petrol station franchise

Tetulla

Hi all,

does anyone know the procedure for owing/running a petrol station in Ireland?

Please all information welcomed. thanks

killiank

Tetulla wrote: »

Hi all,

does anyone know the procedure for owing/running a petrol station in Ireland?

Please all information welcomed. thanks

Hi Tetulla,

Is there some aspect you want to know about in particular. I have been involved in service stations in various ways for about 12 years so I could write a book on it.

Killian

sandin

how about contacting one of the main suppliers? Surely they will have an awful lot more info than anyone here could give you?

I presume it works like any other franchise and they will have a franchise team.

The Pontiac

If you want to know how a petrol station is run, then I'd advice you to take a visit to the Amber petrol station in Fermoy.

Everything is competitively priced e.g. a full deli sandwich for €2.50, breakfast roll for €2.30, 3 small sausage rolls for €1 etc. They also have a seated area so you can have a full Irish on a plate, dinner etc. Nice staff too.

You can barely get in the door early in the morning or at lunch time. There's a queue a mile long!

I stopped off at a Cork city petrol station yesterday and paid €1.09 for a can of coke. What planet is the owner living on? I will never walk in the door again. The fuel was also a few cents dearer than most places. Some people haven't a clue, really. No concept of value whatsoever.

Tetulla

hi thanks, i would like to know the procedure and the initial cost of getting one

mcglic

Hi,
I'm new to the forums. I would be interested to know if most of the petrol stations in Ireland are privately owned, are leased or operate under a franchise?
Is it a lucrative business?
Are there many stations available?
A lot of the petrol stations have say MACE, Centra associated. How does this work?
Is it an expensive business to get into?

EndaHonesty

mcglic wrote: »

Hi,
I'm new to the forums. I would be interested to know if most of the petrol stations in Ireland are privately owned, are leased or operate under a franchise?
Is it a lucrative business?
Are there many stations available?
A lot of the petrol stations have say MACE, Centra associated. How does this work?
Is it an expensive business to get into?

This post from June 2016 by regular poster Bandara is the most informative piece I've ever read about owning/running a petrol station.

It should get you started on trying to understand how the business works...

Bandara wrote: »

Hi,

I'm not really sure what your looking for info wise so I'll just give a rough outline of costs and potential issues and we can go from there.

The problem with reopening an old site (you don't mention how old but I'm assuming 10 years or so), the problem is you have zero idea whats under the ground. By that I mean what level of pollution is there underground, You could have leaded fuel from the pre-1999 old days (i.e. pre-unleaded), or leakage/contamination from old fuel tanks that are either sitting idle underground, or even worse, really old tanks where the old method used to be fill them up with concrete when you are finished with them ! The old tanks were metal so corrosion, leakage, tanks splitting over long periods of time where horrendous continuation issues.

I'm presuming you don't have plans of whats under the ground in the form of old tanks, tanks out of use etc. So your talking money to find that out. Then your going to need to pay to have soil samples done from multiple points on the forecourt, that could involve drilling permanent 'sample wells' where the council can insist that you provide them with soil samples/water samples on a regular basis to ensure nothing untoward is happening. If they show up contamination you may be obliged to inform the council and then your really in the ****. You need to fully understand the water tables in the area, what effect contamination could, would or indeed is having.

Let say you figure out what is actually under the ground, and that you establish the levels of contamination there, you can then agree that benchmark with the council as a legacy issue and upon you leaving the site in the future you can simply have the benchmarks retested and once the situation has not deteriorated further your in the clear. BUT, going back to the old tanks issue, it highly likely they would insist that you dig and remove these from the ground on dispose of the highly toxic waste via the correct channels, this is insanely expensive. I have direct experience of this in a site I operated. There was leaded fuel tanks from the 1980s that had been filled with concrete and abandoned 10ft underground. Local building and development caused the water tables to rise and the previously dormant contamination became an issue, i.e. there was leaded fuel reside going directly into the water table. Lets just say the council (understandably) went screaming mental and threatened to shut the site instantly. The total cost to rectify the issue was approx €600,000. Yep, six hundred grand.

Moving on, lets say there are no such issues.

Your going to need to replace all the pumps, new legislation around the issuing of the Fuel Traders Licenses will pretty much require new pumps as considerably old ones won't do. A good pump is approx €7000, and the additional tech to have it operate as self service is €1500 per pump. Lets say you have three pumps thats 26k or so, then you need a Doms box, this is the bit of kit that controls the pumps, the 'computer' if you will, these run into several thousand euro. Your also going to need new tanks, Im afraid I don't know the cost of these but I'd suggest your going to need 3 or 4 x 20,000 litre ones. Then you going to most likely need to upgrade the Fire Safety standards and install things like a remote kill switch etc for the fire brigade if there isn't one there. Then your CCTV is going to need to be HD with dome and night camera functionality, and you'll need one per pump, thats 6, you need to cover your entrance, exit, as well as a few general forecourt views, so your into a 12-16 cam system, thats another 6-10k depending on what you go for.

Car wash, these are very profitable and an important addition, you can sell and operate these remotely via a Codex unit. A decent refurbished carwash will set you back a minimum of 35k,yearly maintenance contract is about 6k. But its a huge money maker for a site. Average wash is costing you €1.50, your retailing it for €8, and even an average site will sell €25k washes a year. So its 8k+ profit and you'll own the wash in five years, your free-rolling after that as a wash will last you 10-12 years if you take care of it, only cost will be new brushes every 5 years for about 2k.

There is no issue selling UNL in an unmanned site once there is a remote monitoring hub supervising the operation at all times. There are several companies offering this service on an outsourced basis. The relevant statue is here http://www.irishstatutebook.ie/eli/1979/si/311/made/en/print and the sections that cover this in detail are 45 and 46. Derv has very few such restrictions. Your only potential issues would be around fuel delivery, you will require an onsite hut, with safety/fire equipment, a working telephone and a secure location to leave the required documentation (namely a document called a Schedule 4).

Margin wise this depends on the quantities you do obviously. Someone previously mentioned 300k litres a month. Your not going to do this unless you have a very strong location. And if you do do these numbers I'd suggest reopening that shop. I wouldn't be afraid of the local new store. Forecourts are killing traditional convenience stores as parking is not an issue in a forecourt whereas c-stores usually have parking issues. And everyone drives there days. C-stores are in declines past years whereas forecourts are the growth area. You see all the incredible spec €3 million fit out new build Applegreens, Maxols etc, yet you don't see and similar spec new greenfield c-store sites opening anywhere. As I said, forecourts are killing them. If you were to do 300k litres a month in a heavily housing area I'd be thinking of a store doing along the lines of 25k - 30k ex-vat ex agency. In simple terms (and this is very very rudimentary), your store alone would be making a profit of 40k a year. That coupled with 3.5m litres of sales and decent car wash would see the business showing a solid 120k profit, and I have allowed you a repayment capacity of 60k a year for five years to finance the required upgrades and improvements you would need to get the store and forecourt up to standard, so your still going to be showing 120k a year after paying that. (again this is off the top of my head and down to various assumed factors, but I wouldn't be too far out I feel).

Ok, fuel wise you can assume you'll operate off a 5-6c a litre margin, credit/debit card costs will eat up about .7 of a cent of that. Pumps all have temp comp these days but your still going to lose 300-400 litres a month across the site. Maintenance contract for a forecourt of 3 pumps and a Doms box is about 4k a year. Insurance isn't actually as bad as you'd think, assuming your carrying 80,000 litres max I'd venture insurance would be in the region of 3-4k a year.

Polesign, branding, stanchions etc you can get financed by a fuel company. Essentially you sign up to them for a period, usually 5 years and they will make a contribution to brand the site in their livery. Applegreen are desperately trying to tie up dealer owned sites at the moment and I've heard of very average sites getting handed €40,000+ to rebrand. The deal is you buy fuel exclusively off them and in return they write the 40k off over a period of 5 years. If you break the deal before the 5 years is up they usually have the contract written up so they can come after you for the full 40k back. So be warned !

So in summary,

If your site is in a very strong location opening it with a shop is the way to go. I get from your posts that this isn't your cup of tea. Thats fine, still revamp the site, put a shop in and rent it to an operator where you take 7% of his shop turnover and 2c per litre of his fuel sales and 40% of his car wash revenue, or just go the flat rent model - forecourts can be odd though, sometimes a cracking site just doesn't do the business, and an average one performs way above its weight. You get the kick back from Applegreen to help you rebrand, and you sign up with BWG or Musgraves and they'll contribute towards the store fit out, a normal small to medium store could expect to get a 60k contribution from the shop supplier over 5 years (this is a rough but educated guess figure). You get your shop operator to get a personal guarantee underwritten by his bank for 12 months rent in the event of him not paying your covered. Give a 3 year contract with a break after year 1, you'll know after one year regardless. And even if it isn;t working out for the shop operator you now have a up and running store that you can sell to the Applegreens, and KSmarts and leave with a handsome profit.

Up there for thinking, down their for dancing

Hope thats of some help, I know its a bit of a stream of consciousness but I'm just typing as I'm thinking as it now bedtime !

Any questions just shout.

mcglic

Thanks Very much.
There is a lot of info there and I'll have to study it. Seems like an interesting business. I'm wondering how much the shop element contributes to the overall profitability of the business. Also I wonder is there an opportunity to set up a franchise that can be exported say to an African country.

pedroeibar1

mcglic wrote: »

T
Also I wonder is there an opportunity to set up a franchise that can be exported say to an African country.

Of course there is opportunity. It's a big place, 'Africa', fifty-odd countries, more if you include those unrecognised by the UN. Loads of opportunities. South africa on its own has about 5,000 fuel stations, employing about 50,000 staff, mainly forecourt/car wash. Most have already diversified into on-site shops, selling Lotto, phone top-ups, banking services, etc.
Have you ever been to 'Africa'?

Bandara

pedroeibar1 wrote: »

Of course there is opportunity. It's a big place, 'Africa', fifty-odd countries, more if you include those unrecognised by the UN. Loads of opportunities. South africa on its own has about 5,000 fuel stations, employing about 50,000 staff, mainly forecourt/car wash. Most have already diversified into on-site shops, selling Lotto, phone top-ups, banking services, etc.
Have you ever been to 'Africa'?

Lol. Brilliant.