What rate of interest will Circle K charge on the Conversion/Improvement Amount?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
NALTIES, SUITS AND ACTIONS, JUDGMENTS AND COSTS, INCLUDING ATTORNEYS' FEES AND THE COSTS OF LITIGATION, FOR ANY SUCH LOSS, DAMAGE, INJURY, OR OTHER CASUALTY, WHETHER CAUSED BY A NEGLIGENT ACT OR OMISSION OF PURCHASER OR SELLER INDEMNIFIED PARTIES. PURCHASER ACKNOWLEDGES AND AGREES TO PROVIDE
SELLER WRITTEN ASSURANCE WITHIN TEN (10) DAYS FROM SELLER'S REQUEST FOR PURCHASER TO ACCEPT TENDER OF A CLAIM AND TO NOTIFY AND INSTRUCT PURCHASER'S INSURANCE CARRIERS THAT SELLER IS AN INDEMNIFIED PARTY.
2. REPAYMENT OF INCENTIVE AMOUNTS.
- (a) Unless forgiven as set forth in subparagraph (b) below, Purchaser shall repay to Seller the Conversion/Improvement Amount loaned pursuant to paragraph 1(b) above, together with interest on the Conversion/Improvement Amount at the rate of __________ percent ( ___%) per annum, or the highest lawful rate of interest allowed under applicable law, if lower. All interest on the Conversion/Improvement Amount shall be compounded monthly, will accrue on a monthly basis beginning on the date Seller first disburses the Conversion/Improvement Amount ("Disbursement Date") and will continue to accrue until the total principal of the Conversion/Improvement Amount is fully repaid or forgiven.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the interest rate for the Conversion/Improvement Amount is not explicitly stated as a fixed percentage. Instead, the agreement specifies that the interest rate will be a percentage per annum, with the exact percentage to be determined and filled in the provided blank space, or the highest lawful rate of interest allowed under applicable law, if lower. This interest is compounded monthly and accrues from the date Circle K disburses the Conversion/Improvement Amount until the principal is fully repaid or forgiven.
However, the loan of the Conversion/Improvement Amount, along with any accrued interest, may be forgiven annually at a rate detailed in the Amortization Schedule of the Incentive Amounts Schedule. This forgiveness reduces the principal balance, affecting future interest calculations. The total principal and accrued interest become due upon the earlier of the term's end or any termination of the agreement.
Additionally, if an Acceleration Event occurs (as defined in the agreement), the forgiveness of the principal balance and accrued interest ceases. In such cases, the total unforgiven repayment becomes immediately due. Upon termination of the agreement due to an Acceleration Event, interest accrues on all outstanding amounts at a rate of 18% per annum, compounded monthly, or the highest lawful rate under applicable state law, whichever is lower, from the termination date until fully paid.
Prospective Circle K franchisees should carefully review the Incentive Amounts Schedule and consult with Circle K to determine the specific interest rate applicable to their Conversion/Improvement Amount. Understanding the conditions for loan forgiveness and the implications of an Acceleration Event is also crucial for financial planning.