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- Buying a Gas Station or Car Wash you Need Landlord Consent - No Matter What the Lease Says
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Business Transactions
- The Advantages of an Asset Purchase Compared to a Stock Purchase
- Factors to Consider when Buying a Gas Station
- The Importance of a "Financing Contingency" when Buying a Business
- The Importance of a "Non-Compete" when Buying a Business
- The Importance of "Sales Tax Notifications" when Buying a Business in New York
Factors to Consider when Buying a Gas Station
If you are considering the purchase of a gas station or about to sign a gas station purchase or franchise agreement, there are a number of legal factors that you must consider and discuss with your business lawyer. In New York and New Jersey although the purchase of a gas station represents a unique business and investment opportunity, as a prospective purchaser, you must consider and evaluate the following issues:- Is the Gas Station a "Franchised" or "Independent" Operation? Gas stations typically fall within the category of a "franchised" or "independent" station. Franchised gas stations are owned and operated pursuant to a "franchise agreement" with a national supplier such as Exxon, BP and Sunoco. Independent stations are not supported by any national supplier and, basically, sell "unbranded" fuel procured from an assortment of regional suppliers.
With the primary advantage to a "Franchised" station being the name recognition, trademarks, trade design and canopies associated with the national brand, owners of "franchised" stations are franchisees and parties to a franchise agreement. As a business purchaser it is critical to evaluate the advantages and disadvantages of franchised and independent stations. If the gas station that you are purchasing is a "franchised station" some of the many issues that you must consider and discuss with your lawyer, include:
(a) The terms of the franchise agreement and whether or not the franchisor will approve your purchase of the station;
(b) Quotas / requirements for fuel sales;
(c) Rebates that may or may not be paid to you for fuel sales;
(d) Issues as to ownership and maintenance of fuel pumps and tanks
(a) The terms of the franchise agreement and whether or not the franchisor will approve your purchase of the station;
(b) Quotas / requirements for fuel sales;
(c) Rebates that may or may not be paid to you for fuel sales;
(d) Issues as to ownership and maintenance of fuel pumps and tanks
- Does the Seller Own the Pumps and Tanks. Station pumps and fuel tanks will serve as the most critical assets that will affect the the day-to-day operations and profitability of your business. Not every seller of a gas station owns the pumps and tanks which may be owned by the national franchisor (for franchised stations) or the property owner (where the gas station is located on leased property).
If you are evaluating the purchase of a particular gas station, you must determine:
(a) Who owns the "pumps and tanks";
(b) Whether or not the sale includes the transfer of the "pumps and tanks":
(c) If the property where the station is located is "leased, the terms of the lease, including, the remaining terms, rent and whether or not the landlord will consent to an assignment of the lease ;
(d) What is the repair history of the pumps and tanks, the remaining useful life of these critical assets and whether or not the pumps and tanks comply with current regulatory requirements.
(a) Who owns the "pumps and tanks";
(b) Whether or not the sale includes the transfer of the "pumps and tanks":
(c) If the property where the station is located is "leased, the terms of the lease, including, the remaining terms, rent and whether or not the landlord will consent to an assignment of the lease ;
(d) What is the repair history of the pumps and tanks, the remaining useful life of these critical assets and whether or not the pumps and tanks comply with current regulatory requirements.
- The Environmental History of the Station and Issues of Prior Contamination. As the purchaser of a gas station, one of the most critical issues that you must consider and protect yourself from relate to the potential existence of contamination. For the purchase of a station you must consider and evaluate the utilization of an "environmental contingency clause" in your purchase agreement and you must obtain a Phase I environmental site assessment. In my article, "The Importance of an Environmental Site Assessment" I discuss and address these environmental issues in detail. If you are buying a gas station, I strongly recommend that you review this article.
Charles N. Internicola, is a business attorney, author and speaker who represents individuals, entrepreneurs and established business owners in New York and New Jersey business transactions. Charles is the author of "An Entrepreneurs Guide to Purchasing a Business" and he is the publisher of the "New York Franchise Law Blog". If you are buying or selling a business in New York or New Jersey, purchasing a franchise or involved in a license or lease transaction Contact Charles Internicola to discuss the dedicated and precise legal representation that he provides to his clients and the steps that he will take to protect your business interests.
IMPORTANT DISCLAIMER: The information contained on this website is provided for general educational purposes only, should not be relied on as legal advice and does not serve to create an attorney client relationship. In utilizing this website you acknowledge that there is no attorney client relationship between you and Charles N. Internicola, Esq. and that the information contained on this site does not and cannot serve as a replacement for the competent legal advice of a licensed attorney in your state. The content of this website is subject to the Copyright of its author, Charles N. Internicola, Esq.
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