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The Gas Station Market

Below are five steps to buying a gas station. The article includes links to other articles that address points made in far more detail.

Step 1: Choose Gas Station Type

The first step to buying a gas station is deciding whether you want to purchase a franchise of an oil company or an independent station.

As a franchise owner, you are obligated to purchase the franchiser's gasoline, participate in their promotions, and follow its policies. On the other hand, you benefit from the franchiser’s brand. The franchiser also assumes full liability for environmental issues.

Independent gas station owners are free to purchase gasoline from local distributors, which can give them a pricing advantage on the competition. You also assume responsibility for marketing, product line and environmental issues.

Step 2: Research Location

In the article “Gas Stations for Sale in Florida - Best Locations,” its noted new gas station convenience stores are 31 percent larger than the average gas station c-store. This suggests that gas stations in new or developing communities offer the most profitability. Specifically, these are communities composed of large numbers of commuters and the gas station is near commuter arteries where there is little or no competition from nearby gas stations.

Of course, as ideal as a location may seem, it’s important to research current or future plans for roadwork near it.  If the roads that provide access to the gas station are scheduled for construction, the accessibility of the station may be disrupted. Also, consider the environmental laws of each location, particularly if you are considering an independent gas station. Environmental compliance is costly in many areas. And avoid gas stations in neighborhoods with high crime rates.

Step 3: Size and Looks Matter

Customers are attracted to clean gas stations. Also important is a forecourt that is easy to navigate and offers ample parking.  And, as the trend in new gas station construction indicates, the larger a convenience store the better. In fact, having the largest c-store confers a competitive advantage over nearby gas stations.  (See article “Keys to Gas Station Profitability.”)

Step 4: Research Profitability

Be sure that the station has been profitable in the past. Request financial statements and, if need be, hire an accountant to go over them.  Park near the station and count how many customers visit over a few hours to verify the seller's claims. And have the below ground tanks and other infrastructure inspected by an independent appraiser for leaks and other problems. For more, see the article “How To Sell a Gas Station.”

Step 5:  Negotiate a Purchase

Be aware that this is a market rife with unrealistic expectations. Those unfamiliar with negotiating the purchase of a gas station are wise to enlist the services of a broker specializing in gas station sales. An experienced broker can ensure the property meets legal and environmental compliance, analyze the business’ financial records and advise you on a realistic price. If you are unable to work out a deal with the sellers, move on to the next station on your list until you reach a deal that suits you. Once a deal is consummated, create a business plan.

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