What is the maximum interest rate Circle K can charge on late payments?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
for each insufficient funds payment.
3 If you fail to pay any amounts due to us under the Branding Agreement by the due date, the payment will be considered late and we may charge you interest on the amount past due at the lesser of 1½ % per month or the maximum legal rate allowed under applicable law, but no more than 18% per annum simple interest. Interest on late payments is non-refundable. A payment will be considered late if: (i) you fail to pay us the amount owed or (ii) if insufficient funds are available in your account to fully pay the amount owed.
ITEM 7 ESTIMATED INITIAL INVESTMENT
YOUR ESTIMATED INITIAL INVESTMENT
(for new or rebuilt convenience store locations)
| Type of Expenditure | Amount | Method of Payment | When Due | To Whom Payment is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee | $25,000 | Lump Sum | Upon signing | TMC |
| (Note 1) | Agreement | |||
| Regional In-Store | $1,000 ($5 |
Source: Item 6 — OTHER FEES (FDD pages 22–35)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, if a franchisee fails to pay amounts due, Circle K will charge interest on the past due amount. This interest rate will be the lesser of 1½% per month or the maximum legal rate allowed under applicable law. The FDD also clarifies that the interest will not exceed 18% per annum simple interest. This interest on late payments is non-refundable.
For a prospective Circle K franchisee, this means that if you are late on payments, you will incur interest charges. The specific interest rate will depend on the applicable law, but it will not exceed 1½% per month or 18% per year. It is important to note that this interest is non-refundable, so it is crucial to make payments on time to avoid these charges.
It is common practice in franchising to charge interest on late payments as a way to encourage timely payments and compensate the franchisor for the administrative costs and potential cash flow issues associated with late payments. The interest rates charged by Circle K appear to be within the typical range for franchise agreements. Franchisees should be aware of these potential charges and factor them into their financial planning.