What constitutes an Acceleration Event for a Circle K franchisee after the Conversion/Improvement Amount has been disbursed?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
Purchaser's breach of or failure to satisfy any of the following conditions after Seller has disbursed the Conversion/Improvement Amount to Purchaser shall constitute an Acceleration Event (as defined in paragraph 2(c) below):
(i) The Premises shall be approved by Seller for marketing motor fuel under the Proprietary Marks.
(ii) The Motor Fuel Agreement must be current (unexpired) and in effect.
(iii) Purchaser shall not be in default of any provision of this Agreement, the Motor Fuel Agreement, the Security, or any other related or supplemental agreement with Seller including, without limitation, any provision therein requiring timely payment to Seller.
(iv) Purchaser shall comply, and cause the Premises to comply, with Seller's Image Standards throughout the term of this Agreement; provided, however, that with respect to Conversion/Improvement Amount, this obligation shall only apply after Seller has approved the Improvements and/or Conversion as complying with Seller's Image Standards pursuant to paragraph 1(b) above.
(v) Purchaser shall pay when due all income and other tax, if any, associated with the [Competitive Allowance payments / loan of the Conversion/Improvement Amount] under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, an Acceleration Event can occur after Circle K disburses the Conversion/Improvement Amount to the franchisee if the franchisee breaches or fails to satisfy certain conditions. These conditions include the Circle K premises being approved by Circle K for marketing motor fuel under its Proprietary Marks, and the Motor Fuel Agreement remaining current and in effect.
Additionally, a Circle K franchisee must not be in default of any provision within the Franchise Agreement, the Motor Fuel Agreement, the Security agreement, or any other related agreement with Circle K, particularly those requiring timely payments to Circle K. The franchisee must also ensure that the premises comply with Circle K's Image Standards, but this obligation only applies after Circle K has approved the improvements or conversion as meeting those standards.
Finally, the Circle K franchisee is responsible for paying all income and other taxes associated with the loan of the Conversion/Improvement Amount under the agreement. Failure to meet any of these conditions after the disbursement of funds will trigger an Acceleration Event, potentially leading to the acceleration of repayment obligations and other remedies available to Circle K.