Your fuel supply contract: what happens when you sell

1. Term left. How many years until it ends, and does it renew on its own?
2. Volume commitments. Minimum gallons per month or year, and what happens if you fall short.
3. Assignment. Can it be transferred to a buyer, and what approval does the supplier need? Most require the buyer to apply and qualify.
4. Right of first refusal. Many supply deals give the supplier the right to match an offer for your station. That changes how and when you share a buyer’s offer.
5. Money owed back. Upfront incentives, such as rebranding or image money, are often earned over the contract term. End early and you may owe back the unearned part, plus debranding costs.

Write these down on one page. Buyers will ask for exactly this.

This is the most common and usually the smoothest. The buyer applies with your supplier, the supplier approves them, and the contract is assigned at closing.

• Build in time. Supplier credit checks and approvals can take weeks.
• A brand may want a site inspection or require image upgrades as a condition of approval. Find out early who pays.
• Ask the supplier to confirm in writing that you are released once the buyer takes over.

Some buyers, especially regional chains and private-equity-backed groups, already have supply deals and want to rebrand. That can be fine, but someone pays to unwind yours: incentive paybacks, debranding, and any fee in the contract. Get a written payoff figure from your supplier so the cost is in the deal from day one, not discovered at the closing table.

If your contract is near its end, or the terms are weak, it can pay to renegotiate before you go to market. A better margin or a fresh incentive can raise your profit and your price. But a very long new term with heavy minimums can narrow your buyer pool, since some buyers want flexibility. Think about who your likely buyer is before you sign anything new.

Many dealers lease the site from the company that supplies their fuel. In that case the lease and supply deal are usually tied together, and the supplier is approving the buyer for both.

A federal law, the Petroleum Marketing Practices Act (PMPA), governs franchise relationships between fuel suppliers and franchised dealers. Among other things, it limits when a supplier can end or not renew a franchise, and if a supplier decides to sell leased premises in a nonrenewal, it generally has to offer the dealer a chance to buy them first (15 U.S.C. § 2802). Whether PMPA applies to you depends on your exact arrangement, so ask a fuel-industry attorney.

Read the notice section of your contract. Some require notice when you agree to sell, and a right of first refusal may require you to show the supplier the buyer’s offer. Until then, keep it quiet. See how to sell confidentially.

• The current margin or commission per gallon, and how price is set
• Any rebates, incentives or volume bonuses, and when they end
• Credit terms and how you pay for loads
• Gallons history against the contract minimums
• The full payoff figure if they want out

Answering these in one clean page early makes your station easier to underwrite, and it shows buyers there are no surprises waiting.