Here is an interview with Ken Sussman, the President and Founder of Route Brokers. Ken started Route Brokers in 1985. The company sells establish routes on a national scale. Some brands that Route Brokers has worked with are:
- Tropicana Juice
- Edy’s Ice Cream
- Wise Snacks
- UTZ Snacks
- Bachman Snacks
- Herr’s Snacks
- Dolly Madison Ice Cream
- Pepperidge Farm Bread
- Boar’s Head Provisions
- Pepperidge Farm Cookie
- FedEx Ground / Home
- Snapple Beverages
- Mister Softee
Listen to the live interview here: https://thefranchiseacademypodcast.com/the-route-broker/
Tom Scarda: Ken Sussman is the founder and the president of Route Brokers, and he started this business back in 1985. Many people listening probably were not even born in 1985. He created a niche marketplace, and he really filled a need, really indispensable need for the sale of route distribution businesses.
Tom Scarda: Over the past 34 years, he’s been involved in the purchase and sale of thousands of routes coast to coast. He’s really well known in the industry. I knew about him before I even met him. He’s often sought out by companies, and route owners, and potential purchases, or purchasers of … for his experience, and for him to sell businesses for them.
Tom Scarda: His company has offices in New York and New Jersey, and they sell routes nationwide, all the way from Maine to California, and of course, it’s strongest on the East Coast, where most people live, actually, if you look across the country population wise, and even in Florida. I want to welcome my friend and associate here, Ken Sussman. Ken, how are you?
Ken Sussman: I’m very good, Tom. Thank you for having me on your show. It’s an exciting opportunity, since franchises are something that in the past, we actually …. we’ve never been involved in, in all our 34 years. I found that very interesting for us to get on your show and talk about a whole nother type of business that a lot of people are not aware of as even a business.
Tom Scarda: That’s so true. I remember being a kid, and hearing my father talk about, “Those guys that own Boars Head routes, they make millions,” or whatever. That’s all I really ever knew. But now having been in franchising for 20 years, I know a little bit more about routes, but they are really, really different than your typical franchise. In your opinion, Ken, what’s really the difference between a route and a franchise?
Ken Sussman: Well, I would say the most important thing is first of all, is that 95% of the routes that we sell, and which are what is available in the marketplace, are already established on the day of closing, and they usually are established anywhere from five to 35 years. They’re already making money. They’ll be earning money from day one, if someone purchases a route.
Ken Sussman: A route, it usually includes a distribution agreement giving the route owner the right to sell a certain product in a designated area. There are no royalties, there’s no franchise fees associated with operating the route, and basically the owner works on a commission basis. The more they sell, the more they make, but the customers are already established. They’re already there, and there’s records for a buyer to check out before he makes any decision, and actually goes on the route and checks it out for himself, and sees exactly what’s going on. Once he makes the purchase, the first week he’s making money.
Tom Scarda: Right. Yeah, you’re buying into cashflow in the case you have, which is awesome, but it’s my understanding also that in order for you to make more money and to augment that route, you want to go and do a little bit of sales, right? Do you want to try to get into places regardless of what I’m selling, whether it’s bottled coffee, or potato chips, or cold cuts, do I want to go to stores and knock on the door? Is that part of it?
Ken Sussman: Yes, and it’s according to the route. On many routes, the products sell themselves, but in anything, sales is very, very important. The ability to talk to the store owners, the managers, to get an extra display, to grow the business, but there are routes out there that there’s absolutely no sales required. I could give you a perfect example. That’s FedEx. A lot of people don’t even realize that FedEx routes are for sale.
Ken Sussman: FedEx routes have been sold for probably the last … or at least 20 years, and they are in all of … the ground, the home, the bulk routes. Those are all owned by individuals who set up their corporations to run those businesses, and they are independent operators who do that. There’s no sales involved in FedEx, because basically you’re picking up packages, you’re delivering packages. FedEx does all of the sales, and you’re just basically growing your own business just because FedEx keeps on growing day in, day out.
Tom Scarda: Right, right. Obviously, more and more people every day are buying online, so in that particular case, that probably helps somebody that owns a delivery type route business, right?
Ken Sussman: Yes, absolutely. Well, if you’re talking about the delivery of products, let’s say from all of the sales from the Christmas season and throughout the year, everyone is buying. Just for your customers and the people listening to this podcast, UPS, which people might think, “Well, those are also routes.” They are routes, but they’re not owned by individuals. All the UPS routes, United Parcel Service, those are owned by the company directly.
Tom Scarda: Right, a good distinction.
Ken Sussman: It’s the FedEx routes that you can actually buy into. Another little aside there is that Amazon, who is starting up their own delivery service, basically almost all of Amazon’s business that goes out is going through UPS and the United States Postal Service. I think the owner of FedEx just announced recently that they only do like 1% or 2% of their business is through Amazon. The growth of FedEx has been tremendous, because everyone who’s shipping is using the FedEx model.
Tom Scarda: Yeah, for sure. Is Amazon doing something with selling routes or something like that now? I kind of heard about that. Is that right?
Ken Sussman: Yes, they’re doing something. They’re trying it out. They’re seeing what they can get going with that, but it’s not really a success story yet, because it’s really at the infancy, and there’s actually tremendous investment in the vehicles that Amazon is insisting that anyone purchase with those, because remember, those are not established businesses at the present time, so they have to develop those businesses as they go along.
Tom Scarda: Right.
Ken Sussman: It’s a little different type of situation.
Tom Scarda: I heard that they were trying to maybe make it a franchise model, and I don’t think they know exactly what they want to do with that. Everybody knows if you could hitch your wagon to this thing called Amazon, you’re probably going to have some kind of success. It’s interesting.
Tom Scarda: I don’t want to get too deep down that rabbit hole, because it’s like you said, it’s unproven at this point. I like the proven stuff, the things that we’ve seen out there. We know obviously the soft drinks, and those kind of things that are happening in routes. What other types of products would be delivered by routes that we may not think about?
Ken Sussman: Okay. Wise Potato Chips, Utz, the potato chips of the Yankees. Pepperidge Farm bread, Pepperidge Farm cookies, Simply Orange, which is a Coca-Cola product. Dietz and Watson Provisions, Tropicana, Arnold Bread, Mission Tortilla, Partridge Farm Bread, Fairlife Milk. That’s another Coca-Cola product. Bachman, they’re a coffee catering trucks. Those are routes too, and there are vending routes where you have vending machines. You’re basically just servicing those machines, picking up your money, filling up the machines, and they’re very, very easy to operate. All of these are routes. All of these are routes.
Tom Scarda: Wow, that’s amazing. What’s an investment on these things? What could somebody expect to have to lay out?
Ken Sussman: Well, we have routes that someone could invest as little as probably $50,000, and we have some routes where the investment is a million and a half dollars, and anywhere in between. These are still considered small businesses, but they’re … of the small businesses out there, they’re probably one of the most successful type business. There’s rarely a failure.
Ken Sussman: The only times that we’ve ever seen failures is when the owner is not willing to work. So if someone’s not willing to work and work hard, I wouldn’t recommend they buy any business, whether it’s a franchise, a route, or any type of business, whether it’s a mom-and-pop deli. Don’t buy a business. You have to be willing-
Tom Scarda: Amen to that.
Ken Sussman: Yeah. You know it, I know it. We own our own businesses, and if you’re not willing to work, you’re not going to be successful. If you are and if you have a sound base concept, and the route industry does have a sound base concept that’s been working for years and years, I mean, we’re decades in with routes.
Tom Scarda: Yeah. I said in my book Franchise Savvy, “If you’re the kind of person that joins the gym and thinks that you’re going to get in shape just because you joined the gym, you probably shouldn’t buy a business, because it’s just like the gym. You actually got to show up.”
Ken Sussman: That is true. After you show up, you have to work out a little too.
Tom Scarda: You got to work out, absolutely. That’s so funny. Ken, to kind of go backwards a little bit here, how did you even get into this? How did this start?
Ken Sussman: Well, let’s see. 35 years ago, I was in the retail industry. I actually had worked for Bloomingdale’s for many years, and then at Fortunoffs, when Fortunoffs was a major retailer in the New York Metropolitan area, and then with a company called Fred the Furrier. Unless you’re of a certain age group, you won’t even know that that was the largest furrier in the New York Metropolitan area.
Tom Scarda: I do remember them.
Ken Sussman: I decided I wanted to start my own business. One of my friends had a cousin … not cousin, excuse me. He was his brother-in-law, bought a Tropicana route, and he had such a terrible experience finding the route, and dealing with someone who would be able to explain what’s going on, what he should be looking for, what he needs to do, that we started thinking about different businesses to go into, and I finally decided that this industry is a niche where no one is a specialist in this.
Ken Sussman: No one really understands the business, so I did a tremendous amount of research. I really for probably over a year, I was doing my research before I actually started the company. There was a need to create a marketing niche for this business, and that’s what we did. We created it, we created the marketing area so that people could actually buy and sell routes, and now they had a source to come to, and that was Route Brokers.
Tom Scarda: That’s awesome. I love it. It’s a great entrepreneurial story. What is a piece of success advice that you might be able to give to the listeners?
Ken Sussman: Someone once told me, when I actually was looking to start Route Brokers, I asked someone who was very important to me, he was a good friend, but also a lawyer. I asked him if this would be a good business. I told him all about it, and he told me something that I’d look at as the best advice I’ve ever received from my lawyer. His advice was not to leave my great job, and I should not start Route Brokers.
Ken Sussman: But that pushed me to prove him wrong, because I had done my research. I knew that I was going down the right direction, and what I found from that is it’s always easiest when you’re asked for advice from people for them to tell you, “Don’t do it.” Why? They’ll never be wrong. Because if you don’t do it, then hey, it’s so easy to say, “Look, I told you. Don’t go into that business.”
Ken Sussman: But the truth is, you really … If you find a business, or a franchise, or any type of business, and it’s one that you’ve really done your homework, and it’s a sound concept, and you’re dealing with an advisor who can give you good advice, and good direction, then you have to use your own judgment. You should be asking for advice from other people, but in the end, you have to make your own decisions. So the best advice I ever got was advice telling me what not to do.
Tom Scarda: Love it, and it’s … I mean, you’re obviously preaching to the choir when you talk to me, but for the listeners, it’s interesting, because you need an attorney to … like when you’re buying a franchise, and probably this goes with the routes too, you need a lawyer to look over the documents to make sure there’s certain legalities that are straight, but you can’t look to a lawyer, or an accountant, or any professional to tell you, “Yes, this is a good deal,” or, “No, this is a bad deal.”
Tom Scarda: At the end of the day, kind of what you’re saying, and I share this all the time, is that if you get into the business and you do really, really well, the lawyer or the accountant gets nothing out of it, but if you get into that business and you fail, and they told you that it was a good business, you’re going to sue them, because they told you it was a good business professionally.
Tom Scarda: You got to really be careful about what you’re asking for when you’re talking to a professional. You do need the advice, there’s no question about it, but you got to make sure that you’re being advised on the right issues, and don’t go … A good lawyer will never give you advice yes or no. They would tell you, “You got to know that you’re signing this, and it’s a non-compete. After you sell this business, you can’t be in that same business for X years,” and whatever. Anyway, not to go down deeper on that one, but that’s such a cool statement.
Ken Sussman: Right. Just as an aside on that particular point, the truth is lawyers, accountants, their … you’re paying them to tell you the pitfalls. That’s what you’re paying them for. In other words, they’re not there to tell you, “Oh, this is the greatest opportunity in the world.” They’re there to tell you what’s not to do, but in the end, you have to make your own business decision. If you’re not prepared to make your own business decision, then you shouldn’t be going into business. You shouldn’t even be looking at a business in the first place. You need to analyze the advice, and then make your own decision based upon the facts and circumstances.
Tom Scarda: Yup, and then not beat it to death. So Ken, what is one myth about routes that you would like to break here now on this show?
Ken Sussman: Ah, that’s an interesting question. Let’s see, a myth. You know what? People have said to me, and I’ve been at Route Brokers for the last 34 years, but they very often come in, and they say, “Well, someone told me that I shouldn’t buy a route, because the companies can and possibly will take back the routes.”
Ken Sussman: Well, in my 34 years, it’s only happened once, and everyone who owned one of those routes got their full investment back, and then some, unless they overpaid. If someone overpaid in the first place, which I never recommend anyone overpay for something, just because I want to have that type of route, they lost money. But guess who that company was? That was Coca-Cola.
Tom Scarda: I was going to say, yeah. I think it was-
Ken Sussman: That’s where the myth has come from. And actually, it turned out that that was one of the worst decisions Coca-Cola ever made, since they lost huge market share when they went from company … to company owned routes from the independently owned routes, because a company owned route has someone who’s working the route who basically looks, “Hey, I’m here from 9:00 to 5:00. I’m not here to open up new accounts, to encourage someone to have more shelf space, to have more product out there.”
Ken Sussman: Now you had people who were running the routes that basically they were just delivery boys. That’s all they were doing. So Coke made a big mistake there, I believe. I mean, I think anyone who looks back at this situation, probably it’s a Harvard textbook business school lesson of what not to do, but it’s basically that’s a myth that it has rarely happened, and in the case like with Coke, they bought back the routes anyway.
Ken Sussman: By the way, why does it happen? There are so many reasons why companies want independent distributors. They don’t have to worry about help. They don’t have to worry about the truck, because now the truck is the responsibility of the owner of the route. They don’t have to worry about workman’s compensation. They have someone who’s sales-oriented who’s going to be out there trying to develop the business every day.
Ken Sussman: There’s every benefit to the company, and they don’t have the expense, so what the company does, is they take a little less commission on the product, they give that commission to the owner of the route, and now they don’t have all of these responsibilities. They don’t have to worry about all of the matching of the taxes, and this and that.
Ken Sussman: In other words, it’s basically they are now … they just could run their distribution business and let the independent route owner run the business. That’s the direction that most companies are going nowadays, not to company owned routes.
Tom Scarda: Yeah, and that makes perfect sense. I mean, I think about even like in the franchise world, there’s several big named franchises that you would recognize that were almost, if not 100% company owned, that are now franchising out their stores. These are up and running stores, and they want to sell them.
Tom Scarda: They realized that their company stores make something like 27% less than a franchised store, because the man or woman that owns that store, they putting food on their table. To use your phrase, they’re not the 9:00 to 5:00 person who just wants to clock out and go home, they don’t really care, they’re not developing the business.
Tom Scarda: If you are interested in franchises that are for sale with employees and everything in place, and a big brand name, contact me at The Franchise Academy. Tom@thefranchiseacademy.com, and we’re going to let you know where to contact Ken, because Ken got some awesome routes that are for sale at the moment right now. There’s always new ones coming on board too. I guess since we’re giving out web addresses, let’s do that right now for you, Ken. What’s the website for the Route Brokers?
Ken Sussman: Routebrokers.com, and that’s brokers with an S.
Tom Scarda: Routebrokers.com. That’s great. Even on that website, you probably could see things that are for sale right now and things like that, correct?
Ken Sussman: Yes. Yes, you can, but one of the nice things with Route Brokers is there’s no charge for our consultation. Also, if they want to call us, we have an 800 number that spells out 1-800-4, the number four, routes, R-O-U-T-E-S, which is also 1-800-476-8837. So the call is free, the consultation is free, and the opportunities that we will offer them are priceless. We have a lot of great opportunities, and I have routes in general that are netting anywhere from as little as $800 a week to … established routes … to routes that are netting $12,000 a week, and anywhere in between.
Tom Scarda: Netting meaning the profit that the owner puts in their pocket?
Ken Sussman: Right, that’s after all operating expenses, the running the route, any help, any gas, any insurance, any maintenance, all of that is after all of those expenses.
Tom Scarda: Is it typically owner operator, like the guy that owns the route is the guy driving the truck and doing the deliveries, or is there cases where somebody might own like five routes, and have five people driving five different trucks?
Ken Sussman: Used to be almost all routes were the smaller type, one route, one route owner, and very often he was the driver and the operator of the business. There are still many routes that are just like that even today, but there are, in other words, and one of the very interesting things that’s happened, I mentioned FedEx before, those used to be pretty small routes. In other words, you could buy a FedEx route for $100,000, $70,000. It might have been netting $1,200 a week, something like that, because it used to be that you could own one FedEx route.
Ken Sussman: Now it’s changed … and then you were the driver, so the guy delivering the package was typically the driver. But FedEx changed their business model probably about four or five years ago, that they want every route to be actually a total of five routes within that master route. Basically, the route owner is just managing. He’s typically he has a manager, he has drivers, the trucks go out without him. All he has to do is make sure that everything is … that everything happens, and he’s a true manager.
Ken Sussman: We’re getting a lot of white collar people who are looking for that type of business, because they want to get out of the corporate rat race, they want to own their own business, and this is a great opportunity for them.
Tom Scarda: It really is. That’s so cool. So Ken, when somebody is starting up a new business, and they decide, “Hey, we need distribution, and we want to start up routes,” I mean, how do you know how much it’s worth? I’m thinking about … I don’t know if you know of it, there’s a coffee company called Sail Away here on Long Island, and they’re starting to gain some speed and do some distribution and stuff. If I wanted to go buy a Sail Away route, but there’s no track record, they’re new, how do you approach that? How do you think about that?
Ken Sussman: When you’re dealing with a new product, I’m not actually familiar with Sail Away. Have they been around a long time?
Tom Scarda: Maybe two or three years, maybe.
Ken Sussman: Okay. The danger of a newer product coming into the marketplace, because we’re approached by new companies who want to get new distribution, and they want to set up routes, and I always say to the company, I said, “Do you want to make money on the sale of the route, or do you want to make money on the sale of the product?”
Ken Sussman: If they tell me that they want to make money on the sale of the route and they’re a new company, I usually will say, “I don’t think I’m the right person to be dealing with,” because we know that the failure rate for newer companies that are not franchises, these are just simply … there’s not a business model, basically it’s a dream that they want to expand, and they’re looking at if routes might be a great distribution network, and let the owner of the route take the risk, that’s a lot different than an established route that’s already making money from day one.
Ken Sussman: All I would say, is I’m not saying that Sail Away is not going to be successful, they might, but all I would tell you is that it’s a much riskier investment when you have to open up the accounts for yourself, that you’re not buying into something that’s already a proven model that’s been established for five to 35 years. It’s a totally different type of business.
Tom Scarda: Absolutely, you’ve got to be more of a pioneer and a real entrepreneur, but the upside potential might be greater if you can get into this thing for a few thousand, and you could flip it for 50,000 or something like that. Who knows?
Ken Sussman: Right, but that’s the if, and it’s going to take a lot of blood, sweat, and tears to make that happen. In other words, that’s why we stick mainly to established businesses, because there is so much more risk when you’re talking about a startup.
Tom Scarda: By the way, sorry, we’re going to buy something that’s established. How do you price out a route?
Ken Sussman: Pricing is determined by a number of different things. A first and most important is how much net profit is generated by the route. Second, I would say is how long is it established? Just like we were just talking in your previous question.
Ken Sussman: If it’s established for five years, that’s a pretty solid business, and you could look at that track record and say, “Hey, what would make it not continue to go the way it’s going right now?” The condition of the truck, the brand. In other words, different brands do go for different multiples for the route. How close it is to the depot, and the hours that you’re going to have to spend on the route. All of those things really come into play in terms of pricing a route.
Tom Scarda: Well cool, and I just want to also make clear that we’re not making any earnings claims, just because we’re saying in very general terms that you could … some routes produce a certain amount of money, not saying that that will be the money that you could make.
Ken Sussman: I agree with you 100%, and because if the current owner is working let’s say eight hours a day, five days a week, and you take it over and you say, “Hey, I don’t need to work eight hours, I’d like to work five hours a day.” You’re not going to make the same amount of money. The amount of effort you put into a business, and that’s any business, whether it’s a franchise, or a route, or any business you buy, and those efforts, and the intelligent efforts, will make the difference of success or failure.
Tom Scarda: I agree 1,000%. I kind of wanted to ask you, as you’re building this thing for the past 34 years, is there any kind of sour moments, or any bad entrepreneurial moments that you’ve had that you could share, as maybe get a lesson out of it for us?
Ken Sussman: If I think back to that moment where I said, “Oh my god, what happened?” Listen, do you remember my early story, where I told you I listened to my attorney, and I said … I listened, but then I said, “I’m going to do it anyway,” because I felt that this was a good opportunity.
Ken Sussman: Well, I was in business for just about two weeks at that time, and I decided I wanted to get some fresh leads. Two weeks in business. So what I did is, and this is a true story, I went down to the Tropicana depot that was near the office, I bought some donuts and coffee, I gave them to the guard at the gate, and I asked him if I could put some leaflets on the cars in the depot parking lot, because what I basically wanted to do was try to get some leads.
Ken Sussman: He said, “Fine.” I placed one on every car, went back to my office, and I said to myself, “Well, what a great idea. I’m a real entrepreneur here.” About two weeks later, I get a letter addressed to Route Brokers Inc. directly from Tropicana in Florida, the corporate headquarters. I’m figuring, “Wow, I must have really made an impression on these guys.” Well, now I open the letter, and I saw it was from their legal department.
Tom Scarda: Oh, god.
Ken Sussman: It was Tropicana’s legal department telling me that I was unauthorized to be on their property, and that if I came back again, they’ll take legal action against me. I said to myself, “Wow, oh my god. This is not the start for the business that I was hoping for. Maybe I should have listened to my attorney.”
Ken Sussman: Well, I’m the type of person that I always want to make lemon … make lemonade, so what I did is this. I took that nice envelope with the crisp Tropicana logo, and I left it on my desk. Remember, I’m in business two weeks now. When new clients came in to meet with me as a startup business, they knew I was new in the business, part of my presentation was to say, “We’re being contacted by all major companies with routes. As you can see, Tropicana just sent us a letter.”
Ken Sussman: I just didn’t tell them what was in the letter. That is a true story. I remember, I said, “How can this happen to me? I’m in business for two weeks.” But that’s what anyone has to do. If you’re in your own business, you have to figure out how to make things work. If you have a sound idea, you will make things work, and if you work hard. If you give up, then it’s over. When you give up, it’s always over.
Tom Scarda: “Whether you think you can or you can’t you’re right,” said Mr. Henry Ford. That’s just awesome. Just to tie this up, I wanted to just ask you where are routes available to purchase right now? Anything that you’re really excited about? Anything that you’re fired up about?
Ken Sussman: There are routes that we have available nationwide. We’ve sold them across the country, as you mentioned earlier on. Route Brokers has sold thousands of routes over the last 34 years. It needs to be in urban areas, typically, because when you go into suburban areas, there’s very often … and when I talk suburban, I’m not talking about let’s say Long Island, because Long Island and some of the New York Metropolitan areas that are suburban, there’s still plenty of population there, so a route can be successful.
Ken Sussman: When you start going out to the Midwest, and it could be 50 miles between a town, that is not the area where it’s really successful for a route to be. You need not rural areas. Typically, for a route, for an independent owner route, you really need a situation where you have the concentrations of population, and that’s usually in the major cities and in the suburbs of those major cities.
Tom Scarda: If you’re concentrated, then there’s less time on the road going from stop to stop, and all of that. It all calculates, so makes perfect sense. Ken, I want to thank you for being on the show. Tell us again what is the web address for you guys?
Ken Sussman: Routebrokers.com. R-O-U-T-E-B-R-O-K-E-R-S.com. 1-800-4Routes, or 1-800-476-8837. The call is free, the opportunity is priceless.
Tom Scarda: Love that. I’m going to put on our website, TheFranchiseAcademyPodcast.com. You could go to that, and you could hear this again, and you could share it with your friends, and if you get in touch with Ken, let him know you heard it on The Franchise Academy Podcast. Ken, thank you so much, and I will see you at a networking meeting here on Long Island soon.
Ken Sussman: Good. Tom, thank you so much for your time, and for putting on these podcasts. It’s very exciting to be a part of it.
Tom Scarda: Well, thank you so much, and goodbye everybody. God bless you, and listen next week. We have some exciting guests coming up.
Speaker 4: This has been another episode of The Franchise Academy Podcast. For more info, go to our website. TheFranchiseAcademyPodcast.com. Remember to subscribe to Tom Scarda’s YouTube channel for educational videos on franchising. Education, insight, and inspiration.