What is the Licensing Fee based on for a Circle K franchise?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
olding itself out to the public as a TMC licensee, and (iii) immediately remove from the Premises and surrender to TMC or TMC's designee, at Licensee's sole risk and expense, any and all items, signage and materials containing the Proprietary Marks. If Licensee fails to remove all Proprietary Marks from the Premises within 10 days following any termination of this Agreement, then TMC or its designee may immediately enter and remove same at the sole cost and expense of Licensee and Licensee hereby agrees to reimburse TMC for any such cost or expense within 10 days after TMC makes demand for reimbursement.
- (e) Licensee understands and agrees that TMC is relying upon Licensee to pay to TMC the amounts set forth herein, and that the early termination of this Agreement will result in serious losses to TMC. Licensee and TMC acknowledge that the amount of such losses is, and will be, difficult to determine. Therefore, Licensee agrees that in the event of a termination of this Agreement, Licensee shall pay to TMC, as liquidated damages, and not as a penalty: the average monthly Licensing Fee payments (calculated in accordance with paragraph 6) payable by Licensee hereunder for the 12 months preceding the termination (during which time Licensee was in good standing un
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
Based on the 2025 Circle K Franchise Disclosure Document, the licensing fee calculation is tied to the average monthly Licensing Fee payments. Specifically, in the event of early termination of the Branding Agreement, Circle K will calculate liquidated damages based on the average monthly Licensing Fee payments from the previous 12 months (if the Licensee was in good standing). If the agreement is terminated within the first 12 months, the calculation uses the average monthly Licensing Fee payments from the period starting with the agreement's effective date. This average monthly payment is then multiplied by either 48 or the remaining number of months under the agreement's term, whichever is less.
For a prospective Circle K franchisee, this means that the licensing fee is a crucial factor in determining potential financial liabilities, especially if the agreement is terminated early. The calculation method ensures that Circle K is compensated for losses resulting from the termination, with the amount directly linked to the historical Licensing Fee payments. This arrangement underscores the importance of maintaining good standing under the agreement to avoid any inflated calculations of liquidated damages.
It's important to note that if Circle K-branded motor fuel was never offered for sale at the premises, and therefore there is no history of Licensing Fee payments, the liquidated damages will be calculated based on an average monthly payment figure of $500. This provides a baseline for calculating damages in situations where actual Licensing Fee payment history is absent. Franchisees should be aware of this provision, particularly if their business model does not initially include Circle K-branded motor fuel but may in the future.