Guide
Fuel Supply Agreements: What Buyers and Sellers Need to Know
A fuel supply agreement is the contract between a station and its fuel supplier or brand — governing pricing, volume commitments, brand image, incentive money, and term. In a sale, the agreement usually transfers with the deal and can materially raise or lower the station's value.
What a fuel supply agreement covers
Supply agreements set who supplies fuel, at what price basis, for how long, and under what brand. Typical terms run 7–10 years and include volume expectations, image standards, and incentive funding.
- Pricing basis: rack-plus, dealer tank wagon (DTW), or cost-plus
- Term, renewal, and early termination provisions
- Minimum volume commitments and shortfall consequences
- Brand image requirements and re-imaging obligations
Incentive money and clawbacks
Suppliers commonly fund station imaging, canopies, and dispensers with incentive money that amortizes over the agreement term. If the station debrands or the agreement terminates early, unamortized amounts come due — a hidden liability that must be quantified in any purchase.
How agreements transfer in a sale
Most agreements are assignable with supplier consent. The supplier will evaluate the buyer's experience and creditworthiness. Build consent timelines into your closing schedule, and get the exact payoff figure for unamortized incentives before signing a purchase agreement.
Branded vs. unbranded supply
Branded agreements trade margin flexibility for recognition and card infrastructure; unbranded (open rack) supply keeps pricing control but foregoes brand support. The right answer depends on the site's competitive position — see our branded vs. unbranded guide.
Reviewed by the Station Brokers team — fuel-retail transaction specialists. This guide is general information, not legal, tax, or investment advice.