What is the definition of 'Outstanding Amount' in the Circle K agreement, and what factors reduce it?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon expiration or termination of this Agreement for any reason, Franchisee will:
- (A) within five (5) days, pay all Royalty Fees, Promotional Fees, and any other amounts owed to Franchisor, suppliers, or vendors, including the outstanding principal amounts and accrued interest on any notes or evidences of indebtedness of Franchisee payable to Franchisor or any Affiliates.
The payment to Franchisor of all amounts owing will be accelerated on all debt obligations which had been the subject of payment schedules even if payment was then being made promptly according to the agreed schedule.
Franchisee hereby grants to Franchisor a lien and security interest against any and all personal property, equipment, and fixtures owned by Franchisee and used in connection with the Store as security for the payment of such obligations;
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
Based on the 2025 Circle K Franchise Disclosure Document, the 'Outstanding Amount' refers to all Royalty Fees, Promotional Fees, and any other amounts owed to Circle K, its suppliers, or vendors. This includes the outstanding principal amounts and accrued interest on any notes or evidences of indebtedness of the franchisee payable to Circle K or any of its affiliates. Upon termination or expiration of the franchise agreement, the franchisee is obligated to pay all these outstanding amounts within five days.
The payment of all amounts owing will be accelerated on all debt obligations which had been the subject of payment schedules even if payment was then being made promptly according to the agreed schedule. The franchisee grants Circle K a lien and security interest against any personal property, equipment, and fixtures used in connection with the store as security for the payment of such obligations.
The FDD does not explicitly state factors that directly reduce the 'Outstanding Amount' besides making timely payments according to any agreed-upon schedules. However, the 'Outstanding Amount' would decrease as the franchisee fulfills their payment obligations during the term of the agreement. It's important to note that any default by the franchisee in any agreement with Circle K may constitute a default under the franchise agreement, potentially impacting the 'Outstanding Amount'.
Prospective franchisees should seek clarification from Circle K regarding specific scenarios that could affect the 'Outstanding Amount,' such as early payment discounts, dispute resolution processes for incorrect charges, or any potential set-off rights. Understanding these details is crucial for managing the financial obligations and risks associated with the Circle K franchise.