Customers see the fuel sign outside the station, pull up to a pump with more advertisements, and buy gas that has brand additives in it. These customers go inside the station and see more branded merchandise. The world of branded stations operates as a cost efficient way for wholesale fuel suppliers to sell fuel to retailers through contracts and save time.
The world of branded fuels
About 50% of retail gas stations in the United States sell branded fuel, carrying brands like Valero, Alon, and Phillips 66. The owners of these branded stations have signed contracts to carry the product and display signs identifying their relationship. The owners of branded stations are not employees or franchisers of oil companies, but retail outlets that exclusively carry fuel from a single brand.
There are certain advantages available for branded stations. The retail outlets offer instant brand recognition and draw consumers who trust the brand and its quality. Retailers that carry branded fuel also have a guaranteed supply, even during times of shortage. These specific brands offer branded stations information on best practices, training in how to operate a retail fuel business, and techniques for attracting customers.
Why major oil companies partner with retail fuel businesses
Major oil companies concentrate their day-to-day efforts on refining and producing oil and related petroleum products. Oil companies don’t need to own real estate, hire retail employees, or deal with retail customers. The companies leave the majority of the work to the owners of the branded stations.
Contract options for branded fuel stations
When a retailer decides to go with branded fuel, they must sign a contract with certain stipulations.
The typical contract length for branded stations is 10 years, though it can be as short as 3 years or as long as 20 years. Shorter contracts are usually only available on renewals. The contract also lays out the minimum amount the retailer must sell each month to retain the contract. However, most contracts allow the retailer to sell much more than the minimum amount. In times of fuel shortages, the minimum allocation can keep the branded station running when unbranded stations have no supply.
Oil companies do require branded stations to meet specific image requirements. A store must display certain colors, signage, logos, and other key elements of branding. The stations must meet strict guidelines for service and cleanliness as well. In exchange for following these stipulations, the company provides financial incentives and advertising assistance.
At Kendrick Oil, we distribute a wide variety of wholesale fuel, including diesel, regular gas, and both branded and unbranded fuel. If your business is in need of wholesale fuel or if you have questions about any of our products and services, call us at (800) 299-3991. You can also Contact Us by email for more information. We have locations in Texas, New Mexico, Oklahoma, Kansas, Colorado, and Louisiana.