Most major oil companies have been out of the retail fuel business for decades. That is hard for most retail customers to grasp. They see the sign outside the gas station. They pull up to the pump where they see more signage. They buy fuel that has the brand additives in it. They go inside the station, see more signage, and maybe even branded merchandise. How can those stores not be owned and operated by a major oil company?
The World of Branded Fuels
About 50 percent of retail gas stations in the United States sell branded fuel. They carry names like Phillips 66, Shell, and Mobil. The owners of these retail locations have signed contracts to carry a branded fuel and to have the signage identifying that relationship. These owners are not
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It offers brand recognition instantly. It will draw consumers who trust the brand and its quality. Retailers that carry branded fuel also have a guaranteed supply of fuel, even during times of shortage. Oil companies offer their retail outlets information on best practices, training in how to operate a retail fuel business, and techniques for attracting customers.
Why Major Oil Companies are Out of the Retail Fuel Business
Major oil companies concentrate their day-to-day efforts refining and/or producing oil and related petroleum products. They don't need to own real estate, hiring retail employees or dealing with retail customers. They leave that to the owners of the retail fuel outlets.
However, it is to the advantage of the major oil company to maintain a retail presence. That is why 50 percent of gas stations carry branded products and signage. It builds their customer base and brand recognition.
The Contract
When a fuel retailer decides to go with branded fuels, he must sign a contract with certain stipulations.
The typical contract length for branded fuel is 10 years. However, it can be as short as 3 years and as long as 20 years. The shorter contracts are usually only available on