Buying a Service Station Franchise Property

Service stations combine a piece of commercial real estate with a highly regulated retail business, and buying one, whether as an investment with an existing tenant or as an owner-operator, requires due diligence that goes well beyond a standard commercial purchase. Environmental history and franchise arrangements sit alongside the usual questions of title, zoning and finance.

Land, Business, or Both

As with other commercial-niche property types, the first question is what exactly is being sold. Some transactions involve the land and buildings only, leased to an operator under a long-term lease, while others include the operating business, fuel supply arrangements and convenience store stock. Each structure has different implications for GST, stamp duty and the due diligence documents you are entitled to see, an area covered generally in our due diligence checklist for commercial property purchases, so confirm early which version applies to the property you are looking at. Where the business is included, the purchase price is usually apportioned across land, buildings, plant and equipment, fuel stock and goodwill, and this apportionment can affect both GST treatment and stamp duty, so it should be set out clearly in the contract rather than left as a single lump sum figure. If the site currently employs staff, clarify whether they will transfer to you as the new employer and what accrued entitlements, such as unused leave, need to be adjusted between buyer and seller at settlement.

Environmental Due Diligence and Underground Tanks

Underground fuel storage tanks are the single biggest environmental risk on a service station site, and even tanks that were decommissioned years ago can leave contamination in soil or groundwater. Request the full environmental history of the site, including any contamination assessments, monitoring well results, and correspondence with the state environmental regulator about remediation or ongoing monitoring obligations. Many states maintain a public register of contaminated or notified land, and checking whether the site appears on it is a basic first step. Where tanks were replaced or upgraded in the past, ask for the compliance certificates and any groundwater monitoring results from that work, since a tank replacement does not necessarily mean the surrounding soil was tested or remediated at the time. Our detailed guide to contaminated land considerations for service stations covers this in more depth, including how remediation costs and indemnities are typically dealt with in the contract.

Fuel Supply and Franchise Agreements

Most service stations operate under a fuel supply agreement or franchise agreement with a major fuel brand, and these agreements often include minimum purchase volumes, exclusivity clauses, branding and signage requirements, and conditions around the transfer or assignment of the agreement to a new owner. Read the agreement carefully for its remaining term, any right the supplier has to terminate on a change of ownership, and whether consent from the fuel company is required before settlement can occur. Franchise agreements are covered by the Franchising Code of Conduct, and it is worth having your solicitor review the disclosure document provided under the code as a distinct step from the property due diligence itself.

Dangerous Goods Licensing and Safety Compliance

Storing and dispensing fuel requires a dangerous goods licence or notification under state work health and safety legislation, along with compliance with Australian Standards covering tank construction, vapour recovery and fire safety. Confirm that current licences are in place and transferable, and ask for records of the site's most recent safety audit or inspection. If you are taking over as operator rather than simply as landlord, you will generally need to hold or apply for these licences in your own name before you can lawfully operate the site.

Council Zoning and Planning Conditions

Service stations are usually approved under a specific planning permit that sets conditions on hours of operation, signage, traffic management and any ancillary uses such as a car wash or fast food outlet on the same site. Confirm that the current operation matches what was actually approved, and check whether any conditions attached to the permit, such as noise limits or landscaping requirements, remain outstanding. If you are considering redeveloping part of the site, for example adding electric vehicle charging infrastructure, check with council early since this may require a fresh application rather than falling under the existing approval.

GST and the Sale

Where a service station is sold with its lease, fuel supply arrangements and business operations intact, the transaction may qualify as a GST-free sale of a going concern. Where only the land is being sold, standard GST or the margin scheme may apply instead. The ATO's guidance on GST and commercial property explains how these categories are assessed, though the specific treatment of a combined land and business sale should be confirmed with your accountant, since this is general information and not tax advice.

Contract Conditions Worth Negotiating

Given the environmental and licensing complexity involved, contracts for service station purchases commonly include conditions allowing the buyer time to review environmental reports, confirm franchise agreement consent, and obtain finance before the contract becomes unconditional. Retention of part of the purchase price against known or suspected contamination is also common, giving the buyer some protection if remediation costs emerge after settlement. Warranties from the seller about the condition and compliance history of tanks, pumps and dispensing equipment are also standard, and it is worth having these drafted specifically for the property rather than relying on generic commercial contract wording. A conveyancer experienced with these properties can help structure these conditions realistically, balancing your need for protection against a seller's desire for a clean, timely settlement, and the same considerations apply in reverse if you are preparing a commercial sale of a service station property.