What are the ongoing fees a Circle K franchisee must pay (Item 6) after the initial investment (Item 7)?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE 6 ADVERTISING AND PROMOTIONS
- 6.1 Promotional Fees. In addition to the fees payable under Article 5, Franchisee will pay to Franchisor a monthly promotional fee (the "Promotional Fee") consisting of the following components:
- (A) General Promotional Fee. Franchisee must pay Franchisor 0.25% of Franchisee's monthly Gross Sales (on Gross Sales of up to $125,000) to cover general costs associated with promoting Circle K Stores, including, but not limited to, the cost of
image/customer service inspections, incentive programs for franchisees, administrative costs associated with the Promotional Fund, and work done by outside advertising agencies.
If, following a transfer or a renewal, you fail to complete, within 9 months of the transfer or renewal (as applicable), the required Store upgrades and renovations to conform the Store to our then-current standards and image, your Royalty Fee rate will be increased by 1% until such time as all required upgrades and renovations have been completed and the default is cured. In addition, we reserve the right to exercise all other rights available to us under the Franchise Agreement and applicable law, including the right to terminate the Franchise Agreement.
- 10 You must obtain our consent to any transfer or assignment of your interest in the Convenience Store Franchise Agreement, and you or the proposed transferee must pay us a transfer fee in an amount equal to the then-current Initial Franchise Fee prior to the proposed transferee attending training.
For example, as of the date of this Disclosure Document, the transfer fee would be $25,000.
A reduced transfer fee of $3,000 may apply in the following circumstances: (1) the transfer is to your spouse or adult child, if you are an individual, or, if Franchisee is a corporate entity or partnership and the Transfer is to the adult spouse or child of the majority owner; (2) the transfer is to a corporation in which you are the principal shareholder retaining a majority ownership interest and you remain the officer responsible for the full-time personal operation and supervision of the Store; (3) the transfer is the transfer of any interest of any partner or shareholder to another existing or new partner or shareholder, provided your majority partner or shareholder remains the same; or (4) only your name is changed (if you are a corporation or other entity).
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, franchisees are subject to several ongoing fees. One notable fee is the Promotional Fee, where franchisees pay 0.25% of their monthly Gross Sales (on Gross Sales of up to $125,000). This fee is allocated to cover general costs associated with promoting Circle K stores, including customer service inspections, incentive programs for franchisees, administrative costs associated with the Promotional Fund, and work done by outside advertising agencies.
Additionally, if a Circle K franchisee fails to complete required store upgrades and renovations within 9 months of a transfer or renewal, their Royalty Fee rate will be increased by 1% until the upgrades are completed and the default is cured. This increase underscores the importance of maintaining Circle K's standards and image. The document also mentions that Circle K reserves the right to exercise other rights under the Franchise Agreement and applicable law, including termination, for non-compliance.
Furthermore, franchisees may encounter a transfer fee if they seek to transfer or assign their interest in the Convenience Store Franchise Agreement. This fee is equal to the then-current Initial Franchise Fee, which, as of the disclosure document's date, is $25,000. A reduced transfer fee of $3,000 may apply under specific circumstances, such as transfers to a spouse or adult child, or to a corporation where the franchisee retains a majority ownership interest. These ongoing fees represent significant financial obligations that prospective franchisees should carefully consider.