Commercial valuation

How to value: Convenience store and gas station

A convenience store is often a business bought in a rented space, while a gas station is often bought with the land and building. For a gas station, the fuel tanks and the condition of the land are the biggest variables in the value.

An aisle inside a small convenience store, with snacks and household goods on wooden shelves at left, bread and biscuits on a center display, milk and drinks in a lit cooler at right, and a counter at the back. — Photo: Joseph Mischyshyn, Wikimedia Commons (CC BY-SA 2.0) · cropped

Main method
Store: profit multiple. Land and building: separately
Check first
Fuel volume and the supply agreement
Watch out for
Tank leaks and clean-up cost

Timing and the market The value of this type changes with the time and the market mood. Every number below is a made-up example, not a real market number.

How this type is valued

A store business: estimate with seller’s discretionary earnings (SDE: the owner’s pay and personal costs added back to the profit) times a multiple. The multiple is not a fixed number. It changes with lease terms, location, the sales trend and the market mood.

A gas station: look separately at the profit from fuel (volume and margin), the store profit, and the value of the land and building. Value the land and building separately by the income approach or direct comparison.

Check whether the fuel supply agreement (the brand, and the term and conditions with the supplier) carries over to the new owner and how it affects profit.

Fuel tanks and contamination can be a large part of the value, so always check the environmental review (Phase I) and the tank inspection records. Replacing and cleaning older tanks can be very costly.

What drives the value

Store sales, the profit trend, and whether the store runs without the owner.
Fuel volume and the terms of the fuel supply agreement.
Location: main road, entrances, competition nearby, transit and residential areas.
The age and condition of the fuel tanks and the inspection records.
Whether you buy the land and building or lease the space, and the time left on the lease.
Whether the new owner can take over the selling licences and permits (this differs by product).

Documents and numbers to check

Tax returns, profit and loss statements, HST returns and bank deposits for the last 3 years.
Sales and profit by product, and fuel volumes.
The fuel supply agreement and any brand agreement.
A list of fuel tanks, install dates, inspection and registration records, and leak test records.
An environmental review (Phase I) and any earlier contamination studies or clean-up records.
The lease (if it is a rented space) and the landlord’s terms for consenting to a transfer.
A list of selling licences and permits, and a list of employees.

What to watch out for

Leaks from underground tanks and soil or groundwater contamination. Clean-up can cost more than the value. Ask a lawyer who would be responsible.
A fuel supply agreement with poor terms, or one that does not carry over to the new owner.
Profit on the books that differs from real profit: cash sales may be mixed in.
A short lease where the landlord will not agree to an extension.
New gas stations and convenience stores nearby that increase competition.

A made-up example: how the store business value changes with the multiple

These numbers are made up to show the arithmetic. They are not real multiples or prices from any deal. The example is a rented convenience store business with seller’s discretionary earnings (SDE) of $180,000 a year. Inventory is assumed to be counted separately and is not included.

A made-up example: how the store business value changes with the multiple
Multiple	Seller’s discretionary earnings (SDE)	Business value (rough)
2.0x	$180,000	$360,000
2.5x	$180,000	$450,000
3.0x	$180,000	$540,000

What changes with timing and the market

When fuel prices and spending habits change, volumes and margins change. Check that the last year’s numbers are normal.
When loan rates rise, buyers carry a heavier load and the multiple may fall. (A general principle, not a rule.)
When environmental rules and tank inspection standards get stricter, the costs of an older station rise and show up in the value.
When the nearby population and traffic change, store use changes.
Do not treat the price of a similar store sold a few months ago as today’s value.

Where to check the market →

Official sources

What the official sources say 5

O. Reg. 217/01 (Liquid Fuels)O. Reg. 217/01, s. 25 (1) and (2)

A licence or registration referred to in this Regulation is not transferable. … Where the licence holder under subsection 4 (1) changes, the new party shall immediately apply for a licence to operate the facility.

In plain wordsA facility that handles fuel such as gasoline (a gas station, for example) must be licensed to operate, and the licence cannot be transferred to someone else. When the licence holder changes, the new owner must apply for a new licence right away. This regulation covers facilities that handle fuel, so a repair shop without a fuel facility may not be covered. The regulator is TSSA.

Source: ontario.ca/laws/regulation/010217 · checked Nov 2, 2026

Environmental Protection Act (Ontario) — Record of Site ConditionR.S.O. 1990, c. E.19, s. 168.3.1 (1)

Subject to subsection (2), a person shall not, (a) change the use of a property from industrial or commercial use to residential or parkland use; (b) change the use of a property in a manner prescribed by the regulations; or (c) construct a building if the building will be used in connection with a change of use that is prohibited by clause (a) or (b).

In plain wordsTo change land from industrial or commercial use to residential or parkland use, a Record of Site Condition (RSC) must first be filed for the property (apart from the exceptions in subsection (2) of the same section). It is not required for every purchase. It matters most for old factory, repair shop, gas station or dry cleaner sites you plan to change to another use.

Source: ontario.ca/laws/statute/90e19 · checked Nov 2, 2026

Environmental Protection Act (Ontario) — Phase one environmental site assessmentR.S.O. 1990, c. E.19, s. 168.1

“phase one environmental site assessment” means an assessment of property conducted in accordance with the regulations by or under the supervision of a qualified person to determine the likelihood that one or more contaminants have affected any land or water on, in or under the property;

In plain wordsA Phase I environmental assessment is a review by a qualified person, using records and a site visit, of how likely it is that the land or water has been contaminated. It is also where the need for a Phase II study (which tests for contamination) is decided.

Source: ontario.ca/laws/statute/90e19 · checked Nov 2, 2026

Commercial Tenancies Act (Ontario)R.S.O. 1990, c. L.7, s. 2

This Act does not apply to tenancies and tenancy agreements to which the Residential Tenancies Act, 2006 applies.

In plain wordsThe Commercial Tenancies Act (CTA) does not apply to tenancies that the Residential Tenancies Act (RTA) applies to. The RTA covers rental units where people live, so leases of commercial space such as shops, offices and warehouses are usually looked at under the commercial law rather than the RTA. Check mixed buildings with shops below and homes above separately.

Source: ontario.ca/laws/statute/90l07 · checked Nov 2, 2026

Excise Tax Act, Schedule V, Part I — exempt supplies of real propertyExcise Tax Act, Sched. V, Part I, s. 2

A particular supply by way of sale of a residential complex or an interest in a residential complex made by a particular person who is not a builder of the complex or, if the complex is a multiple unit residential complex, an addition to the complex, unless

In plain wordsThe exempt list includes the sale of a residential complex by someone who is not its builder. A sale of a commercial or industrial building or land does not fall under this item, so HST often applies. It depends on whether the seller is an HST registrant and how the buyer reports it, so check with an accountant.

Source: laws-lois.justice.gc.ca/eng/acts/E-15/page-120.html · checked Oct 30, 2026

FAQ

Why is an environmental review especially important for a gas station?

Because fuel leaking from tanks and lines can contaminate the soil and groundwater, and clean-up can be very costly. Before you buy, check the environmental review (Phase I) and the tank inspection records, and ask a professional whether a deeper study (Phase II) is needed.

What do I look at first if I only take over a convenience store business?

First, the lease terms (time left, renewal options, consent to transfer), and then the last 3 years of sales and profit checked against tax returns and bank deposits.

Does the new owner take over the fuel supply agreement?

It differs by agreement. Check in the contract whether it can be taken over and what happens if not, and have a lawyer review it.

Shall we look at the building you are considering?

Tell me about the property or business you are looking at and I will explain how it is valued and what to check first. A formal appraisal is done by a qualified appraiser.

Book a consultation (647) 778-2860

This page was made from official sources checked on Nov 2, 2026. It is not legal, tax or financial advice.

Main sources for this page

O. Reg. 217/01 (Liquid Fuels) · Nov 2, 2026
Environmental Protection Act (Ontario) — Record of Site Condition · Nov 2, 2026
Commercial Tenancies Act (Ontario) · Nov 2, 2026
Excise Tax Act, Schedule V, Part I — exempt supplies of real property · Oct 30, 2026