What is the maximum Level 3 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
Source: Item 10 — FINANCING (FDD pages 55–60)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the maximum Level 3 Equipment/Construction Funding available for bay-conversions, store re-openings, store expansion projects, or conversions where TMC cannot adequately verify existing sales levels is capped at $135,000. This funding is calculated based on up to $60 for each square foot of selling space in the store. However, TMC (presumably Circle K's parent company or a designated affiliate) retains the right to determine the store's square footage, which directly impacts the maximum funding amount.
For a conversion store, the actual funding amount is further based on the verified annual gross sales of the existing convenience store over the most recent 12-month period, as jointly determined by the franchisee and Circle K. It is important to note that if the store's tobacco sales significantly exceed the average percentage of total sales, Circle K may adjust the funding amount. Additionally, Circle K reserves the right to modify the funding amount if merchandise sales levels drop below the amount used to set the original funding before the store officially opens as a Circle K.
Prospective franchisees should carefully consider these factors, as the actual funding received may vary significantly based on the store's size, sales performance, and merchandise mix. It is crucial to have a clear understanding of how Circle K calculates the square footage and verifies sales data to accurately estimate the potential funding available. Franchisees should also be aware of the conditions under which Circle K may modify the funding amount, particularly regarding tobacco sales and potential drops in merchandise sales prior to the store's opening.