Glossary

Service station terms, explained

The words brokers, lenders and sellers use when a servo changes hands, in plain English.

Service station (servo): A site that sells fuel to motorists, usually with a convenience store. Australians commonly call them servos or petrol stations; larger highway sites with heavy-vehicle diesel and parking are called truck stops.
Leasehold business: You buy the operating business (goodwill, equipment and stock) and lease the site from a landlord or fuel company. It is the cheapest way in, but the business depends on the lease and fuel supply terms. Learn more
Freehold going concern: A sale of the land, buildings and the operating business together. The buyer becomes both owner and operator.
Fuel-leased freehold investment: A service station property leased to a fuel operator, sold to investors for the rental income. The buyer is a landlord, not an operator; value is mainly driven by the rent, lease length and tenant strength.
Commission agent: An operating model where the fuel company owns the fuel and sets the pump price, and the operator earns a commission in cents per litre plus the profit from the shop. Learn more
Franchise: An operating model where the operator runs the site under a franchise agreement with a brand, following its systems and paying fees, usually in return for supply, marketing and support.
Dealer supply agreement: An operating model where an independent dealer buys fuel from a supplier under a supply and branding agreement and sets its own pump prices, keeping the fuel margin.
Independent (unbranded) servo: A site that isn't tied to a major brand. It buys fuel from wholesalers on the open market and controls its own pricing and branding.
Cents per litre (cpl): How fuel commission and margins are measured. A commission agent earning 6 cpl on 300,000 litres a month earns $18,000 a month before costs.
Fuel volume: The number of litres a site sells, usually quoted per month (L/mth). It drives fuel income and the customer traffic that feeds the shop, so it's the first number buyers compare.
Shop sales: Convenience store takings, usually quoted per week. For many operators the shop produces most of the gross profit, so ask for the gross margin, not just sales.
Gross margin: Sales minus the cost of the goods sold, shown as a percentage. It shows how much profit the shop actually makes on what it sells.
EBITDA: Earnings before interest, tax, depreciation and amortisation: what the business makes from operations before finance costs. Check whether it includes a wage for the owner, since that changes the real return. Learn more
Stock at valuation (SAV): Fuel and shop stock is counted and paid for at settlement on top of the business price. A price of "$450,000 + SAV" means $450,000 plus the value of stock on hand.
Price on application (POA): The seller hasn't published a price. Enquire with the agent or seller for price guidance.
Underground petroleum storage system (UPSS): The underground tanks and pipework that store and deliver fuel. State environmental regulators set rules for leak monitoring, testing and record keeping, and the system's condition is a major due-diligence item.
Tank and line integrity test: A test that checks underground tanks and fuel lines for leaks. Buyers usually ask for recent results before committing to a purchase.
Environmental site assessment: An investigation of soil and groundwater contamination at a site. Leaks from fuel systems can be expensive to clean up, so buyers and lenders often require one for freehold purchases.
Supply agreement: The contract with a fuel company covering fuel supply, branding, pricing and often equipment. Its remaining term and renewal options strongly affect a business's value.
Yield: For an investment property: annual net rent divided by the price, as a percentage. A $3,000,000 property earning $180,000 a year net has a 6% yield.
Weighted average lease expiry (WALE): The average time left on a property's leases, weighted by rent. A longer WALE means more secure income for an investor.
Net lease: A lease where the tenant pays most property outgoings (such as rates, insurance and maintenance) on top of the rent, so the landlord's income is close to the rent received.
Confidentiality deed: An agreement a buyer signs before receiving confidential details such as the business name, exact address and financial statements. On Servo For Sale buyers can sign it online. Learn more
Data room: A secure online folder where the seller shares documents (financials, leases, supply agreements, tank tests) with buyers who have signed the confidentiality deed.
Blind (confidential) listing: A listing that hides the business name and exact location, showing only the region, to protect staff, customers and suppliers until a serious buyer signs a confidentiality deed.
Expression of interest (EOI): A sale campaign where buyers submit offers by a closing date instead of negotiating against an asking price.
Buyer brief: A description of the site a buyer wants (location, budget, fuel volume, operating model) that brokers can match against off-market opportunities.