A fuel supply contract decides your cost, your volume, and your obligations for its whole term, so it is one of the more consequential things a jobber signs. The headline terms are easy to read; the ones that bite tend to sit lower in the document. This is what is inside a supply contract and what to look at twice before you commit.
What it is
A fuel supply contract is an agreement that sets the terms of your purchases over a period: how the price is figured, how much you can or must buy, delivery, and how long the deal runs. It turns one-off buying into a defined relationship with known rules, which is often what you want, as long as the rules suit you.
The terms that matter
- Pricing formula. Usually a benchmark plus a differential, not a fixed price.
- Volume. Minimums or commitments you agree to buy.
- Term. How long the deal runs and how it renews.
- Delivery and allocation. What happens when supply tightens.
- Branding. Any obligations tied to a brand.
- Exit. How either side can end it.
Branded supply is its own animal
A branded supply agreement layers brand obligations on top of the basics, and the terms are longer and heavier. Expect a multi-year commitment, commonly ten years, with image money for signage and site upgrades amortized over that term. Leave early and the unamortized incentive money usually comes due, plus the cost of de-branding the sites. Many branded deals also require ratable lifting (steady volume through the period) and exclusive purchase of branded gallons from that supplier. None of this is bad on its face. It just means the true cost of exit sits well above zero for most of the term.
How the price is set
Because fuel moves daily, the price is almost always a formula, not a single fixed number. A common form is a published benchmark plus a set differential, for example a rack or OPIS price plus a few cents. That keeps the deal fair as the market swings and makes invoices easy to check against the agreed formula.
What to watch before signing
The traps are usually in the fine print: volume minimums you might miss, how allocation works if supply gets short, the real term and renewal language, branding obligations, and how cleanly you can exit. A contract that looks fine in a calm market can pinch during a shortage or if your volume drops, so read those clauses with care.
How FastDragon helps
A supply contract sets the pricing your invoices and margins ride on, so your system has to apply the formula to every load and prove it. FastDragon Fuel Jobber handles contract and benchmark-based pricing through to the invoice, so your books reflect exactly what you agreed to.
Common questions
How long do fuel supply contracts usually run?
Unbranded deals tend to be short, often a year or two, and some buyers stay on spot purchases with no term at all. Branded supply agreements run much longer, commonly ten years, because the supplier ties signage and incentive money to the term. The longer the term, the more the renewal and exit language matters.
What is image money in a branded contract?
Image money is cash or credits a branded supplier puts toward signage, canopies, and site upgrades when you sign. It is typically amortized over the contract term, so if you leave early or get de-branded, you generally owe back the unamortized balance. Treat it as a loan that forgives itself over time rather than a gift.
What does ratability mean in a supply contract?
Ratability is the requirement to lift your volume evenly over the period instead of in bursts. Suppliers plan terminal inventory around steady pulls, so many contracts let them cut your allocation or charge fees if your lifting swings too far from the schedule. It matters most when prices move and everyone wants to time their loads.
What happens if I miss a minimum volume commitment?
Typical remedies include shortfall fees per undelivered gallon, repricing to a worse differential, clawback of incentive money, or termination for default. Some contracts allow makeup periods or force majeure relief, and that language is worth negotiating before you sign rather than testing after a slow year.
Can I buy fuel outside my supply contract?
It depends on exclusivity. Branded agreements usually require all gallons sold under the brand to come from that supplier, while unbranded contracts may only commit a stated volume and leave you free to shop other racks for the rest. Read the exclusivity clause before you chase a cheaper rack price across town.