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December 28, 2011 NJGCA Dear Exxon Retailer, Almost 30 days have passed since Exxon began distributing packages to each of you in compliance with New Jersey’s Right of First Refusal Law. The law is clear that you only have 60 days to either accept or reject Exxon’s offer to purchase your location. I have been extremely clear and at times very animated and even emotional when trying to make this point: IF YOU PURCHASE YOUR PROPERTY THEN IT IS LIKELY THAT YOU WILL BEGIN A NEW ERA IN BUSINESS THAT IN THE LONG RUN WILL BE VERY PROSPEROUS! IF YOU DO NOT PURCHASE YOUR PROPERTY, THEN IT IS LIKELY YOU WILL HAVE DIFFICULTY SURVIVING AND MAY EVENTUALLY TURN IN YOUR KEYS TO YOUR NEW DISTRIBUTOR! I have stated previously that if you do not purchase your property, then the distributor that has bid on your location will become your new landlord, supplier, and franchisor, and will likely drive you out of business. Why? Because that is what they have done elsewhere, and that is what has been done in other states by their brethren of evil distributors. Aaah…but not all distributors are evil! Read on please! Yes, I know I am using some harsh words to describe these evil operators, but I can easily refer you to other dealers from New Jersey and other states, who will gladly tell you of their own experiences and horror stories. Many of these dealers have already turned in their keys, and many face financial ruin. I cannot stress enough how important it is to either purchase your property or at least have someone else purchase it for you and lease it back to you with a favorable and long term lease! Now I want to follow-up with other important reminders and updates. I have been in discussions with Sun National Bank for several months. Many of you have already applied to Sun for your financing. Last week I received word that Sun will consider more applications, so I have included their contact info below with the names of other finance prospects for you to explore. It is late in the game, but not too late. Get Moving! I am also adding Provident Bank for those of you with multiple locations. Provident Bank is interested in package deals for multi location sites only. Many of you have called and indicated that you are purchasing your property…CONGRATULATIONS!.....That is GREAT! Many have also been asking about certain distributors and the so called deals that are being offered. My advice is very simple and very clear and I will repeat it; THERE ARE 3 DISTRIBUTORS THAT I HAVE INTRODUCED TO YOU. YOU SHOULD INTERVIEW EACH ONE AND SIGN A CONTRACT WITH ONE OF THEM! I have included their contact info below again. You may notice that I have reduced the list from 4 down to 3. That’s because Exxon has not approved a distributor that I previously recommended that I trust to treat you fairly and honorably. Why should you sign a contract with one of the 3 distributors that I have recommended, and not with one of the others? There are a few reasons. First let me assure you that I have no personal interest or anything to gain if you sign with one of the 3 distributors that I continue to recommend. Many of you have asked me if I am profiting by making my recommendations, and I am not insulted at all. Since I am in a position of trust you have every right to ask that question. Considering how many times people take advantage of others when they hold positions of trust, it is understandable that the thought may arise in your heads. However, let me be clear; my only interest in persuading you to sign a contract with one of the 3 distributors that I so strongly recommend is simply because I know from experience that they will always be fair with you. My experience also tells me that other distributors paint a rosy picture, look at you with a trusting face, and then promise with their hand on a stack of bibles that they will never hurt you, but they will slit your throat in a heartbeat. Bottom line is that I DO NOT trust them. Period! But I trust wholeheartedly the 3 distributors that are on the list below! There is something that is very important that MUST be in the contract that you sign with a distributor. I will explain. Exxon is requiring that you show proof that you have signed at least a 3 year contract with an approved distributor to supply you with Exxon branded product. You are required in the ROFR package to sell Exxon branded product for 15 years or else pay a penalty based on your volume. However, Exxon has a hard and steadfast policy that they will not allow you to change distributors without their approval. Their approval will not be given unless the distributor that you are leaving agrees to have the Exxon Trademark transferred to the new distributor that you wish to sign with. It is imperative that who ever you sign a supply contract with include in their contract a clause that clearly states; at the expiration of the contract term, that transfer of the Exxon Trademark to another Exxon Approved distributor WILL NOT BE WITHELD. Any distributor that will not include language to state their express agreement to permit the transfer of the Exxon Trademark should NOT get your business. Before you sign a contract, make sure that your attorney approves the clause that I am advising you to have included. Please feel free to have your attorney call me or send me the contract, and I will let you know if it is acceptable. The 3 distributors I have recommended to you have all agreed that they will not withhold their approval of the transfer of the Exxon Trademark. Please don’t get sucked in by attractive deals that guarantee you certain pricing. Pricing should always be based on Exxon Rack Pricing at a designated terminal. Why? It is a notorious trick that distributors use to lure you in to signing with them by offering pricing at rack or below rack. Distributors sometimes use the terms Distributor Rack, or Acquisition Cost as a reference point for your price. Distributors can arbitrarily set their own so called “Rack Price” and then add the margin that you agreed to, or they can swap product from another “shell” company to themselves at a higher price making their “acquisition cost” higher than the rack would have been. These are all tricks that distributors have used in the past and you should be aware of them. Distributors have to make money too. And they should. And they are entitled to do so. Keep in mind what happens to your business when you can’t get enough margins at the pump. Something suffers somewhere else. I don’t want you to get sucked in by a low price only to find out later that the distributor that you signed with is screwing you somewhere else because they are deep in financial trouble. Distributors make most of their money from the discount that they receive from the refiner at the rack. Most common is a discount of 1-1.5% for paying their invoice in 10 days. That means that at today’s prices distributors get to keep an additional 2.5 – 4 cents on top of the margin they agreed to with you. That’s OK. Like I said they are entitled to earn a profit just as you are entitled to earn a profit. I just want you to be aware how the pricing game works in the real world. Some dealers may tell you that they are receiving pricing that is at “rack” or some dealers may be getting a sweetheart deal at “minus rack” It is important to specify what happens to your price if the refiners discontinue discounts at the rack. What happens if the refiner discontinues discounts and you have a contract with a distributor that states you will receive pricing at rack and no markup? Does that mean that the distributor has to sell you gas at zero profit margins? The distributor is likely to have some kind of an out in the contract to protect them in such a circumstance. You should be aware of this. I hope I stressed the importance of making the right deal with the right supplier of Exxon products. With few exceptions they will ALL tell you nice things, and they will ALL make you think that they will never hurt you or go back on their word, and they will ALL cut your throat and make you bleed someday. Unless a supplier has a PROVEN TRACK RECORD of being a dealer friendly and supportive operation you should not make a deal with them. You will regret making a deal with one the others that are lurking in the petroleum supply business, even though they may present themselves with smiling and friendly faces. Their assurances are not to be believed! I have presented you with 3 Exxon distributors that have the PROVEN TRACK RECORD that I mentioned. Just like I can provide you with dealers that will tell you their horror stories about other distributors on Exxon’s approved list, I can also provide you with dealers who will tell you about their positive stories with the 3 distributors that I am recommending to you. There are mountains of horror stories from dealers that have had the misfortune of dealing with some of the other distributors on the list given to you by Exxon. Some of these distributors have ruined lives and destroyed families….and they did it with a friendly smile and a reassuring promise not to do so! Also, don’t wait until the last minute to secure your tank insurance. I have provided you with the most reliable and economic source in the industry that has served NJGCA members very well. Of course, once the time comes, all of the Underground Storage Tanks and Vapor Recover registration and permits will have to be transferred in to your name. Feel free to contact me and someone from NJGCA will assist you to make the transfer easier. Please email and give me an update. Let me know if you are able or unable to purchase your property. I would like to help and steer you in to some options. Once again, all of us here at NJGCA are excited for you and we are rooting for your success, and we will do whatever we have to do in order to assist you. Good Luck! Sincerely, Sal Risalvato
Exxon Distributors Consumers Oil Ross Enterprises T & R Oil Co. Traditional Finance-Banking-Mortgage-Lender Affinity Federal Credit Union TD Bank Sun National Bank Provident Bank Core Commercial Capital Baker Martin Capital NON Traditional Finance Professionals The Cogent Group Petro Properties & Finance, LLC Legal Council Giordana, Halleran, & Ciesla, P.C. Alan Ashkinaze, Esq Richard Szemiot, Esq. Tank Insurance Dana Insurance and Risk Management Environmental Concerns (Ground) Environmental Alliance Prestige Environmental Inc Service Station Compliance Testing ATS Environmental Services
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