According to the Circle K agreement, what does 'Amount Funded' mean?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1. DEFINITIONS. As used in this Agreement, terms defined in or pursuant to Article 9 of the UCC that are not otherwise defined herein shall have the meanings given them in or pursuant to Article 9 of the UCC. In addition:
- "Amount Funded" means the aggregate amount of the Funding actually provided hereunder.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the 'Amount Funded' is defined within the context of the Equipment/Construction Funding Agreement. This agreement outlines the terms under which Circle K may provide loans or credit accommodations to franchisees for specific purposes related to acquiring equipment, personal property, fixtures, and construction at the franchise location before the store's opening date. The 'Amount Funded' specifically refers to the total sum of the funding that Circle K actually provides to the franchisee under this agreement.
This definition is important for prospective Circle K franchisees because it clarifies the scope of financial assistance they may receive from the franchisor. The agreement sets a 'Maximum Amount' for potential funding, but the 'Amount Funded' represents the actual amount disbursed. This distinction is crucial for franchisees in managing their budgets and financial obligations, as they need to know the precise amount they are responsible for repaying.
Circle K offers different levels of funding based on the type of store (newly constructed, conversion, etc.) and the square footage of selling space. For instance, for newly constructed stores, 'Level 2' funding can be up to $50 per square foot, while 'Level 3' can reach $70 per square foot. For bay conversions, 'Level 2' funding is capped at $90,000, and 'Level 3' at $135,000. The franchisor determines the store's square footage to establish the Maximum Amount. Understanding how the 'Amount Funded' is determined in relation to these levels and caps is essential for franchisees to plan their store development and manage their financial resources effectively.
It is also important to note that Circle K retains the right to reduce the Equipment/Construction Funding amount if merchandise sales levels drop below the levels initially used to determine the funding amount before the store opens. This condition introduces a risk factor for franchisees, as a decrease in projected sales could lead to a reduction in the financial support they receive, potentially impacting their ability to complete the store setup as planned.