ARCO AMPM Franchise in 2024: Costs, Fee & FDD

ARCO (Atlantic Richfield Company) is a household name in the fuel industry, renowned for its commitment to delivering quality gasoline at competitive prices. The brand emerged from the 1966 merger of Atlantic Refining and Richfield Oil, becoming a trailblazer in combining convenience store services with fuel sales. Over the years, ARCO has cultivated a strong presence across the West Coast and beyond, establishing itself as a trusted icon for motorists seeking reliability and affordability. Now under the Marathon Petroleum Corporation umbrella, ARCO continues to uphold its legacy while adapting to the evolving energy landscape.

At the heart of ARCO’s offering is its TOP TIER™ detergent gasoline, which exceeds EPA standards and ensures optimal engine performance by preventing corrosion and sludge buildup. Paired with the ampm convenience stores, ARCO locations offer a one-stop shop for fuel, hot foods, beverages, and snacks. From energy drinks to customizable coffee and fountain drinks, the ampm brand complements ARCO’s fuel services perfectly. ARCO’s core customers include cost-conscious drivers and commuters who prioritize quality, convenience, and affordability in their fueling and shopping experience.

ARCO’s impact is massive, with over 1,000 ampm convenience store locations across Arizona, California, Nevada, Oregon, and Washington. The brand expanded into Mexico in 2017, marking a significant step in its international growth. Supported by Marathon Petroleum’s extensive refining and distribution network, ARCO maintains a robust daily customer base, serving millions of drivers and shoppers across its territories. Its recognizable logo and well-branded locations ensure ARCO remains a trusted choice in a competitive market.

ARCO franchisees benefit from a comprehensive support system designed to simplify operations and drive success. From site branding and marketing resources to a reliable supply chain and dedicated training programs, ARCO offers robust guidance at every step. The franchise system emphasizes sustainability, with investments in renewable energy and emerging technologies to prepare for an energy-diverse future. For franchisees, this means aligning with a forward-thinking brand that prioritizes innovation, customer satisfaction, and environmental responsibility.

ARCO Franchise Insights

1. ARCO pioneered the integration of fuel stations and convenience stores in 1978, setting a standard that has shaped the industry. Today, its ampm stores operate over 1,000 locations across five U.S. states.
2. ARCO’s fuel exceeds EPA standards with advanced detergent additives, ensuring optimal engine performance and customer trust. This standard is recognized by nine of the world’s leading automakers.
3. Marathon Petroleum Corporation, ARCO’s parent company, is the largest refining system in the U.S., processing over 3 million barrels of crude oil daily. This provides ARCO franchisees with unmatched supply chain reliability and support.
4. ampm stores complement ARCO’s fuel offerings by driving significant in-store traffic with their diverse menu of snacks, hot foods, and beverages. This ancillary revenue stream enhances profitability for franchise owners.

How much does it cost to open an ARCO franchise?

Understanding the potential investment size and capital requirements is crucial when considering opening an ARCO franchise. These financial commitments, including equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.

Min & Max Investment

Opening an ARCO location involves several key costs. As ARCO does not produce an up to date Franchise Disclosure Document (FDD), we can estimate the costs for an ARCO based on public filings and analysis. The costs to open up a new ARCO location are estimated to be between $1.78 million to $7.37 million. The lower costs are expected for smaller location conversions and the higher costs are expected for new and larger locations.

Below are the estimated investment cost range to open a new ARCO:

Required Capital

Investing in an ARCO gas station franchise requires meeting specific financial benchmarks to ensure success. Here’s an outline of the financial requirements:

• Investment The total investment ranges from $1.78 million to $7.37 million, covering costs such as land acquisition, construction, equipment, and initial inventory. This includes all essential components to establish the gas station and convenience store. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
• Liquid Assets A minimum of $600,000 in liquid capital is recommended to cover upfront operational expenses and provide a safety net for unexpected costs. Liquid capital includes cash or other easily accessible funds.
• Net Worth Franchisees typically need a minimum net worth of $700,000, which reflects total assets minus liabilities. This ensures the financial stability necessary to sustain long-term operations.

How much does an ARCO franchise owner make?

Calculating the salary of a hypothetical ARCO franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a potential ARCO franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.

ARCO Revenue & Gross Sales

The median gross sales for ARCO gas station franchises are not publicly disclosed, but industry estimates suggest that well-operated locations can generate annual gross sales between $1.5 million and $4 million, depending on factors like location, customer traffic, and fuel pricing. This can vary significantly, as gas station revenue is influenced by local competition, fuel demand, and the additional services offered at the convenience store, such as snacks and drinks.

Which key factors impact the average revenue performance of ARCO franchisees?

The performance of U.S. ARCO franchisees, particularly in terms of median gross sales, is likely influenced by a combination of key factors. Location plays a critical role, with high-traffic areas, such as those near highways or urban centers, driving greater customer volume. Additionally, fuel prices and customer loyalty programs can impact sales, as ARCO’s reputation for affordable, high-quality fuel often attracts price-conscious drivers. The convenience store offerings, such as snacks, beverages, and hot foods, also contribute significantly to revenue. Strong operational efficiency, including inventory management and staffing, as well as local marketing efforts, can further enhance sales performance. Finally, the ongoing brand strength and customer trust in ARCO’s consistent quality fuel help maintain customer retention and steady demand.

ARCO Franchise Operational Costs

When opening an ARCO gas station franchise, it’s important to consider the key ongoing operational costs that directly impact day-to-day operations. These costs are crucial for maintaining smooth operations, profitability, and long-term success.

• Fuel Procurement One of the largest ongoing expenses is purchasing fuel, which fluctuates based on market prices. The cost of acquiring fuel will directly impact your profit margins, especially if fuel prices are volatile.
• Labor Costs Employee wages and benefits for gas station attendants, convenience store workers, and managerial staff are significant ongoing expenses. Ensuring adequate staffing levels while controlling labor costs is important for profitability.
• Inventory Management The cost of replenishing convenience store items, including snacks, beverages, and other goods, must be managed carefully to maintain a balance between product availability and waste reduction.
• Maintenance and Repairs Regular maintenance of pumps, tanks, convenience store equipment, and the property itself is essential to keep the franchise operational. These costs can vary depending on the age and condition of equipment.
• Utility Costs Gas stations often require substantial energy for lighting, refrigeration, and heating/cooling systems. Energy costs can fluctuate depending on the size and usage of the facility.

Understanding and managing these costs effectively is essential to ensure the franchise runs smoothly and maintains profitability in the long term.

ARCO Franchise Fees

When operating an ARCO gas station franchise, there are several ongoing fees that you should factor into your business plan. These fees are essential for maintaining brand consistency, supporting marketing efforts, and ensuring the continued success of your franchise. Below are the key ongoing fees associated with the ARCO franchise, though the exact amounts can vary, and the following are estimates.

• Royalty Fees Typically, ARCO franchisees are required to pay a royalty fee based on a percentage of their gross sales. This fee usually ranges between 4% to 6% and supports the ongoing use of the ARCO brand, systems, and operational support.
• Advertising and Marketing Fees Franchisees contribute to a national and regional marketing fund to support brand awareness and advertising campaigns. These fees generally range from 1% to 2% of gross sales and help fund promotional materials, digital campaigns, and other marketing initiatives.
• Additional Fees There may also be other smaller ongoing fees, such as technology fees for point-of-sale systems, maintenance of proprietary systems, and equipment leasing fees, depending on the franchise agreement.

ARCO Franchise Earnings

While specific earnings data for ARCO franchises is not publicly available, we can provide an informed overview based on industry standards and the franchise’s characteristics. The potential earnings for a gas station franchise like ARCO are typically influenced by several key factors, including location, fuel prices, and the variety of services offered. Gas stations located in high-traffic areas, such as near highways or urban centers, tend to see higher sales due to the larger volume of customers. In addition, the profitability of the convenience store operations, which may offer food, beverages, and other goods, can significantly impact overall earnings, especially if the station is able to attract customers for both fuel and in-store purchases.

In general, gas station franchises benefit from steady demand for fuel, but earnings can be volatile due to fluctuations in fuel prices and market conditions. Although precise earnings figures are often not disclosed, a well-run ARCO franchise in a strategic location, with strong operational management, has the potential to generate consistent revenue.

How to Open an ARCO Franchise

Becoming an ARCO franchisee involves a well-defined process that begins with making an initial inquiry and ends with the successful operation of your gas station franchise. Each step is designed to ensure that you meet the requirements, understand the expectations, and are well-prepared to operate your business. Here’s a breakdown of the process:

1. Initial Inquiry and Research The first step is to reach out to ARCO or its franchise development team to express your interest. You will receive preliminary information about the franchise, including investment requirements, fees, and available territories.
2. Franchise Application Once you’ve reviewed the initial information and are interested in moving forward, you will need to submit a formal franchise application. This typically involves providing details about your financial background, business experience, and reasons for wanting to open an ARCO franchise.
3. Discovery Day and Interviews After reviewing the FDD, you may be invited to attend a “Discovery Day” where you will meet with the franchisor’s team. This is an opportunity to ask questions, learn more about the business, and ensure it aligns with your goals. You will also undergo interviews to assess your suitability as a franchisee.
4. Franchise Agreement Signing If you are selected to move forward, you will sign a franchise agreement, outlining the terms and conditions of the franchise relationship. This agreement will cover the franchise fee, operational requirements, and other obligations.
5. Training and Support Once the agreement is signed, you will undergo a comprehensive training program. This includes operational training, customer service standards, and financial management. ARCO offers support to ensure you are fully prepared to manage your franchise effectively.
6. Site Selection and Construction After training, the next step is selecting a site for your ARCO gas station, if one hasn’t already been pre-selected. You will work with the franchisor to find a suitable location and, if needed, begin construction or remodeling.
7. Pre-Opening Preparation Before opening your ARCO franchise, you will need to finalize inventory, staff your station, set up operational systems, and ensure everything is in place for a smooth opening.
8. Opening the Business With all preparations complete, you will officially open your ARCO franchise for business. The franchisor will continue to provide ongoing support to ensure your operations run smoothly.

Pros & Cons

Pros

Strong Brand Recognition: ARCO is a well-established and trusted brand on the West Coast with a reputation for providing quality fuel at competitive prices. Its recognizable logo and customer loyalty provide a solid foundation for attracting customers.

Proven Business Model: With over 60 years in operation, ARCO has refined its business model, including combining fuel sales with a convenience store offering (through its partnership with ampm). This model diversifies revenue streams, providing a more stable income.

High Demand for Fuel and Convenience Products: Gas stations are essential businesses with constant demand, especially in high-traffic areas. ARCO’s inclusion of convenience store offerings, like snacks and beverages, capitalizes on this demand.

TOP TIER™ Gasoline: ARCO’s commitment to high-quality gasoline sets it apart from many competitors, enhancing customer satisfaction and loyalty. The brand’s use of TOP TIER™ detergent gasoline is a unique selling point recognized by automakers and consumers.

Cons

Dependence on Fuel Prices: Like many gas stations, ARCO’s revenue can be heavily influenced by fluctuating fuel prices. A downturn in oil prices or shifts in consumer behavior can impact profitability, especially if fuel margins become tighter.

Intense Competition: The fuel and convenience store industry is highly competitive, with several major brands (such as Chevron, Exxon, and Shell) vying for market share. Competition may impact pricing and customer acquisition, especially in urban or saturated markets.

Location Sensitivity: The success of an ARCO franchise is closely tied to location. High-traffic areas are crucial for maximizing customer visits, and finding the right site can be challenging and costly. Poor location choices may hinder performance.

Regulatory and Environmental Compliance: Gas stations face a variety of environmental and regulatory standards. Compliance with these requirements can result in additional costs, both in terms of time and money, to ensure your station operates within legal and safety standards.