What is the maximum Level 2 Equipment/Construction Funding amount available for bay-conversions of Circle K stores?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
e contains. TMC has the right to determine the square footage to establish the maximum amount of the funding.
For bay-conversions, store re-openings, store expansion projects, or conversions where TMC cannot adequately verify existing sales levels, two levels of funding are available, which for purposes of the calculation of Royalty Fees are referred to as "Level 2" funding amount and "Level 3" funding amount. The Level 2 funding amount of the Equipment/Construction Funding is up to $40 for each square foot of selling space your Store contains, capped at $90,000. The Level 3 funding amount of the Equipment/Construction Funding is up to $60 for each square foot of selling space your Store contains, capped at $135,000. TMC has the right to determine the square footage to establish the maximum amount of the funding.
For a conversion Store, the amount of the funding specified in the Equipment/Construction Funding Agreement is based on the verified annual amount of your existing convenience store's Gross Sales for the most recently completed 12-month period as determined by you and us. If your conversion Store's tobacco sales as a percentage of your total sales are substantially over the average for such percentage, your funding may be altered. In addition, TMC reserves the right to modify the amount of the funding if, subsequent to the parties' execution of the Equipment/Construction Funding Agreement but before the store is deemed open as a Circle K Store, the merchandise sales levels drop below the amount used by TMC to set the origina
Source: Item 10 — FINANCING (FDD pages 55–60)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, Level 2 Equipment/Construction Funding is available for bay-conversions, store re-openings, store expansion projects, or conversions where TMC (presumably Circle K's parent company or a designated agent) cannot adequately verify existing sales levels. The Level 2 funding amount is up to $40 for each square foot of selling space in the store, with a maximum cap of $90,000. TMC has the right to determine the square footage used to calculate the maximum funding amount.
For a conversion store, the actual funding amount specified in the Equipment/Construction Funding Agreement will be based on the verified annual gross sales of the existing convenience store for the most recent 12-month period, as determined jointly by the franchisee and Circle K. However, Circle K reserves the right to modify the funding amount if the store's tobacco sales are substantially higher than the average percentage or if merchandise sales levels drop below the amount used to set the original funding before the store opens as a Circle K.
In practical terms, a prospective Circle K franchisee considering a bay-conversion should understand that the available funding is tied to the store's size and sales performance. The franchisee should carefully document and verify the store's square footage and sales history to maximize the potential funding. The franchisee should also be aware that Circle K retains some discretion in determining the final funding amount and can adjust it based on factors like tobacco sales or declining sales figures prior to the store's opening as a Circle K. This introduces an element of uncertainty and risk for the franchisee, who may need to adjust their financial projections accordingly.