What options does a Circle K franchisee have for equipment, construction, and other funding?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
be responsible for the installation and maintenance of all signs. Any signage may not be used except as permitted hereunder and may not be altered or removed by Franchisee except with Franchisor's prior written consent or upon termination of this Agreement.
- 7.6 Equipment/Construction and Other Funding. Franchisor may offer to Franchisee funding for acquisition of certain Store equipment and/or construction of the Store ("Equipment/Construction Funding") if Franchisee qualifies for same. If Franchisee accepts the Equipment/Construction Funding, Franchisee must sign the Equipment/Construction Funding Agreement attached hereto as Exhibit 4 (the "Equipment/Construction Funding Agreement") and the Personal Guaranty (attached hereto as Exhibit 5). Franchisor will use the Equipment/Construction Funding funds, on Franchisee's behalf, to off-set the acquisition cost of Store equipment and the construction cost of the Store, and pay related invoices on Franchisee's behalf. The Equipment/Construction Funding will be amortized over the Term. Schedule A to the Equipment/Construction Funding Agreement sets forth the options available to Franchisee with respect to Equipment/Construction Funding. The amount of Equipment/Construction Funding, if any, that Franchisee is approved to receive will be noted on the Data Sheet. If, subsequent to the parties' execution of the Equipment/Construction Funding Agreement but before the store is deemed open as a Circle K Store hereunder, the merchandise sales levels at the store drop below the levels that Franchisor used to set the Equipment/Construction Funding amount, Franchisor reserves the right to reduce the Equipment/Construction Funding amount accordingly.
In addition to the Equipment/Construction Funding, Franchisee may qualify for an additional amount up to $10,000 in funding from Franchisor if it qualifies for and maintains in the Store a qualifying third-party or proprietary food service offering that Franchisor pre-approves in writing and that complies with the third-party license or other agreement pursuant to which Franchisee receives the right to operate such offering (the "Qualifying Food Offering"). Whether or not Franchisor officially approves such funding by signing a funding agreement, such funding will not be provided if: i) Franchisee is not operating the Store in full compliance with the terms and conditions of the Franchise Agreement, or ii) the Qualifying Food Offering is not fully operational at the Store within one year of the date Franchisor officially approves providing such funding to Franchisee, or, if the Store is a conversion store, within one year of the Open Date. If such funding is accepted by Franchisee, the amount will be noted on the Data Sheet and Franchisee may be required to enter into a separate funding agreement with Franchisor (in the form provided by Franchisor). If, for any reason, the Qualifying Food Offering is removed from the Store during the Term, Franchisee will be required to repay the funding amount, less the amortized portion for each month that the Qualifying Food Offering was in full operation in the Store.
- 7.7 Franchised Location; Franchisor's Approval of the Lease.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, Circle K may offer franchisees funding for the acquisition of store equipment and/or construction of the store if the franchisee qualifies. If a franchisee accepts this Equipment/Construction Funding, they must sign the Equipment/Construction Funding Agreement and a Personal Guaranty. Circle K will then use these funds to offset the acquisition and construction costs, paying related invoices on the franchisee's behalf. The funding will be amortized over the term of the agreement, with specific options detailed in Schedule A of the Equipment/Construction Funding Agreement. The approved funding amount will be noted on the Data Sheet. However, Circle K reserves the right to reduce the funding amount if merchandise sales levels drop below the levels used to determine the initial funding amount before the store opens.
For newly constructed Circle K stores and raze-and-rebuild projects, there are two levels of funding available: Level 2 and Level 3. The Level 2 Maximum Amount is up to $50 per square foot of selling space, while the Level 3 Maximum Amount is up to $70 per square foot. Circle K determines the store's square footage to establish the Maximum Amount. For bay conversions, store re-openings, store expansion projects, or conversions where Circle K cannot adequately verify existing sales levels, Level 2 funding offers up to $40 per square foot, capped at $90,000, and Level 3 funding offers up to $60 per square foot, capped at $135,000. Circle K retains the right to determine the square footage for these calculations as well.
For a Conversion Store, the Maximum Amount is based on the verified annual amount of the Conversion Store's Gross Sales for the most recently completed 12-month period as determined by Franchisee and Franchisor. If the Conversion Store's tobacco sales as a percentage of the total sales are substantially over the average for such percentage, the funding may be altered. Otherwise, the Maximum Amount for Conversion Stores is as follows:
Prospective franchisees should carefully review Schedule A of the Equipment/Construction Funding Agreement and the Data Sheet to understand the specific funding options and amounts available to them, as well as the terms and conditions of the funding. It is also important to note that the availability and amount of funding can be affected by factors such as sales performance and store type.