• Service Station Law

  • Whether you are considering purchasing a service station or assessing the viability of a franchise, Harbourside Commercial Lawyers Sydney has all the expertise you need to get the right advice and make the right business decisions.

    Our firm’s Principal, Abraham Ishkhanian, knows the service station business inside out. His family has owned, operated and managed service stations for over 45 years. Abraham personally managed several service stations for 15 years which included major companies such as Caltex, Ampol, Mobil and United.

    That unique industry experience enables us to assist many clients, many of whom are major owners and operators of some of Sydney’s largest service stations.

    Our deep understanding enables us to talk your language and understand the issues to deliver the best advice.

    Buying or selling a service station

    If you are interested in selling, buying or operating a service station you need to ensure you get thorough advice because it is a complex and specialised area of law. Apart from the usual issues of buying or selling a business consideration must be given to the strict environmental legislation and compliance.

    Contracts need to be drawn up that are industry specific and that properly cater and protect your interests as well as meet your compliance obligations. Proper searches and reports must be obtained to ensure that you are not buying into the Vendors negligence or other site issues.

    A purchase would often involve entering several complex agreements which bind the parties in many ways often with 3 or 4 separate parties. When selling, or purchasing a Franchise some of the documents required are;

    • Sale of Business Contract;
    • Franchise Agreement;
    • Lease Agreement;
    • Licence Agreement;
    • Equipment Leases;
    • Employment Contracts;
    • Contractor Agreements
    • Disclosure Documents;
    • Purchase of Franchise Systems;
    • The Oil Code;

    Leasing and franchising a service station

    The right to occupy a Service Station site can come about through many complex and often confusing agreements. Most are operated under a Franchise system where the operator enters a Franchise Agreement with an Occupation Agreement.

    These are separate documents but work together at the same time. They are often considerably long and hard to read for the untrained eye. You need to receive the right advice before entering into any agreements so you are aware of the legal consequences and obligations you are being asked to enter into.

    Environmental and Compliance Obligations

    Service station operators need to be aware of their obligations, including the need for strict compliance of the laws and regulations. Penalties for pollution breaches are astronomically high and can measure hundreds of thousands of dollars.

    The Protection of the Environment Operations Act 1997 is the main piece of legislation affecting this industry. This relates to water, air and land pollution, offensive noise, hazardous materials and waste.

    Vapour Recovery systems (VR1 & VR2) are now compulsory in all Service Stations in New South Wales and some other states. Hefty fines and site closures are just some of the consequences of non-compliance even if no environmental damage has been caused.

    Independent Operators and supply agreements

    Independent operators are exposed as they don’t have the protection as operators who operate under a franchised network. The obligations of independent operators are greater and therefore greater risk is borne by them.

    Independent operators must ensure that the sites are compliant with all regulations particularly environmental laws. Local councils have recently cracked down on independent operators as they view these operators as being the ones most likely not to comply.

    Supply Agreements

    Independent and Freehold operators can enter into Supply Agreements with oil companies for the supply of fuel and other branded products. Supply agreements are not just fuel related but can also incorporate further items often overlooked by operators such as;

    • Petrol Bowsers
    • Signage
    • Corporate branding
    • Authority to accept corporate cards for payment
    • Access to buying groups for discounted stock

    Mechanical Workshops and Car Washes

    Although the number of Automotive workshops is declining there is still a demand for automotive repairs and even more so of mechanics wanting to lease workshops to establish their own business. There are many issues to consider with these setups, often including:

    • Leases
    • Licence Agreements
    • Contractor agreements
    • Sub-contractor agreements
    • Employment agreements
    • Faulty workmanship claims
    • Occupational Health and Safety (OH&S)

    These are in addition to the environmental regulations such as waste oil storage and disposal.

    Contact us through our enquiry form or Phone: 02 9262 3553.

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