Requirements for Buying a Petrol Station in South Africa

how to buy a petrol station

Oil Company Requirements, Cash Contribution, Funding Requirement, Training, Licence application, etc

Please take note of the following requirements to buy a petrol station, 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.

Oil Company Requirements 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.