If a Circle K franchisee makes a partial prepayment of Fundings, how will that prepayment be applied?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.6 Equipment/Construction and Other Funding. Franchisor may offer to Franchisee funding for acquisition of certain Store equipment and/or construction of the Store ("Equipment/Construction Funding") if Franchisee qualifies for same. If Franchisee accepts the Equipment/Construction Funding, Franchisee must sign the Equipment/Construction Funding Agreement attached hereto as Exhibit 4 (the "Equipment/Construction Funding Agreement") and the Personal Guaranty (attached hereto as Exhibit 5). Franchisor will use the Equipment/Construction Funding funds, on Franchisee's behalf, to off-set the acquisition cost of Store equipment and the construction cost of the Store, and pay related invoices on Franchisee's behalf. The Equipment/Construction Funding will be amortized over the Term. Schedule A to the Equipment/Construction Funding Agreement sets forth the options available to Franchisee with respect to Equipment/Construction Funding. The amount of Equipment/Construction Funding, if any, that Franchisee is approved to receive will be noted on the Data Sheet. If, subsequent to the parties' execution of the Equipment/Construction Funding Agreement but before the store is deemed open as a Circle K Store hereunder, the merchandise sales levels at the store drop below the levels that Franchisor used to set the Equipment/Construction Funding amount, Franchisor reserves the right to reduce the Equipment/Construction Funding amount accordingly.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Circle K may offer franchisees funding for store equipment and/or construction, termed "Equipment/Construction Funding," if the franchisee qualifies. If a franchisee accepts this funding, they must sign the Equipment/Construction Funding Agreement and a Personal Guaranty. Circle K will then use these funds on the franchisee's behalf to offset the acquisition and construction costs, paying related invoices directly.
The Equipment/Construction Funding is amortized over the term of the agreement. The specific funding options available are detailed in Schedule A of the Equipment/Construction Funding Agreement. The amount of funding a franchisee is approved to receive will be noted on the Data Sheet.
However, Circle K retains the right to reduce the funding amount if, after the agreement is signed but before the store opens as a Circle K, the merchandise sales levels drop below what Circle K used to determine the initial funding amount. The FDD does not specify how a partial prepayment of these fundings would be applied, so prospective franchisees should seek clarification from Circle K regarding this matter.