Who is responsible for paying the operating expenses of a Circle K store?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall purchase, install and maintain, at Franchisee's expense, an electronic point-of-sale cash register system, designated by Franchisor that meets standards and specifications established by Franchisor, as modified by Franchisor from time to time in response to business, operations and marketing conditions (the "EPOS System"). In addition to the EPOS System, Franchisee must purchase,
install and maintain, at its expense, a back-office computer system, including without limitation both hardware and software, or other existing or future communication or data storage systems, designated by Franchisor which meet standards and specifications established by Franchisor, as modified by Franchisor from time to time in response to business, operations and marketing conditions (collectively "Computer Systems").
However, during the Training Program, Franchisee is responsible for all salaries, fringe benefits, payroll taxes, travel costs, lodging, food, and other personal expenses incurred by those attending the Training Program on Franchisee's behalf.
If TMC is required to configure the Equipment for Franchisee, Franchisee will be obligated to reimburse TMC for the reasonable costs and expenses of such configuration, including, but not limited to, expenses for travel and lodging.
Franchisee will be responsible for all costs associated with the use of the management firm, a portion of which costs will be covered by the Equipment/Construction Funding, if applicable, as determined by Franchisor.
In addition, Franchisee will reimburse Franchisor for any expenses incurred by Franchisor to fix, correct, or remedy any deficiencies found in Franchisee's operations;
In addition, Franchisee must pay Franchisor up to 1.25% of Franchisee's monthly Gross Sales (on Gross Sales of up to $125,000) ("Local and Regional Promotional Fee") to cover the costs associated with local and regional promotions of, and equipment upgrades for, Circle K Stores located in a particular area (the "Designated Marketing Area" or "DMA").
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the franchisee is generally responsible for the operating expenses of their Circle K store. This includes expenses related to the electronic point of sale (EPOS) system and computer systems, which the franchisee must purchase, install, and maintain at their own expense. These systems must meet the standards and specifications set by Circle K, and franchisees are responsible for upgrades and replacements as required.
Furthermore, the franchisee is responsible for expenses related to training, including salaries, travel, lodging, and food for themselves and their store managers attending the training program. If Circle K configures equipment for the franchisee, the franchisee must reimburse Circle K for the associated costs, including travel and lodging. Additionally, franchisees are responsible for the costs associated with using a third-party management firm selected by Circle K for store development and construction.
In certain situations, Circle K may incur expenses that the franchisee is then obligated to reimburse. For example, if the franchisee fails to comply with the franchise agreement and Circle K incurs expenses to correct deficiencies in the franchisee's operations, the franchisee will be required to reimburse Circle K for these expenses. The franchisee is also responsible for the Local and Regional Promotional Fee, which is up to 1.25% of monthly gross sales (on gross sales of up to $125,000), to cover local and regional promotions and equipment upgrades.
Overall, the franchisee bears the primary responsibility for the financial obligations related to operating the Circle K store, including system maintenance, training, and promotional activities, as well as reimbursements for certain expenses incurred by Circle K to rectify operational issues.