Regarding business ethics, this is not a good idea. As the owner, you provide the trucks and equipment.
He might think this justifies some sort of equity in your company on top of his hourly wage. He also might think this gives him leverage on other employees and yourself by acting like a boss instead of worker.
What happens when you do get this extra route built up and going strong and then he quits? Not only quits, but poaches some employees, grabs a few of your yards, and decides to run his own business.
The guy must be pretty young or stupid to be willing to put the wear and tear on his personal vehicle for your company.