What is the Circle K Franchisee's obligation regarding the payment of other fees and payments specified in the agreement?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Franchisee understands that Franchisor would neither grant to Franchisee the right to use the Marks and the Business System nor provide Franchisee with any information or knowhow about Circle K Stores and the Business System unless Franchisee has agreed to comply with the terms and conditions of this Agreement, including the obligation to pay the Initial Franchise Fee, the Royalty Fee, the Promotional Fee, and the other fees and payments specified herein.
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.
Franchisee must pay Franchisor up to 1.25% of Franchisee's monthly Gross Sales (on Gross Sales of up to $125,000) ("Local and Regional Promotional Fee") to cover the costs associated with local and regional promotions of, and equipment upgrades for, Circle K Stores located in a particular area (the "Designated Marketing Area" or "DMA").
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, franchisees have specific obligations regarding the payment of fees outlined in the franchise agreement. Franchisees acknowledge that Circle K would not grant them the right to use their marks and business system without agreeing to pay the Initial Franchise Fee, the Royalty Fee, the Promotional Fee, and other specified payments.
Upon termination or expiration of the agreement, franchisees must pay all Royalty Fees, Promotional Fees, and any other amounts owed to Circle K, its suppliers, or vendors within five days. This includes outstanding principal and accrued interest on any debts the franchisee owes to Circle K or its affiliates. All amounts owed to Circle K become immediately due, even if they were previously subject to a payment schedule. To secure these payment obligations, franchisees grant Circle K a lien and security interest in their personal property, equipment, and fixtures used in connection with the store.
In addition to these fees, franchisees may also be required to pay a Local and Regional Promotional Fee of up to 1.25% of their monthly Gross Sales (on Gross Sales of up to $125,000) to cover local and regional promotions and equipment upgrades. The exact rate can vary depending on the Designated Marketing Area (DMA) where the store is located, and not all franchisees in the same DMA will necessarily pay the same rate. Circle K retains final decision-making authority over all matters relating to the Promotional Fees collected and is not obligated to spend Promotional Fees in any particular market or geographic area or in proportion to the payments made by franchisees in a market.
Prospective franchisees should carefully review all fee obligations outlined in the Franchise Agreement and related documents to fully understand their financial commitments to Circle K. Understanding these obligations is crucial for assessing the overall financial viability of the franchise opportunity.