Gas Station Glossary
Plain-English definitions of common gas station deal terms, due diligence items, and structures. Use this as a quick reference when reviewing opportunities or preparing a sale.
Tip: If you’re in diligence, start with the Gas Station Due Diligence page and use this glossary to decode reports and documents.
- AADT / VPD
- Average annual daily traffic / vehicles per day. A proxy for drive-by exposure and convenience demand.
- ALTA Survey
- A detailed survey (often lender-required) showing boundaries, easements, access, and improvements.
- Assignment
- Transfer of a lease or contract (such as a fuel supply agreement) to a buyer, subject to approvals.
- Business-Only (Leasehold)
- A sale of the operating business without owning the underlying real estate; the buyer operates under a lease.
- Cap Rate
- Net operating income divided by purchase price for real estate. Used more for leased-fee or investment-grade deals.
- Canopy
- The overhead structure covering dispensers. Condition and size matter for curb appeal and compliance.
- COA / Certificate of Occupancy
- Local approval that the building use meets code and zoning requirements.
- Convenience Store (C-Store)
- The retail component selling inside merchandise, which often drives a large share of profit.
- Debt Service Coverage Ratio (DSCR)
- A lender metric: cash flow available for debt payments divided by annual debt service.
- Deed
- The legal document transferring real estate ownership.
- Due Diligence Period
- The negotiated window to verify environmental, financial, lease/title, and operational details before closing.
- Easement
- A legal right for someone else to use part of the property (utilities, access, ingress/egress).
- Environmental Escrow
- Funds held back at closing to address known or potential environmental issues.
- Estoppel
- A statement (often from a landlord or tenant) confirming key lease facts and that no defaults exist.
- Fee Simple
- Full ownership of land and improvements.
- Franchise / Brand Agreement
- Terms and obligations to operate under a specific fuel brand (if applicable).
- Fuel Margin
- Profit per gallon after cost of fuel and applicable fees; a key driver of station performance.
- Fuel Supply Agreement
- Contract governing branded or unbranded fuel supply, pricing, term, and volume obligations.
- Gallons
- Fuel volume sold over a period (monthly/annual). Often used with margin to estimate fuel profit.
- Ground Lease
- A lease of land (the tenant owns improvements). Often used for branded stations or long-term investment structures.
- Ingress / Egress
- How vehicles enter/exit the site. Critical for traffic flow and sales.
- Inside Sales
- Revenue from in-store merchandise; often a major contributor to profit.
- Inventory (Inside)
- Retail merchandise stock on hand at closing, typically valued separately from real estate.
- LOI (Letter of Intent)
- A non-binding (or limited-binding) term sheet outlining price and key deal terms before a contract.
- Lease Assignment
- A landlord-approved transfer of a tenant’s lease to a buyer.
- Leased Fee
- Real estate sold with an in-place tenant and lease income; valued like an investment property.
- Lien
- A legal claim on the property or business assets that must be addressed at closing.
- MUTCD / Signage Compliance
- Rules governing roadway signage and visibility; local requirements can affect signage value.
- MPD (Multi-Product Dispenser)
- A dispenser that can offer multiple fuel grades. Modern MPDs can improve throughput.
- NDA
- Non-disclosure agreement used to protect sensitive information and exact locations in confidential transactions.
- Net Profit
- Profit after expenses. Underwriting should normalize owner compensation and one-time items.
- Offer / Purchase Agreement
- The binding contract that governs the transaction terms and timeline.
- Phase I ESA
- A records-based environmental report identifying potential contamination risks.
- Phase II ESA
- Sampling/testing performed when Phase I flags potential contamination.
- POS Reports
- Point-of-sale summaries used to validate sales, departments, and performance trends.
- Pump Count
- Number of fueling positions/hoses. Relates to throughput potential and peak-hour demand.
- Quiet Marketing
- Controlled outreach to pre-qualified buyers without public advertising.
- RINs
- Renewable Identification Numbers tied to renewable fuel compliance; sometimes impacts economics depending on operations.
- Reconciliation
- Process of confirming actual inventory, prorations, and adjustments at closing.
- Rent Coverage
- A check that the business cash flow can support rent (for leased sites).
- Sale-Leaseback
- Owner sells the real estate and leases it back, often monetizing equity while continuing operations.
- Site Plan
- A drawing showing improvements, parking, access, and easements; used for planning and approvals.
- SNDA
- Subordination, Non-Disturbance, and Attornment agreement; protects lease rights relative to financing.
- Tank Tightness Test
- Testing to verify UST integrity. Requirements vary by jurisdiction.
- Traffic Generator
- Nearby demand drivers (interstates, employers, schools, neighborhoods) that support sales.
- Triple Net (NNN)
- Lease where tenant pays taxes, insurance, and maintenance, in addition to base rent.
- Underwriting
- Evaluating a deal’s economics, risk, and execution path using realistic assumptions.
- UST (Underground Storage Tank)
- Fuel storage tanks underground. Their age, condition, and records heavily affect environmental risk.
- Variance
- Local approval to deviate from zoning rules (signage, setbacks, use, etc.).
- Working Capital
- Cash needed to operate (inventory, float, payroll timing). Not always included in purchase price.
- Zoning
- Local land-use designation that dictates allowed uses and restrictions for the site.
- ADA Compliance
- Accessibility requirements for entrances, restrooms, routes, and parking.
- Allocation
- How purchase price is allocated among assets (real estate, inventory, equipment, goodwill) for reporting.
- Bill of Sale
- Document transferring business assets such as equipment and goodwill.
- Car Wash
- An ancillary profit center; evaluate equipment age, water reclamation, and maintenance.
- Contamination
- Presence of hazardous substances that can trigger cleanup obligations and lender concerns.
- Deed Restrictions
- Recorded limitations that can restrict use, signage, or operations.
- Dispenser
- Fuel pump hardware. Age and compatibility can affect maintenance and compliance.
- EMV / Payment Compliance
- Card payment security standards; important for fraud risk and processing.
- Fire Marshal Inspection
- Safety review relevant to fuel dispensing, tanks, electrical, and emergency systems.
- Forecourt
- The paved fueling area around dispensers; condition affects safety and perception.
- Goodwill
- Intangible value of the operating business; often part of business-only transactions.
- Health Department
- May apply if food service is present (hot food, deli, coffee).
- Lottery
- If offered, may be a meaningful inside-sales driver; confirm licensing and transferability.
- Prorations
- Closing adjustments for items like rent, utilities, taxes, and inventory.
- Setbacks
- Required distance from property lines; can affect redevelopment or expansion.
- Title Commitment
- Pre-closing report listing conditions required to issue title insurance.
- Vapor Recovery
- Fuel vapor control systems required in some areas; affects equipment and compliance.
- Water Reclamation
- Car wash system that captures/reuses water; can reduce operating cost and meet regulations.
- FFE (Furniture, Fixtures & Equipment)
- Physical assets of the business such as coolers, shelving, kitchen equipment, and POS.
- Environmental Insurance
- Policy sometimes used to manage residual environmental risk when lenders require it.
Need help? If you want a broker to guide the process, see Sell, Buy, or Off-Market.