If you Google a list of investment ideas, you will find gas station investment on that list. Are gas stations profitable? People need gas. There is money to make in this business. However, you need to consider some important legal factors.
Before you start calculating potential gas station revenue you can generate with this investment, find a good business lawyer to discuss those factors.
Independent or Franchised
The following are the two categories of gas stations:
- Independent station
- Franchised station
In a franchised gas station investment, you need to sign a franchise agreement with a leading supplier. On the other hand, an independent station is not supported by a leading supplier. If it is a franchised gas station, your gas station carries the name of a well-established brand. Find a business lawyer to discuss the terms and conditions of the franchise agreement. The franchisor may approve or reject your deal.
Convenience Store
Your goal of gas station investment is to make money by selling fuel. You can make more money by selling other items. You can generate a bigger revenue by selling cigarettes, sodas, candy and other products. This is the reason why most gas stations have attached convenience stores.
Pumps and Tanks
Pumps and fuel tanks affect your operation and profit. You may not get the ownership of pumps and tanks. If it is a franchised gas station, the franchisor is the owner of pumps and tanks. In some cases, the property owner owns pumps and tanks. Before making a gas station investment, find out if the transfer of pumps and tanks is included in the sale or not. If the gas station is on leased property, learn about the remaining useful life of pumps and tanks. Make sure that they meet regulatory requirements.
Environmental History
Does the gas station contaminate the environment? Learn about the history of the gas station. If the gas station is contaminating the environment, this may lead to fines and you may even need to shut down your gas station.
State-specific Laws
In addition to the federal laws, also learn about the state laws and regulations related to gas stations. There are consequences of violating these laws and regulations. This may lead to temporary or permanent suspension of your license.
Risks in Gas Station
Like every other business, there are risks involved in gas stations as well. The profit of a gas station depends on traffic. If you choose the wrong location, you may end up losing money. You need to think about future development as well. Your prediction may go wrong.
Business Plan
You need a business plan for the right direction and focus. This plan also makes it easy to set up a gas station.
Products and Services
What else can you sell with gas? You can also offer mechanic services and/or have a convenience store. What will you sell in the convenience store?
Effects on the environment is a serious concern. When you are creating an agreement, make sure that there are clauses related to the environment.
