A field-ready letter of intent built for c-store acquisitions — covering fuel supply contracts, UST liability, lottery license transfers, lease assignment, and SBA financing contingencies that generic templates miss.
A Letter of Intent (LOI) is the critical first document in a convenience store acquisition. It establishes the proposed purchase price, deal structure, due diligence timeline, and key contingencies before both parties invest significant time and money in the transaction. In c-store deals, the LOI must address industry-specific risks that generic business LOI templates ignore entirely — including environmental liability from underground storage tanks, the assignability of fuel supply agreements, lottery and alcohol license transferability, and landlord cooperation on lease assignment. Whether you are an owner-operator using SBA 7(a) financing or a fuel distributor acquiring a retail site to lock in fuel volume, a well-drafted LOI protects your position, signals to the seller that you are a credible buyer, and sets the negotiating framework before attorneys draft the definitive asset purchase agreement. This guide walks through every section of a c-store LOI with example language, negotiation notes, and the most common mistakes buyers make when structuring the initial offer.
Find Convenience Store Businesses to Acquire1. Identification of Parties and Business
Clearly identify the buyer entity (or buyer's designated acquisition entity to be formed), the seller, and the business being acquired — including the trade name, physical address, and whether the transaction includes real estate, fuel equipment, or both.
Example Language
This Letter of Intent is entered into as of [Date] by and between [Buyer Name or Entity] ('Buyer') and [Seller Name or Entity] ('Seller') with respect to the proposed acquisition of the convenience store and fuel retail operation known as [Store Trade Name], located at [Street Address, City, State, ZIP] ('the Business'), including all associated personal property, inventory, fuel equipment, and goodwill as further described herein. If the transaction includes owned real property at the above address, such real property shall be included in the purchase price as set forth in Section 2.
💡 If the buyer intends to use an SBA loan or form a new LLC for the acquisition, specify 'Buyer or Buyer's designated entity to be formed' to preserve flexibility. Sellers often push back on unnamed entities — be prepared to provide a personal guarantee or proof of funds to maintain credibility at the LOI stage.
2. Purchase Price and Deal Structure
State the total proposed purchase price, how it is allocated between business assets and real estate (if applicable), and how the purchase price will be funded — including SBA financing, buyer equity, seller note, and any earnout components tied to fuel volume or inside sales.
Example Language
Buyer proposes to acquire the Business and, if applicable, the real property located at the above address for a total purchase price of $[X,XXX,000], allocated as follows: (a) Business assets including goodwill, inventory, equipment, and assignable contracts: $[X,XXX,000]; (b) Real property (if included): $[X,XXX,000]. The purchase price shall be funded as follows: approximately [10–15%] from Buyer's equity contribution, approximately [75–80%] from SBA 7(a) financing, and approximately [10%] from a Seller note to be subordinated to the SBA lender, payable over [5] years at [6–7%] interest, with repayment commencing [12] months post-closing. Inventory at closing shall be purchased at cost in addition to the purchase price and settled at closing via a physical count.
💡 In c-store deals, fuel equipment (dispensers, UST systems, canopy) can account for $200K–$500K of asset value. Sellers frequently overvalue equipment; buyers should anchor equipment value to a third-party appraisal. If requesting a seller note, expect pushback from sellers who want a clean exit — framing the seller note as a signal of the seller's confidence in the business can help move negotiations forward. Earnouts tied to fuel volume benchmarks are common with distributor-backed buyers but should include a 12-month baseline measurement period.
3. Due Diligence Period and Access
Define the length of the due diligence period, what materials the seller must provide, and buyer's right to access the premises, POS systems, fuel records, and environmental documentation without disrupting store operations.
Example Language
Buyer shall have [45] business days from the date of full execution of this LOI ('Due Diligence Period') to conduct a thorough investigation of the Business, including but not limited to: (a) review of 3 years of federal tax returns and monthly profit and loss statements; (b) audit of POS transaction data and fuel gallonage reports for a minimum of 36 months; (c) review of all fuel supply agreements, brand affiliation contracts, and equipment lease obligations; (d) Phase I Environmental Site Assessment of underground storage tank systems and fuel delivery infrastructure; (e) review of all state and local licenses including lottery commission license, alcohol and tobacco permits, and health department certifications; and (f) inspection of all leased or owned real property. Seller agrees to provide reasonable access to the Business and its records within [5] business days of LOI execution, subject to reasonable confidentiality protections for employees and vendors.
💡 45 days is standard for c-store deals with real estate; 30 days may be acceptable for leased-only locations with clean records. Push hard for actual POS exports and fuel gallonage reports — sellers sometimes offer tax returns alone, which are insufficient to reconcile cash sales. Environmental due diligence is non-negotiable; any seller resisting Phase I access is a serious red flag. Build in a right to extend the due diligence period by 15 days if the Phase I triggers a Phase II Environmental Site Assessment.
4. Environmental Contingency
Establish buyer's right to terminate the LOI or renegotiate the purchase price if environmental due diligence reveals underground storage tank contamination, regulatory violations, or estimated cleanup costs above a defined threshold.
Example Language
This LOI and Buyer's obligation to proceed to closing is expressly contingent upon the results of a Phase I Environmental Site Assessment (and Phase II, if recommended) satisfactory to Buyer in its sole discretion. In the event that the Phase I or Phase II assessment identifies recognized environmental conditions (RECs), confirmed releases, or estimated remediation costs exceeding $[50,000], Buyer shall have the right, at its election, to: (a) terminate this LOI without penalty and receive a full refund of any deposit; (b) renegotiate the purchase price to reflect estimated remediation liability; or (c) require Seller to remediate identified conditions at Seller's expense prior to closing. Seller represents and warrants that all underground storage tanks are currently registered with the applicable state environmental agency and that no known contamination or regulatory orders are pending as of the date of this LOI.
💡 This is the most critical contingency in any c-store acquisition. UST remediation costs can range from $50,000 for minor releases to $500,000+ for severe contamination — and they become the buyer's liability post-closing in an asset purchase if not properly addressed. Sellers with aging single-walled tanks or stores built before 1990 represent elevated risk. Always require seller to provide copies of all prior Phase I reports, leak detection records, and state UST registration documents as part of the initial due diligence package.
5. Fuel Supply Agreement and Brand Affiliation
Address the disposition of existing fuel supply agreements, branded fuel contracts (Shell, BP, Chevron, Marathon, etc.), and any equipment or image program obligations that may restrict buyer's ability to change fuel suppliers post-acquisition.
Example Language
Seller shall provide Buyer with complete copies of all fuel supply agreements, brand licensing agreements, dealer supply contracts, and equipment loan or image program agreements currently in effect at the Business within [5] business days of LOI execution. Buyer's obligation to proceed to closing is contingent upon Buyer's reasonable satisfaction that: (a) existing fuel supply agreements are either assignable to Buyer or terminable without material penalty; (b) any brand affiliation or image program obligations, including equipment loans or brand signage costs, are disclosed in full and their financial impact reflected in the purchase price; and (c) Buyer has the right to negotiate a new or replacement fuel supply agreement on commercially reasonable terms. Seller agrees not to modify, extend, or terminate any fuel supply agreement without Buyer's prior written consent during the Due Diligence Period.
💡 Branded fuel supply agreements with majors like Shell or BP are often non-assignable and expire upon change of ownership — meaning the buyer must negotiate a new supply agreement from scratch. This can significantly affect fuel margin and should be investigated before signing the LOI. Unbranded or open dealer locations offer more flexibility. Equipment loan programs tied to brand affiliation (where the oil company financed dispenser upgrades in exchange for volume commitments) can create hidden liabilities of $50,000–$200,000 that must be resolved at or before closing.
6. Lease Assignment or Real Estate Terms
Address either the assignment of an existing commercial lease to the buyer or, if real estate is included in the transaction, the terms of the real estate purchase. For leased locations, confirm landlord consent requirements and remaining lease term.
Example Language
If the Business operates from leased premises: Buyer's obligation to close is contingent upon Seller obtaining written consent from the landlord to assign the existing lease to Buyer on terms acceptable to Buyer, including a remaining lease term of not less than [5] years (inclusive of any renewal options exercisable by Buyer). Seller agrees to promptly notify the landlord of the proposed transaction and to cooperate with Buyer in securing such consent. Buyer shall have the right to negotiate directly with the landlord regarding lease terms, rent amounts, and renewal options. If the landlord declines to assign the lease or imposes materially adverse conditions, Buyer may terminate this LOI without penalty. If the Business operates from owned real property: the real property shall be conveyed to Buyer at closing by general warranty deed, free and clear of all liens except as disclosed in writing to Buyer during due diligence, and shall be subject to a satisfactory title search and survey at Buyer's expense.
💡 Lease assignment is one of the most common deal killers in c-store transactions. Landlords for high-traffic corner or highway locations frequently use a change of ownership as leverage to renegotiate rent upward or shorten renewal terms. Buyers should request a copy of the full lease — including all amendments — at LOI execution. Locations with fewer than 5 years of remaining term and no renewal options will face SBA lender pushback and should be repriced accordingly. If the seller owns the real estate, bundling it into the deal is strongly preferred and typically adds 0.5x–1x to total enterprise value.
7. Lottery License, Alcohol, and Tobacco Permit Transferability
Confirm the transferability of all state-issued licenses and permits material to the Business's revenue, including lottery commission licenses, alcohol sales licenses (if applicable), and tobacco retailer permits.
Example Language
Seller represents that the Business currently holds the following licenses and permits: [list all applicable licenses]. Buyer's obligation to close is contingent upon Buyer's ability to obtain all licenses and permits necessary to operate the Business in the ordinary course, including but not limited to a state lottery commission retailer license, [alcohol sales permit], and tobacco retailer registration. Seller agrees to cooperate fully with Buyer's applications for such licenses and to continue operating the Business under existing licenses through the closing date. In jurisdictions where lottery licenses are non-transferable, Seller shall assist Buyer in submitting a new license application no later than [30] days prior to the target closing date, and closing may be conditioned upon receipt of a new license or a written commitment from the issuing authority.
💡 Lottery income is often a meaningful revenue stream in c-store operations, particularly in states with scratch ticket programs. Many state lottery commissions require new owner applications rather than simple transfers — a process that can take 30–90 days. Factor this into your closing timeline. Alcohol licenses, where held, are highly jurisdiction-specific; some states require buyers to apply months in advance. Include a closing condition tied to license approval where income from that license exceeds 5% of total store revenue.
8. Exclusivity and No-Shop Period
Establish a period during which the seller agrees not to solicit, negotiate with, or accept offers from other potential buyers while the LOI is in effect.
Example Language
In consideration of Buyer's commitment of time, resources, and professional fees to conduct due diligence, Seller agrees that for a period of [60] days from the date of full execution of this LOI ('Exclusivity Period'), Seller shall not, directly or indirectly, solicit, entertain, or enter into discussions, negotiations, or agreements with any other party regarding the sale, transfer, merger, or other disposition of the Business or the underlying real property. Seller shall promptly notify Buyer of any unsolicited inquiries received during the Exclusivity Period. The Exclusivity Period shall automatically extend by [15] days in the event Buyer exercises its right to conduct a Phase II Environmental Site Assessment.
💡 60 days of exclusivity is standard and should be sufficient for most c-store transactions. Sellers may resist exclusivity longer than 45 days if they have significant buyer interest. Tie the exclusivity period directly to the due diligence period so they run concurrently. If the seller insists on a shorter exclusivity window, negotiate for automatic extension triggers tied to environmental or licensing delays — both of which are common in this industry.
9. Deposit and Good Faith Earnest Money
Specify any good faith deposit required by the seller upon LOI execution, the conditions under which it is refundable, and who holds it during the due diligence period.
Example Language
Upon full execution of this LOI, Buyer shall deposit $[10,000–25,000] ('Deposit') with [Escrow Agent or Seller's Attorney] as evidence of good faith. The Deposit shall be fully refundable to Buyer in the event that: (a) Buyer terminates this LOI during the Due Diligence Period for any reason or no reason; (b) Buyer is unable to obtain satisfactory SBA financing commitment within [45] days of LOI execution; (c) the Phase I or Phase II Environmental Site Assessment reveals conditions that Buyer in its sole discretion determines to be unacceptable; or (d) Seller is unable to deliver lease assignment consent or required license transfers. The Deposit shall be applied toward the purchase price at closing.
💡 Sellers of c-stores priced above $1M commonly request deposits of $15,000–$25,000 to filter out unserious buyers. Keep the refund conditions broad during due diligence — your leverage to walk away should be preserved until you have completed environmental review, POS reconciliation, and confirmed fuel supply terms. Avoid non-refundable deposits at the LOI stage; that structure belongs in the definitive purchase agreement after due diligence is complete.
10. Target Closing Date and Conditions to Closing
Establish a target closing date and enumerate the key conditions that must be satisfied before either party is obligated to close the transaction.
Example Language
The parties shall target a closing date of [90–120] days from the date of full execution of this LOI, subject to the satisfaction of the following conditions: (a) execution of a definitive Asset Purchase Agreement mutually acceptable to both parties; (b) receipt of SBA 7(a) loan commitment and satisfaction of all lender conditions; (c) completion of due diligence satisfactory to Buyer; (d) landlord's written consent to lease assignment or delivery of satisfactory title and survey for owned real property; (e) receipt of all required licenses and permits by Buyer, including lottery commission license and alcohol permit where applicable; (f) Phase I Environmental Site Assessment with no material unresolved conditions; (g) confirmation that all fuel supply agreements are either assignable or terminable without material penalty; and (h) no material adverse change in the Business, including fuel volume, inside sales, or regulatory status, between the date of this LOI and the closing date.
💡 90–120 days is a realistic closing timeline for SBA-financed c-store deals. Environmental assessments, SBA underwriting, and license applications each have their own timelines that often run in parallel. Build in a 30-day extension right triggered by SBA processing delays or Phase II requirements — both are common. The material adverse change clause is particularly important in c-stores where a key supplier relationship, lottery license suspension, or failed health inspection could materially impair business value between signing and closing.
Purchase Price Allocation Between Business Assets and Real Estate
How the total purchase price is split between tangible business assets (equipment, inventory, goodwill) and real property has significant tax implications for both parties and affects SBA loan structuring. Sellers typically prefer more goodwill allocation for capital gains treatment; buyers prefer equipment allocation for depreciation benefits. The allocation also affects how lenders appraise collateral — real estate and UST equipment are appraised separately. Negotiate this split explicitly in the LOI rather than deferring it to the purchase agreement.
Environmental Liability Cap and Remediation Responsibility
Define a dollar threshold above which environmental cleanup costs allow the buyer to terminate or renegotiate. Standard LOIs set this between $25,000 and $75,000 depending on the age and condition of UST systems. Also negotiate whether the seller must remediate pre-closing or whether a price reduction and escrow holdback is acceptable in lieu of full remediation. Ambiguity on this point is one of the most common causes of deal failure in c-store transactions.
Fuel Supply Agreement Assignment or Early Termination Rights
Negotiate whether the existing supply agreement transfers to the buyer at its current terms, terminates at closing, or triggers an early termination fee. If an early termination penalty applies, negotiate whether it is deducted from the purchase price or paid separately by the seller. Buyers should also negotiate the right to engage a new fuel distributor prior to closing so that fuel supply continuity is secured from day one.
Seller Training and Transition Period
Convenience store operations — particularly vendor relationships, lottery reconciliation, fuel ordering, and cash management — often require hands-on knowledge transfer. Negotiate a 2–4 week seller training period included in the purchase price, and an optional consulting agreement at $1,500–$3,000 per week for up to 90 days thereafter. Owner-operators with 10+ years at a single location hold institutional knowledge that significantly reduces buyer risk during the transition period.
Inventory Purchase at Cost vs. Inclusion in Purchase Price
Inventory in a c-store — including tobacco, beverages, snacks, lottery ticket stock, and fuel — is almost always purchased separately at cost via a physical count conducted the night before closing. Negotiate explicitly that inventory is excluded from the stated purchase price and settled at closing based on actual count. Also clarify how fuel in the ground is valued: typically at Seller's most recent rack cost per gallon multiplied by volume in tanks at closing.
Find Convenience Store Businesses to Acquire
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Most sections of a well-drafted LOI are intentionally non-binding — including the proposed purchase price, deal structure, and due diligence findings. However, specific provisions are typically drafted as binding and enforceable: the exclusivity period, confidentiality obligations, and deposit refund terms. In c-store deals, it is especially important to ensure that the environmental contingency and fuel supply agreement contingency are clearly labeled as conditions to closing rather than binding commitments, so the buyer retains the right to walk away without penalty if these items are unsatisfactory.
For most c-store deals, 45 days is the minimum realistic due diligence window — and 60 days is preferable when the transaction includes real estate, a Phase I Environmental Site Assessment, or complex fuel supply agreement review. Environmental assessment alone takes 2–3 weeks for a Phase I and 4–6 weeks for a Phase II if soil sampling is required. Pair that with SBA lender underwriting (which typically requires a business appraisal and real estate appraisal), POS data reconciliation, and license transfer applications, and a 30-day due diligence period is almost never adequate for a thorough c-store acquisition.
Independent convenience stores in the lower middle market typically sell for $500,000 to $3,000,000 depending on whether real estate is included, the strength of fuel volume, inside sales mix, and SDE. The business-only value (excluding real estate) is typically 2.5x–4.5x trailing twelve-month SDE. A store generating $250,000 in annual SDE might sell for $625,000–$1,125,000 for the business alone. If owned real estate is bundled into the transaction, total enterprise value can increase by $300,000 to $700,000 or more depending on location and property condition.
Yes — convenience store acquisitions are SBA 7(a) eligible and represent one of the more common use cases for SBA business acquisition loans. A typical SBA-financed c-store deal involves 10–15% buyer equity, 75–80% SBA 7(a) loan, and 5–10% seller note subordinated to the SBA lender. SBA lenders will require a business appraisal, real estate appraisal (if applicable), Phase I Environmental Site Assessment, and evidence of clean environmental records. Stores with unresolved UST contamination or pending environmental orders are generally not SBA-financeable until those issues are resolved.
If a Phase I or Phase II Environmental Site Assessment reveals contamination from underground storage tanks, the buyer has several options depending on how the LOI is structured. If the LOI includes a well-drafted environmental contingency, the buyer can terminate and receive a full deposit refund, renegotiate the purchase price downward to reflect estimated remediation costs, or require the seller to remediate prior to closing. Remediation costs for minor releases typically run $25,000–$75,000; major contamination events can exceed $500,000. Some states have petroleum cleanup funds that cover a portion of remediation costs for qualifying sites — confirming eligibility for such programs should be part of due diligence.
No — lottery retailer licenses are state-regulated and in most jurisdictions are non-transferable. The incoming buyer must apply for a new lottery commission license in their own name. This process can take 30–90 days depending on the state, and some states conduct background checks or require proof of financial responsibility. Buyers should factor this timeline into their closing schedule and include a closing condition tied to lottery license approval where lottery income is a material revenue stream. Sellers should cooperate by providing a letter of endorsement and historical lottery sales records to support the buyer's application.
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