With the recent spike in fuel prices, many people are considering opening a gas station franchise so they can profit instead of getting hosed over (pun intended).
In this article, I’ll explain what a gas station franchise is, the advantages they provide, how much they cost, and how to start a franchise.
What is a Gas Station Franchise?
Gas station franchises are a type of business in which an individual or company buys the rights to open and operate a gas station from an established parent company. Gas stations can offer various services such as oil changes, car washes, convenience stores and other automotive services.
One of the many benefits of starting a gas station franchise is the access to the well-known brand name and advertising campaigns of the parent company. I’ll talk about other benefits later.
These franchises typically require a substantial investment up front, as well as ongoing royalty and marketing fees that must be paid to the parent company in order for the franchisee to remain compliant with their contract.
What are the Different Types of Gas Station Franchises
Gas stations offer convenience, affordability, and customer service that has become increasingly important for today’s consumers. In fact, studies show that 86% of customers will pay more for better service.
That’s why it’s important to understand the different types available so you can make the best decision for your business.
Here are some of the most common types of gas station franchises:
Convenience Store Gas Stations
These are the most common type of gas station franchise. They typically include a convenience store, which offers food and beverages, as well as other items such as cigarettes and newspapers. Many also offer automotive services such as car washes and oil changes.
Gas Station/Car Wash Combinations
There are several gas station/car wash combinations on the market. Gas stations that offer car washes typically have a larger footprint than other types of franchises, so they require more capital to get started.
Full-Service Gas Stations
These types of gas station franchises provide customers with more options than traditional convenience store locations. They often include a full-service restaurant, auto repair shop, and/or tire services.
Gas Station/Restaurant Combinations
Gas station/restaurant combinations are increasing in popularity. These franchises offer customers not only fuel but also food options such as burgers and fries, pizza, or sandwiches.
By understanding the different types of gas station franchises available, you can choose the type that best aligns with your business goals.
Gas Station Franchise Costs: Startup Costs & Annual Fees
There are two costs you need to know before starting a franchise: startup costs and annual fees.
Gas station franchises typically require a significant upfront investment of $250,000 – $500,000. Gas station franchise start up costs vary based on the size, location and type of gas station you choose.
See if you qualify for financing from the SBA for approved franchises.*
*No impact to your credit score. For informational purposes only.
This can include franchise fees, site improvements, build out costs, capital for inventory and supplies as well as equipment like pumps and tanks. It’s important to research the specific requirements of each gas station franchise you are considering in order to get an accurate estimate of startup costs.
Gas station franchises also require ongoing fees in addition to the franchise fee. These may include royalty and marketing fees, rent or lease payments, insurance and other operational expenses. Factor these costs into your budget so you know exactly what you will be responsible for paying each year as a franchisee.
Benefits of Owning a Gas Station Franchise
Gas stations are in high demand, with people needing fuel to get around and convenience stores offering essential items on their trips. Gas station franchises offer entrepreneurs the chance to own their own business while benefitting from the support of an established brand.
Here are some of the benefits of owning a gas station franchise.
Brand Recognition
Gas station franchises have the advantage of being easily recognizable and trusted by customers. Customers know that when they visit a gas station, they can expect high-quality products and services. Gas station franchises are often well known in their local areas, giving them a competitive edge over independent gas stations that may not be as familiar to customers.
Strong Support System
Gas station franchises come with a built-in support system that can help franchisees get their business up and running quickly. Gas station franchise owners have access to an experienced team of professionals who can provide guidance on everything from setting up the store to marketing and promotions. This support is often invaluable in helping entrepreneurs get started and succeed.
High Demand
Until Tesla’s are the most popular vehicles on the road, people will need gas to get to where they want to go. While gas stations are competitive, they are one of the few franchises that offer a necessity.
Expansion Opportunities
Gas station franchises offer owners the chance to expand their business if they choose, either by adding more stores or expanding services offered at existing locations. Gas station franchise owners who are successful may be able to open additional outlets in other areas, giving them a larger customer base and potential for increased profits.
How to Choose the Right Gas Station Franchise for You
Choosing the right gas station franchise is a difficult decision that requires time and research. Here are some tips to help you choose the right gas station franchise:
Consider your location: Gas stations are most profitable when they’re in convenient locations with high traffic. Look for a spot that has easy access to main roads and highways, as well as plenty of nearby residential areas or businesses where customers can easily stop by.
Review franchise requirements: Different brands may have different requirements when it comes to startup costs, ongoing fees and minimum inventory levels. Some franchisees may also require a specific type of fuel or brand of convenience store items. Make sure you understand what’s required for each franchise before committing to any particular one.
Research popularity and reputation: Gas stations are local businesses, so it’s important to know how well the community perceives the brand and how successful other franchises have been in the area. Ask around for opinions from customers and do an online search for reviews of each gas station franchise you’re considering.
If you want to start a franchise but can’t seem to find that perfect fit, schedule a franchise evaluation with Franchise Transparency Project. One of our industry veterans will match your personal skills and goals with a franchise concept that’s perfect for you!
Set your self up for success by speaking with an industry veteran before making the leap into franchising.
