Is a Circle K franchisee required to purchase damaged or unsaleable merchandise from the franchisor?

According to Circle K's 2025 Franchise Disclosure Document, franchisees are not required to purchase damaged or unsaleable merchandise from Circle K. However, the franchisee may purchase such merchandise if both parties mutually agree to the sale. This provides some flexibility for franchisees who might want to try and salvage or repurpose such items, but it does not obligate them to take on inventory that is not in saleable condition. This protects the franchisee from being forced to invest in merchandise that will likely result in a loss.

This policy is relatively standard in the franchise industry, as most franchisors aim to ensure franchisees maintain quality and brand consistency. Requiring franchisees to purchase damaged goods could negatively impact the customer experience and brand image. By allowing the purchase of damaged goods only through mutual agreement, Circle K maintains control over its brand standards while providing an option for franchisees who see potential value in the merchandise.

When a Circle K store is purchased from Circle K, the franchisee will pay Circle K the value of the entire inventory in the store as of the transfer date. The inventory will be calculated using the retail inventory accounting method then in use by Circle K. Circle K will provide the franchisee with an estimate of the value of the inventory expected to be in the store as of the transfer date, and the franchisee will pay such amount on or prior to the transfer date. On the transfer date, the parties will confirm the actual value of the inventory as of the transfer date. Within 30 days of the transfer date, if the amount paid by the franchisee for the estimated inventory is greater than the actual value of inventory confirmed on the transfer date, the franchisee will receive a refund of such difference. If the amount paid by the franchisee for the estimated inventory is less than the actual value on the transfer date, the franchisee will make a corresponding additional payment to Circle K.