Buying a last-mile delivery contractor in Canada

Someone evaluating a delivery contractor that runs routes for a platform is buying that right, a group of drivers and a set of vans. What matters is whether the contract runs long enough to pay back what you spend, whether drivers stay, what condition the vans are in and whether the records match the seller’s account. Those are things to ask about, not assume. This guide covers what a good contractor looks like, what a seller may not mention, and what you must qualify for yourself. It does not tell you whether to buy.

The first question is whether the platform accepts you

If the contract that earns the revenue is between the seller and a platform, the seller’s signature on a purchase agreement does not settle whether the platform will accept you. Ask early whether the platform has a vetting process for new operators, and what it wants to see, for example whether it asks about your experience, finances, insurance or background. Do not rely on the seller to describe the platform’s position. Ask the seller to arrange a conversation, or make your offer conditional on the platform’s written approval. Our answer on whether contracts and leases transfer in an asset purchase explains why assignment needs separate attention.

What a good one looks like

Look for a contract with a clear term and renewal path, a territory the business already serves with reasonable density, a driver team that has been stable, and performance records the platform is satisfied with. Ask for the platform’s scorecards or equivalent and how the business ranks against its measures. A business whose routes are run by a manager and a stable team is a different purchase from one that runs on the owner’s own long days, because on the owner’s departure the work still has to be done by someone, and that someone costs money.

What the seller may not volunteer

Ask about any probation, warning or penalty from the platform, any route the platform has taken away or reduced, driver turnover in the past year, and how the owner’s own time is spent. Ask whether vans are owned, leased or financed and what is owed on each. Ask what drivers are paid and how, and whether any complaint about pay or status has been made. Ask for documents behind each answer: the platform’s notices, driver pay records, the lease and loan statements for each van, and the insurance claims history. Compare each document with what you were told, and write down any difference before it becomes a surprise after closing. If an answer cannot be backed by a document, treat it as unverified and ask your lawyer how the purchase agreement should deal with it, whether through a representation, a condition or a price adjustment.

What you must qualify for yourself

Some requirements attach to the operator, not the business. Ontario says that if you operate a commercial vehicle in Ontario you must have a valid CVOR certificate, with exceptions such as some lighter trucks, and that the CVOR program monitors and evaluates operators’ safety records. Transport Canada says the National Safety Code is a code of minimum performance standards applying to all persons responsible for the safe operation of commercial vehicles. Confirm with your own province’s transportation ministry what you must hold in your own name, and what you must do before you operate the existing fleet, rather than assuming the seller’s registration carries over.

Driver status is something you take on

If you keep drivers the seller treated as contractors, you take on the question of whether that treatment is right. The CRA describes an employee as generally working under the direction and control of the payer, and a self-employed worker as free to choose how to carry out the contract. Ontario’s Employment Standards Act, 2000 s. 5.1(1) says an employer shall not treat, for the purposes of that Act, a person who is its employee as if the person were not an employee under the Act. Our answer on a seller who misclassified an employee as a contractor explains how liability can follow the business. A lawyer should review this before you sign.

• Get the platform’s written position on your taking over the contract and routes
• Compare the seller’s reported profit with the platform’s own statements and the bank deposits
• List every van, who owns it, and any lien or lease against it
• Ask how each driver is engaged and paid, and whether any complaint exists
• Confirm in writing which registrations and approvals you hold personally and which you still need