UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

       |X|Annual report pursuant to Section 13 or 15(d) of the
          Securities Exchange Act of 1934
          For the fiscal year ended December 29, 1996, or

       |_|Transition report pursuant to Section 13 or 15(d) of 
          the Securities Exchange Act of 1934
          For the transition period from _______________ to _______________

                           Commission File No. 1-9510

                               FFP PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)

                Delaware                               75-2147570
    (State or other jurisdiction of                 (I.R.S. employer
     incorporation or organization)              identification number)

                2801 Glenda Avenue; Fort Worth, Texas 76117-4391
           (Address of principal executive office, including zip code)

                                  817/838-4700
              (Registrant's telephone number, including area code)


           Securities registered pursuant to Section 12(b) of the Act
          Title of Each Class         Name of Each Exchange on Which Registered
       Units Representing Class A              American Stock Exchange
     Limited Partnership Interests
          Unit Purchase Rights                 American Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act

                                      None

        Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

        Indicate by check mark if disclosure of  delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

        The aggregate  market value of Class A Units held by  non-affiliates  of
the  registrant  at  March  28,  1997,  was  $9,457,000.  For  purposes  of this
computation,  all officers,  directors,  and beneficial owners of 10% or more of
the  Class  A  Units  of  the  registrant  are  deemed  to be  affiliates.  Such
determination  should not be deemed an admission that such officers,  directors,
and beneficial owners are affiliates.



                             Class A Units 3,529,205
                              Class B Units 175,000
               (Number of units outstanding as of March 28, 1997)


                                


                                      INDEX

                                                                         Page
Part   I
    Item 1.    Business                                                     1
    Item 2.    Properties                                                  11
    Item 3.    Legal Proceedings                                           11
    Item 4.    Submission of Matters to a Vote of Security Holders         11

Part   II
    Item 5.    Market for the Registrant's Units and Related Security
                  Holder Matters                                           12
    Item 6.    Selected Financial and Operating Data                       14
    Item 7.    Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                15
    Item 8.    Financial Statements and Supplementary Data                 22
    Item 9.    Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure                                 23

Part   III
    Item 10.   Directors and Executive Officers of the Registrant          24
    Item 11.   Executive Compensation                                      27
    Item 12.   Security Ownership of Certain Beneficial Owners and
                  Management                                               30
    Item 13.   Certain Relationships and Related Transactions              32

Part   IV
    Item 14.   Exhibits, Financial Statements, Schedules and Reports on
                  Form  8-K                                                35

Signatures                                                                 37

                                        
                                     PART I

Item 1.  BUSINESS.

General Background

     FFP Partners, L.P. ("FFPLP," the "Partnership," or the "Company"),  through
its  subsidiaries,  owns and  operates  convenience  stores,  truck  stops,  and
self-service  motor fuel outlets over an eleven state area.  It also  operates a
money order  company,  selling  money orders  through its own outlets as well as
through agents;  and sells motor fuel on a wholesale basis,  primarily in Texas.
FFPLP, a Delaware limited partnership,  was formed in December 1986, pursuant to
the Agreement of Limited  Partnership  of FFP Partners,  L.P. (the  "Partnership
Agreement").  FFP Partners  Management  Company,  Inc.  ("FFPMC" or the "General
Partner")  serves  as  the  general  partner  of  the  Partnership.  FFPMC  or a
subsidiary  also serves as the general partner of the  Partnership's  subsidiary
partnerships.   References  herein  to  the  "Company"  include  FFPLP  and  its
subsidiaries.

     The  Company  commenced  operations  in May 1987 upon the  purchase  of its
initial  base of retail  outlets from  affiliates  of the General  Partner.  The
purchase of these  outlets  was  completed  in  conjunction  with the  Company's
initial  public  offering  of  2,065,000  Class A Units of  limited  partnership
interest,  representing a 56% interest in the Company.  In connection  with this
transaction,   1,585,000  Class  B  Units  of  limited   partnership   interest,
representing  a 43% interest in the Company,  were issued to  affiliates  of the
General Partner and the General Partner received its 1% interest in the Company.
(As permitted in the Partnership Agreement,  certain of these Class B Units were
converted  to Class A Units in  January  1996.)  The  senior  executives  of the
Company had owned and managed these operations prior to their acquisition by the
Company.  Although the companies  from which the Company  acquired  these retail
outlets engage in other businesses which they conducted in the past, they agreed
not to engage in the convenience  store,  retail motor fuel, or other businesses
which  compete  with the  Company  without  prior  approval by a majority of the
General Partner's disinterested directors. The affiliates of the General Partner
that received Class B Units upon the  Partnership's  commencement  of operations
were: Economy Oil Company;  Gas-Go,  Inc.;  Gas-N-Sav,  Inc.; Hi-Lo Corporation;
Hi-Lo  Distributors,  Inc.;  Nu-Way  Distributing  Company;  Nu-Way Oil Company;
Swifty Distributors,  Inc.;  Thrift-Way,  Inc.; Thrift  Distributors,  Inc.; and
Thrift Wholesale Company.

     The  Company  maintains  its  principal  executive  offices at 2801  Glenda
Avenue, Fort Worth, Texas 76117-4391; its telephone number is 817/838-4700.

Operations

     Description of Operations.  The Company conducts its operations principally
through its 99%-owned  subsidiary,  FFP Operating Partners,  L.P.  ("FFPOP"),  a
Delaware limited  partnership.  FFPMC holds a 1% general  partner's  interest in
FFPOP. The Company has other direct or indirect subsidiaries: Direct Fuels, L.P;
FFP Financial  Services,  L.P.;  FFP Money Order Company,  Inc.;  Practical Tank
Management,  Inc.; and FFP  Transportation,  L.L.C.  These companies are engaged
businesses that are complimentary to the activities of FFPOP.

     Convenience  Stores. At year end 1996, the Company operated 117 convenience
stores,  a decrease of ten stores from the previous  year end.  This decrease is
due to the sale of the  merchandise  operations  of 18  outlets  to  independent
operators  during  1996 offset by the opening or  conversion  from  self-service
gasoline outlets of eight stores.  {See Store Development.} The Company's stores
are open seven days a week,  offer extended hours (eleven of the stores are open
24 hours a day, the remainder generally are open from 6:00 am to midnight),  and
emphasize convenience to the customer through location,  merchandise  selection,
and service. The convenience stores sell groceries,  tobacco products,  take-out
foods and beverages  (including  alcoholic  beverages  where local laws permit),
dairy  products,  and  non-food  merchandise  such as health and beauty aids and
magazines and, at all except two of the stores,  motor fuel. Food service in the
convenience  stores varies from  pre-packaged  sandwiches and fountain drinks to
full  food-service  delicatessens  (at 41 stores),  some with  limited  in-store
seating.  During  late  1993,  the  Company  began  installing  small  "express"
franchises of Kentucky  Fried  Chicken(R) and Subway  Sandwiches(R)  in selected
convenience  stores  and at the end of 1995 five of its  convenience  stores had
these or other branded food outlets in them. {See Store  Development;  Products,
Store Design and  Operation.}  The  convenience  stores  operate  under  several
different trade names, all of which were used by the predecessor companies.  The
principal trade names are "Kwik Pantry," "Nu-Way," and "Economy Drive-Ins."

     For fiscal year 1996,  the  convenience  stores  accounted  for 35% (39% in
1995) of the Company's consolidated revenues.  They had average weekly per store
merchandise  sales of $9,454 and motor fuel sales of 11,901  gallons.  In fiscal
1995,  average  weekly sales were $9,560 of  merchandise  and 12,093  gallons of
fuel.

     Truck Stops.  At December 29, 1996,  the Company  operated ten truck stops,
the same number as at the previous year end. The truck stops,  which principally
operate under the trade name of "Drivers,"  are located on interstate  and other
highways and are similar in their operations to the convenience stores, although
the merchandise mix is directed towards truck drivers and the traveling  public.
Five of the truck stops have full service restaurants;  the Company operates two
of the  restaurants  and leases the other three to  independent  operators.  The
other five outlets offer  prepared-to-order food service,  including two outlets
which have a combination  Kentucky Fried  Chicken/Taco Bell "express"  franchise
and one which has a Pizza Hut  franchise  within the store.  In 1996,  the truck
stops  (including  their  associated  restaurants  and food service  facilities)
accounted for 13% (13% in 1995) of the  Company's  consolidated  revenues,  with
average weekly per outlet  merchandise  and food sales  (including  food service
sales) of $17,192  ($17,506  in 1995) and fuel sales of 66,973  gallons  (68,274
gallons in 1995).

     Self-Service  Gasoline  Outlets.  The  Company  operated  206  self-service
gasoline  outlets at December 29,  1996, a net increase of 12 outlets  since the
prior  year  end.  This  increase  resulted  principally  from  the  sale of the
merchandise  operations  of  certain  convenience  stores,  referred  to  above.
Although these  convenience store operations were sold, the Company retained the
motor fuel concession at these locations. In addition, the Company acquired some
outlets  through the  execution of new  contracts  with  independent  operators,
re-opened  previously  closed  locations,   and  closed  or  disposed  of  other
locations. The Company's self-service gasoline outlets consist of fuel pumps and
related storage equipment located at independently  operated convenience stores.
These outlets are operated  pursuant to contracts  that  generally  obligate the
Company to provide motor fuel inventory,  fuel storage and dispensing equipment,
and  maintenance  of the fuel  equipment  while  the  store  operator  agrees to
collection  and  remittance  procedures.  The  convenience  store  operators are
compensated by  commissions  based on profits and/or the volume of fuel sold. In
addition,  the contracts  generally grant the Company the right of first refusal
to purchase the operator's convenience store should it be offered for sale. Many
of the contracts have renewal options and, based on past experience, the General
Partner believes that a significant  number of those contracts which do not have
renewal options will be renegotiated and renewed upon expiration. In addition to
the contractual  arrangement between the store operator and the Company,  115 of
these  operators  also lease or sublease  the store  building  and land from the
Company or affiliates of the General Partner.

     During fiscal 1996, the  self-service  gasoline  outlets had average weekly
per outlet fuel sales of 8,584  gallons as  compared to 7,794  gallons in fiscal
1995. In 1996, the Company's  self-service  gasoline  outlets  accounted for 26%
(23% in 1995) of the Company's consolidated revenues.

     Wholesale Fuel Sales.  The Company has sold motor fuel on a wholesale basis
to smaller  independent and regional chains of fuel retailers since it commenced
operations.  The wholesale fuel operation was expanded in later years to include
sales to commercial  end-users of motor fuels, such as local governmental units,
operators  of vehicle  fleets,  and public  utilities.  In 1996,  the  Company's
wholesale  operations  contributed 24% of  consolidated  revenues (24% in 1995).
During 1996,  the Company did not have  facilities for the bulk storage of motor
fuel. Accordingly, purchases were made to fill specific customer orders.

     In March 1996, the Company  completed the purchase of a non-operating  fuel
processing  facility and bulk storage  terminal  located in Euless,  Texas.  The
facility has been  undergoing  renovation  and the Company  anticipates  it will
begin  operating in April 1997.  This facility  gives the Company the ability to
provide  terminalling   services  (storage  and  delivery  services)  for  other
wholesalers of motor fuel and to separate commingled refined products into their
component  parts for sale to  retailers  and end users.  The  facility has total
storage for 235,000 barrels  (9,879,000  gallons) of motor fuel and the capacity
to process  approximately 1,500 barrels per day of commingled product. The motor
fuel obtained by separating  commingled  products will be used by the Company to
satisfy a portion of the fuel supply needs for it its own retail outlets and its
wholesale customers.

     The  Company  has been  designated  a "jobber"  for Citgo,  Chevron,  Fina,
Conoco,  Texaco,  Coastal,  Diamond  Shamrock,  Sinclair,  and Phillips 66. This
designation  enables  the Company to work with  independent  fuel  retailers  to
qualify the retailers to operate as a branded  outlet for the large oil company.
The Company then  supplies  motor fuel to such  retailers  on a wholesale  basis
under contracts ranging from five to ten years.

     Management  believes the Company's  fuel wholesale  activities  enhance its
relationships  with its fuel vendors by increasing  the volume of purchases from
such  vendors.  In  addition,  the  wholesale  activities  permit the Company to
develop relationships with smaller fuel retailers that may, at some future time,
be interested in entering into a  self-service  gasoline  marketing  arrangement
with the Company. {See Self-Service Gasoline Outlets.}

     Market Strategy. The Company's market strategy emphasizes the operation and
development of existing  stores and retail outlets in small  communities  rather
than  metropolitan   markets.  In  general,   the  Company  believes  stores  in
communities  with  populations  of 50,000 or less  experience  a more  favorable
operating environment, primarily due to less competition from larger national or
regional  chains and access to a higher quality and more stable labor force.  In
addition,  costs of land,  reflected  in both new  store  development  costs and
acquisition  prices for existing stores and retail outlets,  are generally lower
in small  communities.  As a result of these factors,  the Company believes this
market strategy enables it to achieve a higher average return on investment than
would be achieved by operating primarily in metropolitan markets.

     Store Development. In early 1994 in its continuing endeavor to increase the
productivity  and operating  efficiency of its existing  store base, the Company
identified outlets that it believed would contribute more to the earnings of the
Company if operated by  independent  operators  rather than by the Company.  The
Company undertook a program to sell the merchandise  operations of these outlets
to  independent  operators.  In  1996,  1995,  and  1994  the  Company  sold the
merchandise operations at 18, 10, and 15 of these outlets, respectively. Because
of their different overhead structure,  independent  operators are often able to
operate  the stores  less  expensively  than can the  Company.  These sales were
structured such that the Company retained the real estate or leasehold  interest
and leased or  subleased  the land and  building to the operator for a five year
period  with a five  year  renewal  option.  The  Company  also  entered  into a
self-service  gasoline  agreement  covering  the fuel sales at these  locations.
Management believes that the sales of these stores and the resulting combination
of rents,  fuel profits,  and other income  enhance the  profitability  of these
outlets to the Company.  The Company is continuing to negotiate the sales of the
merchandise operation of additional stores.

     In  addition  to  the  sales  of  the  merchandise  operations  at  certain
convenience  stores,  discussed  above,  management  is  seeking  other  ways to
increase the productivity of the Company's present base of convenience store and
truck  stop  outlets.  A part  of  this  effort  involves  the  installation  of
limited-menu  "express"  outlets of national food franchises in Company outlets.
In 1994 and 1995, the Company  commenced  operating  combination  Kentucky Fried
Chicken/Taco  Bell outlets in two truck  stops,  a Pizza Hut outlet in one truck
stop,  Kentucky Fried Chicken  outlets in two convenience  stores,  and a Subway
Sandwich franchise in one convenience store. The Company's  experience with this
type of food service  operation  indicates that it increases store traffic as it
offers the advantage of national  name-brand  recognition  and  advertising.  In
addition,  the training and operational  programs of these franchisors provide a
consistent and high-quality  product to the Company's  customers.  Management is
evaluating  the existing  operations to determine if it would be  appropriate to
install  additional  outlets  of  this  type  in  other  locations.  It is  also
evaluating the relative merits of the various types of franchises.

     Opportunities  to expand  self-service  gasoline  outlets  are  limited  by
competitive factors,  including the existence of established  facilities at most
independent  convenience  stores.  However,  the Company continues to pursue the
acquisition  of this type of  outlet  principally  through  the  development  of
relationships through its fuel wholesaling operations.

     Products,  Store Design and  Operation.  The number and type of merchandise
items stocked in the convenience stores vary from one store to another depending
upon the size and location of the store and the type of products  desired by the
customer base served by the store.  However, the stores generally carry national
or regional brand name merchandise of the type customarily  carried by competing
convenience  stores.  Substantially  all the convenience  stores and truck stops
offer fast foods such as hot dogs,  pre-packaged sandwiches and other foods, and
fountain drinks.  Forty-one of the convenience  stores have facilities for daily
preparation of fresh food catering to local tastes,  including fried chicken and
catfish, tacos, french fries, and made-to-order  sandwiches.  Also, as discussed
above five convenience stores and three truck stops have small "express" outlets
of national fast-food franchises or other branded food service.

     Although the stores vary in layout and design,  schematic diagrams for each
store are used to direct  the store  manager in the  placement  of  products  to
maximize exposure of high turnover and high margin items to the flow of customer
traffic.

     The Company utilizes a team approach to its marketing  function rather than
having a specific person who is responsible for that activity. Senior operations
executives  and other  management  personnel  continually  review  and  evaluate
products and services for possible  inclusion in the Company's  retail  outlets.
Special  emphasis is given to those goods or services  that carry a higher gross
profit margin than the Company's overall average, will increase customer traffic
within the stores, or complement other items already carried by the stores.  The
marketing teams,  which include the Regional  Managers,  in conjunction with the
Company's vendors,  develop and implement promotional programs and incentives on
selected items,  such as fountain  drinks and fast food items. In addition,  new
products and services are reviewed on a periodic  basis to ensure a  competitive
product  selection.  Due to the geographic  distribution of the Company's stores
and the  variety  of trade  names  under  which  they are  operated,  the use of
advertising is limited to location signage, point-of-sale promotional materials,
advertisements in local newspapers, and locally distributed flyers.

     Over the last several  years,  the Company has  increased the number of its
"branded" outlets, those which are affiliated with a large oil company. In March
1997,  the Company had 221 (209 in 1996) retail  outlets which were branded,  as
compared to 65 such  outlets in 1990.  The Company has outlets  that are branded
Citgo, Chevron,  Fina, Conoco,  Diamond Shamrock,  Texaco, and Coastal.  Branded
locations generally have higher fuel sales volumes (in gallons) than non-branded
outlets due to the  advertising  and  promotional  activities of the  respective
major oil company and the  acceptance of such oil company's  proprietary  credit
cards. The increased customer traffic associated with higher fuel sales tends to
increase  merchandise sales volumes,  as well. The Company continues to evaluate
the  desirability  of branding  additional  outlets.  In addition to the Company
operated convenience stores, truck stops, and self-service fuel outlets that are
branded,  the  Company  also serves as a  wholesale  distributor  to 162 branded
retail outlets.

     Merchandise  Supply.  Based on competitive bids, the Company has selected a
single  company  as  the  primary  grocery  and  merchandise   supplier  to  its
convenience  stores and truck stops.  However,  some merchandise  items, such as
bakery goods, dairy products,  soft drinks, beer, and other perishable products,
are generally  purchased from local vendors and/or wholesale route  salespeople.
The  Company  believes  it  could  replace  any  of its  merchandise  suppliers,
including its primary merchandise  supplier,  with no significant adverse effect
on its operations.

     Motor Fuel  Supply.  The  Company  purchases  fuel for its  branded  retail
outlets and branded  wholesale  customers  from the respective oil company which
branded  the outlet and for its  unbranded  outlets  from large  integrated  oil
companies and independent  refineries.  In order to maintain  flexibility in the
purchase of motor fuel, the Company does not have  long-term  contracts with any
suppliers of petroleum products covering more than 10% of its motor fuel supply.

     During recent years,  the Company has not experienced  any  difficulties in
obtaining   sufficient   quantities  of  motor  fuel  to  satisfy  retail  sales
requirements.  However,  unanticipated  national or  international  events could
result in a curtailment of motor fuel supplies to the Company, thereby adversely
affecting  motor fuel sales.  In  addition,  management  believes a  significant
portion of its merchandise  sales are to customers who also purchase motor fuel.
Accordingly,  reduced  availability of motor fuel could negatively  impact other
facets of the Company's operations, as well.

Competition

     The  convenience  store industry is highly  competitive.  Most  convenience
stores and an increasing  number of traditional  grocery stores in the Company's
market areas sell motor fuel; in addition,  merchandise  similar or identical to
that sold by the Company's  stores is generally  available to  competitors.  The
Company  competes with local and national chains of  supermarkets,  drug stores,
fast-food  operations,   and  motor  fuel  retailers.   It  also  competes  with
independently  operated  convenience  stores and national  chains of convenience
stores such as "7-Eleven"  and "Circle K." Major oil companies are also becoming
a significant  factor in the convenience  store industry as they convert outlets
that previously sold only motor fuel to convenience stores;  however,  major oil
company stores generally carry a more limited selection of merchandise than that
carried by the Company's outlets and operate  principally in metropolitan areas,
where the Company has few outlets.  Some of the Company's competitors have large
sales volumes,  benefit from national or regional advertising,  and have greater
financial resources than the Company.

     The  Company  believes  each of its  retail  outlets  competes  with  other
retailers in its immediately  surrounding area, generally within a radius of one
to two  miles.  Management  believes  the  Company's  outlets  compete  based on
location,  accessibility, the variety of products and services offered, extended
hours of operation, price, and prompt check-out service.

     The Company's wholesale fuel operation is also very competitive. Management
believes  this  business  is highly  price  sensitive,  although  the ability to
compete is also dependent upon providing  quality products and reliable delivery
schedules.  The Company's  wholesale fuel operation  competes for customers with
large  integrated  oil companies  and smaller,  independent  refiners,  and fuel
jobbers,  some of which  have  greater  financial  resources  than the  Company.
Management  believes it can compete  effectively in this business because of the
Company's purchasing  economies,  numerous supply sources, and the reluctance of
many larger suppliers to sell to smaller customers.

Employees

     At March 16, 1997, the Company employed 1,138 people  (including  part-time
employees). In addition to employees of the Company, the General Partner employs
five  executive  officers  who perform  services  for the  Company;  the Company
reimburses  the  General  Partner  for the  direct and  indirect  costs of these
personnel.

     There are no collective  bargaining  agreements between the Company and any
of its employees.  Management  believes the  relationship  with employees of the
Company is good.

Trademarks and Trade Names

     The  Company's  convenience  stores and truck  stops are  operated  under a
variety of trade names,  including "Kwik Pantry," "Nu-Way,"  "Economy," "Dynamic
Minute  Mart,"  "Drivers,"  and "Drivers  Diner." New outlets  generally use the
trade name of the Company's stores  predominant in the geographic area where the
new store is located. The Company sells money orders in its outlets, and through
agents,  under the service mark  "Financial  Express  Money Order  Company." The
money orders are produced  using a computer  controlled  laser  printing  system
developed by the Company.  This system is also  marketed to third  parties under
the name of "Lazer Wizard."

     Eight  of the  Company's  truck  stops  operate  under  the  trade  name of
"Drivers;"  the two other truck  stops use the same trade name as the  Company's
convenience stores in the area in which they are located.

     The  Company  has  registered  the names  "FFP  Partners,"  "Kwik  Pantry,"
"Drivers,"  "Drivers Diner," "Financial Express Money Order Company," and "Lazer
Wizard" as service marks or trademarks under federal law.

Insurance

     The Company carries workers' compensation  insurance in all states in which
it operates.

     The Company  maintains  liability  coverages for its vehicles which meet or
exceed  state  requirements  but it does not carry  automobile  physical  damage
insurance. Insurance covering physical damage of properties owned by the Company
is  generally  carried  only for  selected  properties.  The  Company  maintains
property  damage  coverage on leased  properties as required by the terms of the
leases thereon.

     The  Company  maintains   general  liability   insurance  with  limits  and
deductibles  management believes prudent in light of the exposure of the Company
to loss  and the cost of the  insurance.  The  Company  does  not  maintain  any
insurance  covering losses due to environmental  contamination.  {See Government
Regulation - Environmental Regulation.}

     The Company monitors the insurance  markets and will obtain such additional
insurance coverages as it believes appropriate at such time as they might become
available at costs management believes reasonable.

Government Regulation

     Alcoholic  Beverage  Licenses.  The Company's retail outlets sell alcoholic
beverages in areas where such sales are legally permitted. The sale of alcoholic
beverages is generally  regulated by state and local laws which grant to various
agencies  the  authority  to approve,  revoke,  or suspend  permits and licenses
relating to the sale of such  beverages.  In most  states,  such  agencies  have
wide-ranging  discretion to determine if a licensee or applicant is qualified to
be licensed. The State of Texas requires that licenses for the sale of alcoholic
beverages be held, directly or indirectly, only by individual residents of Texas
or by  companies  controlled  by such  persons.  Therefore,  the  Company has an
agreement with a corporation  controlled by John H. Harvison, the Chairman and a
director  of the  General  Partner,  which  permits  that  corporation  to  sell
alcoholic beverages in the Company's Texas outlets where such sales are legal.

     In many states,  sellers of alcoholic  beverages have been held responsible
for damages  caused by persons who purchased  alcoholic  beverages from them and
who were at the  time of the  purchase,  or  subsequently  became,  intoxicated.
Although the  Company's  retail  operations  have adopted  procedures  which are
designed to minimize such liability,  the potential exposure to the Company as a
seller of alcoholic  beverages is substantial.  The Company's  present liability
insurance provides  coverage,  within its limits and subject to its deductibles,
for this type of liability.

     Environmental Regulation. The Company is subject to various federal, state,
and local environmental, health, and safety laws and regulations. In particular,
federal  regulations  issued in late 1988  regarding  underground  storage tanks
established requirements for, among other things,  underground storage tank leak
detection  systems,  upgrading  of  underground  tanks with respect to corrosion
resistance,  corrective  actions in the event of leaks, and the demonstration of
financial  responsibility to undertake  corrective  actions and compensate third
parties for damages in the event of leaks.  Certain of these  requirements  were
effective  immediately  and others are being  phased in over a ten year  period.
However,  all  underground  storage tanks must comply with all  requirements  by
December 1998.  The Company has  implemented a plan to bring all of its existing
underground  storage tanks and related equipment into compliance with these laws
and  regulations  and  currently  estimates  the costs to do so will  total from
$1,837,000 to $2,245,000 over the next two years.

     All  states  in which  the  Company  has  underground  storage  tanks  have
established trust funds for the sharing,  recovering, and reimbursing of certain
cleanup costs and liabilities incurred as a result of leaks in such tanks. These
trust funds,  which essentially  provide  insurance  coverage for the cleanup of
environmental  damages caused by an underground storage tank leak, are funded by
a tax on  underground  storage tanks or the levy of a "loading fee" or other tax
on the  wholesale  purchase of motor fuels  within each  respective  state.  The
coverages afforded by each state vary but generally provide up to $1,000,000 for
the  cleanup  of  environmental  contamination  and most  provide  coverage  for
third-party  liability,  as well.  Some of the funds  require the Company to pay
deductibles up to $25,000 per occurrence.

     Although the  benefits  afforded the Company as a result of the trust funds
are  substantial,  the Company may not be able to recover  through higher retail
prices the costs associated with the fees and taxes which fund the trusts.

     Management  believes  the Company  complies in all material  respects  with
existing  environmental  laws and  regulations and is not currently aware of any
material  capital  expenditures,  other than as  discussed  above,  that will be
required to further comply with such existing laws and regulations. However, new
laws and  regulations  could be adopted which could require the Company to incur
significant additional costs.

Federal Income Tax Law

     Under the Internal  Revenue Code of 1986, as amended (the "Code"),  certain
publicly-traded  partnerships  are  treated as  corporations  for tax  purposes.
However,  due to a transitional rule, the Company will continue to be treated as
a partnership for federal income tax purposes until the earlier of (i) its first
tax year beginning after 1997 or (ii) its addition of a "substantial new line of
business" as defined by the Code. In addition,  (i) the passive loss rules under
the Code are  applied  separately  with  respect to items  attributable  to each
publicly-traded  partnership  that  is not  treated  as a  corporation  for  tax
purposes and (ii) net income from publicly-traded partnerships is not treated as
passive income.

     In the recent past,  legislation  was  introduced  in Congress  which would
extend the  "grandfather"  provision which permits the Company to continue to be
treated as a partnership for tax purposes  either  indefinitely or for a limited
period.  However,  these  bills  were  not  passed.  As of March  1997,  similar
legislation has not been reintroduced  although certain  interested  parties are
still advocating for such a bill.

     Consequently, the Company has been studying various alternative structures.
The options available to the Company include  converting its current  operations
to a corporate form, which will, in effect,  occur if the Company takes no other
action; placing its retail and other operations that do not generate "qualifying
income"  (as  defined in the tax code) in a separate  corporate  subsidiary  and
continuing  the  operation  of its  remaining  activities  as a  publicly-traded
limited  partnership;  or placing  its  retail  operations  and its real  estate
holdings  into  separate  corporations,  distributing  those  interests  to  its
unitholders,  and qualifying the company holding the real estate  interests as a
real estate  investment  trust.  Although  no  decision  has yet been made as to
changes in the  structure  of the  Company,  one of the  primary  considerations
affecting any decision is that the  restructuring be accomplished in a manner so
as to qualify as a tax-free transaction.

Forward-Looking Statements

     Certain  of  the  statements  made  in  this  report  are   forward-looking
statements  that involve a number of risks and  uncertainties.  Statements  that
should generally be considered  forward-looking include, but are not limited to,
those  that  contain  the words  "estimate,"  "anticipate,"  "in the  opinion of
management," "believes," and similar phrases. Among the factors that could cause
actual results to differ  materially from the statements made are the following:
general  business  conditions  in the  local  markets  served  by the  Company's
convenience  stores,  truck stops,  and other retail outlets,  and its wholesale
fuel  markets;  the  weather  in  the  local  markets  served  by  the  Company;
competitive  factors such as changes in the locations,  merchandise  offered, or
other  aspects  of  competitors'  operations;  increases  in cost  of  fuel  and
merchandise  sold or  reductions  in the gross profit  realized from such sales;
expense  pressures  relating to operating  costs,  including  labor,  repair and
maintenance,   and  supplies;  and,  unanticipated  general  and  administrative
expenses, including costs of expansion or financing.

Item 2. PROPERTIES.

     The following table summarizes the ownership status of the Company's retail
outlets as of February 28, 1997:

                            Owned     Leased from  Leased from
                            by the     Affiliates   Unrelated
                           Company       of the      Parties        Total
                                        General
                                        Partner
                    
                                         Number of Locations
Convenience Stores
      Land                     39           53           21          113
      Buildings                90            5           18          113
Truck Stops
      Land                      2            6            2           10
      Building                  6            2            2           10       
Self-service gasoline
outlets
      Land                     15          100           91          206
      Buildings                64           51           91          206
Other/Not Active
      Land                      6            8           12           26 
      Buildings                 9            5           12           26        
Total
      Land                     62          167          126          355
      Buildings               169           63          123          355
                              
     The leases  covering  land and  buildings  leased  from  affiliates  of the
General Partner  generally expire on May 31, 1997, and have one or two five-year
renewal periods with renewal at the sole option of the Company. The monthly rent
upon renewal will be adjusted by the increase in the consumer  price index since
the leases were entered into.  Management  believes the terms and  conditions of
the leases with  affiliates  are more  favorable  to the Company than could have
been obtained from unrelated third parties.

     The  executive  offices of the Company  are located at 2801 Glenda  Avenue,
Fort Worth, Texas, where it occupies  approximately 15,000 square feet of office
space leased from three companies affiliated with the General Partner.


Item 3.  LEGAL PROCEEDINGS.

     The Company is periodically  involved in routine  litigation arising in the
ordinary course of its businesses,  particularly  personal injury and employment
related claims.  Management presently believes none of the pending or threatened
litigation of this nature is material to the Company.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to a vote of Unitholders during 1996.


                                     PART II


Item 5.  MARKET FOR THE REGISTRANT'S UNITS AND RELATED SECURITY HOLDER MATTERS.

     The  Company's  Class A Units are listed for trading on the American  Stock
Exchange (symbol "FFP").  At March 20, 1997, there were 209 holders of record of
the Class A Units and one holder of record of the Company's  Class B Units;  the
Class B Units are not listed for trading on any securities  exchange.  {See Item
12. Security Ownership of Certain Beneficial Owners and Management.} The Class A
and Class B Units have identical rights with respect to cash  distributions  and
to voting on matters brought before the partners.

     In August 1989, the Company entered into a Rights Agreement and distributed
to its  Unitholders  Rights  to  purchase  Units  under  certain  circumstances.
Initially the Rights were attached to all Unit Certificates  representing  Units
then outstanding and no separate Rights Certificates were distributed. Under the
Rights Agreement,  the Rights were to separate from the Units and be distributed
to  Unitholders  following  a  public  announcement  that a  person  or group of
affiliated  or  associated  persons (an  "Acquiring  Person") had  acquired,  or
obtained  a  right  to  acquire,  beneficial  ownership  of 20% or  more  of the
Partnership's  Class A Units or all classes of outstanding  Units.  On August 8,
1994, a group of Unitholders  announced that they had an informal  understanding
that they would vote their Units together as a block.  The agreement  related to
units that constituted  approximately 25% of the Class A Units then outstanding.
Therefore, the Rights became exercisable on October 7, 1994, the record date for
the issuance of the Rights Certificates (the "Distribution Date").

     The Rights  currently  represent the right to purchase a Rights Unit (which
is  substantially  equivalent  to a Class A Unit) of the  Company  at a price of
$20.00 per Unit.  However,  the Rights Agreement  provides,  among other things,
that if any person  acquires  30% or more of the Class A Units or of all classes
of  outstanding  Units  then each  holder of a Right,  other  than an  Acquiring
Person,  will have the right to  receive,  upon  exercise,  Rights  Units (or in
certain  circumstances,  other property)  having a value of $40.00 per Unit. The
Rights  will  expire on August 13,  1999,  and do not have any voting  rights or
rights to cash distributions.

     The  following  table sets forth the range of high and low sales prices for
the  Partnership's  Class A Units as reported on the American Stock Exchange for
the periods indicated:

                                         High           Low
                                               Dollars
              1995
                 First Quarter           8 5/8         5 5/8
                 Second Quarter          7 5/8         5 3/8
                 Third Quarter             8             6
                 Fourth Quarter         7 15/16        6 3/4
              1996
                 First Quarter             8           6 3/16
                 Second Quarter         7 13/16          6
                 Third Quarter           7 5/8           6
                 Fourth Quarter         7 7/16         5 1/8

     The following table sets forth the distributions declared and
paid by the Company in 1995 and 1996:
                                                    Amount per
                                                   Class A and
        Record Date             Date Paid          Class B Unit
         
      March 31, 1995         April 12, 1995            $0.120
      April 24, 1995         May 9, 1995                0.270
      August 16, 1995        August 31, 1995            0.180
      November 28, 1995      December 12, 1995          0.300
      April 10, 1996         April 24, 1996             0.205
      August 27, 1996        September 11, 1996         0.210

     Distributions are dependent upon the actual level of earnings and cash flow
of the Company,  capital expenditures required to maintain or used to expand the
productive  capacity of the Company's asset base, and requirements for servicing
the Company's debt. In addition, the Company has entered into a Credit Agreement
with a bank which contains various restrictive covenants, including restrictions
on the payment of cash  distributions to unitholders The Credit Agreement limits
the payment of cash distributions to 50% of net income as reported in accordance
with generally accepted accounting  principles and by requiring that the Company
maintain certain  financial  ratios.  Beginning in 1998, the Company will become
taxable  as  a  corporation,  unless  alternative  structures  are  implemented.
Accordingly,  funds  available  for  distribution  will be reduced by any income
taxes that may be incurred by the Company.  {See Federal Income Tax Law and Item
7.  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations, Liquidity and Capital Resources.}


Item 6.  SELECTED FINANCIAL AND OPERATING DATA.

                                   1996      1995    1994      1993      1992
Financial Data (in thousands, except per unit data):
Revenues and Margins -
    Motor fuel sales              $321,814 $296,887 $275,278  $246,023 $217,248
    Motor fuel margin               20,672   22,813   22,332    21,650   16,963
    Merchandise sales               60,579   65,512   72,827    74,921   56,946
    Merchandise margin              17,821   19,187   20,169    20,320   19,884
    Miscellaneous revenues           7,759    7,646    7,408     5,706    5,086
    Total revenues                 390,152  370,045  355,513   326,650  279,280
    Total margin                    46,252   49,646   49,909    47,676   41,933
Direct store expenses               27,062   28,496   29,553    28,794   24,771
General and administrative expenses 11,506   11,795   11,056    10,527    9,415
Depreciation and amortization        3,951    3,769    4,352     5,681    5,435
Total operating expenses            42,519   44,060   44,961    45,002   39,621
Operating income                     3,733    5,586    4,948     2,674    2,312
Interest expense                    (1,246)  (1,176)  (1,173)   (1,565)  (1,724)
Income before income taxes/other      
   items                             2,487    4,410    3,775     1,109      588
    Deferred income taxes           (2,646)    (500)    (244)      (94)       0
    Gain on extinguishment of debt       0        0      200         0        0
    Change in accounting for income      
      taxes                              0        0        0      (297)       0
Net income/(loss)                   $(159)   $3,910   $3,731      $718     $588
Income/(loss) per unit -
    Before income taxes/other items  $0.67    $1.07    $0.97     $0.28    $0.16
    Net income/(loss)                (0.04)    1.07     1.03      0.20     0.16
Cash distributions declared per
    Class A and Class B Unit        $0.415   $0.870   $0.370    $0.000   $0.000
Total assets                       $78,599  $69,332  $67,978   $70,277  $68,116
Long-term obligations                9,418    7,100    9,527    10,755   17,164
Operating Data:
Gallons of motor fuel sold (in thousands)
    Retail                         197,687  193,233  196,246   187,267  170,410
    Wholesale                       90,704   95,473   81,289    57,718   39,590
Fuel margin per gallon (in cents)
    Retail                             9.3     10.9     10.1      10.0      9.2
    Wholesale                          1.9      1.7      1.8       1.7      1.0
Average weekly merchandise sales -
    Convenience stores              $9,454   $9,560   $9,901   $10,289   $8,370
    Truck stops                     17,192   17,506   18,160    17,798   15,709
Merchandise margin                   29.4%    29.3%    27.7%     27.1%    34.9%
Number of locations at year end -
    Convenience stores                 117      127      127       145      137
    Truck stops                         10       10       10        10        9
    Self-service fuel outlets          206      194      185       169      171

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS.

General

     This discussion  should be read in conjunction with the selected  financial
and operating data, the description of the Company's  business  operations,  and
the financial  statements and related notes and schedules  included elsewhere in
this  Annual  Report  on  Form  10-K.  {See  Item 1.  Business,  Forward-Looking
Statements.}

     The Company  reports its  results of  operations  using a fiscal year which
ends on the last Sunday in  December.  Most fiscal  years have 52 weeks but some
consist of 53 weeks.  Fiscal 1995 was a 53-week year,  while fiscal 1996,  1994,
1993, and 1992 were 52-week  years.  This variation in time periods most affects
revenues (and related costs of sales) and salary costs as other  expenses  (such
as rent and  utilities)  are usually  recorded on a  "monthly"  basis.  However,
differences  in the number of weeks in a fiscal  year  should be  considered  in
reviewing financial data.

1996 Compared with 1995

     The Company's  total  revenues  increased  $20,107,000  (5.4%) in 1996 over
1995.  This  increase was the result of a $24,927,000  (8.4%)  increase in motor
fuel  sales  offset  by  a  $4,933,000  (7.5%)  decline  in  merchandise  sales.
Miscellaneous revenues were essentially flat between the two years.

     The increased fuel revenues  resulted from increased prices and an increase
of 4,454,000  gallons (2.3%) of fuel sold at retail offset by a 4,769,000 gallon
(5.0%)  decline in wholesale  gallons sold.  The increase in retail fuel gallons
sold parallels the 2.4% increase in the average number of locations selling fuel
in 1996 as compared to 1995.  The  decrease in wholesale  fuel gallons  resulted
from the absence of large spot sales to certain  customers in 1996. The majority
of the Company's wholesale sales are to smaller independent  retailers,  many of
which are  contractually  committed to purchase from the Company.  However,  the
Company also markets to operators of larger  convenience  store chains and other
retail  outlets but such  customers  are  primarily  motivated by price.  Due to
increases  in wholesale  fuel prices in 1996,  the Company was not able to be as
aggressive in its pricing to these customers as in prior years.

     Although  fuel  sales  increased,   fuel  margin  declined   significantly,
$2,141,000 (9.4%), from the prior year. This decline was caused by substantially
reduced  retail fuel  margins in 1996 as compared to 1995.  The 1996 retail fuel
margin was 9.3 cents per gallon,  a drop of 14.7% from the 10.9 cents per gallon
realized in 1995. The reduced margin resulted from increases in wholesale prices
that  could  not be fully  passed  on to  retail  customers  due to  competitive
pressures from  non-traditional  fuel  retailers in the Company's  market areas,
such as grocery  stores that have  installed  fuel islands.  The reduced  retail
margin was experienced by the Company  throughout 1996 with the exception of its
second fiscal  quarter.  Although the volumes of fuel sold on a wholesale  basis
declined,  the wholesale margin per gallon increased by 11.8%, from 1.7 cents in
1995 to 1.9 cents in 1996.

     The  $4,933,000  decline  in  merchandise  sales  primarily  relates to the
decline in the average number of convenience  stores and truck stop  restaurants
operated  during the year.  The  Company  continued  its  program of selling the
merchandise  operations of selected convenience stores to independent operators,
with 18 such sales in 1996. Under this program,  begun in mid-1994,  the Company
sells the  merchandise  operations of outlets that it believes  will  contribute
more to its earnings if operated by  independent  operators than by the Company.
The independent  operators,  because of their different overhead structure,  are
able to operate the stores less  expensively  than can the Company.  These sales
are  structured  such that the  Company  retains  the real  estate or  leasehold
interest  in the  property  and  leases or  subleases  the land,  building,  and
equipment to the operator. The Company also retains the motor fuel concession at
these outlets, which become self-service fuel outlets for the Company. The sales
of these  stores,  offset to some extent by the  conversion  of certain gas only
outlets to convenience stores,  reduced the average number of convenience stores
operated during the year by 5.0%. In addition, the Company leased the restaurant
facilities at two of its truck stops to independent operators in early 1996.

     Total  merchandise  gross profit also  declined due to the sales  declines;
however,  the margin on merchandise  sales increased  slightly in 1996, to 29.4%
from 29.3%.  Shortly  after year end 1996,  the Company  reorganized  its retail
operations  placing  convenience  stores and truck stops, and their related food
service operations, under the supervision of one executive.  Management believes
this  supervisory  structure  will  increase the focus on improving  merchandise
margins and sales levels in its outlets.

     Although  miscellaneous revenues in total were relatively unchanged between
1996 and 1995, the  composition of the revenues  shifted.  Gains on the sales of
merchandise  operations  at  convenience  stores  increased to  $1,778,000  from
$791,000  (124.8%) while check cashing fees, food stamp  commissions,  and other
revenues related to check cashing booths declined  $497,000 due to closing eight
such outlets.  In addition,  the Company  recognized a one-time gain of $353,000
from the sale of a fleet  fueling  franchise  in 1995.  Other items  included in
miscellaneous  revenue,  such as lottery  commissions and money order fees, were
relatively unchanged between the periods.

     Direct store expenses  consist of those costs directly  attributable to the
operation of the Company's retail outlets,  such as salaries and other personnel
costs, supplies, utilities, repairs and maintenance, and commissions paid to the
operators  of  the  self-service  motor  fuel  outlets.   These  costs  declined
$1,434,000  (5.0%) in 1996 from 1995.  This decline was due to the  reduction in
the average number of convenience stores operated during 1996 and to the closure
of the eight check cashing outlets,  both discussed  above,  offset by increased
fuel  commissions paid to operators of the Company's  self-service  fuel outlets
due to an increase in the number of this type of outlet.  The Company leases the
land or land and buildings at 167 of its retail locations from affiliates of the
General  Partner.  As is  customary in these types of  agreements,  these leases
provide for  adjustments in the monthly rent based on the change in the consumer
price index.  The adjustments are made every five years with the next adjustment
to be effective  beginning in May 1997. Although the index on which the upcoming
adjustment  will be based has not yet been  published,  the Company  anticipates
that the rents paid for these locations will increase by approximately  $225,000
annually beginning in May 1997.

     General and  administrative  expenses  declined  $289,000 (2.5%) in 1996 as
compared to the prior year principally due to declines in salaries and bad debts
although all  categories  of costs except legal and  professional  fees declined
slightly or were flat compared to 1995.

     The modest increase in depreciation and amortization expense relates to the
increases in the Company's fixed assets over the last few years.  Because of the
significant  asset  additions  during the current year,  principally  related to
environmental  upgrades at the Company's retail locations and to improvements at
the fuel terminal  acquired in early 1996,  which is expected to begin operating
in the first quarter 1997, it is expected that  depreciation and amortization in
future years will increase from the current level.

     Interest  expense  was  relatively  unchanged  in 1996 from the prior year,
increasing  $70,000  (6.0%).  Although  the  Company's  total  debt  (long-  and
short-term  and capital  leases)  increased by a total of  $5,935,000,  interest
rates were somewhat lower in 1996 than 1995, much of the additional indebtedness
was  incurred  late in the  year,  and a  significant  portion  of the  debt was
incurred to finance  renovation  of the fuel  terminal and the interest  expense
related thereto was  capitalized.  The Company expects that its interest expense
will  increase in 1997 over 1996 due to the rise in its debt levels;  and,  when
the fuel terminal begins operating,  the debt incurred to finance its renovation
will begin to be  expensed.  If general  interest  rate  increases  occur,  such
increases will, of course,  increase the Company's  interest  expense as much of
the Company's debt carries a floating rate.

     The Company adopted Financial  Accounting Standards Board Statement No. 109
"Accounting for Income Taxes" ("SFAS 109") at the beginning of fiscal 1993. As a
result of adopting this accounting principle,  the Company is required to record
deferred  income tax  expense  attributable  to changes  arising in the  current
period in the temporary  differences  between  financial and tax reporting which
are expected to reverse  after 1997,  when the Company will become  taxable as a
corporation.  These  differences  are due  primarily  to  temporary  differences
between the financial  reporting amounts and tax bases of the Company's property
and equipment.

     In 1996,  the Company  recorded  deferred  income taxes of  $2,646,000,  an
increase of  $2,146,000  (429.2%)  over the previous  year. Of the total for the
current  year,  $2,089,000  was  related  to a change in the  lives  used by the
Company to depreciate  certain buildings for income tax reporting  purposes.  In
August 1996, Congress passed legislation  clarifying that certain buildings used
in connection  with the retail sale of motor fuel qualified for a  substantially
shorter  depreciable  life for tax  purposes  than  was  being  utilized  by the
Company.  Substantially  all of the buildings owned by the Company qualified for
this shorter life. In January 1997, the Internal Revenue Service issued a notice
explaining how the tax deduction  related to the change in the depreciable lives
on these assets should be determined.  As a result, the Company will take a 1996
tax  deduction  for  the  difference  between  the tax  depreciation  previously
recorded and the depreciation available using the shorter life. However, it must
record deferred taxes on this timing  difference.  If the Company were a taxable
entity,  the  deferred tax charge would have been offset by a current tax credit
of an equal amount with no impact on the Company's reported net income. However,
since the Company is a  partnership  and does not report any current  income tax
expense or credit,  the current tax benefit of this  deduction will be allocated
to the Company's unitholders.

     The  1996  deferred  tax  expense  not  related  to  the  above   described
clarification in the tax law, was $557,000,  an increase of $57,000 (11.4%) over
the expense reported in 1995 and is principally due to additions to fixed assets
which are depreciated  differently for financial reporting and tax purposes. The
deferred  tax  expense  is  expected  to grow in 1997 as the date at  which  the
Company  will become  taxable as a  corporation  grows closer since fewer of the
differences  between tax and financial reporting will reverse prior to such date
and because of the  significantly  increased  tax  deduction  available  for the
deprecation of many of the Company's buildings.  However, the $2,089,000 expense
related to the "catch-up" in depreciation discussed above will not recur.

     The  Company's  reported a net loss of $159,000 in 1996, as compared to net
income of $3,910,000  in 1995  primarily  due to  significant  impact of reduced
retail fuel margins and to the  non-recurring  deferred tax provision related to
the change in the depreciable lives of certain buildings for tax purposes.

1995 Compared with 1994

     The Company's  motor fuel revenues for 1995  increased over the 1994 period
by  $21,609,000  (7.8%) due to increased  wholesale  fuel sales.  Wholesale fuel
sales increased  14,184,000  gallons  (17.4%) over 1994. This increase  resulted
from a full year of sales from a marketing  arrangement  begun in mid-1994  that
emphasizes  sales to contractors and other  commercial  users of fuel as well as
from growth in these sales.  However,  the increase in wholesale  fuel sales was
offset by a decline in retail  fuel  sales.  Motor  fuel sales at the  Company's
retail outlets  declined by 3,013,000  gallons (1.5%) as a result of lower sales
volumes at the  Company's  truck  stops due to  increased  competition  from new
outlets in several of the Company's markets.  The margin on fuel sales increased
$481,000 (2.2%) in 1995 over 1994.  This increase  resulted from improved retail
fuel  margins  (10.9  cents in 1995 vs 10.1  cents in 1994)  and the  additional
margin from the increased wholesale activity.

     Merchandise sales in 1995 declined by $7,315,000  (10.0%) from the previous
year  due  principally  to  the  sale  of  the  merchandise  operations  at  ten
convenience  stores under the Company's  program of selling these  operations to
independent  operators.  The merchandise  sales decline was also affected by the
absence of a full year's sales at the 15 outlets  whose  merchandise  operations
were sold in the third and fourth quarters of 1994.

     The Company  also  experienced  a decline in its  average  weekly per store
sales for  convenience  stores of $341  (3.4%) in 1995 as compared to 1994 and a
decline of 3.6% in sales at the truck  stops  (combined  with  their  associated
restaurants).  These  declines  are  attributable  to the  Company's  efforts to
increase  the  margin  on  merchandise  sales  at  all  of  its  outlets.  Total
merchandise margin declined by $982,000 due to the reduced merchandise sales but
the gross profit  percentage on merchandise  sales increased to 29.3% from 27.7%
reflecting the Company's program of selectively  increasing prices on less price
sensitive items.

     Miscellaneous  revenues  were up  $238,000  (3.2%) in 1995 over 1994.  This
increase  resulted  primarily from increases in excise tax handling fees (due to
increased fuel volumes) and money order fees (due to increased  numbers of items
sold and an increase in the per item fee) and a gain recognized from the sale of
the Company's fleet fuel franchise offset by declines in food stamp  commissions
(due to the  adoption  in Texas of a  "debit"  card  for this  activity)  and in
commissions  on the  wholesale  sale of  cigarettes  (due to a more  competitive
market).

     Direct store  expenses in 1995  declined  $1,057,000  (3.6%) from the prior
year.  This reduction was due to the elimination of payroll (and related costs),
utilities,  and  other  operating  expenses  at  the  convenience  stores  whose
merchandise operations were sold to independent operators offset by increases in
the fuel  commissions  paid to the operators of those  stores,  and increases in
wage and other personnel costs at the stores operated by the Company.

     General and administrative  expenses increased $739,000 (6.7%) in 1995 over
1994.  This  increase was caused by  increased  professional  fees,  principally
attributable to the cost of consultants assisting in reorganizing certain of the
Company's back office processes,  increased rental expense,  associated with the
Company's  increased  use of leases to provide  vehicles and to finance  certain
equipment,  increased insurance costs, and increases in bank charges, associated
with the trial use of a deposit  pick up  service at the  Company's  convenience
stores and truck stops.  These  increases were offset by a reduction in bad debt
expense due to better monitoring of receivables.

     The $583,000 (13.4%) decline in depreciation  and  amortization  expense is
due to the continued  full  depreciation  of assets  acquired upon the Company's
formation in 1987 and the somewhat  limited  additions to property and equipment
over the past few years.

     Even though the Company's  long-term bank debt declined by $3,580,000  from
1994 to 1995,  interest  expense was flat between the two years due to increased
use of capital leases, which carry a somewhat higher but fixed interest rate, to
fund capital expenditures.

     The  increase  in the  deferred  tax expense in 1995 as compared to 1994 is
principally due to additions to fixed assets which are  depreciated  differently
for financial reporting and tax purposes.

     The  $263,000  (0.5%)  decline  in the  Company's  total  margin in 1995 as
compared to 1994 was offset by significant  reductions in operating expenses and
depreciation  and  amortization  such that income  before income taxes and other
items  increased  $635,000  (16.8%).  However,  due to the  increase in deferred
income taxes,  discussed  above,  and the  occurrence in 1994 of a $200,000 gain
from the early  extinguishment of debt in connection with the refinancing of the
Company's  bank debt in early 1994,  net income  increased  by  $179,000  (4.8%)
between the two years.

Liquidity and Capital Resources

     The Company has a Credit  Agreement  with a major bank under which it has a
$10,000,000  revolving  credit line to be used for working capital  purposes and
two term loans.  The  revolving  credit line bears  interest at the bank's prime
rate  and  matures  on April  30,  1998,  but the  agreement  requires  that the
outstanding  balance be paid down to  $1,500,000  or less for three  consecutive
days during each calendar  quarter.  One of the term loans had a balance at year
end 1996 of $5,625,000 and is due in quarterly  installments of $312,500 through
March 31, 2001.  The other term loan had a year end 1996  balance of  $3,000,000
and is due on a payment schedule which requires  aggregate  payments of $225,000
in 1997 and $450,000 in 1998. Payments in subsequent years increase to a maximum
of $700,000  annually  in the final year of the loan which  matures on March 31,
2003.  Both term loans bear interest at LIBOR plus 1.75% fixed at  approximately
30 day  intervals.  Although the interest  rates on the term loans are variable,
the Credit  Agreement  provides the Company with the ability to fix the rates on
all or a portion of the loans for varying periods of time up to their maturity.

     The  Credit  Agreement   contains  various   requirements  and  restrictive
covenants,   including  a  pledge  of  the  Company's  accounts  receivable  and
inventories,   a  negative  pledge  of  its  fixed  assets,  limits  on  capital
expenditures, and limits on cash distributions (to 50% of net income as reported
for generally accepted accounting  principles),  and the requirement to maintain
certain  financial  ratios.  At year end 1996, the Company was not in compliance
with certain of the  financial  ratios and covenants in  the  Credit  Agreement.
However, the bank has waived compliance with these ratios or  amended the Credit
Agreement with respect to these items.

     During  1996,  the  Company  made  aggregate  cash   distributions  to  its
unitholders of $1,545,000 ($0.415 per unit). However, the distributions were not
made  at  regular,   periodic  intervals  nor  at  fixed  amounts.  The  Company
anticipates  that it will  make  cash  distributions  to  unitholders  in  1997.
However,  no  determination  has made  with  respect  to the  amount of any such
distributions,  or the date(s) on which such  distributions  might be made.  Any
future  distributions  will be dependent upon the  profitability of the Company,
its debt service requirements,  needs for capital  expenditures,  and compliance
with the  restrictions in its Credit  Agreement.  Beginning in 1998, the Company
will  become  taxable  as  a  corporation  unless  alternative   structures  are
implemented.  Accordingly,  funds available for distribution  will be reduced by
any income taxes that may be incurred by the  Company.  {See Change in Structure
of Company.}

     The Company's  cash flows from operating  activities  were $485,000 less in
1996 than in 1995. This decline was due principally to the $4,069,000 decline in
net income offset by the  significant  increase in deferred taxes related to the
change in  depreciable  lives for certain  buildings  for tax  purposes  and the
increased gain on the sales of the merchandise operations of certain convenience
stores.  Cash used to purchase  property and equipment  increased  $4,755,000 in
1996 due to expenditures  to acquire and renovate the fuel terminal  acquired by
the  Company  in  early  1996 and to  continued  environmental  upgrades  at the
Company's retail outlets.  The Company will invest  additional funds to complete
the renovation of the terminal in 1997,  although the amount  expended should be
substantially  less  than  was  spent in 1996.  Expenditures  for  environmental
upgrading at the retail outlets  should  continue at about the same pace in 1997
and  1998  as in  1996  but  should  decline  significantly  thereafter  as  all
environmental  upgrading  must be  completed  by year end 1998.  The Company has
contracted  with a firm to  install  the  necessary  equipment  and/or to modify
existing  installations  to  meet  current  environmental  requirements  by  the
December  1998  deadline.  The cost of this  upgrading is expected to be between
$1,837,000 to $2,245,000 and will be incurred  during 1997 and 1998. The Company
will pay for some of its expected capital  expenditures from operating cash flow
and expects to finance a portion of the expenditures by utilizing lease lines of
credit, as it has in the past.

     The Company's  financing  activities  provided  $4,331,000 of cash in 1996.
This  amount  represents  a change of  $7,183,000  from 1995 levels due to a net
increase  of  $5,528,000  in  aggregate  debt  (balances  due on  the  Company's
revolving  credit line, its long-term  debt, and its capital lease  obligations)
and  a  reduction  of  $1,659,000  in  the  amount  of  distributions   paid  to
unitholders.  The reduced distributions to unitholders resulted from the decline
in the Company's earnings in 1996.

     The Company is party to commodity  futures  contracts and forward contracts
to buy and sell fuel,  both of which are used  principally  to satisfy  balances
owed on exchange  agreements.  Both of these types of contracts have off-balance
sheet risk as they involve the risk of dealing with others and their  ability to
meet the terms of the contracts and the risk associated with unmatched positions
and market  fluctuations.  The open  positions  under these  contracts  were not
significant  at  year  end  1996.  {See  Note 11 to the  Consolidated  Financial
Statements.}

     The Company had negative working capital at year end 1996 of $7,410,000, an
increase of $2,963,000 from 1995. This change resulted  primarily from increases
in the current  portion of the Company's  short- and long-term  debt and capital
leases.  The Company has received a proposal to  refinance  its debt which would
provide for an increase in the term debt  available  to the Company and a longer
amortization  of  such  debt.  The  Company  believes  that  this  or a  similar
refinancing  of its  debt  will  be  accomplished  during  1997  and  that  such
refinancing will enhance its working capital position.

     The  Company  has  tradtionally  been able to  operate  its  business  with
negative working capital, principally because most sales are for cash and it has
received payment terms from vendors. Consequently,  even if a refinancing is not
completed,  the  Company  believes  that the  availability  of funds  under  its
revolving  line of credit and its  traditional  use of trade  credit will permit
operations to be conducted in a customary manner.

Inflation and Seasonality

     The Company  believes  inflation has not had a material effect on operating
results  in  recent  years  except  for the  upward  pressure  placed  on wages,
primarily store wages, by the federal minimum wage increase which took effect in
1996.  The  additional  increase in the minimum wage  scheduled for October 1997
will again place  pressure  on the level of store  wages.  However,  the Company
expects that  operating  margins  will be adversely  affected for only a limited
time as it believes that prices can be increased fairly quickly in order to pass
along this increased cost to customers.  The Company does not believe it will be
at a competitive  disadvantage as it believes its wage structure is in line with
that of other convenience store operators.  Apart from the impact of the minimum
wage increase and the scheduled rent increases discussed earlier, operations for
the  foreseeable  future are also not expected to be  significantly  impacted by
inflation.  Generally,  increased  costs of in-store  merchandise can be quickly
reflected in higher prices to customers.  The price of motor fuel,  adjusted for
inflation, has declined over recent years. However, significant increases in the
retail  price of motor fuels could  reduce fuel demand and the  Company's  gross
profit on fuel sales.

     The Company's  businesses are subject to seasonal  influences,  with higher
sales  being  experienced  in the  second  and  third  quarters  of the  year as
customers tend to purchase more motor fuel and convenience  items,  such as soft
drinks, other beverages, and snack items, during the warmer months.

Change in Structure of Company

     Under  current tax law,  the Company will become  taxable as a  corporation
beginning  in 1998.  This change,  which was  included in 1986  revisions to the
Internal  Revenue Code, would mean that the Company would begin paying taxes and
that any  distributions  made to the  unitholders  would be treated as corporate
dividends.

     In  connection  with this  change,  the Company has been  studying  various
alternative  structures.  The options  available  to it include  converting  its
current  operations  to a  corporate  form,  which  will in effect  occur if the
Company takes no other action;  placing its retail and other  operations that do
not  generate  "qualifying  income"  (as  defined in the tax code) in a separate
corporate subsidiary and continuing the operation of its remaining activities as
a publicly-traded limited partnership;  or placing its retail operations and its
real estate holdings into separate  corporations,  distributing the interests in
those  corporations to its  unitholders,  and qualifying the company holding the
real estate interests as a real estate investment trust ("REIT").

     As stated above, a decision has not yet been made  regarding  restructuring
the Company and  management  is  continuing  to evaluate the foregoing and other
alternatives  available to it. One of the primary  considerations  affecting any
decision is that the  restructuring be accomplished in a manner so as to qualify
as a tax-free transaction for the Company and its unitholders.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The financial  statements  and  supplementary  data filed herewith begin on
page F-1.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE.

     There were no changes in, nor disagreements with, accountants during 1996.



                                    PART III


Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

General Partner

     FFP Partners  Management  Company,  Inc., a Delaware  corporation formed in
December  1986,  is  the  General  Partner  of  and  manages  the  Company.  The
Unitholders have no power, as limited partners,  to direct or participate in the
control of the business of the Company.

Management of the General Partner

     Set forth below are the names, ages, positions,  and business experience of
the executive officers and directors of the General Partner:

             Name               Age                  Position
John H. Harvison [1]             63   Chairman of the Board and Chief
                                       Executive Officer
Robert J. Byrnes [1]             56   President, Chief Operating Officer,
                                       and Director
Steven B. Hawkins                49   Vice President - Finance and
                                       Administration, Secretary,
                                       Treasurer, and Chief Financial Officer   
J. D. St.Clair                   62   Vice President - Fuel Supply and
                                       Distribution and Director
Michael Triantafellou            43   Vice President - Retail Operations and
                                       Director
Robert E. Garrison, II [1,2]     55   Director
John W. Hughes [1,2]             55   Director
Garland R. McDonald              59   Director
John D. Harvison                 40   Director
E. Michael Gregory               45   Director
--------------------------------------
[1]  Member of Compensation Committee
[2]  Member of Audit Committee

     John H.  Harvison  has been  Chairman of the Board of the  General  Partner
since the commencement of the Company's  operations in May 1987. Mr. Harvison is
a founder  and an  executive  officer  of each of the  companies  from which the
Company acquired its initial base of retail outlets,  and has been active in the
retail gasoline  business since 1958 and in the convenience store business since
1973.  In  addition,  he has  been  involved  in oil  and  gas  exploration  and
production,  the ownership and  management of an oil refinery and other personal
investments. In January 1995, Mr. Harvison consented to the entry of a cease and
desist order by the United States Office of Thrift Supervision that, among other
things,  prohibits  him from  participating  in any manner in the conduct of the
affairs of federally insured depository  institutions.  This Order was issued in
connection  with  Mr.  Harvison's  ownership  in  a  federal  savings  bank  and
transactions  between him (and companies in which he had an ownership  interest)
and that  institution.  In consenting to the issuance of the Order, Mr. Harvison
did not admit any of the  allegations  against him and consented to the issuance
of the Order  solely to avoid the cost and  distraction  that would be caused by
prolonged  litigation  to contest  the  positions  taken by the Office of Thrift
Supervision.  Mr.  Harvison  is the  father of John D.  Harvison,  who is also a
director of the General Partner.

     Robert J. Byrnes has been the President of the General  Partner since April
1989 and has been a Director  since May 1987.  From May 1987 to April 1989,  Mr.
Byrnes served as Vice  President - Truck Stop  Operations  for the Company.  Mr.
Byrnes has been, since 1985, the President of Swifty Distributors,  Inc., one of
the companies from which the Company  acquired its initial retail outlets.  From
1975 through 1984,  Mr. Byrnes was President of Independent  Enterprises,  Inc.,
which  owned and  operated  convenience  stores and a truck  stop.  During  that
period, he was also President of Enterprise Distributing,  Inc., a wholesaler of
motor fuels.  Prior to 1975,  Mr.  Byrnes was  President  of Foremost  Petroleum
Corporation (which is now a subsidiary of Citgo Petroleum Corporation) and was a
distribution  manager for ARCO Oil & Gas Company.  He is currently a director of
Plaid  Pantries,  Inc.,  an  operator of  convenience  stores  headquartered  in
Beaverton, Oregon.

     Steven B.  Hawkins has been Vice  President  - Finance and  Administration,
Secretary,  and Treasurer of the General Partner since May 1987. From April 1980
through  December  1987,  Mr.  Hawkins  was  employed  as   Secretary/Treasurer,
Controller and Chief Financial Officer by various companies  affiliated with the
General Partner. Prior to joining such affiliates,  Mr. Hawkins was employed for
nine years by Arthur Andersen & Co., an international public accounting firm. He
is a member of both the American  Institute of Certified Public  Accountants and
the Texas Society of CPAs.

     J. D. St.Clair has been Vice President - Fuel Supply and Distribution and a
Director of the General Partner since May 1987. Mr. St.Clair is a founder and an
executive  officer of several of the companies  from which the Company  acquired
its  initial  retail  outlets.  He has  been  involved  in the  retail  gasoline
marketing and convenience store business since 1971. Prior to 1971, Mr. St.Clair
performed  operations  research and system analysis for Bell  Helicopter,  Inc.,
from 1967 to 1971; for the National  Aeronautics and Space  Administration  from
1962 to 1967; and Western Electric Company from 1957 to 1962.

     Michael  Triantafellou was elected Vice President - Retail Operations and a
Director of the General  Partner in February  1997. He had served as Director of
Truck Stops and Food Service  Operations for the Company since January 1994. Mr.
Triantafellou  has been  engaged in the truck stop and food  service  industries
since 1976,  having held various  middle and upper  management  positions in the
truck  stop  businesses  of  Truckstops  of America  (from 1975 to 1980),  Bar-B
Management  (from 1980 to 1985)  Greyhound-Dial  Corp.  (from 1985 to 1993), and
Knox Oil of Texas (from 1993 to 1994).  Mr.  Triantafellou is a 1975 graduate of
the Wharton School of the University of Pennsylvania.

     Robert E.  Garrison,  II, has been a Director of the General  Partner since
May 1987.  Mr.  Garrison is a managing  partner of Harris,  Webb &  Garrison,  a
regional  merchant and investment bank, and is also Chairman and Chief Executive
Officer of Pinnacle Management & Trust Co., a state chartered  independent trust
company.  From October 1992 through  February 1994, Mr. Garrison was Chairman of
Healthcare  Capital  Group,  Inc., a regional  investment  bank  focusing on the
health care industry.  From April 1991 through  October 1992,  Mr.  Garrison was
Chairman  and Chief  Executive  Officer of Med Center  Bank & Trust,  one of the
leading independent banks in Houston, Texas. Mr. Garrison served as President of
Iroquois  Brands,   Ltd.  ("IBL"),  a  manufacturer  of  material  handling  and
construction equipment,  pharmaceutical and personal care products, and operator
of  convenience  stores and retail fuel outlets in the United  Kingdom from 1989
until  September  1990.  From 1982 through March 1989,  Mr.  Garrison  served as
Executive Vice President and director of Lovett  Mitchell Webb & Garrison,  Inc.
("LMW&G"),  one of the representatives of the underwriters in the initial public
offering of the Company in May 1987,  where he managed the  Investment  Research
and Investment Banking Division,  and Boettcher & Company,  Inc., which acquired
LMW&G in  September  1987.  From  1971 to 1982,  Mr.  Garrison  was  First  Vice
President and Director of Institutional Research at Underwood Neuhaus & Co. From
1969 to 1971,  Mr.  Garrison  was Vice  President  of BDSI,  a  venture  capital
subsidiary of General Electric.

     John W. Hughes has been a Director of the General  Partner  since May 1987.
Mr.  Hughes is an attorney  with the law firm of Garrison & Hughes,  L.L.P.,  in
Fort Worth,  Texas. From 1991 to 1995 he was an attorney with the firm of Simon,
Anisman,  Doby & Wilson,  P.C., in Fort Worth, Texas. Since 1963, Mr. Hughes has
been  a  partner  of  Hughes  Enterprises,  which  invests  in  venture  capital
opportunities, real estate, and oil and gas.

     Garland R.  McDonald,  is  employed  by the Company to oversee and direct a
variety of special projects. He was elected to the Board in January 1990. He had
previously served as a Director of the General Partner from May 1987 through May
1989 and served as a Vice  President  of the  General  Partner  from May 1987 to
October 1987. Mr. McDonald is a founder and the Chief Executive Officer of Hi-Lo
Distributors,  Inc.,  and Gas-Go,  Inc., two of companies from which the Company
initially  acquired its retail  outlets.  He has been  actively  involved in the
convenience store and retail gasoline businesses since 1967.

     John D.  Harvison  was elected a Director  of the General  Partner in April
1995.  Mr Harvison  has been Vice  President  of Dynamic  Production,  Inc.,  an
independent  oil and gas  exploration  and  production  company  since 1977.  He
previously  served as Operations  Manager for Dynamic from 1977 to 1987. He also
serves as an office of various other  companies that are affiliated with Dynamic
that are  involved  in real  estate  management  and  various  other  investment
activities.  Mr.  Harvison is the son of John H.  Harvison,  the Chairman of the
Board of the General Partner.

     E.  Michael  Gregory  was  elected to the Board of the  General  Partner in
September 1995. Mr. Gregory is the founder and President of Gregory  Consulting,
Inc., an engineering  and consulting firm that is involved in the development of
products  related to the  distribution  and storage of  petroleum  products  and
computer software for a variety of purposes  including work on such products and
software for the Company.  Prior to founding  Gregory  Consulting  in 1988,  Mr.
Gregory was the Chief  Electronic  Engineer for Tidel Systems (a division of The
Southland  Corporation)  where  he  was  responsible  for  new  product  concept
development and was involved in projects involving the monitoring of fuel levels
in underground storage tanks. He is a Registered Professional Engineer in Texas.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Regulations  issued  under  the  Securities  Exchange  Act of 1934  require
certain  persons to report their  holdings of the Company's  Class A and Class B
Units to the Securities and Exchange  Commission ("SEC") and to the Company.  To
the best of the  Company's  knowledge,  based upon  copies of reports  and other
representations provided to the Company, all 1996 reports required under Section
16 of the  Securities  Exchange Act of 1934 were filed in a timely manner except
that the following reports were filed late: (i) reports for the month of January
1996 for John H. Harvison,  John D. Harvison,  Randall W. Harvison,  7HBF, Ltd.,
HBF Financial,  Ltd., and Garland R. McDonald covering the conversion of Class B
Units  indirectly  owned by them to Class A Units;  and,  (ii) a report  for the
month of February 1996 for Robert E. Garrison,  II,  covering Class A Units sold
by him individually and acquired by an Individual Retirement Account of which he
is the beneficiary.


Item 11.  EXECUTIVE COMPENSATION.

     The  Company  reimburses  the  General  Partner  for all of its  direct and
indirect  costs  (principally  officers'  compensation  and  other  general  and
administrative  costs)  allocable  to the  Company.  Cash  bonuses to  executive
officers  of  the  General  Partner  are  not  chargeable  to the  Company  as a
reimbursable expense.

     Each  director who is not an officer or employee of the General  Partner or
the  Company  receives  an annual  retainer of $4,000 plus $1,000 for each Board
meeting,  or committee  meeting not held in  conjunction  with a Board  meeting,
which he attends and $500 for each telephone  meeting in which he  participates.
Each  director is also  reimbursed  for expenses  related to attendance at board
meetings.

     In  addition,  non-employee  directors  are  generally  granted  options to
acquire 25,000 Class A Units at the fair market value of the underlying units on
the date of grant.  The options become  exercisable with respect to one-third of
the Units covered thereby on each of the  anniversary  dates following the grant
and expire  ten years  after  grant.  In the event of a change in control of the
Company,  any  unexercisable  portion of the  options  will  become  immediately
exercisable.  Upon exercise,  the option price may be paid, in whole or in part,
in Class A Units owned by the director.

     Directors  who are  officers or  employees  of the  General  Partner or the
Company receive no additional  compensation for attendance at Board or committee
meetings.

     The General  Partner  has  employment  agreements  with  Messrs.  Harvison,
Byrnes,  Hawkins,  and St.Clair which provide that if the employment of any such
officer is  terminated  for any reason  other than the  commission  of an act of
fraud or dishonesty with respect to the Company or for the  intentional  neglect
or nonperformance  of his duties,  such officer is to receive an amount equal to
twice his then current  annual salary plus a  continuation  of certain  benefits
provided by the Company for a period of two years. Any cost incurred under these
agreements is to be borne by the Company.

Summary Compensation Table

     The following table provides information regarding compensation paid during
each of the Company's last three fiscal years to the Company's  Chief  Executive
Officer and to each of the Company's other executive  officers who earned salary
and bonus of more than $100,000 in the latest fiscal year:

                           Summary Compensation Table

                                                    Annual Compensation
                                                  -----------------------
                                                                 Other
                  Name                                           Annual
                  and                                            Compen-
           Principal Position             Year      Salary       sation
                                                      ($)          ($)
                                          
John H. Harvison                          1996       137,597[1]     -
Chairman and Chief Executive Officer      1995       135,000        -
                                          1994       135,000        -
                                                    
Robert J. Byrnes                          1996       137,597[1]     -
President,  Chief Operating Officer, and  1995       135,000        -
   Director                               1994       135,000        -
                                                    
Avry Davidovich [2]                       1996       127,404[1]     -
Executive  Vice  President - Convenience  1995       125,000        -
   Stores and Director                    1994       125,000        -
                                                    
---------------------------------------------------------------------------
[1] The annual  salaries did not change from 1995 to 1996.  The Company pays its
    employees  on a weekly basis and there were 53 pay periods in 1996 vs 52 pay
    periods in 1995.
[2] Mr. Davidovich resigned as an officer and director in February 1997.

     There were no long-term  compensation  awards or payouts  during any of the
last three years.

     General Partner's Incentive Bonus. On an annual,  non-cumulative basis, the
General  Partner  may  earn  incentive  compensation  (the  "Incentive  Bonus"),
pursuant to the FFPOP Partnership  Agreement,  with respect to each fiscal year,
only if (a) the net  income of the  Company  for such  year,  as  determined  in
accordance with generally accepted accounting principles and calculated prior to
the payment of the incentive compensation, equals or exceeds $1.08 per Unit, and
(b) the total of the quarterly cash  distributions  for such year to the holders
of Units equals or exceeds $1.50 per Unit (such  distributions  being those made
for such year, even though the distribution for the fourth quarter will actually
be paid  subsequent  to year end).  In the event these tests are met,  incentive
compensation will be paid in cash, by the Company,  in an amount equal to 10% of
net income before such incentive compensation.  Although there is no requirement
to do so, management believes that any such incentive  compensation  received by
the General Partner would be used to pay bonuses to its executive officers.  The
General Partner did not earn any incentive compensation during 1996.

     Class A Unit  Options  Exercised  during  Fiscal  1996 and Fiscal  Year End
Option Values. The following table provides  information about options exercised
during the last fiscal year and the value of unexercised options held at the end
of the fiscal year by the named executive officers:

               Aggregated Option/SAR Exercises in Last Fiscal Year
                          and FY-End Option/SAR Values
                                                                     
                                                                     Value of
                                                       Number of    Unexercised 
                                Units                Unexercised   In-the-Money 
                               Acquired              Options/SARs  Options/SARs 
                                  on       Value      at Fiscal     at Fiscal 
                               Exercise  Realized     Year End       Year End
                                 (#)        ($)         (#)           ($) [1]
                                            
                                              
           Name and                                Exercisable/   Exercisable/
      Principal Position                           Unexercisable Unexercisable
John H. Harvison                 - 0 -      - 0 -    40,000/0      $65,000/$0
Chairman and Chief Executive
   Officer
Robert J. Byrnes                 - 0 -      - 0 -    35,000/0      $56,875/$0
President, Chief Operating
   Officer, and Director
Avry Davidovich  [2]             - 0 -      - 0 -       0/0          $0/$0
Executive Vice President -
   Convenience Stores and
   Director
--------------------------------------------------------------------
[1] The  closing  price  for the  Company's  Class A Units  as  reported  by the
    American Stock Exchange on December 29, 1996, was $5.375. The value shown is
    calculated by multiplying the difference  between this closing price and the
    option exercise price times the number of units underlying the option.

[2]    Mr. Davidovich resigned as an officer and director in February 1997.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Class A and Class B Units

     The following table sets forth as of March 28, 1997,  information regarding
the only persons known by the Company to own, directly or indirectly,  more than
5% of each class of its Class A and Class B Units:

  Title              Name and Address          Amount and Nature of    Percent
of Class            of Beneficial Owner        Beneficial Ownership    of Class
Class A   7HBF, Ltd.                              524,333   [1]          15.2%
          2801 Glenda Avenue
          Fort Worth, Texas  76117
Class A   HBF Financial, Ltd.                     738,297   [2]          21.4%
          2801 Glenda Avenue
          Fort Worth, Texas  76117
Class A   Garland R. McDonald                     194,167   [3]           5.6%
          2801 Glenda Avenue
          Fort Worth, Texas  76117
Class B   7HBF, Ltd.                              175,000   [4]         100.0%
          2801 Glenda Avenue
          Fort Worth, Texas  76117

[1]  Consists of 524,333 Class A Units owned by eight  companies which are owned
     or  controlled  by  7HBF,  Ltd.,  a  limited  partnership  owned by John H.
     Harvison and members of his immediate family.  7HBF, Ltd., may be deemed to
     share  beneficial  ownership  of 144,417  Units with  Garland R.  McDonald,
     49,750  Units  with  Garland R.  McDonald  and  Barbara  J. Smith  (John H.
     Harvison's sister), 83,417 Units with J. D. St.Clair, and 16,833 Units with
     Robert J. Byrnes.

[2]  Consists of 738,297  Class A Units owned by a company which is owned by HBF
     Financial,  Ltd.,  a limited  liability  company  owned by  trusts  for the
     benefit of members of John H. Harvison's  immediate family. In addition HBF
     Financial, Ltd., owns 31% of the general partner of 7HBF, Ltd.

[3]  Consists  of  194,617  Class A Units  owned by two  companies  of which Mr.
     McDonald is deemed to be the beneficial  owner.  Mr. McDonald may be deemed
     to share  beneficial  ownership of 144,417 of these Units with 7HBF,  Ltd.,
     and 49,750 Units with Barbara J. Smith and 7HBF, Ltd.

[4]  Consists  of 175,000  Class B Units  owned of record by a company  owned by
     7HBF, Ltd. The beneficial of these Units is in dispute.

     The  following  table sets  forth as of March 28,  1997,  information  with
respect  to the  Class A Units  and  Class B  Units  beneficially  owned  by all
directors and executive  officers of the General  Partner (such  information  is
based on ownership reported to the Company by such persons):

                                     Title     Amount and Nature of   Percent of
                                    of Class Beneficial Ownership [1] Class [1]
      Name of Beneficial Owner
John H. Harvison, Chairman          Class A          0    [2, 3]         0.0%
Robert J. Byrnes, President and     Class A     16,833     [4]           0.5%
   Director
Steven B. Hawkins, Vice President   Class A      1,300     [5]           0.0%
J. D. St.Clair, Vice President and  Class A     88,417     [6]           2.5%
   Director
Michael Triantafellou, Vice         Class A          0                   0.0%
   President and Director
Robert E. Garrison, II, Director    Class A     86,805     [7]           2.5%
John W. Hughes, Director            Class A          0                   0.0%
Garland R. McDonald, Director       Class A    194,167     [8]           5.5%
John D. Harvison, Director          Class A          0   [9, 10]         0.0%
E. Michael Gregory, Director        Class A          0                   0.0%
All directors and executive         Class A    387,522   [11,12]        11.0%
   officers as a group (10 persons)
------------------------------------------------------------------------
[1]  Excludes Class A Units covered by the options discussed in Item 11. 
     Executive Compensation.
[2]  Excludes 524,333 Class A Units beneficially owned by 7HBF,
     Ltd. (a Texas limited partnership of which John H. Harvison and members
     of his family are partners); 738,443 Class A Units beneficially
     owned by HBF Financial, Ltd. (a Texas limited liability company  which is
     98%-owned by trusts for the benefit of the children of John H. Harvison);
     and 32,167 Class A Units owned by a company of which John H. Harvison is 
     an officer and director and one-third of which is owned by trusts for the
     benefit of his children.  7HBF, Ltd., may be deemed to share beneficial 
     ownership of 144,417 Units with Garland R. McDonald, 49,750 Units with 
     Garland R. McDonald and Barbara J. Smith (John H. Harvison's sister),
     83,417 Units with J. D. St.Clair, and 16,833 Units with  Robert J. Byrnes.
[3]  Excludes  175,000 Class B Units owned of record by a company owned by 7HBF,
     Ltd. The beneficial ownership of these Units is in dispute.
[4]  Shares are held by a company ofwhich Mr. Byrnes is a director and
     executive officer.  Mr. Byrnes may be deemed to share beneficial ownership
     of these units with 7HBF Financial, Ltd.
[5]  Units are held by an Individual Retirement Account for the benefit of Mr. 
     Hawkins.
[6]  Includes 5,000 Units held directly and 83,417 Units held by a company of
     which Mr.St.Clair is a director and executive officer.  Mr. St.Clair may
     be deemed to share beneficial ownership of the 83,417 Units with 7HBF
     Financial, Ltd.
[7]  Includes  79,751 Units held  directly and 7,054 Units held by an Individual
     Retirement Account for the benefit of Mr. Garrison.
[8]  Units are held by two companies of which Mr. McDonald is a director and 
     executive officer.  Mr. McDonald may be deemed to share beneficial
     ownership of 144,417 Units with 7HBF, Ltd., and of 49,750 Units
     with 7BHF, Ltd., and Barbara J. Smith.
[9]  Excludes 524,333 Class A Units beneficially owned by 7HBF,Ltd. 
     (a Texas limited partnership of which John D. Harvison and members of his
     family are partners); and 738,443 Class A Units beneficially owned by HBF
     Financial, Ltd. (a Texas limited liability company which is 98%-owned by
     trusts for the  benefit of the  siblings of John D.  Harvison);  and
     32,167 Class A Units owned by a company one-third of which is owned by
     trusts for the benefit of John D. Harvison and his siblings. 7HBF, Ltd.,
     may be deemed to share beneficial ownership of 144,417 Units with Garland 
     R. McDonald,49,750 Units with Garland R. McDonald and Barbara J. Smith
     (John H. Harvison's sister), 83,417 Units with J.D. St.Clair, and
     16,833 Units with Robert J. Byrnes.
[10] Excludes 175,000 Class B Units owned of record by a company owned by
     7HBF, Ltd.  Mr. Harvison is a manager of 7HBF,Ltd.  The beneficial
     ownership of these Units is in dispute.
[11] Excludes the 524,333,  738,443, and 32,167 Class A Units discussed in notes
     2 and 9.
[12] Excludes the 175,000 Class B Units discussed in notes 3 and 10.

General Partner

     The General  Partner makes all decisions  relating to the management of the
Company.  Companies  owned,  directly or  indirectly,  by certain  officers  and
directors  (principally John H. Harvison and members of his immediate family) of
the General Partner are the sole shareholders of the General Partner. Certain of
these  companies  have  executed  proxies  which  assign the right to vote their
respective  stock in the General Partner to their  respective  stockholders on a
basis pro rata to each  stockholder's  ownership of the respective  company.  By
virtue of this action and through  ownership of the equity  interests in certain
of these  companies  or their  affiliates,  John H.  Harvison and members of his
immediate  family  have the  right to vote  92.2%  of the  stock of the  General
Partner.  Messrs. Byrnes,  St.Clair, and McDonald collectively have the right to
vote 6.1% of the stock of the General Partner.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Related Transactions

     The  Company  leases  land or land and  buildings  for  some of its  retail
outlets and some  administrative  and executive  office  facilities from various
entities directly or indirectly owned by Messrs.  John H. Harvison,  and members
of his immediate family, Byrnes, St.Clair, and McDonald. During fiscal 1996, the
Company paid $847,000 to such entities with respect to these leases. The General
Partner  believes  the  leases  with its  affiliates  are on terms that are more
favorable  to the  Company  than  terms  that  could  have  been  obtained  from
unaffiliated third parties for similar properties.

     John H.  Harvison,  Chairman  of the General  Partner,  owns 50% of Product
Supply Services, Inc. ("Product Supply"), which provides consulting services and
acts as an agent for the Company in  connection  with the  procurement  of motor
fuel for sale by the  Company.  Product  Supply  provides  such  services to the
Company  pursuant to an  agreement  providing  that the Company will pay Product
Supply $5,000 per month, supply it with office space and support services,  such
as telephone and clerical assistance, and pay its reasonable out-of-pocket costs
in providing such services.  The agreement may be canceled either by the Company
or Product Supply upon sixty days' written notice.  During fiscal year 1996, the
Company paid $68,000 to Product Supply for its services.

     E. Michael  Gregory,  a Director of the General  Partner,  is the owner and
president of Gregory  Consulting,  Inc. ("Gregory  Consulting"),  which provides
engineering,  consulting,  and other  similar  services to the  Company.  During
fiscal  year  1996,  the  Company  paid  Gregory  Consulting  $246,000  for such
services.

     Under Texas law,  the  Company is not  permitted  to hold  licenses to sell
alcoholic  beverages  in Texas.  Consequently,  the  Company  has  entered  into
agreements with Nu-Way Beverage  Company ("Nu-Way  Beverage"),  a company wholly
owned by John H. Harvison, under which Nu-Way Beverage sells alcoholic beverages
at the Company's Texas outlets. Under this agreement,  the Company receives rent
and a management  fee relative to the sale of alcoholic  beverages  and it loans
funds to Nu-Way Beverage to pay for alcoholic  beverage  purchases.  The Company
receives  interest on such funds at 1/2% above the prime rate charged by a major
commercial  bank and the loan is secured  by the  alcoholic  beverage  inventory
located in the Company's  Texas outlets.  During 1996,  the highest  balance due
under  this  loan  was  $433,000  and the  balance  at the end of the  year  was
$420,000. During 1996, Nu-Way Beverage sold $8,240,000 of alcoholic beverages at
the Company's  Texas outlets.  After  deducting cost of sales and other expenses
related to these sales,  including  $1,265,000  of rent,  management  fees,  and
interest paid to the Company, Nu-Way Beverage had earnings of $82,000 from sales
of alcoholic beverages at the Company's outlets.

     In June 1994,  the Company  concluded the  settlement of a lawsuit which it
had filed  against  Nu-Way Oil  Company  and Nu-Way  Distributing  Company  (the
"Nu-Way  Companies"),  both of which are controlled by John Harvison and members
of his immediate family, and a related suit which the Nu-Way Companies had filed
against the Company.  Under the  settlement,  all claims in both of the lawsuits
were  dismissed  and the  Company  received  cash,  a  promissory  note  from an
affiliated company (secured by first and second liens on real estate), and title
to a convenience  store which was being leased by the Company from an affiliate.
The Company estimated the assets it received had an aggregate value of $485,000.
The affiliated  companies  received  approximately  $65,000 in cash (held in the
Registry of the Court) and 30,000 Class B Units owned by an affiliate  that were
being held by an escrow agent.  This agreement was approved by the disinterested
directors  of the  General  Partner.  The note  which the  Company  received  in
connection with this  settlement is to be repaid over five years,  with interest
at 9.5%; the highest balance outstanding during 1996 under the note was $89,000,
and the balance outstanding at year end 1996 was $69,000.

     In 1980 and 1982, certain of the Affiliated Companies granted to E-Z Serve,
Inc. ("E-Z  Serve"),  the right to sell motor fuel at retail for a period of ten
years  at  self-serve  gasoline  stations  owned  or  leased  by the  Affiliated
Companies or their affiliates.  All rights to commissions under these agreements
and the right to sell motor  fuel at  wholesale  to E-Z Serve at such  locations
were assigned to the Company on May 21, 1987, in connection with the acquisition
of its initial base of retail  operations.  In December 1990, in connection with
the  expiration or termination  of the  agreements  with E-Z Serve,  the Company
entered into  agreements  with Thrift  Financial  Co.  ("Thrift  Financial"),  a
company owned and controlled by members of John H. Harvison's  immediate family,
which  grant to the Company  the  exclusive  right to sell motor fuel at certain
retail  locations.  The terms of these  agreements  are comparable to agreements
that the Company has with other  unrelated  parties.  During  fiscal  1996,  the
Company paid Thrift Financial $276,000 under these agreements.

     Cost  Allocations.  Determinations  are made by the  General  Partner  with
respect to costs incurred by the General Partner (whether directly or indirectly
through its  affiliates)  that will be  reimbursed  by the Company.  The Company
reimburses the General Partner and any of its affiliates for direct and indirect
general  and  administrative  costs,   principally  officers'  compensation  and
associated  expenses,  related to the business of the Company. The reimbursement
is based on the time devoted by employees to the Company's business or upon such
other reasonable  basis as may be determined by the General  Partner.  In fiscal
1996, the Company reimbursed the General Partner and its affiliates $745,000 for
such expenses.

                                     PART IV


Item 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.

        (a) The  following  documents are filed as part of this Annual Report on
Form 10-K:

           (1)  Financial Statements.

           See Index to Financial  Statements and Financial Statement
       Schedules on page F-1 hereof.

           (2)  Financial Statement Schedules.

           See Index to Financial  Statements and Financial Statement
       Schedules on page F-1 hereof.

           Schedules  other  than  those  listed on the  accompanying
       Index  to  Financial   Statements   and  Financial   Statement
       Schedules  are omitted  because they are either not  required,
       not applicable, or the required information is included in the
       consolidated financial statements or notes thereto.

           (3)  Exhibits.

        3.1  Amended and Restated  Certificate of Limited  Partnership
             of FFP Partners, L.P. [3.7]  {1}
        3.2  Amended and Restated  Certificate of Limited  Partnership
             of FFP Operating Partners, L.P. [3.8] {1}
        4.1  Amended and Restated Agreement of Limited  Partnership of
             FFP Partners,  L.P., dated May 21, 1987, as amended by
             the First Amendment to Amended and Restated  Agreement
             of Limited  Partnership  dated August 14, 1989, and by
             the  Second   Amendment   to  Amended   and   Restated
             Agreement  of  Limited   Partnership  dated  July  12,
             1991.  {5}
        4.2  Amended and Restated Agreement of Limited  Partnership of
             FFP Operating Partners, L.P. dated May 21, 1987.  {2}
        4.3  Rights  Agreement  dated as of August 14,  1989,  between
             the Company and NCNB Texas  National  Bank,  as Rights
             Agent. [1]  {3}
       10.1  Nonqualified  Unit  Option  Plan  of FFP  Partners,  L.P.
             [10.2]  {1}
       10.2  Form of Ground Lease with Affiliated  Companies.  [10.3]
             {1}
       10.3  Form  of  Building  Lease  with   Affiliated   Companies.
             [10.4]  {1}
       10.4  Form of Agreement  with  Product  Supply  Services,  Inc.
             [10.5]  {1}
       10.5  Agreement of Limited  Partnership  of Direct Fuels,  L.P.
             [10.6]  {4}
       10.6  Form  of  Employment   Agreement   between  FFP  Partners
             Management   Company,   Inc.,  and  certain  executive
             officers  dated April 23,  1989,  as amended  July 22,
             1992. [10.9]  {5}
       10.7  Amended and  Restated  Credit  Agreement  between Bank of
             America  Texas,  N.A.,  and  FFP  Operating  Partners,
             L.P., dated November 27, 1996. {6}
       21.1  Subsidiaries of the Registrant.  {6}
       23.1  Consent of KPMG Peat Marwick LLP. {6}
       27    Financial data schedule. {6}
       99.1  Financial statements of FFP Operating Partners, L.P.,
             a  99%-owned  subsidiary  of the  Registrant.  {These
             financial statements are being filed as an exhibit to
             facilitate  compliance with certain state  regulatory
             requirements.} {6}
-----------------------
          {1}  Included as the indicated exhibit in the Partnership's
               Registration Statement on Form S-1 (Registration No.
               33-12882) dated May 14, 1987, and incorporated herein by
               reference.
          {2}  Included as the indicated  exhibit in the  Partnership's
               Annual  Report on Form 10-K for the  fiscal  year  ended
               December 27, 1987, and incorporated herein by reference.
          {3}  Included as the indicated  exhibit in the  Partnership's
               registration  statement  on Form 8-A  dated as of August
               29, 1989, and incorporated herein by reference.
          {4}  Included as the indicated  exhibit in the  Partnership's
               Current Report on Form 8-K, dated February 10, 1989, and
               incorporated herein by reference)
          {5}  Included as the indicated  exhibit in the  Partnership's
               Annual  Report on Form 10-K for the  fiscal  year  ended
               December 27, 1992, and incorporated herein by reference.
          {6}  Included herewith.

        (b) No  reports on Form 8-K were  filed  during the last  quarter of the
        period covered by this Annual Report on Form 10-K.


                                   SIGNATURES

               Pursuant  to the  requirements  of  Section  13 or  15(d)  of the
Securities  and Exchange Act of 1934, the Registrant has duly caused this Annual
Report on Form 10-K to be signed  on its  behalf by the  undersigned,  thereunto
duly authorized.

Dated:  April 11, 1997               FFP PARTNERS, L.P.
                                     (Registrant)
                                     By: FFP Partners Management Company, Inc.,
                                         General Partner

                                             By: /s/ John H. Harvison
                                                 John H. Harvison
                                                 Chairman of the Board



     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Annual  Report has been signed below by the  following  persons on behalf of the
Registrant in the capacities indicated as of April 11, 1997.

/s/ John H. Harvison                     Chairman of the Board of Directors and
---------------------------------------  Chief Executive Officer of FFP Partners
John H. Harvison                         Management Company, Inc. (Principal
                                         executive officer)

/s/ Robert J. Byrnes                     President, Chief Operating Officer, and
---------------------------------------- Director of FFP Partners Management
Robert J. Byrnes                         Company, Inc.  (Principal operating
                                         officer)

/s/ Steven B. Hawkins                    Vice President - Finance and
---------------------------------------- Administration, and Chief Financial
Steven B. Hawkins                        Officer of FFP Partners Management
                                         Company, Inc. (Principal financial and
                                         accounting officer)

/s/ J. D. St.Clair                       Director of FFP Partners Management
---------------------------------------- Company, Inc.
J. D. St.Clair

/s/ Michael Triantafellou                Director of FFP Partners Management
---------------------------------------- Company, Inc.
Michael Triantafellou

/s/ Robert E. Garrison, II               Director of FFP Partners Management
---------------------------------------- Company, Inc.
Robert E. Garrison, II

/s/ John W. Hughes                       Director of FFP Partners Management
---------------------------------------- Company, Inc.
John W. Hughes

/s/ Garland R. McDonald                  Director of FFP Partners Management
---------------------------------------- Company, Inc.
Garland R. McDonald

/s/ John D. Harvison                     Director of FFP Partners Management
---------------------------------------- Company, Inc.
John D. Harvison

/s/ E. Michael Gregory                   Director of FFP Partners Management
---------------------------------------- Company, Inc.
E. Michael Gregory


Item 8.  INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE.

                             
                                                                          Page
                                                                         Number
Independent Auditors' Report                                              F-2

Consolidated Balance Sheets as of December 29, 1996, and 
  December 31, 1995                                                       F-3

Consolidated  Statements  of Operations  for the Years Ended
  December 29, 1996, December 31, 1995, and December 25, 1994             F-4

Consolidated  Statements of Partners'  Capital for the Years 
  Ended  December 29,1996, December 31, 1995, and December 25, 1994       F-5

Consolidated  Statements  of Cash Flows for the Years Ended 
  December  29, 1996, December 31, 1995, and December 25, 1994            F-6

Notes to Consolidated Financial Statements                                F-8

Schedule II - Valuation and Qualifying Accounts                           F-26




                                       F-1




                          INDEPENDENT AUDITORS' REPORT



The Partners
FFP Partners, L.P.:

     We have audited the consolidated financial statements of FFP Partners, L.P.
(a Delaware Limited  Partnership) and subsidiaries as listed in the accompanying
index. In connection with our audits of the consolidated  financial  statements,
we  also  have  audited  the  financial  statement  schedule  as  listed  in the
accompanying  index.  These  consolidated  financial  statements  and  financial
statement  schedule are the  responsibility  of the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and financial statement schedule based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in  all  material  respects,  the  financial  position  of FFP
Partners,  L.P. and  subsidiaries as of December 29, 1996 and December 31, 1995,
and the results of their  operations  and their cash flows for each of the years
in the three-year  period ended December 29, 1996, in conformity  with generally
accepted  accounting  principles.  Also in our  opinion,  the related  financial
statement  schedule,  when  considered  in  relation  to the basic  consolidated
financial  statements  taken  as a  whole,  presents  fairly,  in  all  material
respects, the information set forth therein.



                                             KPMG Peat Marwick LLP


Fort Worth, Texas
March 14, 1997


                      FFP PARTNERS, L.P., AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                    DECEMBER 29, 1996, AND DECEMBER 31, 1995
                                 (In thousands)

                                                              1996      1995
                             ASSETS
Current Assets
   Cash and cash equivalents                                  $8,244    $8,106
   Trade receivables, less allowance for doubtful
    accounts of $883 and $1,045 in 1996 and 1995, 
    respectively                                              10,303     9,440
   Notes receivable                                              778       453
   Receivables from affiliated company                           420       436
   Inventories                                                12,489    11,260
   Prepaid expenses and other current assets                     625       615
      Total current assets                                    32,859    30,310

Property and equipment, net                                   38,024    31,872
Noncurrent notes receivable, excluding current portion         2,069     1,156
Claims for reimbursement of environmental remediation costs    1,038     1,255
Other assets, net                                              4,609     4,739
      Total Assets                                           $78,599   $69,332

               LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
   Amount due under revolving credit line                     $6,823    $4,003
   Current installments of long-term debt                      1,587     1,028
   Current installments of obligations under capital leases    1,122       884
   Accounts payable                                           14,150    13,030
   Money orders payable                                        7,809     5,918
   Accrued expenses                                            8,778     9,894
      Total current liabilities                               40,269    34,757

Long-term debt, excluding current installments                 7,765     6,157
Obligations under capital leases, excluding current 
  installments                                                 1,653       943
Deferred income taxes                                          3,781     1,135
Other liabilities                                                993       639
      Total Liabilities                                       54,461    43,631
Commitments and contingencies

Partners' Capital
    Limited partners' equity                                  24,165    25,713
    General partner's equity                                     242       257
    Treasury units                                              (269)     (269)
      Total Partners' Capital                                 24,138    25,701

      Total Liabilities and Partners' Capital                $78,599   $69,332

          See accompanying notes to consolidated financial statements.


                      FFP PARTNERS, L.P., AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
    YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995, AND DECEMBER 25, 1994
                     (In thousands, except unit information)

                                                  1996        1995        1994
Revenues
   Motor fuel                                   $321,814    $296,887    $275,278
   Merchandise                                    60,579      65,512      72,827
   Miscellaneous                                   7,759       7,646       7,408
      Total Revenues                             390,152     370,045     355,513

Costs and Expenses
   Cost of motor fuel                            301,142     274,074     252,946
   Cost of merchandise                            42,758      46,325      52,658
   Direct store expenses                          27,062      28,496      29,553
   General and administrative expenses            11,506      11,795      11,056
   Depreciation and amortization                   3,951       3,769       4,352
      Total Costs and Expenses                   386,419     364,459     350,565


Operating Income                                   3,733       5,586       4,948
   Interest Expense                                1,246       1,176       1,173
Income before income taxes and
   extraordinary item                              2,487       4,410       3,775
   Deferred income tax expense arising from
     Change in tax lives of certain buildings      2,089           0           0
     Other items                                     557         500         244

Income/(loss) before extraordinary item             (159)      3,910       3,531
   Extraordinary item - gain on
      extinguishment of debt                           0           0         200
Net Income/(Loss)                                  $(159)     $3,910      $3,731

Net income/(loss) allocated to
   Limited partners                                $(157)     $3,871      $3,694
   General partner                                    (2)         39          37

Income/(loss) per limited partner unit
   Before extraordinary item                      $(0.04)      $1.07       $0.97
   Gain on extinguishment of debt                   0.00        0.00        0.06
   Net income/(loss)                              $(0.04)      $1.07       $1.03

Distributions declared per unit                   $0.415      $0.870      $0.370

Weighted average number of Class A
   and Class B Units outstanding               3,684,525   3,632,221   3,589,337

          See accompanying notes to consolidated financial statements.



                      FFP PARTNERS, L.P., AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
     YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995, AND DECEMBER 25, 1994
                     (In thousands, except unit information)

                                 Limited Partners     General  Treasury
                                
                                Class A    Class B    Partner   Units     Total

Balance, December 26, 1993       $15,813     $6,634     $225   $(269)   $22,403

Exercise of Class A Unit
    options by employees              53          0        0       0         53

Distributions to partners
    ($0.37 per Class A and
    Class B Unit)                   (761)      (563)     (13)      0     (1,337)

Net income                         2,124      1,570       37       0      3,731

Balance, December 25, 1994        17,229      7,641      249    (269)    24,850

Exercise of Class A Unit
    options by employees
    and directors                    238          0        1       0        239

Retirement of Class A Units          (94)         0        0       0        (94)

Distributions to partners
    ($0.87 per Class A and
    Class B Unit)                 (1,838)    (1,334)     (32)      0     (3,204)

Net income                         2,254      1,617       39       0      3,910


Balance, December 31, 1995        17,789      7,924      257    (269)    25,701

Exercise of Class A Unit
    options by employees
    and directors                    139          0        2       0        141

Conversion of Class B Units        6,691     (6,691)       0       0          0

Distributions to partners
    ($0.415 per Class A and
    Class B Unit)                 (1,445)       (85)     (15)      0     (1,545)

Net (loss)                          (150)        (7)      (2)      0       (159)


Balance, December 29, 1996       $23,024     $1,141     $242   $(269)   $24,138


          See accompanying notes to consolidated financial statements.


                      FFP PARTNERS, L.P., AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
     YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995, AND DECEMBER 25, 1994
                 (In thousands, except supplemental information)

                                                       1996      1995      1994
Cash Flows from Operating Activities
   Net income/(loss)                                  $(159)   $3,910    $3,731
   Adjustments to reconcile net income/(loss)to net
   cash provided by operating activities
      Depreciation and amortization                   3,950     3,769     4,352
      Provision for doubtful accounts                   327       459       804
      Provision for deferred income taxes             2,646       500       244
      (Gain) on sales of property and equipment         (21)     (256)      (16)
      (Gain) on extinguishment of debt                    0         0      (200)
      (Gain) on sales of convenience store           (1,778)     (791)     (829)
   operations
      Minority interest in net income of                 32        42        41
   subsidiaries
   Changes in operating assets and liabilities
      (Increase) in trade receivables                (1,190)   (1,807)   (2,018)
      Decrease in notes receivable                      540       733        80
      Decrease in receivables from affiliated company    16        15        24
         (Increase)/decrease in inventories          (1,229)       86     2,211
      (Increase)/decrease in prepaid expenses and
          other current assets                          (10)       (8)      156
      Decrease in claims for reimbursement of
          environmental remediation cost                217       314       192
      Increase/(decrease) in accounts payable         1,120      (150)    1,137
      Increase in money orders payable                1,891     1,656       832
      Increase/(decrease) in accrued expenses
          and other liabilities                        (794)   (2,429)      353
Net cash provided by operating activities             5,558     6,043    11,094

Cash Flows from Investing Activities
   Purchases of property and equipment               (9,517)   (4,762)   (3,772)
   Proceeds from sales of property and equipment         98       314        44
   Investments in joint ventures and other entities       0    (1,350)        0
   (Increase) in other assets                          (332)     (687)     (787)
Net cash (used in) investing activities              (9,751)   (6,485)   (4,515)

                                                                         
Cash Flows from Financing Activities
   Borrowings/(payments) on revolving
        credit line, net                              2,820     4,003    (7,116)
   Proceeds from long-term debt                       4,000         0    12,161
   Payments on long-term debt                        (2,033)   (4,178)  (13,576)
   Borrowings under capital lease obligations         1,923     1,076     1,560
   Payments on capital lease obligations               (975)     (694)     (115)
   Proceeds from exercise of unit options               141       145        53
   Distributions to unitholders                      (1,545)   (3,204)   (1,337)
Net cash provided by/(used in) financing activities   4,331    (2,852)   (8,370)

Net increase/(decrease) in cash and cash equivalents    138    (3,294)   (1,791)
Cash and cash equivalents at beginning of year        8,106    11,400    13,191
Cash and cash equivalents at end of year             $8,244    $8,106   $11,400


Supplemental Disclosure of Cash Flow Information

     Cash  paid for  interest  during  1996,  1995,  and  1994  was  $1,097,000,
$1,394,000, and $1,283,000, respectively. Purchases of property and equipment in
1996 include $80,000 of capitalized interest.

Supplemental Schedule of Noncash Investing and Financing Activities

     During 1996, the Company  acquired fixed assets of $200,000 in exchange for
notes payable.

     During 1995,  the Company (i) acquired fixed assets of $598,000 in exchange
for notes payable and (ii) retired  $94,000 in Class A Units in connection  with
the  surrender of 12,295 Class A Units in payment for the exercise of options to
acquire 25,000 Class A Units by a director of the General Partner.

     During 1994, the Company  acquired  property  valued at $215,000 and a note
receivable of $120,000 through settlement of a lawsuit.

          See accompanying notes to consolidated financial statements.


                      FFP PARTNERS, L.P., AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          DECEMBER 29, 1996, DECEMBER 31, 1995, AND DECEMBER 25, 1994


1.  Basis of Presentation

(a) Organization of Company

     FFP Partners, L.P. ("FFPLP"),  through its subsidiaries,  owns and operates
retail convenience stores, truck stops, and self-service motor fuel outlets over
an eleven  state area.  It also  operates  check  cashing  booths and conducts a
wholesale  motor fuel  business,  both  primarily  in Texas.  FFPLP,  a Delaware
limited partnership, was formed in December 1986 and commenced operations in May
1987. FFP Partners Management Company,  Inc. ("FFPMC" or the "General Partner"),
serves as the general partner of FFPLP.  FFPMC, or a subsidiary,  also serves as
the general  partner of FFPLP's  subsidiary  partnerships.  References  in these
notes to the "Company" include FFPLP and its subsidiaries.

     The  Company  owns  and  conducts  its  operations  through  the  following
subsidiaries:
                                                       Principal         Percent
            Entity                Date Formed          Activity           Owned
FFP Operating Partners, L.P.,   December 1986    Operation of convenience    99%
   a Delaware limited                               stores and other
   partnership                                      retail outlets
Direct Fuels, L.P., a Texas     December 1988    Operation of fuel           99%
   limited partnership                              terminal and
                                                    wholesale fuel sales
FFP Financial Services, L.P.,   September 1990   Operation of check          99%
   a Delaware limited                               cashing booths
   partnership
Practical Tank Management,      September 1993   Underground storage tank   100%
   Inc., a Texas corporation                        monitoring
FFP Transportation, L.L.C., a   September 1994   Ownership of tank          100%
   Texas limited liability                          trailers leased to
   company                                          independent trucking
                                                    company
FFP Money Order Company, Inc.,  December 1996    Sale of money orders       100%
   a Nevada corporation                             through agents

(b) Consolidation

     All significant intercompany accounts and transactions have been eliminated
in the  consolidated  financial  statements.  The  minority  interest in the net
income or loss of subsidiaries  which are not  wholly-owned by FFPLP is included
in general and administrative expenses.


2.  Significant Accounting Policies

(a) Fiscal Years

     The Company  prepares its financial  statements  and reports its results of
operations  on the  basis of a fiscal  year  which  ends on the last  Sunday  of
December.  Accordingly,  the fiscal years ended  December 29, 1996, and December
25,  1994,  consisted  of 52 weeks,  while the year  ended  December  31,  1995,
consisted  of 53  weeks.  Year end data in these  notes is as of the  respective
dates above.

(b) Cash Equivalents

     The Company considers all highly liquid investments with maturities at date
of purchase of three months or less to be cash equivalents.

(c)  Notes Receivable

     Notes receivable are recorded at the amount owed, less a related  allowance
for  impairment.  The provisions of Statement of Financial  Accounting  Standard
("SFAS") No. 114,  "Accounting by Creditors for Impairment of a Loan," have been
applied in the evaluation of the collectibility of notes receivable. At year end
1996 and 1995, no notes receivable were determined to be impaired.

(d) Inventories

     Inventories  consist of retail convenience store merchandise and motor fuel
products.  Merchandise  inventories are stated at the lower of cost or market as
determined by the retail method.  Motor fuel inventories are stated at the lower
of cost or market using the first-in, first-out ("FIFO") inventory method.

     The  Company  has  selected a single  company as the  primary  grocery  and
merchandise  supplier to its convenience stores and truck stops although certain
items,  such as bakery  goods,  dairy  products,  soft drinks,  beer,  and other
perishable products, are generally purchased from local vendors and/or wholesale
route salespeople.  The Company believes it could replace any of its merchandise
suppliers,  including  its primary  grocery and  merchandise  supplier,  with no
significant adverse effect on its operations.

     The  Company  does not have  long-term  contracts  with  any  suppliers  of
petroleum   products   covering   more  than  10%  of  its  motor  fuel  supply.
Unanticipated  national or international events could result in a curtailment of
motor fuel  supplies to the  Company,  thereby  adversely  affecting  motor fuel
sales. In addition, management believes a significant portion of its merchandise
sales are to  customers  who also  purchase  motor  fuel.  Accordingly,  reduced
availability of motor fuel could negatively impact other facets of the Company's
operations.

(e) Property and Equipment

     Property and equipment are stated at cost. Equipment acquired under capital
leases is stated at the present  value of the initial  minimum  lease  payments,
which is not in  excess of the fair  value of the  equipment.  Depreciation  and
amortization of property and equipment are provided on the straight-line  method
over the estimated useful lives of the respective assets. Leasehold improvements
are amortized on the straight-line  method over the shorter of the lease term or
the estimated useful lives of the respective assets.

(f)  Investments

     Investments in joint ventures and other entities that are 50% or less owned
are accounted for by the equity method and are included in other assets, net, in
the accompanying consolidated balance sheets.

(g) Intangible Assets

     In  connection  with the  allocation  of the  purchase  price of the assets
acquired in 1987 upon the commencement of the Company's  operations,  $6,192,000
was  allocated  to  contracts  under  which the Company  supplies  motor fuel to
various  retail  outlets and  $1,093,000  was allocated as the future benefit of
real estate leased from  affiliates of the General  Partner.  The fuel contracts
were amortized using the  straight-line  method over 6.3 years, the average life
of such  contracts at the time they were  acquired.  The value assigned to these
contracts  became fully amortized  during 1993. The future benefit of the leases
is being amortized  using the  straight-line  method over 20 years,  the initial
term and option periods, of such leases.

     Goodwill of $2,020,000 is being  amortized using the  straight-line  method
over  20  years.  The  Company  assesses  the   recoverability  of  goodwill  by
determining   whether  the  amortization  of  the  balance  over  the  remaining
amortization period can be recovered through  undiscounted future operating cash
flows of the acquired operations.  The amount of goodwill impairment, if any, is
measured  based on  projected  discounted  future  operating  cash flows using a
discount rate reflecting the Company's  average cost of funds. The assessment of
the recoverability of goodwill would be impacted if anticipated future operating
cash flows are not achieved.

(h) Sales of Convenience Store Operations

     The Company sold the  merchandise  operations  and related  inventories  of
certain  convenience  store  locations to various  third parties in exchange for
cash and notes receivable.  The notes receivable generally are for terms of five
years, require monthly payments of principal and interest,  and bear interest at
rates  ranging  from 8% to 10%.  Summary  information  about  these  sales is as
follows:

                                                                Gains
                                                        -----------------------
             Number              Notes        Total                   Deferred
              Sold      Cash     Receivable  Proceeds  Recognized  (at year-end)
                           (In thousands, except number sold)
  1996          18       $816     $1,561     $2,377     $1,778         $250
  1995          10        357        543        900        791          200
  1994          15        778      1,056      1,834        829          400

     Gains on sales  which  meet  specified  criteria,  including  receipt  of a
significant  cash down  payment and  projected  cash flow from store  operations
sufficient to adequately  service the debt, are  recognized  upon closing of the
sale.  Gains on sales which do not meet the  specified  criteria are  recognized
under  the  installment  method  as cash  payments  are  received.  Gains  being
recognized under the installment method are evaluated  periodically to determine
if full recognition of the gain is appropriate.

     Under  these  sales,  the  Company  retains  the real  estate or  leasehold
interests,  and leases or subleases the store  facilities  (including  the store
equipment)  to  the  purchaser   under  five-year   renewable   operating  lease
agreements.  The Company retains ownership of the motor fuel operations and pays
the purchaser of the store  commissions  based on motor fuel sales. In addition,
the new store operators may purchase merchandise under the Company's established
buying arrangements.

(i) Environmental Costs

     Environmental   remediation  costs  are  expensed;   related  environmental
expenditures that extend the life, increase the capacity,  or improve the safety
or efficiency of existing assets are capitalized.  Liabilities for environmental
remediation costs are recorded when environmental  assessment and/or remediation
is  probable  and  the  amounts  can  be  reasonably  estimated.   Environmental
liabilities  are evaluated  independently  from  potential  claims for recovery.
Accordingly,   the  gross  estimated   liabilities  and  estimated   claims  for
reimbursement  have been presented  separately in the accompanying  consolidated
balance sheets (see Note 13b).

     In October 1996,  the American  Institute of Certified  Public  Accountants
issued   Statement  of  Position   ("SOP")   96-1,   Environmental   Remediation
Liabilities.  SOP 96-1, which will be adopted by the Company at the beginning of
its 1997 fiscal year, requires,  among other things,  environmental  remediation
liabilities  to be accrued  when the  criteria  of SFAS No. 5,  "Accounting  for
Contingencies,"  have been met. The SOP also  provides  guidance with respect to
the measurement of remediation  liabilities.  Such accounting is consistent with
the Company's current method of accounting for environmental  remediation costs,
and  therefore,  adoption of SOP 96-1 in 1997 is not expected to have a material
impact on the Company's consolidated financial position,  results of operations,
or liquidity.

(j) Motor Fuel Taxes

     Motor fuel  revenues  and related  cost of motor fuel  include  federal and
state excise taxes of $105,718,000,  $103,478,000,  and $103,117,000,  for 1996,
1995, and 1994, respectively.

(k) Exchanges

     The  exchange  method of  accounting  is utilized  for motor fuel  exchange
transactions.  Under this method,  such transactions are considered as exchanges
of assets with deliveries being offset against receipts, or vice versa. Exchange
balances  due from  others  are valued at current  replacement  costs.  Exchange
balances due to others are valued at the cost of forward  contracts (Note 11) to
the extent they have been entered  into,  with any remaining  balance  valued at
current  replacement cost.  Exchange balances due to others at year end 1996 and
1995 were $4,000 and $-0-, respectively.

(l) Income Taxes

     Taxable  income or loss of the  Company  is  includable  in the  income tax
returns of the individual partners; therefore, no provision for income taxes has
been made in the  accompanying  consolidated  financial  statements,  except for
applying the provisions of SFAS No. 109 "Accounting for Income Taxes," which was
adopted in fiscal 1993.

     Under the Revenue Act of 1987  ("Revenue  Act"),  certain  publicly  traded
partnerships  are to be  treated  as  corporations  for tax  purposes.  Due to a
transitional  rule, this provision of the Revenue Act will not be applied to the
Company until the earlier of (i) its tax years  beginning after 1997 or (ii) its
addition of a "substantial  new line of business" as defined by the Revenue Act.
Legislation  has been introduced into Congress which would extend for a two year
period the Company's  partnership  tax status.  However,  no action has yet been
taken on this  legislation.  The  General  Partner  continues  to  evaluate  the
Company's alternatives with respect to its tax status.

     Income  taxes are  accounted  for under  the  asset and  liability  method.
Deferred tax assets and liabilities are recognized for the estimated  future tax
consequences  attributable to existing  differences  between financial statement
carrying  amounts of assets and liabilities and their  respective tax bases that
are  expected to reverse  after 1997.  Deferred tax  liabilities  and assets are
measured  using enacted tax rates expected to be in effect when such amounts are
realized or settled. The effect of a change in tax rates is recognized in income
in the period that includes the enactment date.

(m)  Fair Value of Financial Instruments

     The  carrying  amounts of cash,  receivables,  amounts due under  revolving
credit line,  and money orders  payable  approximate  fair value  because of the
short maturity of those  instruments.  The carrying  amount of notes  receivable
approximates fair value which is determined by discounting  expected future cash
flows at current rates.

     The carrying  amount of long-term debt  approximates  fair value due to the
variable interest rate on substantially all such obligations.

(n)  Units Issued and Outstanding

     Units outstanding at year end 1996 and 1995 were as follows:

                                          1996           1995
         Class A Units                 3,529,205      2,137,076
         Class B Units                   175,000      1,533,522

     The Company's Class A Units are traded on the American Stock Exchange.  The
Class B Units, which are not registered and are not traded on the American Stock
Exchange, are held by an entity affiliated with the General Partner.

     During 1996,  1,358,522  Class B Units  primarily held by affiliates of the
General  Partner  were  converted  to  Class A  Units,  in  accordance  with the
Partnership Agreement. The remaining Class B Units may be converted into Class A
Units on a one-for-one basis at the option of the unitholder.  The Class A Units
and Class B Units have identical rights with respect to cash  distributions  and
to voting on matters brought before the partners.

     During 1990, the Company  acquired  13,300 Class A Units and 51,478 Class B
Units which are being held in the treasury at cost.

(o) Income/(Loss) per Unit

     The  Partnership  Agreement  provides  that  net  income  or  loss is to be
allocated (i) 99% to the limited partners and 1% to the General Partner and (ii)
among the  limited  partners  based on the  number of units  held.  Accordingly,
income/(loss)  per unit is calculated by dividing 99% of the appropriate  income
statement  caption by the weighted  average  number of Class A and Class B Units
outstanding  for the year. No effect has been given to the unit purchase  rights
and options  outstanding  under the unit option  plans (Note 9) since the effect
would be immaterial or anti-dilutive.

(p) Cash Distributions to Partners

     Distributions  to partners  represent a return of capital and are allocated
pro rata to the  General  Partner  and  holders  of both the Class A and Class B
Units.

(q) Employee Benefit Plan

     The Company has a 401(k)  profit  sharing plan  covering all  employees who
meet age and tenure  requirements.  Participants  may  contribute  to the plan a
portion, within specified limits, of their compensation under a salary reduction
arrangement.   The  Company  may  make  discretionary   matching  or  additional
contributions  to the plan.  The Company did not make any  contributions  to the
plan in 1996, 1995, or 1994.

(r)  Use of Estimates

     The use of  estimates  is required to prepare  the  Company's  consolidated
financial   statements  in  conformity   with  generally   accepted   accounting
principles.  Although  management  believes that such estimates are  reasonable,
actual results could differ from the estimates.

(s)  Unit Option Plan

     The  Company  accounts  for its unit  option  plan in  accordance  with the
provisions of Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for  Stock  Issued  to  Employees,"  and  related   interpretations.   As  such,
compensation  expense would be recorded only if the current  market price of the
underlying  unit on the date of grant of the option  exceeded the exercise price
of the option. On January 1, 1996, the Company adopted SFAS No. 123, "Accounting
for  Stock-Based  Compensation,"  which  permits  entities to (i)  recognize  as
expense over the vesting period the fair value of all stock-based  awards on the
date of grant or (ii) continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and  earnings  per share  disclosures  for employee
option  grants made in 1995 and future years as if the  fair-value-based  method
defined in SFAS No. 123 had been  applied.  The  Company  has elected the second
alternative (see Note 9).

(t)  Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

     The Company  adopted the  provisions of SFAS No. 121,  "Accounting  for the
Impairment of  Long-Lived  Assets and  Long-Lived  Assets to Be Disposed Of," on
January 1, 1996.  This  statement  requires that  long-lived  assets and certain
identifiable  intangibles  to be  reviewed  for  impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be  recoverable.  Recoverability  of assets to be held and used is measured by a
comparison  of the  carrying  amount of such  assets to  future  net cash  flows
expected to be  generated  by the assets.  If such assets are  considered  to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying  amount or fair value less
costs to sell.  The initial  adoption of this  statement did not have a material
impact on the Company's consolidated financial position,  results of operations,
or liquidity.


3.  Property and Equipment

     Property and equipment consists of the following:

                                                         1996      1995
                                                         (In thousands)
        Land                                            $4,703    $4,319
        Land improvements                                2,698     2,627
        Buildings and improvements                      26,509    24,515
        Machinery and equipment                         35,450    31,302
        Construction in progress                         2,821         0
                                                        72,181    62,763
  
        Accumulated depreciation and amortization      (34,157)  (30,891)
                                                       $38,024   $31,872

4.  Other Assets

     Other assets consist of the following:

                                                       1996      1995
                                                       (In thousands)
    Intangible Assets (Note 2g)
       Ground leases                                  $1,093    $1,093
       Goodwill                                        2,040     2,020
       Other                                           2,295     1,984
                                                       5,428     5,097
       Accumulated amortization                       (2,375)   (2,056)
                                                       3,053     3,041
    Investments in joint ventures and other entities   1,293     1,350
    Other                                                263       348
                                                      $4,609    $4,739


     In  December  1995,  the Company  advanced  $1,200,000  to a company  which
granted  the Company a security  interest  in certain  loans that are secured by
convenience  stores located in areas where the Company currently has operations.
These loans will be liquidated  through collection or through the acquisition of
the stores by the Company through foreclosure proceedings.


5.  Notes Payable and Long-Term Debt

     The Company has a Credit  Agreement with a bank that provides a $10,000,000
revolving  credit line for working capital  purposes.  The revolving credit line
bears  interest at the bank's prime rate (8.25% at year end 1996) and matures on
April 30,  1998.  The Credit  Agreement  requires  that the balance  outstanding
(excluding  letters  of  credit)  under the  revolving  credit  line not  exceed
$1,500,000 for three consecutive calendar days in each quarter. At year end 1996
and  1995,  there  was  $6,823,000  and  $4,003,000,  respectively,  due  on the
revolving  credit  line and there were  outstanding  letters of credit  totaling
$625,000 at each year end.

     The Credit  Agreement  also  provides  two term loans.  One such loan had a
balance at year end 1996 of $5,625,000,  bears interest at the London  Interbank
Offered  Rate  ("LIBOR")  plus 1.75  percent,  requires  quarterly  payments  of
interest plus  principal of $312,500,  and matures on March 31, 2001.  The other
term loan had a balance of $3,000,000 at year end 1996,  bears interest at LIBOR
plus 1.75 percent,  requires  quarterly  payments of interest plus  principal of
$75,000 in June,  September,  and December  1997,  and March 1998,  principal of
$125,000  in each of the next 16  quarters,  and  principal  of  $175,000 in the
subsequent four quarters,  and matures on March 31, 2003.  (Through December 31,
1996, both of these loans bore interest at the bank's prime rate.)

     All loans are secured by the Company's  accounts  receivable and inventory.
In addition the Company has  provided a negative  pledge of all its fixed assets
and real  property  and the bank has the right to require a  positive  pledge of
such assets at any time. The loans are guaranteed by the General Partner and its
subsidiary.  The Credit  Agreement also contains various  restrictive  covenants
including  restrictions  on borrowing  from persons other than the bank,  making
investments in,  advances to, or guaranteeing  the obligations of other persons,
maintaining  specified  levels  of  equity,  restrictions  on  distributions  to
unitholders  and on the amount of capital  expenditures,  and the maintenance of
certain  financial  ratios.  At year end 1996, the Company was not in compliance
with certain  financial  ratios and covenants in the Credit Agreement.  The bank
has waived  compliance  with these ratios or  amended the Credit Agreement  with
respect to these items.

     The Company has other notes  payable  which bear  interest at 6% to 10% and
are due in monthly or annual installments through 2012. Such notes are unsecured
or secured by  receivables  or land and had  aggregate  balances of $603,000 and
$622,000 at year end 1996 and 1995, respectively.

     The aggregate fixed maturities of long-term debt for each of the five years
subsequent to 1996 are as follows:

                                         (In thousands)
          1997                               $1,587
          1998                                1,764
          1999                                1,929
          2000                                1,810
          2001                                1,180
          Thereafter                          1,082
                                             $9,352

     In February  1994,  the Company  refinanced its then existing bank debt. In
connection with this  refinancing,  the Company  received a discount of $200,000
for the early  retirement of the existing debt. This discount is reflected as an
extraordinary   item  in  the  accompanying  1994   consolidated   statement  of
operations.


     6. Capital  Leases

     The Company is obligated under  noncancelable  capital leases  beginning to
expire in 1997.  The gross amount of the assets  covered by these capital leases
that are included in property and  equipment  in the  accompanying  consolidated
balance sheets is as follows:

                                                  1996      1995
                                                   (In thousands)
        Machinery and equipment                  $2,412    $2,636
        Accumulated amortization                   (798)     (425)
                                                 $1,614    $2,211


     The  amortization  of assets  held  under  capital  leases is  included  in
depreciation   and  amortization   expense  in  the  accompanying   consolidated
statements of operations.  Future minimum lease payments under the noncancelable
capital leases for years subsequent to 1996 are:


                                                         (In thousands)
    1997                                                      $1,332
    1998                                                         561
    1999                                                         440
    2000                                                         395
    2001                                                         527
    Thereafter                                                    80
    Total minimum lease payments                                3,335

      Amount representing interest                              (560)
   Present value of future minimum lease payments              2,775
      Current installments                                    (1,122)
   Obligations under capital leases, excluding current        $1,653
     installments


7.  Operating Leases

     The  Company  has  noncancelable,  long-term  operating  leases on  certain
locations,  a significant portion of which are with related parties.  Certain of
the leases have contingent rentals based on sales levels of the locations and/or
have escalation clauses tied to the consumer price index.  Minimum future rental
payments  (including  bargain renewal  periods) and sublease  receipts for years
after 1996 are as follows:

                             Future Rental Payments      Future
                       Related                          Sublease
                       Parties     Others      Total    Receipts
                                                             
                                       (In thousands)
      1997                $712      $597    $1,309     $1,031
      1998                 657       541     1,198        952
      1999                 657       499     1,156        841
      2000                 657       453     1,110        549
      2001                 657       369     1,026        200
      Thereafter         1,977     1,116     3,093         41
                        $5,317    $3,575    $8,892     $3,614

     Total rental expense and sublease income were as follows:

                             Rent Expense
                      Related                      Sublease
                      Parties   Others    Total     Income
                                  (In thousands)
      1996              $727      $742    $1,469    $1,154
      1995               849       735     1,584       843
      1994               842       912     1,754       592

8.  Accrued Expenses

     Accrued expenses consist of the following:

                                                         1996      1995
                                                          (In thousands)
Motor fuel taxes payable                                 $5,726    $6,599
Accrued payroll and related expenses                        818     1,349
Accrued environmental remediation costs (Note 13b)            0       322
Other                                                     2,234     1,624
                                                         $8,778    $9,894


9.  Nonqualifying Unit Option Plan and Unit Purchase Rights

     The Company has a Nonqualifying  Unit Option Plan and a Nonqualifying  Unit
Option Plan for  Nonexecutive  Employees  that authorize the grant of options to
purchase up to 450,000 and 100,000 Class A Units of the Company, respectively.

     Following is a summary of activity under the stock option plans:

                                               Class A      Price      Weighted
                                                Units       Range      Average
Options outstanding, December 26, 1993         309,932   $2.00-3.75      $3.55
                                 
Options granted during year                     10,000      3.88          3.88
    Options expired or terminated during year   (8,666)     3.75          3.75
    Options exercised during year              (17,336)   2.00 - 3.75     3.04
Options outstanding, December 25, 1994         293,930    2.00 - 3.88     3.59

    Options granted during year                 50,000    6.00 - 7.00     6.50
    Options expired or terminated during year   (6,999)     3.75          3.75
    Options exercised during year              (76,267)   2.00 - 3.88     3.11
Options outstanding, December 31, 1995         260,664    3.75 - 7.00     4.28

    Options granted during year                      0
    Options expired or terminated during year   (1,333)     3.75          3.75
    Options exercised during year              (37,332)     3.75          3.75
Options outstanding, December 29, 1996         221,999    3.75 - 7.00     3.70

Options exercisable, December 29, 1996         185,333    3.75 - 3.88     4.00


     The exercise  price of each option granted under the plans is determined by
the Board of  Directors,  but may not be less than the fair market  value of the
underlying  units on the date of  grant.  The  exercise  prices  of the  options
outstanding at year end 1996 are:


                 Exercise                     Options
                  Price                     Outstanding
                  $3.750                      165,333
                  $3.875                        6,666
                  $6.000                       25,000
                  $7.000                       25,000
                                              221,999

     At year  end  1996,  the  weighted-average  remaining  contractual  life of
outstanding options was 6.31 years.

     All options  outstanding at year end 1996 are  exercisable  with respect to
one-third of the units covered thereby on each of the anniversary dates of their
grants and expire ten years from the date of grant.  In the event of a change in
control of the  Company,  any  unexercisable  portion of the options will become
immediately exercisable.

     The Company  applies APB Opinion No. 25 in  accounting  for its unit option
plans;  accordingly,  no  compensation  cost  related  to  the  plans  has  been
recognized in the financial statements.  Had the Company determined compensation
cost at the date of grant for its unit  options  based on the fair  value of the
options under SFAS No. 123, the Company's 1996, 1995, and 1994 net income/(loss)
would not have differed materially from the amounts reported.

     In August 1989, the Company entered into a Rights Agreement and distributed
to its unitholders rights to purchase Rights Units (substantially  equivalent to
a Class A Unit) under certain circumstances.  Initially the Rights were attached
to all unit  certificates  representing  units then  outstanding and no separate
Rights  Certificates  were distributed.  Under the Rights Agreement,  the Rights
were to separate from the Units and be distributed  to  Unitholders  following a
public  announcement that a person or group of affiliated or associated  persons
(an "Acquiring Person") had acquired, or obtained a right to acquire, beneficial
ownership  of 20% or more of the  Partnership's  Class A Units or all classes of
outstanding Units. On August 8, 1994, a group of Unitholders announced that they
had an informal  understanding  that they would vote their  Units  together as a
block.  The agreement  related to units  constituting  approximately  25% of the
Class A Units then  outstanding.  Therefore,  the Rights became  exercisable  on
October 7, 1994,  the record date for the  issuance  of the Rights  Certificates
(the "Distribution Date").

     The Rights  currently  represent the right to purchase a Rights Unit (which
is  substantially  equivalent  to a Class A Unit) of the  Company  at a price of
$20.00 per Unit.  However,  the Rights Agreement  provides,  among other things,
that if any person  acquires  30% or more of the Class A Units or of all classes
of  outstanding  Units  then each  holder of a Right,  other  than an  Acquiring
Person,  will have the right to  receive,  upon  exercise,  Rights  Units (or in
certain  circumstances,  other property)  having a value of $40.00 per Unit. The
Rights  will  expire on August 13,  1999,  and do not have any voting  rights or
rights to cash distributions.


10.  Income Taxes

     As discussed in Note 2(l),  the Company  adopted the provisions of SFAS No.
109 as of the beginning of its 1993 fiscal year.  Noncash charges of $2,646,000,
$500,000, and $244,000 were recorded in 1996, 1995, and 1994,  respectively,  to
record deferred income tax expense.

     In  August  1996,  Congress  passed  legislation  clarifying  that  certain
buildings used in connection  with the retail sale of motor fuel qualified for a
substantially  shorter depreciable life for tax purposes than was being utilized
by the Company.  In January 1997, the Internal  Revenue  Service issued a notice
explaining how the tax deduction  related to the change in the depreciable lives
on these assets should be determined.  As a result, the Company will take a 1996
tax  deduction  for  the  difference  between  the tax  depreciation  previously
recorded  and  the  depreciation  available  using  the  shorter  life  and  has
recognized  an  additional  deferred  income tax  provision of $2,089,000 in the
fourth quarter 1996 related to this timing  difference.  The current tax benefit
of this deduction will be allocated to the Company's unitholders.

     The tax  effects of  temporary  differences  that give rise to  significant
portions  of the  deferred  tax  liabilities  at year  end 1996  and  1995,  are
presented below. Those temporary differences which are expected to reverse prior
to the Company's  being treated as a corporation  for tax purposes  (fiscal year
1998) have been excluded.

                                                1996       1995
                                                 (In thousands)
     Deferred tax liabilities:
       Property and equipment, principally
         due to basis differences and
         differences in depreciation          $(2,950)     $(845)
       Other                                     (831)      (290)
                                              $(3,781)   $(1,135)


11.  Futures and Forward Contracts

     The Company is party to commodity  futures contracts with off-balance sheet
risk.  Changes in the market value of open futures  contracts are  recognized as
gains or losses in the period of change.  These investments  involve the risk of
dealing with others and their ability to meet the terms of the contracts and the
risk  associated  with  unmatched  positions and market  fluctuations.  Contract
amounts  are often used to express  the  volume of these  transactions,  but the
amounts potentially subject to risk are much smaller.

     From time-to-time the Company enters into forward contracts to buy and sell
fuel,  principally to satisfy  balances owed on exchange  agreements  (Note 2k).
These  transactions,  which  together with futures  contracts are  classified as
operating activities for purposes of the consolidated  statements of cash flows,
are  included in motor fuel sales and related  cost of sales and resulted in net
gains as follows:

                                 (In thousands)
            1996                      $243
            1995                        87
            1994                     1,069

     Open positions under futures and forward  contracts were not significant at
year end 1996 and 1995.


12.  Related Party Transactions

     The Company  reimburses the General Partner and its affiliates for salaries
and related costs of executive  officers and others and for expenses incurred by
them in  connection  with the  management  of the Company.  These  expenses were
$745,000, $727,000, and $733,000 for 1996, 1995, and 1994, respectively.

     In July 1991,  the Company  entered  into an agreement  with an  affiliated
company  whereby  the  affiliated  company  sells  alcoholic  beverages  at  the
Company's stores in Texas. Under Texas law, the Company is not permitted to hold
licenses to sell alcoholic  beverages in Texas. The agreement  provides that the
Company will receive rent and a management  fee based on the gross receipts from
sales of alcoholic  beverages at its stores.  In July 1992,  the  agreement  was
amended to be for a term of five years commencing on the date of amendment.  The
sales recorded by the affiliated  company under this agreement were  $8,240,000,
$9,116,000,  and $9,180,000 in 1996, 1995, and 1994,  respectively.  The Company
received  $1,265,000,  $1,217,000,  and  $1,226,000  in 1996,  1995,  and  1994,
respectively,  in rent,  management  fees,  and interest,  which are included in
miscellaneous  revenues in the  consolidated  statements  of  operations.  After
deducting cost of sales and other expenses related to these sales, including the
amounts paid to the  Company,  the  affiliated  company had earnings of $82,000,
$91,000,  and $119,000 in 1996,  1995,  and 1994,  respectively,  as a result of
holding these  alcoholic  beverage  permits.  Under a revolving note executed in
connection  with this  agreement,  the Company  advances funds to the affiliated
company to pay for the purchases of alcoholic beverages. Receipts from the sales
of such  beverages  are credited  against the note balance.  The revolving  note
provides for interest at 1/2% above the prime rate charged by a major  financial
institution.

     From time to time,  the General  Partner may advance  funds to the Company.
Under the  Partnership  Agreement,  the General  Partner is  permitted to charge
interest on such advances provided the interest rate does not exceed rates which
would be charged by unrelated third parties. There were no advances owing to the
General Partner during or at the year ends of 1996, 1995, and 1994.

     The General Partner is entitled to  noncumulative,  incentive  compensation
each year in an amount  equal to 10% of the net income of the  Company  for such
year (prior to the calculation of the incentive  compensation),  but only if net
income  (prior  to the  calculation  of the  incentive  compensation)  equals or
exceeds $1.08 per unit and only if the total of the quarterly cash distributions
for  such  year  are  at  least  $1.50  per  unit.  The  incentive  compensation
requirements were not met in 1996, 1995, or 1994.

     The  Company  purchases  certain  goods  and  services   (including  office
supplies,  computer software and consulting services, and fuel supply consulting
and  procurement  services) from related  entities.  Amounts  incurred for these
products and services were $359,000, $421,000, and $147,000, for 1996, 1995, and
1994, respectively.

     As a part of its merchandise  sales  activities,  the Company  supplies its
private  label  cigarettes  on a wholesale  basis to other  retailers who do not
operate  outlets in its trade areas and pays them rebates based on the volume of
cigarettes purchased.  In 1996 and 1995, the Company paid $14,000 and $51,000 of
such rebates to a company on whose Board one of the Company's executive officers
serves.  The amount of rebates paid to this company was  calculated  in the same
manner as the rebates paid to non-related companies.

     In 1980 and 1982,  certain  companies  from which the Company  acquired its
initial base of retail outlets  granted to a third party the right to sell motor
fuel at retail for a period of 10 years at self-serve gasoline stations owned or
leased  by  the  affiliated  companies  or  their  affiliates.   All  rights  to
commissions under these agreements and the right to sell motor fuel at wholesale
to the third party at such locations were assigned to the Company in May 1987 in
connection  with the  acquisition of its initial base of retail  operations.  In
December  1990,  in  connection  with  the  expiration  or  termination  of  the
agreements  with the third party,  the Company  entered into  agreements  with a
company owned and controlled by the Chairman of the General  Partner and members
of his immediate family,  which grant to the Company the exclusive right to sell
motor  fuel at retail at these  locations.  The  terms of these  agreements  are
comparable to agreements that the Company has with other unrelated parties.  The
Company paid this affiliated  company  commissions  related to the sale of motor
fuel at these locations of $277,000,  $261,000,  and $222,000 in 1996, 1995, and
1994, respectively.

     During 1995, the Company purchased four parcels of land, including building
and petroleum  storage tanks and related  dispensing  equipment,  from a company
controlled  by the Chairman of the General  Partner and members of his immediate
family.  The Company  paid a total of  $116,000  for the real estate and related
improvements.  The Company is operating one of these  locations as a convenience
store and one as a  self-service  motor fuel  outlet and  intends to operate the
other two as either convenience  stores or self-service motor fuel outlets.  The
purchase price was determined by reference to similar properties acquired by the
Company from unrelated parties.

     During 1996, the Company charged to expense  $611,000 to reimburse  various
related companies for legal fees that benefited the Company. Of this amount, the
Company paid $225,000  during 1996;  the remaining  $386,000 owed at year end is
included in accrued liabilities in the accompanying consolidated balance sheets.


13.  Commitments and Contingencies

(a) Uninsured Liabilities

     The  Company  maintains   general  liability   insurance  with  limits  and
deductibles  management believes prudent in light of the exposure of the Company
to loss and the cost of the insurance.

     The Company  self-insures claims up to $45,000 per year for each individual
covered by its employee medical benefit plan for supervisory and  administrative
employees; claims above $45,000 are covered by a stop-loss insurance policy. The
Company  also  self-insures  medical  claims for its eligible  store  employees.
However,  claims under the plan for store  employees are subject to a $1,000,000
lifetime limit per employee and the Company does not maintain stop-loss coverage
for these claims.  The Company and its covered  employees  contribute to pay the
self-insured  claims  and  stop-loss  insurance  premiums.  Accrued  liabilities
include  amounts  management  believes  adequate to cover the  estimated  claims
arising prior to a year-end, including claims incurred but not yet reported. The
Company  recorded  expense  related to these plans of  $271,000,  $353,000,  and
$288,000 in 1996, 1995, and 1994, respectively.

     The  Company is covered for  worker's  compensation  in all states  through
incurred loss retrospective  policies.  Accruals for estimated claims (including
claims  incurred but not reported) have been recorded at year end 1996 and 1995,
including the effects of any retroactive premium adjustments.

(b) Environmental Matters

     The  operations  of the Company are subject to a number of federal,  state,
and local environmental laws and regulations,  which govern the storage and sale
of motor  fuels,  including  those  regulating  underground  storage  tanks.  In
September 1988, the Environmental  Protection Agency ("EPA") issued  regulations
that require all newly  installed  underground  storage tanks be protected  from
corrosion, be equipped with devices to prevent spills and overfills,  and have a
leak detection  method that meets certain  minimum  requirements.  The effective
commencement  date for newly installed tanks was December 22, 1988.  Underground
storage  tanks in place  prior to December  22,  1988,  must  conform to the new
standards by December 1998.  The Company has  implemented a plan to bring all of
its existing  underground  storage tanks and related  equipment into  compliance
with these laws and regulations and currently  estimates the costs to do so will
range  from  $1,837,000  to  $2,245,000  over the next two  years.  The  Company
anticipates that  substantially  all these  expenditures  will be capitalized as
additions  to property  and  equipment.  Such  estimates  are based upon current
regulations,  prior  experience,  assumptions  as to the  number of  underground
storage tanks to be upgraded,  and certain other  matters.  At year end 1996 and
1995,  the  Company  recorded  liabilities  for future  estimated  environmental
remediation  costs  related  to  known  leaking  underground  storage  tanks  of
$643,000.  Of such amounts,  $-0- and $322,000,  respectively,  were recorded in
accrued   expenses  and  the  remainder  was  recorded  in  other   liabilities.
Corresponding  claims for  reimbursement of environmental  remediation  costs of
$643,000 were recorded in 1996 and 1995, as the Company  expects that such costs
will be  reimbursed  by various  environmental  agencies.  In 1995,  the Company
contracted  with a third  party to  perform  site  assessments  and  remediation
activities  on 35 sites  located  in Texas  that are  known or  thought  to have
leaking  underground  storage  tanks.  Under the contract,  the third party will
coordinate with the state regulatory authority the work to be performed and bill
the state  directly  for such work.  The  Company is liable for the  $10,000 per
occurrence  deductible  and for any  costs in  excess  of the  $1,000,000  limit
provided for by the state  environmental trust fund. The Company does not expect
that  the  costs  of  remediation  of any of these  35  sites  will  exceed  the
$1,000,000 limit. The assumptions on which the foregoing estimates are based may
change and unanticipated  events and circumstances may occur which may cause the
actual cost of complying with the above  requirements to vary significantly from
these estimates.

     During 1996, 1995, and 1994,  environmental  expenditures  were $2,019,000,
$1,003,000,  and  $934,000,  respectively  (including  capital  expenditures  of
$1,456,000,  $644,000,  and $820,000),  in complying with environmental laws and
regulations.

     The Company does not maintain  insurance  covering  losses  associated with
environmental  contamination.  However, all the states in which the Company owns
or operates  underground storage tanks have state operated funds which reimburse
the Company for certain  cleanup costs and  liabilities  incurred as a result of
leaks in  underground  storage tanks.  These funds,  which  essentially  provide
insurance coverage for certain environmental liabilities, are funded by taxes on
underground  storage tanks or on motor fuels  purchased  within each  respective
state.  The coverages  afforded by each state vary but  generally  provide up to
$1,000,000  for the  cleanup of  environmental  contamination  and most  provide
coverage for third-party liability as well. The funds require the Company to pay
deductibles  ranging from $5,000 to $25,000 per occurrence.  The majority of the
Company's  environmental  contamination cleanup activities relate to underground
storage  tanks  located in Texas.  Due to an increase in claims  throughout  the
state,  the Texas  state  environmental  trust  fund has  significantly  delayed
reimbursement  payments for certain  cleanup costs after  September 30, 1992. In
1993,  the  Texas  state  fund  issued  guidelines  that,  among  other  things,
prioritize  the timing of future  reimbursements  based upon the total number of
tanks operated by and the financial net worth of each applicant. The Company has
been classified in the category with the lowest priority.  Because the state and
federal  governments  have the right,  by law, to levy  additional  fees on fuel
purchases,  the  Company  believes  these  clean up  costs  will  ultimately  be
reimbursed.  However, due to the uncertainty of the timing of the receipt of the
reimbursements, the claims for reimbursement of environmental remediation costs,
totaling $1,038,000 and $1,255,000 at year end 1996 and 1995, respectively, have
been  classified  as  long-term  receivables  in the  accompanying  consolidated
balance sheets.

(c) Other

     The  Company is subject to  various  claims and  litigation  arising in the
ordinary course of business, particularly personal injury and employment related
claims. In the opinion of management,  the outcome of such matters will not have
a  material  effect  on  the  consolidated  financial  position  or  results  of
operations of the Company.


14. Quarterly Operating Results (Unaudited)

     Quarterly results of operations for 1996, 1995, and 1994, were as follows:

                             First    Second     Third    Fourth      Full
                            Quarter   Quarter   Quarter   Quarter     Year
                                   (In thousands, except per unit data)
1996
Total revenues               $94,391  $105,092   $94,298   $96,371   $390,152
Total margin                  10,989    13,473    11,407    10,383     46,252
Net income/(loss)               (169)    2,030       564    (2,584)      (159)
Net income/(loss) per unit    $(0.05)    $0.55     $0.15    $(0.69)    $(0.04)

1995
Total revenues               $84,413   $97,623   $93,716   $94,293   $370,045
Total margin                  10,970    12,521    13,963    12,192     49,646
Net income                       154     1,172     2,071       513      3,910
Net income per unit            $0.04     $0.32     $0.56     $0.15      $1.07

1994
Total revenues               $83,825   $87,760   $96,771   $87,157   $355,513
Total margin                  10,998    11,987    13,899    13,025     49,909
Income/(loss) -
   Before extraordinary
      item                      (486)      517     2,473     1,027      3,531
    Gain on extinguishment
      of debt                    200         0         0         0        200
   Net income/(loss)            (286)      517     2,473     1,027      3,731
Income/(loss) per unit -
   Before extraordinary
      item                    $(0.13)    $0.14     $0.68     $0.28      $0.97
   Net income/(loss)           (0.08)     0.14      0.68      0.28       1.03



                                                                     Schedule II

                      FFP PARTNERS, L.P., AND SUBSIDIARIES
                        Valuation and Qualifying Accounts
                                 (In thousands)

                                           Year Ended December 29, 1996
                                    Balance   Additions                 Balance
                                       at     Charged to                 at
                                    Beginning Costs and    Deductions    End
            Description             of Period  Expenses   (describe)  of Period
Allowances for doubtful accounts
    Trade receivables                 $1,045       $327      $489 (a)    $883


                                           Year Ended December 31, 1995
                                    Balance   Additions                 Balance
                                       at     Charged to                 at
                                    Beginning Costs and  Deductions     End
            Description             of Period  Expenses  (describe)   of Period
Allowances for doubtful accounts
    Trade receivables                  $ 917       $459      $331 (a)  $1,045


                                           Year Ended December 25, 1994
                                    Balance   Additions                 Balance
                                       at     Charged to                  at
                                    Beginning Costs and  Deductions       End
            Description             of Period  Expenses  (describe)   of Period
Allowances for doubtful accounts
    Trade receivables                  $ 531       $804      $418 (a)    $917
    Noncurrent receivable from
        affiliated companies             447          0       447 (a)      0


(a)    Accounts charged-off, net of recoveries.