What is the maximum Level 2 Equipment/Construction Funding amount offered by Circle K for a newly constructed store, and how is it calculated?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
n remove the equipment. Upon receipt of such payment, we will release our security interest in the equipment.
For a newly constructed Circle K Store, or the raze and rebuild of a Circle K Store, 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 $50 for each square foot of selling space your Store contains. The Level 3 funding amount of the Equipment/Construction Funding is up to $70 for each square foot of selling space your Sto
Source: Item 10 — FINANCING (FDD pages 55–60)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, for a newly constructed Circle K store, the Level 2 Equipment/Construction Funding can be up to $50 for each square foot of selling space the store contains. The document also mentions that TMC (presumably Circle K's parent company or a related entity) has the right to determine the square footage to establish the maximum amount of funding.
This means that the actual amount of funding a franchisee receives will depend on the size of their store, as determined by TMC. For example, if TMC determines that a new Circle K store has 2,000 square feet of selling space, the maximum Level 2 funding would be $100,000 (2,000 x $50). It is important to note that the funding offered will not exceed the actual costs incurred for equipment and construction.
It's also worth noting that Circle K retains a security interest in the equipment purchased with this funding until the franchise agreement expires. If the agreement is terminated, the franchisee must either pay the remaining net value of the equipment or allow Circle K to remove it. This is a fairly standard practice in franchising, as it protects the franchisor's investment in the franchisee's business.
Prospective franchisees should carefully consider the implications of accepting Equipment/Construction Funding, including the royalty fee increases associated with different funding levels. They should also verify with Circle K/TMC how the store's square footage will be determined and what specific costs are eligible for coverage under the funding program.