Requirements for Buying a Petrol Station in South Africa

how to buy a petrol station
  • As an applicant, one of the minimum Oil Company requirements is to show proof of 20% unencumbered cash, calculated from the total Selling Price, Stock, and Working Capital. • This 20% unencumbered fund should be cash readily available in liquid form and not sourced from a bond or another loan, as this would increase the debt burden of the franchisee personally.
  • Example
  • Selling Price of business R 5,000,000 net profit +- R 120,000 pm
  • Plus: Stock R 1,200,000
  • Plus Working Capital R 500,000
  • Other: e.g., Training, Licence application, etc. R 100,000
  • Oil company fuel guarantee of R 800,000
  • TOTAL Funding Requirement R 7,600,000
  • Less: required 20% Own Cash Contribution R 1,520,000
  • Therefore, the loan amount of 80% is NOT to be more than R 6,080,000
  • 100% Funding is not viable
  • 100% Funding will have a loan payback of +- R 145,000 per month for 5 years, note business net profit is only +- R 120,000 per month. You will receive NO monthly salary for 5 years and you will have to pay from your own money another R25,000 per month to cover the loan.
  • Important Information and Application Requirements
  • Required Documents
  • To apply as a dealer, you must submit the following documents:
  • 1.         Full set of CIPC company documents.
  • 2.         Police clearance certificate for the main applicant and all CIPC listed directors (issued within the last 3 months).
  • 3.         Company shares certificates.
  • 4.         Certified ID copy (issued within the last 3 months).
  • 5.         Proof of own funds contribution (issued within the last 3 months).
  • 6.         Updated CV.
  • 7.         Completed oil company application form.
  • Application Process Guidelines
  • Fill in ALL fields on the form; if information is not applicable, insert “N/A”.
  • Incomplete applications will not be considered.
  • Please title attachments appropriately.
  • Screening Process
  • Applications are screened based on the oil company’ criteria.
  • Shortlisted candidates undergo a panel interview and business plan assessment one week after the application deadline.
  • Dealer’s Requirements
  • Dealers must reside within 30km of the site.
  • If applying for a site outside the home address, relocation must be proven.
  • Dealers must be full-time and hands-on with the business.
  • Psychometric Assessment
  • Assessment must be completed within 7 days of notification.
  • Cost is approximately R3,000 – R4,000, subject to change.
  • Final decision is based on assessment and interview feedback.
  • For Appointed Candidates Only
  • Mandatory +-6-week oil company Dealer training (cost for applicant: approximately R30,000).
  • Training is held in Gauteng; transport and accommodation are at the applicant’s expense.
  • Retail License
  • Dealers must apply for a Retail license from the Department of Mineral Resources and Energy (DMRE) before taking over the station. Approximately three to four months for the application process.
  • Application cost is borne by the applicant.
  • Funding
  • Candidates must secure funding from recognized financial institutions within 3 months.
  • Oil companies do not provide funding for station purchases.
  • Disclaimer/Terms and Conditions
  • Acceptance of the application form by the Oil Company does not guarantee station ownership.
  • Oil companies may withdraw the appointment at any stage.
  • Decision on applications is final.
  • Appointment is confirmed with a signed letter from the oil company.
  • Oil companies promote transformation as per the Liquid Fuels Charter.
  • Oil companies are not liable for personal losses during the application process.
  • Frequently Asked Questions
  • How do I become an oil company Dealer?
  • Search for available sites, fill out the application form and submit all required documents.
  • Due diligence, interview, psychometric assessment, and compliance check follow.
  • Do the oil companies provide funding?
  • No, applicants must source their funding.
  • What is the minimum amount needed to apply?
  • Oil companies preference are 20%, applicants must commit some of their capital.
  • Are there funding institutions willing to fund applicants?
  • Yes, candidates must engage with these institutions directly.
  • How long does the process take?
  • Approximately two to two and a half months for the application process, and additional time for licensing and funding.
  • What if I want to build my site?
  • New site developments are managed by oil companies’ Retail Investment Team, they requiring specific documentation.
  • The oil company Retail Investment Team oversees new site developments, ensuring adherence to specific requirements:
  • 1.         Deed of ownership for the land.
  • 2.         Municipal zoning approval for the designated land.
  • 3.         Completion of an Environmental assessment report.
  • 4.         Submission of a Traffic count report.
  • 5.         Site and retail licenses.
  • 6.         Development of a comprehensive Business plan.