I'm a carrier - Planning to give/sell ownership of my trucks to my drivers (Good idea or Bad?)

Essentially he wants to do a lease purchase. He needs to offer better than the megas.. simple.

 

Well sort of,

The difference between a lease purchase at any of the megas is that you are not getting any of the profits. You get your cpm and that's it. This proposed model includes wages for driving, and then a slice of the pie of profits, according to how much of the truck you own.

Heck, who knows, it might not be viable to make it fair enough for driver and owner. One thing is for sure, $1.65 a mile to the truck is not enough to be fair.

 

Why are you factoring? That would be the first place to save money and increase driver pay and profit.
You could sell truck to driver with purchase contract and be a lien holder. You are both protected .
He sells truck you get money as lien holder.
You bankrupt he can pay off lien and keep truck.
In theory!
Good luck

 

Yes it would be a viable business model but ...

this is a one or two truck operation he has, not a very good start. He does not have deep pockets and talking as if he understands the tax liabilities for the driver.

for this to actually work, he has to have a lot of positive cash flow (factoring is a red flag) and deep pockets that can be used to cover the driver.

This model also shifts it from being an employer/employee to a carrier/contractor.

Decent equipment is subjective and because he has no real idea what it takes, buying new and passing it onto another under a lease agreement can work but then he can't have them as employees.

Would you want to pay off a truck in 4 years and have it near the end of its life cycle?

You can't use it as an asset, even if the transfer was done recently, sure you can depreciate the cost of the truck after the lease buyout takes place but who cares - depreciating it needs to take place in the front end of the transaction, not the rear of it.