Does the location of the Circle K store affect the Royalty Fee rate?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise Agreement.
3 The Royalty Fee may also be reduced or temporarily waived if the Franchise Agreement is for a store located in a particular geographic area where there is a very limited number of existing Circle K stores. It may also be reduced or temporarily waived as a result of a franchisee's entering into, or having previously
entered into, a motor fuel agreement with us or our affiliate or if we have a relationship with franchisee's motor fuel supplier. The monthly Royalty Fee may be increased by up to 1% if you keep your Store open less than 24 hours per day (and 24-7 operation is not prohibited by the law) or you utilize a pass-through window or bullet-resistant glass surrounding the sales counter for any time period.
- 4 You must obtain our written approval prior to operating any other business from your Store. If we approve a separate food service business to be operated from your Store (such separate business, an "Additional Business"), you will be required to pay us a separate Co-Branded Royalty Fee as a percentage of the Additional Business's Gross Sales.
Source: Item 6 — OTHER FEES (FDD pages 22–35)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the location of the store can indeed affect the royalty fee rate. Specifically, if the Circle K store is located in a geographic area where there is a very limited number of existing Circle K stores, the royalty fee may be reduced or temporarily waived.
Additionally, the royalty fee rate can be impacted if the store is located in an area that prohibits or restricts the collection of royalties on the sale of alcoholic beverages. In such cases, the royalty fee rate will be increased by 0.5%; however, the gross sales calculation will not include any income from the sale of alcoholic beverages. This adjustment ensures that franchisees are not penalized for circumstances dictated by local regulations.
These location-based adjustments to the royalty fee demonstrate that Circle K considers the specific market conditions and regulatory environment in which a franchise operates. This can be a significant benefit for franchisees as it provides some flexibility and support based on their store's location. Prospective franchisees should carefully consider these factors and discuss them with Circle K during their due diligence to fully understand the potential impact on their royalty fee obligations.