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Is It Time To Invest in a Gas Station Franchise?

A gas station investment can require a bit more attention than other forms, but the market is up, and the future is looking good for gas station franchises.

By Morgan Wood1851 Franchise Contributor
Updated 4:16PM 01/23/23

Gas stations are a popular franchising choice for many as they offer various services, some of which are necessary. Though work-from-home and hybrid schedules are becoming more popular, Americans are not completely off of the roads, and the gas station market continues to grow.

In 2022, the gas station market in the U.S. was worth over $138 billion and grew by 10.4% in the year alone. The market grew by 4.2% between 2017 and 2022, an impressive number considering that time span included a huge decline and recovery from COVID-related ramifications. 

The profitability of a gas station relies somewhat on the need for and price of gas, but maybe not as much as you think. For many gas station owners, fuel purchases are not the source of substantial revenues. Rather, the goods sold inside offer much higher profit margins.

Each gas station will have slightly different offerings inside the store, but there are a few popular goods that many stores will offer, all of which are incredibly popular among Americans.

  • The average American spends nearly $10 per week on snacks. This comes out to almost $500 per year or $28,766.40 in a lifetime.
  • It is estimated that over 34 million Americans are smokers. Depending on the severity of the habit, some smokers will spend nearly $200,000 on cigarettes in a lifetime.
  • Americans spend about $70 billion on lottery tickets each year.

Time spent on the road increases consumers’ likelihood of stopping by a gas station, whether they need to fill up, grab a snack or drink, or both. 2022 data now reports that the average American drives over 14,000 miles per year, with some states surpassing 24,000 — on average — per person.

What All Should I Consider?

Given the state of the market and consumer spending, now seems to be a reasonable time to invest in a gas station concept. However, like any franchise purchase, this is not a decision that should be made lightly.

When starting the investment process, one of the most important things to consider will be location. Sometimes, the franchisor will support its investors in choosing prime real estate, but if this sort of support is not available or robust within the franchise system you have selected, you should not dismiss the importance of this selection. Choosing the right spot will directly influence how much traffic passes you and, therefore, how much business you receive.

Running a gas station also requires a set of inspections, licenses and education that other concepts may not. The gas station business can be a risky one because of the flammable nature of the fuel itself and the risk of burglary. This should not deter you from opening a gas station; rather, secure the licensure, insurance, training and other protections necessary to ensure the smoothest experience for guests and employees.

There are environmental requirements associated with gas stations as well. If you are overtaking an existing establishment, you may need to reevaluate the building and facilities. If you’re building from scratch, check local regulations first. There can be state-specific laws, requirements for double-lined tanks and other details outlined in an “environmental contingency clause” commonly found in agreements.