How to Buy & Run a Petrol Station Business (UK Guide)

In the UK, petrol stations operated by major oil companies, supermarket groups and independents generate a total revenue of around £25.7bn each year. The relatively stable and consistent demand for fuel, therefore, makes petrol stations an interesting investment opportunity.

In this article, we’ll explore the essentials of buying and running a petrol station business, covering franchising, financing, licensing and day-to-day operations, as well as examining the impending 2030 legislation phasing out the sale of new petrol and diesel cars. We’ll also explore how the shift towards electric and alternative fuels is likely to reshape industry demand, retail offerings and profitability over the coming decade.

Understanding Ownership

Before we get into the crux of this article, there are a couple of terms to get familiar with; CODO, DODO, and less common, COCO. These acronyms describe the overall ownership model in use:

• CODO - Company Owned, Dealer Operated - this is the most common. The fuel company (e.g. Shell) owns the land, building and equipment, but the dealer runs the day-to-day operation.
• DODO - Dealer Owned, Dealer Operated - The dealer owns and is responsible for all aspects.
• COCO - Company Owned, Company Operated - The fuel company owns and operates the petrol station.

What Are the Three Main Routes Into the Petrol Station Industry?

Typically, business owners use three different routes into this lucrative industry: buying an existing operation, franchising, or building a petrol station from scratch. Here’s what each involves:

Buying an Existing Petrol Station

Purchasing an established petrol station is typically a DODO model, and offers several advantages, such as:

• Immediate Revenue & Cash Flow: Start generating income from day one.
• Established Infrastructure: Pumps, tanks, canopy, and retail space already in place.
• Existing Customer Base: Local motorists are already aware of your location. 
• Trading History Data: Financial records help with access to commercial loans.

If buying a petrol station is the best route for you, there are a few things you should consider:

• Location & Catchment: Proximity to major/busy roads and competing petrol stations.
• Footfall & Traffic Patterns: Peak hours, seasonal fluctuations, and local demographics.
• Fuel Supply Contracts: Length, pricing formula, and tie‑in obligations with suppliers.
• Convenience Store Sales: Product range, margins, and potential for expansion (coffee machines, fresh food).

Franchising a Petrol Station

Franchising typically operates on the CODO model, and offers a number of advantages compared to the independent route. These include:

• Brand Recognition: Quick trust and loyalty programmes to bring in repeat customers.
• Operational Support: You’ll receive training, marketing materials, and POS systems.
• Bulk Buying Power: Provides better fuel and retail margins to support your finances.

However, there are some considerations to be aware of, including the following:

• Less Autonomy: Brand-restricted fittings, opening hours, and product ranges.
• Fees & Royalties: These can erode your profit margins, and contract terms can be rigid. 
• Contract Lengths: These are often 5 to 20 years long and may incur exit penalties. 

You can either launch a brand-new franchise petrol station or take over an existing location under a franchising agreement; the latter resembles buying a business in many respects. 

Many of the biggest oil companies and petrol station businesses offer franchising opportunities, such as:

Each fuel distributor uses their own name for their franchise model. For example, Texaco use the term “Texaco Retailers”, Shell use the term “Shell Dealers” or “Shell Retailers",Murco uses “Murco Dealers”, Jet uses “Jet Dealers”, and BP uses “BP Connect Franchise".

Building a New Petrol Station From The Ground Up

If you’d prefer to start your petrol station business from scratch, here are a few benefits of doing so:

• Bespoke Design: Tailor the forecourt layout, shop, and branding to how you’d like it. 
• Optimised Location: Choose a site with ideal traffic flow and nearby amenities. 
• Long-Term Asset: New builds often come with a long lease, offering potential asset appreciation. 
• Modern Infrastructure: Install the latest fuel management systems and other new technologies. 

There are some risks and considerations involved with this route, such as:

• Lengthy Timeline: Planning permission and construction often take 12 to 18 months.
• High Upfront Cost: Site purchase, planning, groundwork, and construction can be very expensive.  
• Planning Risks: Issues can arise, such as planning refusals or environmental objections. 
• Market Uncertainty: Shifting legislation, such as the 2030 ICE ban, may impact future fuel demand.

How Much Does It Cost to Buy a Petrol Station?

In the UK, the cost to buy an existing petrol forecourt varies considerably by size and location. Small neighbourhood sites can start from around £300,000, while busy motorway‐service freeholds often exceed £1 million. If you’re considering buying an independent petrol station or are starting one from scratch, Union Business Finance provides several bespoke petrol station finance solutions to help your new business venture progress. 

If you opt for the franchise route instead of buying outright, the costs are cheaper, but they do require upfront investments. For example, a Shell retailer opportunity requires a total initial investment of £138,000 - there’s no separate franchise fee to pay, but you must fund and purchase all shop stock, employ and manage your staff, and in return, you share in the profits from both fuel and convenience store sales. 

How Many Litres of Fuel Does a Petrol Station Hold?

 Petrol station forecourts typically store fuel underground in twin or multi-compartment steel tanks. An individual compartment will usually range from 20,000L to 40,000L in capacity; large enough to keep frequent deliveries to a minimum, yet small enough to fit under a single forecourt.

Most typical “neighbourhood” sites carry three grades of fuel (e.g. regular unleaded, premium unleaded and diesel), so you’ll often find two 25,000L compartments per grade, giving a total of around 150,000L on site.

Understanding these volumes is key: a single litre of petrol occupies roughly one cubic decimetre, so 150,000L of fuel represents 150 m³ of liquid beneath your pumps. 

Correctly determining the amount of fuel required for your operation is important as it impacts:

• Delivery logistics (you’ll typically receive one or two bulk tanker visits per week), 
• Working capital requirements (you prepay or deposit against several tens of thousands of litres at once) and 
• Environmental safeguards (spill containment, leak monitoring, and regular tank testing become ever more important as capacity rises).

How Profitable Is a Petrol Station in the UK?

Typical Revenue Streams

• Fuel Sales: The core business - unleaded petrol, diesel and premium grades. Though volumes are high, margins per litre are slim (often around 3 to 6 pence per litre).
• Convenience Store Sales: Groceries, snacks, drinks, tobacco, and lottery tickets. Margins here typically range from 20% to 35% depending on product mix and supplier deals.
• Car Wash Usage: Manual or automated washes. Margins can exceed 50% once fixed costs are covered, especially on premium wash packages.
• Food & Beverage Concessions: In-store coffee bars, hot food display counters or third-party franchises, like Subway, Costa, or Greggs. Net margins vary - often 10% to 20% for operator-run outlets, with concessionaires taking a share of turnover.
• Ancillary Services: Air/water machines, ATM surcharges, EV charger fees, and locker rentals - all of which add low-overhead incremental income.

By maximising higher margin streams (convenience store sales, wash services, and concessions), negotiating favourable fuel contracts, and choosing a site with strong, consistent traffic, a forecourt operator can significantly improve overall profitability despite tight fuel margins. 

What Are the Regulatory Considerations of Running a Petrol Station?

Operating a petrol station in the UK requires several statutory certificates and permits to ensure safe fuel storage, environmental protection and compliance with health, safety and fire regulations:

Petroleum Storage Certificate

Under the Petroleum (Consolidation) Regulations 2014, any site dispensing petrol must hold a Petroleum Storage Certificate. This certificate, issued by your local Petroleum Enforcement Authority (often your local council or the HSE’s appointed officer), confirms that your tanks, bunding, leak detection and spillage controls meet prescribed safety standards. 

Certificates must be renewed annually, with fees payable to the Petroleum Enforcement Authorities (PEA), and failure to hold one can lead to enforcement action under the Dangerous Substances and Explosive Atmospheres Regulations (DSEAR) or the Health and Safety at Work Act (HSWA). 

As a general guideline, here’s the annual fee price (subject to change):

 For more information on how to apply, visit https://www.gov.uk/find-licences/petroleum-storage-licence 

Environmental Permits

If your tank design or site location (for example, within a groundwater protection zone) poses a risk to soil or water, you may need an Environmental Permit from the Environment Agency (or the equivalent body in Scotland, Wales or Northern Ireland). A permit is also required if the throughput of petrol exceeds 500,000L in any 12-month period. The cost for this varies as it’s based on a “time and materials” basis, but you can contact the Environment Agency for further information and guidance.

You must follow “good practice” guidance on tank installation and leak detection; the Environmental Agency can impose additional conditions or require a permit if it considers your controls insufficient to prevent groundwater pollution. 

Health & Safety and Fire Regulations

The Dangerous Substances and Explosive Atmospheres Regulations 2002 (DSEAR) govern the classification of hazardous zones, equipment standards (e.g. ATEX-rated electrical fittings) and safe work procedures for petrol vapours. Enforcement is by the PEA, using powers under DSEAR when dealing with petrol-related risks. A DSEAR assessment will usually cost between £3,000 to £6,000 for a mid-sized site. 

The Regulatory Reform (Fire Safety) Order 2005 requires a fire-risk assessment covering your pumps, tank-filling areas, shop and any ancillary services (car wash, storage of flammable goods). These risk assessments often cost upwards of £1,000. Adequate fire-fighting equipment, staff training and emergency plans must be documented and held on site. 

Underground Tank Compliance

The installation, testing, maintenance and eventual decommissioning of Underground Storage Tanks (USTs) are tightly controlled:

• Installation & Design: Tanks must comply with standards (double-skinned or single-skinned with external bund) and undergo integrity testing before first use.
• Monitoring & Maintenance: Regular tank tightness tests, bund inspections and pipework checks are mandated - typically every 12 months - to detect leaks early.
• Decommissioning: Before removal, tanks must be emptied, degassed and certified gas-free; the PEA must be notified prior to any excavation or disposal works.

Costs typically range from £10k to £50k depending on the size of the tanks.

2030 Legislation Changes and Long-Term Impact

From 1 January 2030, the sale of new petrol and diesel cars will be phased out under the UK’s Zero Emission Vehicle (ZEV) mandate. Between 2030 and 2035, some low-emission hybrids will remain exempt, but after 2035, only zero-tailpipe-emission vehicles (pure EVs and hydrogen) may be sold. 

So, what does this mean for petrol stations? Here are three main considerations:

• Declining Fuel Volumes: As ICE (internal combustion engine) vehicle sales cease, petrol and diesel throughput will gradually decrease, squeezing fuel-sale margins.
• Diversification Imperative: Forecourts must invest in EV-charging infrastructure, renewable fuels (e-fuels, bio-LPG) and higher-margin retail or concession services to offset fuel revenue declines.
• Site Re-Profiling: Many operators are repurposing forecourt real estate for click-and-collect lockers, last-mile delivery hubs or co-working spaces to maintain footfall and access new income streams.

Insurance Requirements

Under UK law, any petrol station employing staff must carry Employers’ Liability insurance (set at a minimum of £5 million) to cover workplace injuries or illnesses. While Public Liability insurance (PLI) is not mandatory, most forecourt operators secure at least £5 million cover against third-party claims from slips, fuel spills or equipment failures. 

What Documents Do You Need to Purchase a Petrol Station?

There are several key documents that you’ll need to assemble for a petrol station purchase; let’s take a look at what they are and why each is important:

1. Business Financial Statements

• What They Are: At minimum, three years’ worth of profit & loss accounts, balance sheets and cash flow statements, plus breakdowns by fuel, shop, car wash, and other income streams.
• Why You Need Them: These show historic profitability, expose debts or hidden liabilities, and help you model future returns. 

2. Fuel Supply Agreements

• What They Are: Contracts governing your terms with petrol suppliers (price formula, delivery schedules, minimum volume commitments, rebate structures, and transferability).
• Why You Need Them: Any unassignable or soon-to-expire agreement can leave you scrambling for a new supplier, potentially at worse rates.

3. Environmental Reports & Tank Compliance Records

• What They Are: Phase I (and, if flagged, Phase II) site assessments for soil/groundwater contamination, plus tank-testing certificates, primary tank & bund inspections, and other related permits.
• Why You Need Them: Leaks or historic contamination can trigger massive clean-up costs, lender refusals, or planning refusals. 

4. Property Title / Lease & Planning Permissions

• What They Are: Title deeds (or lease documents, including landlord’s consent) and any planning consents specific to forecourt use.
• Why You Need Them: You must confirm you’re acquiring the correct interest (freehold vs leasehold) and that the site is lawfully permitted to operate as a petrol station.

5. Regulatory Licenses & Permits

• What They Are: Petroleum Storage Certificate, local‐authority filling‐station licence, Trading Standards pump-testing records, health & safety approvals, food-hygiene/alcohol/tobacco licences, waste disposal permits, etc.
• Why You Need Them: Any lapse or non-transferable permit risks forced closure or hefty fines by Petroleum Enforcement Authorities (PEAs) and/or other relevant bodies. 

6. Contracts With Suppliers & Service Providers

• What They Are: All existing agreements, such as fuel and shop suppliers, equipment maintenance, waste management, franchisor, or marketing partners.
• Why You Need Them: Some may require third-party consent to transfer, and you’ll want to know if there are onerous exclusivity or volume commitment clauses. 

7. Equipment & Asset Inventory

• What It Is: A detailed register of pumps, tanks, canopy, store fixtures, POS hardware, security systems, car wash machinery, and any vehicles - showing age, condition, warranties and maintenance history.
• Why You Need It: To verify exactly what you’re paying for, predict capital expenditure (CapEx) needs and sort tax depreciation.

8. Employee & TUPE Documentation

• What It Is: Staff contracts, pension scheme docs, holiday/sick leave records, and any outstanding employment claims.
• Why You Need It: Under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) rules, existing employees transfer automatically, so you must understand their terms and liabilities to avoid post-sale disputes.

9. Insurance Policies

• What They Are: Environmental liability, public/employers’ liability, property and business interruption cover.
• Why You Need Them: Lenders will often insist on up-to-date cover, and you need to know if any historic claims might affect premiums.

10. Business Structure & Company Records

• What They Are: If the petrol station trades via a limited company, you’ll need incorporation documents, shareholder/director registers, Articles of Association, PSC register, plus any IP (trademarks, domains, loyalty schemes).
• Why You Need Them: Your chosen acquisition route (asset vs share purchase) will have different tax, liability, and governance outcomes.

How to Sell a Petrol Station

When you’re ready to sell, start by tidying up your financial records. Produce up-to-date profit & loss accounts, cash-flow forecasts and a clear asset register - and ensure all licences, environmental permits, and tank-testing certificates are in order. Assemble a concise information memorandum that highlights recent trading trends, growth opportunities and any major capital works completed.

To find the right buyer, enlist a specialist broker who can tap into their network of investors and operators, or advertise through the major franchise networks if you hold a branded site. You can also consider a private sale via industry websites or local business-for-sale listings (such as Christie & Co or PropertyLink); just be sure to qualify prospects with simple NDAs and proof of funding before sharing detailed due diligence materials. A well-packaged sale, marketed through the right channels, will typically attract multiple offers and secure the best price.

Top Tips for Buying & Running a Petrol Station

• Engage with experienced finance brokers, such as Union Business Finance, to explore tailored lending packages and cash flow solutions specific to petrol station acquisitions.
• Beyond financials, review environmental surveys, tank-testing records and supplier contracts. Early identification of site issues helps avoid costly surprises down the line.
• Don’t rely solely on your fuel supplier’s retail offerings; source supplemental partners for coffee, fresh food, newspapers and confectionery to boost margins and customer choice.
• Prioritise staff training and customer service, as a well-trained, friendly team is important for creating a repeat customer base, key for such a competitive industry. 
• Keep a three-month reserve to cover fuel deposits, payroll, and seasonal dips. Regularly review weekly fuel purchase cycles and retail inventory turns to maintain healthy liquidity.
• Schedule annual tank inspections and licence renewals without fail. A spotless health, safety and environmental record protects both your licence to trade and your reputation.
• Begin integrating EV chargers, alternative fuel options, or hybrid vehicle services ahead of the planned 2030 ICE-vehicle phase-out. 

Contact Union Business Finance to Kickstart Your Petrol Station Business!

Starting and running your own petrol station business (or franchising a forecourt) is a lucrative business opportunity, but it’s not without its challenges. Union Business Finance can help you overcome any financial hurdles you may experience, thanks to our experience working with businesses in this industry and the range of finance solutions we can broker for you. 

To learn more about what’s available to you and to help our team really get to know your business, simply get in touch with us today!

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