# Owning a Canada post good/bad idea?



## Causalien (Apr 4, 2009)

Need some differential analysis on the pros and cons of buying a business like Canada post. This is a new field for me so I am soliciting opinions with everyone I know.

It will be a joint venture with a business partner. Go.


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## crazyjackcsa (Aug 8, 2010)

You mean like a shipping company?


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## Causalien (Apr 4, 2009)

One Postal office outlet.


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## bayview (Nov 6, 2011)

Causalien said:


> One Postal office outlet.


How does one find opportunities like this. I hear some comes with steady cashflows.


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## Causalien (Apr 4, 2009)

Luck, having a fortress moat ready... and drive that fact into the hippocampus of everyone in my human network so they call me up when they need a partner.

Steady cash flow? How so? All I remember are the postal worker strikes, and the fact that email will eventually replace post mail...

The royal mail, care to comment? I look forward to your opinion the most.


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## the-royal-mail (Dec 11, 2009)

I think it's a good gig. There's lots of competition for postal gigs. Just my opinion though. Best to do your research, crunch the numbers, find out the costs involved etc as with any business.

But to suggest that email will replace mail is laughable at best. Anyone who thinks the PO is "obsolete" (something that was spewed frequently on Internet forums during the last postal strike in 2011) has obviously never purchased anything online. The main reason online shopping (which is exploding in popularity each year) works and is affordable/feasible for the average person is due to reasonable lettermail and parcel post rates. For a large share of the stuff people buy online, using couriers is simply too expensive and inconvenient and they don't have the tremendous infrastucture in place that has been established by the PO. The post office is undergoing a major shift from letters to parcels due to online shopping but the Internet is not the enemy.

Although I don't agree with everything in this article (tablets are not a replacement for mail any more than fax machines are), this should provide some more nuggets of info about where CP is at right now:

http://business.financialpost.com/2012/02/18/canada-post-targets-transformation/


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## MoneyGal (Apr 24, 2009)

The neighbourhood CP concession in my nabe gave it up. I know the proprietors; they had what sound like pretty good reasons to abandon the franchise - they described getting pretty squeezed, from their perspective, on the franchising requirements. 

In your shoes, I'd talk to a variety of CP franchise owners. If you can find ones who've abandoned the franchise, their input might be especially valuable. Of course, the neighbourhood demographics will affect the success of any given outlet.


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## Four Pillars (Apr 5, 2009)

If it's the actual Canada Post corporation you are interested in - I'm sure it can be had for a dollar if you agree to take over their ridiculous pension obligations.

While I don't blame anyone at CP for their situation, that industry (among many) is a great example of the problem with DB pensions. If the industry/company shrinks for whatever reason then the DB plan becomes unsustainable.


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## jcgd (Oct 30, 2011)

Anything paper I had delivered died with the strike. All I have mailed now is parcels so I can choose any shipper. 

I think it's a matter of time before paper mail is dead. It's sad that we are still wasting all that paper. 

On the other hand parcel deliveries seems to be steadily increasing.


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## Eclectic12 (Oct 20, 2010)

Four Pillars said:


> [ ... ]
> 
> While I don't blame anyone at CP for their situation, that industry (among many) is a great example of the problem with DB pensions. If the industry/company shrinks for whatever reason then the DB plan becomes unsustainable.


Is that really true for a private company DB pension?

The insurance company I worked for regularly slashed staff if the industry or their sales dropped too much. Doing so results in a cap on the DB pension obligation. Even better from a company perspective, where the former employee leaves the DB plan, any future obligations are removed completely. 

Industry/company shrinkage is certainly a stress and can become a factor in making the DB pension unsustainable but is not end all and be all.


My impression is that CP as a crown corporation has had difficulty using similar tactics and has inflated DB pension commitments.

IMO, CP's pension situation is different from a private company and is more comparable to gov't DB pensions 


Cheers


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## zylon (Oct 27, 2010)

*$899,000*



bayview said:


> How does one find opportunities like this. I hear some comes with steady cashflows.


http://www.century21.ca/Property/AB/T0J_0Y4/Drumheller/Railway_Avenue/96


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## kcowan (Jul 1, 2010)

Shoppers uses them as traffic generators. That is why they are always in the back corner.


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## Causalien (Apr 4, 2009)

So to summarize.
DB, and whether or not I'll be on the hook for it. Look for how many workers are about to retire. I should be able to dig this out of the financial statements.

Franchisee requirements. I'll be getting consultation with someone at the head office soon. But not sure if he'll be able to help on this. So a potential weak area.

Surrounding demographics. I need more input on this. What's a good surrounding demographic. What type of people will generate the most income. Amazon junkies comes to mind. ID ing them will be hard.


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## MoneyGal (Apr 24, 2009)

There's no DB requirement. You aren't staffing this place with Canada Post employees. You are what's known as a "private sector partner" of Canada Post. As I recall, CP lobbied pretty hard against postal outlet franchises when they were first introduced, and that's part of the reason why. 

Demographics: you don't just want "people who get a lot of mail." You want people who will come into your store/outlet for whatever reason. The abandoned franchise that I know of is also a Sears depot. Their rationale was that the two businesses - mail and Sears parcel pickup - are strongly related, and they were (apparently) right. What made the franchise unworkable for them was not the demographics, but the franchising requirements.


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## OhGreatGuru (May 24, 2009)

According to this is web site: http://www.dailyfranchises.com/franchises/Canada_Post_Franchise.htm

*Special Note - Canada Post does not accept franchise inquiries. They scout areas of interest and approach businesses owners in that area.*

That site also suggests: _For more information on owning a Canada Post franchise, please visit the official Canada Post website_ but I can't find any such information on CP's web site.


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## marina628 (Dec 14, 2010)

Prepare for your jaws to drop ,my friend had a store with a Canada post.His employee over many years ripped him off on about $300,000 worth of western union transfers,postage meter fees and stealing parcels.He was able to keep this scam going as he was getting the mail from these companies asking for payments.The coins were all removed but the outside storage boxes were left to make it look like big inventory.Because it was a Canada post outlet RCMP had to deal with it and he could not deal with local police. People who lost packages were screwed over as Canada Post did not help,I know a guy who bought a computer that was sent to store and 'disappeared' he charged back on cc as nobody would help him.
If you want to work it yourself go ahead but be aware the potential for theft is huge just you never hear about it as CANADA Post keeps everyone on gag orders.

Marina


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## Causalien (Apr 4, 2009)

I'll ask the partner how he came by the opportunity. But I am pretty sure it's along the line of "Someone I know"


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## bayview (Nov 6, 2011)

Thks Zy. The info in the link u gave is more like a pty deal than a postal franchise. 

Cheers,


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## zylon (Oct 27, 2010)

bayview said:


> Thks Zy. The info in the link u gave is more like a pty deal than a postal franchise.
> 
> Cheers,


I don't know what "a pty deal" is.

It's a real estate ad. If Canada Post doesn't renew the lease, then the owner is left with a commercial building. It's been a Post Office since 1987.


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## Causalien (Apr 4, 2009)

Negotiation broke down... there are issues.


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## Mall Guy (Sep 14, 2011)

kcowan said:


> Shoppers uses them as traffic generators. That is why they are always in the back corner.


As kcowan points out, most retailers (host business) use them to drive traffic. Not sure the business model is sustainable as a stand alone business. Do you operate a host business that could benefit from a constant flow of traffic - drug store, C-store, anywhere that can benefit from an impulse purchase of a higher margin item. Of course there are also other alternatives, like a UPS franchise, although in my experience they can be hit or miss (again, demographics of the area).

But are you looking to operate a CP retail outlet or be CP's landlord? If it is the latter, make sure that the location is suitable for other types of business. That means location, parking, access, visibility, building condition, cost of conversion, zoning . . . what's the exit strategy?


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## Causalien (Apr 4, 2009)

Well, as a standalone, the income barely covers the cost and time investment. So the only exit strategy is to sell at a higher price, which, in my opinion is a lousy investment when compared against all my other income generating assets. I think what is necessary is having it as an attachment to another franchise. With that, we will need a 3rd partner to invest enough capital for both franchises. There are other exit strategies, but they don't make sense when there are two equal owners.


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