How to Franchise: Shell Gas Station in the Philippines

Fuel is undeniably one of the essential commodities of our times. With the increase in car ownership and consequently increase in demand for oil, it’s a great opportunity to grab the chance to be part of the oil business in the country.

One of the trusted names in the Philippine oil industry is Shell. Know more if franchising and operating this gas station is the suitable business path for you.

Franchise Highlights: Pilipinas Shell

Looking for other profitable franchises in the Philippines? Check out PinoyMoneyTalk’s list of 100 Best Franchises in the Philippines under Php 1 Million

About Pilipinas Shell

Shell Philippines started in 1914 as a distributor of kerosene in the country. Over time, the company has grown and expanded its product lines to include a wide range of fuels, lubricants, bitumen and other specialty oil-based products.

In the 1960s, Shell built its first crude refinery in Batangas making the company an established manufacturer and refiner of petroleum products in the Philippines. It was 1986 when Pilipinas Shell acquired the majority of the Philippine Petroleum Company, the country’s only lube refinery then.

At present, Shell Philippines is involved in oil and gas exploration, production, oil refinery, distribution, and sales to retail and institutional consumers.

Pilipinas Shell Gas Station Dealership

Pilipinas Shell’s franchises, also called dealerships, may either be: (1) company-owned or (2) dealer-owned. Whether you’ll choose to operate a company-owned or dealer-owned gas station, the Shell dealership includes the following benefits:

• Use of Shell brand and other trademarks
• Location and market study
• Layout and fitting out of service station
• Building and equipment
• Operating standards
• Training for retailer and staff
• Procurement programs
• Pre-opening assistance
• Grand opening assistance
• Marketing strategies
• Research and development
• Business counseling

What’s the difference between Company-owned and Dealer-owned?

Company-owned Shell dealership

This type of dealership, specifically called Company Owned Dealer Operated or CODO, is built and equipped by Shell. If you are to franchise this type of gas station, your role will be to operate, keep fuels well stocked, and grow the dealership with the support and programs offered by Shell.

Dealer-owned Shell dealership

An alternative to CODO is Dealer Owned Dealer Operated or DODO type of Shell gas station. The station is built, equipped, and operated by the Dealer. Shell prefers these types of dealers to already own a commercial lot, with size of at least 600-1000 sqm and with 30-50 sqm frontage, which will be the location of the station.

The primary role of Shell in a DODO dealership is to provide the supply of products to be sold in the station and to enhance branding. Just like in CODO, Shell will help the dealer grow the business through Shell-initiated marketing support programs.

Return on Investment (ROI) on Shell dealership

According to Shell, the expected Return on Investment (ROI) for each dealership is around 20-30%. The average payback period for a gas station is around 2-3 years.

If approved, the dealer franchisee will sign a 3-year Retailer Agreement with Pilipinas Shell. Renewal of said dealership contract will be dependent on the business performance of the gas station.

Shell Gas Station Franchise Fee

How much is the Shell franchise fee to operate a gas station? This is where it gets interesting. What’s unique with Shell is that it actually doesn’t charge a franchise fee. You heard it right, there is no franchise fee.

But of course, there are still fees that you need to pay in order to be allowed to acquire and operate your own Shell dealership. These fees include:

1. Processing fee
2. Royalty fee
3. Retailer fee

The initial investment required will depend on whether you will franchise a CODO or DODO type of station.

As of 2020, the required franchise investment to begin operating a Company Owned Dealer Operated (CODO) Shell gas station is around PHP 5-6 Million per station.

Meanwhile, the initial franchise investment required to operate a Dealer Owned Dealer Operated (DODO) Shell station is around PHP 10-12 Million.

This initial investment will cover:

• fuels inventory (2-3 day stock cover)
• lubricants inventory (1 month stock cover)
• merchandise in the Shell Shop/Select
• lube/wash-bay equipment
• initial operating expense (salaries, utilities, uniforms, business permit, and others)
• power generator

Take note that the Shell Select convenience store and Shell auto-repair automotive shop will have to be applied separately from the gas station franchise.

How to Franchise a Shell Gas Station

Interested to be a franchisee / dealer / retailer of a Shell gas station? Download the application form from Pilipinas Shell website and email it to newbusiness-ph@shell.com together with your Full Name, Email Address, Contact numbers, and Proposed location of the gas station.

The application form requires you to divulge personal details about yourself and/or the company applying for dealership. This includes details of previous employment, character references, and financial information (that is, your net worth and assets) of the applicant.

Application Essay Questions

Also prepare good answers to the the following short essay questions required in the application form that will be used by Shell to assess your application.

For Company Owned Dealer Operated (CODO) gas station franchise, be ready with your answers to the following application form questions:

1. Please give an example of a time when you had to be patient and polite with an individual or group of people (e.g., customer, workmate, friend) under difficult circumstances.

2. Please provide an example of when you have made an extra special effort to help somebody.

3. Why have you chosen to apply to become a Retailer with Shell, and why do you think you would be suitable for this type of role?

4. Please give an example of when and how you have managed to persuade someone to do something.

5. What are your earning aspirations per annum (that is, gross earnings after costs and before income tax) over the next three years?

6. Please explain how you would fund a minimum investment of PHP 5 Million to about PHP 8 Million.

For Dealer Owned Dealer Operated (DODO) franchises, be ready with your answers to the following application form questions:

1. Please give a narrative of yourself (include family background & educational background).

2. Why have you chosen to apply to become an investor of Shell, and why do you think you would be suitable for this type of role?

3. What are your earning aspirations per annum (that is, gross earnings after costs and before income tax) over the next five years?

4. Please provide financing sources to fund the investment requirement of PHP 12 Million to PHP 20 Million to fund a cluster of 1-2 sites.

Ready to proceed? Before you start the application process, make sure you understand the eligibility requirements and other required dealership details before you contact Shell to franchise a gas station.

Dealership Eligibility and Requirements

The Shell dealership in the Philippines may be awarded to a person or an individual note more than 55 years old. The legal entity could be a Sole Proprietorship named after the dealership applicant or, if a corporation, the nominated principal should be owning at least 50.1% of the company.

Also, make sure you pass the “pre-screening checklist” that Pilipinas Shell will check when evaluating dealership applicants. These application criteria include:

• Must not be more than 55 years of age;
• Filipino national with an established residence in the Philippines;
• May have a family Business or own business/ or has experience in Managing a Business/managing several staff;
• Not an ex-employee or ex-retailer from the oil industry for at least 2 years;
• Legal entity should be a Sole Proprietor; if corporation, managing partner (nominated principal) should own at least 50.1% of shares;
• Passionate about customers and engaged to manage a Retail business;
• Ability to motivate his or her people towards agreed business targets;
• Willingness to devote time to oversee day-to-day operations of the business

Shell Franchising Contact Details

If you have additional questions or clarifications, contact them directly using the details below:

Email Address:

newbusiness-ph@shell.com

Telephone Numbers:

Shell Customer Service Centre:
Telephone Number (Metro Manila): +63-2-8878-8888
PLDT toll-free number (Outside Metro Manila): 1-800-10000-3333

Interested in other franchises in the Philippines? Check out PinoyMoneyTalk’s list of 100 Best Franchises in the Philippines under P1 Million

Sources: Official company website (shell.com.ph)