Buying a gas station is a fundamentally different kind of acquisition than most small businesses, mostly because of two things: environmental liability tied to underground fuel storage, and fuel supply agreements that can lock you into terms for years. Get these two things wrong and you can inherit problems that have nothing to do with how well the store itself is run.
What Should You Know About Underground Storage Tank Liability?
Underground storage tanks are the single biggest environmental risk in this industry. A leaking or non-compliant tank can mean expensive remediation costs, and depending on how the deal is structured, that liability can follow the new owner even for contamination that happened under prior ownership. Insist on current tank testing records, environmental compliance certifications, and ideally a Phase I environmental site assessment before you commit. This is one area where skipping due diligence to save a few thousand dollars can cost you vastly more later.
How Does the Fuel Supply Agreement Affect You?
Most gas stations operate under a supply agreement with a specific brand or distributor, which can dictate the fuel prices you pay, branding requirements, required renovations, and the contract's remaining term. Get a copy of this agreement early and understand whether it transfers to you automatically, needs to be renegotiated, or locks you into terms you didn't set. A below-market fuel supply contract can be a hidden source of margin; an above-market one can quietly erode profitability no matter how well you run the store.
Is the Real Estate Included, and Does It Change the Deal?
Some gas station sales include the underlying real estate; others are a business-only sale with a separate lease. Owning the real estate adds significant purchase price but removes lease risk and rent increases entirely — a meaningfully different investment than leasing the location and running the business on top of it. Either way, confirm zoning is current and compliant, since gas station zoning can be more restrictive to change than other commercial property types.
How Should You Evaluate the Convenience Store Side of the Business?
For most gas stations, the convenience store, not the fuel itself, drives the real margin — fuel margins are typically thin and heavily influenced by the supply contract, while in-store sales carry much higher margins. Ask for a breakdown of fuel revenue versus store revenue and their respective margins separately, since a station that looks strong on total revenue can be far less profitable than it appears if fuel volume is propping up a weak convenience store operation.
What Else Should You Verify Before You Close?
Confirm all required licenses (fuel retailer, tobacco, lottery, alcohol if applicable) transfer or that you can reapply without a service gap, check equipment condition for pumps and point-of-sale systems, and review any franchise or branding agreement terms closely if the station operates under a recognized fuel brand. Given the environmental and regulatory complexity here, an attorney experienced specifically in gas station transactions is worth the cost.
For the general framework of what to verify in any acquisition, see our due diligence checklist. If you're evaluating a gas station and want help thinking through the risks, get in touch with Silver Surf.
Because of the environmental exposure specifically, many gas station deals are structured as asset purchases rather than stock sales, so the buyer isn't inheriting the selling entity's full history of liability. That's a decision to make deliberately with your attorney, not something to leave to whatever the seller's side proposes first.