The pros and cons of retained gallons payout in the sale of fueloil business
- Acorn Consultants, Edgecomb, ME (USA)
Historically many fueloil businesses have been sold with at least a portion of the payout tied to the future delivery of gallons to the customers of the seller. This concept is usually not present in the sales of most retail businesses because future purchases by transferred customers is dependent on pricing, promotion, location, reputation, branding and other factors. In the case of fueloil, the customer is known to have a loyalty to the fueloil dealer, which in part is due to the need for service rendered to the heating equipment in the home. Periodic studies indicate customer loyalty is in the range of 8 to 10 years with the same dealer. In many markets, growth in the percentage of consumer price buyers who pay cash may be changing these loyalties. For example, in New Hampshire a recent study by the state energy office indicates that the percentage of fuel buyers who buy for cash has increased from 27.5% during the 1982-1983 heating season to 41.5% this past year. No one knows how this trend will impact on the sales of fueloil businesses via retained gallons. This article discusses the following: why customer lists should not be considered good will; underlying assumptions in sale; options of the seller; why misunderstandings occur; defining the account; definition of gallons to be counted; compatibility of policies; how much will be retained; and how to protect yourself and retention.
- OSTI ID:
- 5614232
- Journal Information:
- Fueloil and Oil Heat and Solar Systems; (USA), Vol. 49:1; ISSN 0148-9801
- Country of Publication:
- United States
- Language:
- English
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