What is the per gallon amount used in the liquidated damages calculation for Circle K?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
nchise Agreement. In addition, Purchaser understands and agrees that Seller is relying upon Purchaser to purchase the minimum volume of motor fuel product set forth in paragraph 3 above and the applicable Commodity Schedule(s) attached hereto, and that any breach or repudiation of this Agreement, or other failure to purchase those minimum volumes of motor fuel product by Purchaser will result in serious losses to Seller. Purchaser and Seller acknowledge that the amount of such losses is, and will be, difficult to determine. Therefore, Purchaser agrees that in the event of a termination of this Agreement Purchaser shall pay unto Seller, as liquidated damages, and not as a penalty, the greater of: (i) three and one-half cents ($0.035) per gallon multiplied by the minimum monthly volume in gasoline and diesel gallons set forth in paragraph 3 above and the applicable Commodity Schedule(s) attached hereto multiplied by the lesser of: a) 48 months or b) the number of months remaining under the Term of this Agreement, or (ii) three and one-half cents ($0.035) per gallon multiplied by the average monthly volume in gasoline and diesel gallons actually purchased by Purchaser (calculated for the period starting on the date of commencement of the Term and continuing until the date of termination or repudiation, as the case may be) multiplied by the lesser of: a) 48 months or b) the number of months remaining under the Term of this Agreement. The provisions of this Section 21 do not apply if the Agreement expires at the end of its initial Term or is terminated due to (i) Purchaser's (or if Purchaser is an entity, Purchaser's principal equity holder's) death; (ii) Purchaser's (or if Purchaser is an entity, Purchaser principal equity holder's) incapacity for at least 90 consecutive days, in either case which event results in Purchaser's (or if Purchaser is an entity, Purchaser's principal equity holder's) inability to personally operate the business hereunder; (iii) condemnation or other taking, in whole or in part, of the Franchised Locati
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, if the franchise agreement is terminated, the franchisee may have to pay liquidated damages to Circle K. The liquidated damages will be the greater of two calculations, both of which include a per gallon amount of $0.035.
The first calculation is $0.035 per gallon multiplied by the minimum monthly volume in gasoline and diesel gallons, as specified in the agreement, multiplied by the lesser of 48 months or the number of months remaining under the agreement's term. The second calculation is $0.035 per gallon multiplied by the average monthly volume in gasoline and diesel gallons actually purchased by the franchisee, calculated from the start of the term until termination, multiplied by the lesser of 48 months or the remaining months in the agreement's term.
These liquidated damages do not apply if the agreement expires at the end of its initial term or is terminated due to specific circumstances, such as the franchisee's death or incapacity, condemnation of the location, destruction of the location without the franchisee's fault, or Circle K's decision to withdraw from marketing in the area. However, if a court deems the liquidated damages payment unenforceable, Circle K can pursue other remedies, including consequential damages.