Find out what you need to know to purchase the right franchise at a fair cost.
Gas stations have been in the news lately. Increasing gas prices and high gasoline demand make it seem attractive to own gas stations. Add to this the ancillary products and services gas stations sell to drivers, including food and drinks, lottery tickets, tires, mechanic services, detailing, and more. Owning a gas station can seem like a great business opportunity to many entrepreneurs.
Opening or buying an existing gas station and operating it independently can be daunting. You have to source all your equipment, systems, and supplies. Gas station franchises allow you to jump on the service station business bandwagon and more easily run a profitable operation.
Purchasing a gas station franchise isnât cheap, but it can pay off if you invest smartly in the right one. A gas station in the United States can make between $4,500 and $14,500 daily, depending on size, location, and product and service offerings.
This article will reveal the costs associated with different gas station franchises, explain whether itâs a good business opportunity, and go over everything you need to know to purchase the right gas station franchise for you.
- Cost of popular gas station franchises
- The top factors that impact gas station franchise costs
- Additional costs of opening and operating a gas station franchise
- Franchise gas stations: The opportunity
Cost of popular gas station franchises
Investing in a petrol station franchise can cost prospective business owners a significant amount. The total initial cost typically runs between $250,000 to $2 million for a small gas station, although there are some less costly local chain options. However, youâll likely earn less from them. There will also be ongoing costs like franchise fees, insurance, licenses, inventory, royalties, and many more, which could add another $300,000 per year.
Hereâs how much you can expect to pay for some different types of gasoline station franchises.
There are more than 8,600 7-Eleven convenience stores located across the United States. Many of them sell gas. The companyâs goal is to make franchising easy. 7-Eleven offers a turnkey solution that includes everything franchisees need to do business effectively. 7-Eleven franchise stores and gas stations are delivered in fully operational condition.
The initial cost to start a 7-Eleven c-store and gas station franchise is between $45,000 and $1.2 million.
Shell is a premium provider of gas across the United States and one of the top gas station franchise businesses. Its brand is well-known, and many drivers seek out Shell gas stations.
Because of this, the typical costs of a Shell franchise are high. The initial investment is typically between $2.5 million and $6.6 million. The annual franchise fee is $30,000, and you must maintain $700,000 in liquid capital.
Ikeâs Love & Sandwiches
This popular nationwide chicken sandwich franchise has a menu with many popular items. Many locations come with gas stations.
The startup cost can range from $175,000 to $275,000. The annual franchise fee is $50,000.
Currently, this company has more than 500 locations in the United States.
The initial investment in this franchise is between $1.0 million and $1.4 million. Youâll also be responsible for an annual $25,000 franchise fee.
AMPM has rapidly grown since it opened in the late 1970s. There are hundreds of these combined gas stations and convenience stores throughout the U.S.
Youâll have to invest between $400,000 and $11 million in an AMPM franchise location. The cost is dependent on the site, its size, and how busy it is. Youâll also be required to maintain between $800,000 and $1.2 million in liquid cash assets. AMPM offers franchisees in-class sessions and hands-on training to run their gas stations and convenience stores effectively.
Circle K gas stations and convenience store franchises are located in more than 20 states.
Circle K franchisees must make an initial investment of between $200,000 and $1.6 million. The ongoing annual franchise fee is approximately $25,000. Circle K offers third-party financing options to cover equipment costs.
Street Corner is a chain of boutique convenience stores typically located in busy urban areas. Many locations also sell gas. Street Corner was founded in 1988 and has been franchising since 1995.
An initial investment of between $45,000 and $1.5 million is required to purchase a Street Corner franchise. Franchisees are required to maintain a liquid net worth of $100,000. Financing is available from third-party sources. It can cover the franchise fee, equipment, start-up costs, accounts receivable, inventory, and payroll.
Sunoco APlus combined gas stations and convenience stores are located on the east coast of the United States and in parts of upstate New York and Ohio.
Getting a Sunoco APlus franchise is challenging. Candidates are evaluated based on their business experience, skills, financial strength, and personal ambition. The total cost for a Sunoco APlus franchise is relatively affordable, running between $25,000 and $600,000.
Dash In provides franchising opportunities for its gas stations and convenience stores across America. Itâs been franchising since 1979.
The franchise cost of a Dash In is between $140,000 and $190,000. The company offers financing options.
Express Convenience has been franchising since the mid-1980s. The gas station and convenience store combos are located in the Midwest.
It takes an investment of between $165,000 and $200,000 to get an Express Convenience franchise. Owners are provided with training on how to run their businesses. Financing is available for Express Convenience franchises.
On the Run
On the Run gas stations and stores offer typical convenience store products in addition to fresh snacks, quick meal options, health and beauty supplies, and more.
A total investment fee of $50,000 is required to get an On the Run franchise. You must have liquid assets available of at least $100,000. This is one of the lowest franchise costs we encountered in our research.
ExtraMileâs convenience store and gas station combination locations offer Chevron gasoline coupled with retail food outlets. The ExtraMile franchise was established in 2007 and has more than 200 locations.
ExtraMile franchisees receive training from Chevron, advertising support, ongoing business advice, and mechanizing. The total investment to buy and manage an ExtraMile franchise is between $1.5 million and $2.5 million.
This isnât meant to be a comprehensive list of gas station franchise costs. Instead, it shows a range of options from well-known national chains, which usually require a higher cost of entry, and smaller regional players, which are typically less expensive.
Did you know: A successful gas station owner can make anywhere from $40,000 to $100,000 or more annually? Owners of gas stations that do more than sell gasoline earn more money because the profit margins of the other things they sell are high.
The top factors that impact gas station franchise costs
Here are some of the biggest factors that affect the cost of running a gas station franchise. You must know them as you review franchise agreements and evaluate your options.
- Type of gas station: Full service, minimum service, or self-service. The less service you offer, the cheaper your operational costs.
- Location. A station in a busy, heavy-trafficked area will cost more than one in a less-dense place.
- Licenses and permits. Some parts of the United States have more demanding licensing and permit requirements â and higher costs â than others.
- Type of facility. A complex business offering value-add services will cost more than a simple gas station.
- Product and service offerings. Inventory and payroll majorly impact the costs of running a gas station. The more products and services you offer, the higher the cost. However, it also increases how much you could earn.
- Number of gas pumps. The cost to open and operate a ten-pump station will be higher than a five-pump one. It could also allow you to sell a lot more gas.
- Hiring a franchise consultant, attorney, accountant, and financial advisor. Leveraging the services of these professionals will cost you, but it could also save you a lot in costly mistakes.
- Promoting and marketing the gas station. Stations in busy locations may sell themselves. Those in less busy ones may need promotion to attract customers.
- Furnishing and equipping the station. These costs will increase based on the size and complexity of the operation.
- Insurance. Insurance premiums for gas stations are high because of the risks associated with running these types of businesses. But consider the costs if you donât have adequate protection.
- Staffing. Your gas station is only as good as the people working there. Youâll want to hire the best people and train them well.
- Uniforms, shoes, and protective gear. You must ensure your employees look great, represent the brand well, and have everything needed to stay safe on the job.
Additional costs of opening and operating a gas station franchise
Depending on your franchise agreement, some of these estimated costs may apply to you. Others will not.
- Registering the business: $750
- Expenses for obtaining licenses and permits and setting up accounting services: $15,000
- Grand opening marketing costs: $3,500
- Business consultant fees: $2,500
- Annual business insurance: $30,000
- Utility deposits: $6,500
- Salaries and bills for the first three months of operation: $60,000
- Store equipment: $14,000
- Furniture, tools, and equipment: $14,000
- Essential equipment: $750
- Miscellaneous costs: $10,000.
Franchise gas stations: The opportunity
Gas stations and their corresponding convenience store or food outlets rank as one of the most popular and profitable franchise types in the United States. But is it right for you, and how can you stand out from the competition and earn a profit?
Before committing to a gas station franchise, you must understand how gas station franchising works, how much you can earn, and the risks involved.
Purchasing a gas station franchise
It has never been a better time to invest in a gas station franchise. Increasing gas prices and demand coupled with the opportunity to open a convenience store, fast food operation, car wash, or repair shop provides several sources of income that can be a more stable investment than a retail store, fast food restaurant, or other types of franchises. Low labor costs, easy training for new workers, and franchisor support are just a few advantages of owning a gas station franchise.
Follow these steps to buy your franchise.
1. Write a business plan
Before starting any business, you need a business plan that includes complete information about the company you want to operate, including how youâll run, finance, market, and staff it. It should completely explain your business model and include detailed cash flow projections. A business plan allows you to figure out how to proceed and is a necessary tool if you seek funding or financing for a new business.
Sometimes, a franchise company may help you develop a business plan. Whatâs important is that you have a complete one before you invest any money.
2. Choose among the franchise options
Do your research to find the right franchise option. Ask yourself:
- Do you want to invest more in a national franchise with the possibility of earning higher returns on your investment?
- Or would you prefer to spend less on a local opportunity that could still provide reasonable income?
- Do you want to only invest in a gas station franchise, or would you prefer to branch out into also operating a convenience store, fast food outlet, auto repair shop, or another add-on?
Once you know the type of franchise you want to invest in, do your due diligence to find some options that align with your business plans and investment preferences.
Selecting the right location for your gas station franchise will help you maximize traffic and income possibilities. However, popular sites will cost you more to secure and keep the franchise over time.
4. Hire expert help
Get support from a lawyer, accountant, and financial advisor to help you review franchise agreements. Theyâll help you understand what youâre getting into and avoid pitfalls. You may also want to engage with a franchise consultant. They could help steer you to the correct franchise option for you.
5. Complete the franchise application
Most franchise applications require a great deal of disclosure. Make sure you complete applications thoroughly and accurately. If you donât understand anything, contact the franchisor or work with a franchise consultant to help you complete your applications.
6. Get financing
Some franchises will require you to pay many startup costs from your savings. You wonât be able to get a business loan to cover these costs. However, others will let you use a franchise loan or other financing to pay certain costs. Some franchisors will make you use lenders in their networks. Others will allow you to get the funding you need from a bank or other traditional lender or an online small business lender, or other alternative financing company.
7. Get trained
Once youâre approved for a gas station franchise, itâs likely the franchise company will require you to attend mandated training. It will likely provide valuable information to help you operate your gas station more efficiently and effectively, including how to get gas delivered, secure inventory, and purchase supplies. It will also help you understand how to stay in brand compliance.
8. Secure permits, licenses, and insurance
Itâs likely your local and state governments will make you get permits and licenses to run your business. The types will depend on laws and regulations and the type of franchise you open. Some common examples include:
- Health department license
- Business license
- Fire department permit
- Air and water pollution control permit
- Sign permit.
Your franchise company and a lawyer specializing in franchise businesses should be able to advise you on what youâll need to run your business.
While youâre at it, contact a business insurance expert to get adequate coverage to protect your new business. Gas stations are risky, and you want to make sure yours is adequately protected. Some typical gas station insurance coverages include:
- General liability
- Commercial property
- Workersâ compensation
- Commercial auto.
9. Hire employees and open your business
Ensure you interview job applicants, check their references, and do background checks. Youâre entrusting your new business to them, so you only want to have the best people on your team. Once youâre staffed up and set up, youâre ready to open your new franchise. Consider starting slow with a soft opening, then amp up the advertising and promotion when youâre confident everything is running smoothly.
With billions of dollarsâ worth in annual sales, gas stations are big business in the United States. Gas station franchises offer the chance for people to jump on the gasoline retail bandwagon and run a busy and profitable business.