What constitutes an event that would cause the Conversion/Improvement Amount to become immediately due for a Circle K franchise?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
agraph 1(d) below, with respect to any claim with respect to, the compliance of the Improvements and/or Conversion with all applicable laws, regulations, ordinances, codes, approvals, permits, licenses, entitlements, and consents.
- (c) Additional Conditions. The following are additional conditions for [Seller's obligation to pay unto Purchaser, and Purchaser's right to receive, the Competitive Allowance / Seller's obligation to lend and disburse to Purchaser, and Purchaser's right to receive, the Conversion/Improvement Amount]. 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.
- (d) Indemnity.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, a breach of certain conditions after the Conversion/Improvement Amount has been disbursed can trigger an Acceleration Event, causing the amount to become immediately due. These conditions include:
- Failure to have the premises approved by Circle K for marketing motor fuel under their trademarks.
- The Motor Fuel Agreement is not current or in effect.
- Defaulting on any provision of the Franchise Agreement, the Motor Fuel Agreement, the Security agreement, or any other related agreement with Circle K, including timely payments.
- Failure to comply with Circle K's Image Standards, after Circle K has approved the improvements or conversion.
- Failure to pay income or other taxes associated with the loan of the Conversion/Improvement Amount.
Upon the occurrence of an Acceleration Event, the remaining principal of the Conversion/Improvement Amount, along with accrued interest, becomes immediately due and payable to Circle K. The franchisor also has all legal and equitable remedies available, including the right to set-off or recoup against any amount due to the franchisee and the right to terminate the Franchise Agreement. If the agreement is terminated, interest accrues on all outstanding amounts at a rate of 18% per annum, compounded monthly, or the highest lawful rate under state law, whichever is lower, from the termination date until paid in full.