What determines the term of the loan for Circle K's Incentive / Conversion Funding?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
your RFD allowing you the same construction allowance as described at the time you signed your RFD Agreement.
Motor Fuel Business
We offer an Incentive / Conversion Funding Program for our Motor Fuel Business offering. Below is a summary of the Incentive / Conversion Funding Program. If you accept Incentive / Conversion Funding from us, you will sign an Incentive and Amortization Agreement, Promissory Note, Security Agreement (form copies of each are attached as Exhibit 6 to the Motor Fuel Agreement (which is Exhibit G to this Disclosure Document)) and the Personal Guaranty (a sample copy of which is included as Exhibit J to the Franchise Disclosure Document) that you sign in connection with the Convenience Store Franchise Agreement will apply to your obligations under the Incentive/Conversion Funding Program.
| Average Gross Sales (last 12 months) | Equipment/Construction Funding Available |
|---|---|
| $50,000 or less | Up to 0.8 times Gross Sales |
| $50,001 to $75,000 | Up to 0.9 times Gross Sales |
| $75,001 to $100,000 | Up to 1.1 times Gross Sales |
| $100,001 to $150,000 | Up to 1.2 times Gross Sales |
| $150,001+ | Up to 1.3 times Gross Sales |
Notes:
- (1) The amount of Incentive / Conversion Funding offered will depend on the condition of the Business including, the amount of necessary improvements and branding requirements.
- (2) The term of the loan will vary depending on each particular loan and the related circumstances (Section 6 of Incentive and Amortization Agreement).
- (3) You will not make any payments to us or our affiliate under the terms of the Incentive and Amortization Agreement, provided an Acceleration Event (as defined in Section 2(c) of the Incentive and Amortization Agreement) does not occur. Provided an Acceleration Event has not occurred, a portion of the Incentive / Conversion Funding offered to you, plus all accrued interest, will be forgiven each year at the rate set forth in the Amortization Schedule attached to the Incentive and Amortization Agreement. The total number of payments will depend on the term of your loan and will be designated in Section 6 of the Incentive and Amortization Agreement.
- (4) Provided an Acceleration Event has not occurred, no payment obligations exist under the terms of the Incentive and Amortization Agreement.
- (5) In connection with obtaining Incentive /Conversion Funding, you must execute a Security Agreement covering, among other things, all accounts, inventory, equipment, furniture, fixtures, tangible property, general intangibles, chattel paper and other instrument (a sample copy of which is included in Exhibit B to the Incentive and Amortization Agreement) and a Promissory Note (a sample copy of which is included as Exhibit A to the Incentive and Amortization Agreement).
Source: Item 10 — FINANCING (FDD pages 55–60)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the term of the Incentive / Conversion Funding loan for the Motor Fuel Business offering will vary depending on each particular loan and the related circumstances. The specific details regarding the loan term will be outlined in Section 6 of the Incentive and Amortization Agreement. The total number of payments a franchisee will make depends on the term of their loan, and this will be designated in the same section of the agreement.
It's important to note that franchisees will not make any payments under the Incentive and Amortization Agreement unless an Acceleration Event occurs, as defined in Section 2(c) of the agreement. If no Acceleration Event occurs, a portion of the Incentive / Conversion Funding, along with accrued interest, will be forgiven each year at a rate specified in the Amortization Schedule attached to the Incentive and Amortization Agreement.
Prospective Circle K franchisees should carefully review the Incentive and Amortization Agreement, including Section 6 and the Amortization Schedule, to fully understand the loan terms, payment obligations, and conditions for forgiveness. Understanding these details is crucial for assessing the financial implications of accepting Incentive / Conversion Funding.