Buying a Petrol Station Business

Cash requirements to buy a petrol station business

Requirements to buy a petrol station


IMPORTANT INFORMATION REGARDING OIL COMPANIES’ PREFERRED REQUIREMENTS FOR APPOINTING A DEALER / TENANT FOR ONE OF THEIR OWN / CONTROLLED PETROL STATION SITES / BUSINESSES OF WHICH POTENTIAL PURCHASERS SHOULD BE AWARE WHEN CONSIDERING PURCHASING A PETROL STATION

Please take note of the following, which is furnished to you without prejudice, for your information, guidance, benefit, and assistance if you are unfamiliar with the normal selection requirement or criteria as required by most Oil Companies.

1. Oil Companies prefer that potential purchaser making inquiries have at least 50 % of the TOTAL funding requirement needed to acquire a Petrol Station business in CASH on hand and MUST be able to obtain APPROVED FINANCE for the balance.

Example
Selling Price of business R 6 000 000.00
Plus: Stock R 500 000.00
Working Capital R 500 000.00
Other: e.g. Training, Licence application etc. R 100 000.00
TOTAL Funding Requirement R 7 100 000.00
Less: required Own Cash Contribution R 3 550 000.00
Therefore Loan amount NOT to be in excess of R 3 550 000.00

2. If you, as a potential purchaser, intend borrowing any funds from the National Empowerment Fund (N.E.F), Ithala, Khula or similar Financial Institution, then, PRIOR written “Approval in Principle” for your intended loan amount MUST be obtained by you FIRST.

3. NO communications with you will be entertained by us unless you obtain this “Approval in Principle” and return it to us.

4. You MUST personally operate the business FULL TIME yourself and may NOT be FULLY active in any OTHER business or employment activity at the same time.

5. You MUST live within a time period of 20 minutes from the business that you intend purchasing (for emergency reasons).

6. ALL parties to ANY Sale Agreement MUST attend the Oil Company’s training courses PRIOR to taking occupation of the premises or business.

7. The preferred age group for applicants is between 25 and 50 years old.

8. Any previous Petrol Station or General Dealer shop experience is an advantage but NOT a specific requirement.

9. Any previous or present business and /or management, supervisory, or general retail experience will be an added advantage.

10.The Oil Companies would prefer that you do NOT own or be directly associated with a DIFFERENT brand of fuel from the one that you intend acquiring. For example, you may NOT purchase an Engen service station business if you are already directly associated with, or own, a Shell service station business. This is to obviate conflicts of interest or brand loyalty.

11. In the event of a Company, Trust, or Close Corporation purchasing the business where MORE than one person will own that ENTIRE entity, then, in such an event, THAT entity shall, when called upon to do so by the Oil Company, by way of a Resolution, duly appoint a person who shall act for and on behalf of that entity, to sign all documents, make decisions and act in the best interest of that entity at all times.

12. You will be required to provide documentary PROOF of your Finances to us and a Seller upon submission of an offer.

13. Furthermore, the Oil Company will require you to also provide them with the same documentary proof, PRIOR to you being interviewed by the Oil Company for the Petrol Station that you elect to purchase.

14. In some instances, the Oil Company may prefer a B.E.E. (Black Economic Empowerment) applicant or an arrangement whereby a black person will own a minimum 51% share in the business for a particular Petrol Station.

15. The Oil Company leases are normally 5 years, or 3 years with an option to renew for 2 years, duration.

16. In Some instances, the Oil Company might insist to interview at least 3 to 4 Buyers for one of their Own / Controlled Sites before they make an appointment.

COMMISSION FOR AGENT-BROKER-CONSULTANT-ADVISER-AGENCY IN SOUTH AFRICA

In accordance with Section 34 A of the Estate Agency Affairs Act 112 of 1976. Section 1(vi) provides that;

Anyone who practices as an agent-broker-consultant-adviser-agency in South Africa who is not in possession of a valid Fidelity Fund Certificate, disqualify from claiming any commission, consulting fee or referral fee on the relevant dealings if he/she/they do not hold a valid Fidelity Fund Certificate. No party is entitled to any commission, consulting fee or referral fee unless he/she/they hold a valid Fidelity Fund Certificate. Failing they are operating fraudulent and illegal.

The seller will have to properly account to SARS for any fees; and provide SARS with proof that the agent-broker-consultant-adviser-agency they paid the commission, consulting fee or referral fee too, had a valid Fidelity Fund Certificate. Failure to do so could prove to be very costly!

If there is any doubt as to whether or not an agent-broker-consultant-adviser-agency have a valid fidelity fund certificate, do not hesitate to contact the Estate Agency Affairs Board or your Attorney to confirm and verify the registration status.

Visit the Estate Agency Affairs Board website for more details.  https://www.eaab.org.za/