If you’re thinking of buying a gas station, good idea! Now the important question is whether you should purchase a franchise or an independent. To make sure you’re making the wisest choice, spend some time considering in-depth answers to questions like these . . .
Question #1: Who’s responsible for environmental problems?
Environmental compliance situations are the most significant issues in buying a station. If you run into problems with environmental laws, and have to pay out for expensive clean-ups or brand new equipment, it could mean closing your business. I’m not exaggerating! Here are some situations that you might not have thought about . . .
• Underground leaks. If one of your tanks leaks, who pays for the cleanup – you, or the gas company who sold you the franchise?
• New equipment. If every station across your state is immediately required by law to hook up a new kind of vent for underground tanks, you’ll have to pay out for that new equipment if you’re an independent station.
• Site remediation. If you sell your station, who pays for removing the underground tanks, cleaning up the soil and getting the certification that states your property’s remediation (clean up) has been approved by the state?
Question #2: If you purchase a franchise, can you stop concerning yourself with environmental issues?
In general, the answer to this question is yes. Your parent company (Exxon, Mobil, etc.) will install any new equipment that the state requires, and will step in to do the clean-up if one of your tanks suddenly develops a leak underground.
However, you should never make any assumptions in this area. You and your attorney have to comb through your franchising agreement to understand exactly what’s covered, and what’s not!
Question #3: If I’m buying an independent, what do I really own?
If you purchase an independent station that has no ties to a major brand of gasoline, the answer to this question is reasonably clear. You’re probably buying the business as an entity, as well as the real estate where the business is located, along with the tanks, pumps and other equipment that you’ll need to sell gasoline. However, the picture can become complicated somewhat if you are buying the business, but not the real estate (land, buildings). You and your attorney should really pin every detail down.
Question #4: If I am buying a franchise station, what do I really own?
The answers to this question can be more complicated than you’d expect. After you buy, for example, you might end up owning the building – but not the land and equipment, which are owned by the parent company. Or you could lease the building and the land, but have the canopies, pumps and other equipment owned by the parent company.
Remember, different franchising organizations set up their ownership packages in entirely different ways. To find out if the deal is right for you, you’ll need to go over all franchise plans and documents closely with your attorney.
Question #5: If it’s a franchise, who pays for what?
If you purchase a franchise, you will likely be more than surprised to discover all the things that your parent organization expects you to pay out for. Some or all of these items might not be covered, so be sure to ask ahead of time:
1. Insurance and Repairs – You may have to pay to insure and maintain the parent company’s pumps, signs and canopies.
2. Rent Increases – If the parent company leases you the premises, be prepared to get socked with large rent increases every two or three years. Try to get these terms spelled out in the franchise agreement.
3. Promotional Items – When the parent company decides to sell a new kind of coffee in your convenience store, or to offer special gas discounts on Tuesdays, and decides to advertise those offerings with special signs – will you be required to pay for them?
4. Payroll and Benefits – Don’t expect the parent company to pay salaries or provide benefits for your employees. It’s the one area where you’ll find that you’re suddenly operating like an independent business.
Richard Parker is the President and founder of the prestigious Diomo Corporation – The Business Buyer Resource Center. His celebrated materials, seminars and consulting have encouraged thousands of aspiring business buyers from around the World to pursue their dream of buying a business.
- Key Tips for Reducing All Types Of Crime at a Gas Station or C-Store If you passed by a prominent advertisement for a gas...
- How to Franchise Your Business And What Are The Benefits And Struggles Of Developing A Franchise. If you own a company that has grown into 2...
- Why Franchise Your Business And What Are The Advantages And Problems Of Building A Franchise. If you own a organisation that has grown into two...
- Surefire Tips for Effectively Utilizing the Due Diligence Process So, what exactly is due diligence and why is it...
- Surefire Tips for Establishing a Business Valuation If you’re looking to buy a business, it’s important to...