What were the royalty and promotional fees for Circle K for the year ended April 28, 2024?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
| Year Ended April 27, 2025 | Year Ended April 28, 2024 | Year Ended April 30, 2023 | |
|---|---|---|---|
| Services provided directly by Couche-Tard and affiliates | |||
| Payroll | $ 10,515,829 | $ 10,782,922 | $ 11,326,632 |
| Employee relations | 26,694 | 23,832 | 20,510 |
| Travel | 519,624 | 517,850 | 452,367 |
| Supplies | 163,619 | 168,735 | 223,560 |
| Advertising | 15,002,542 | 14,407,276 | 14,739,200 |
| Other | 646,530 | 779,056 | 437,144 |
| 26,874,838 | 26,679,671 | 27,199,413 | |
| Services allocated by Couche-Tard and affiliates | 91,957 | 85,353 | 63,441 |
| Third-party costs paid by Couche-Tard and affiliates | 856,643 | 624,996 | 851,610 |
| Merchandising and support services paid directly to | |||
| Couche-Tard and affiliates | 9,472,519 | 9,175,185 | 5,485,735 |
| $ 37,295,957 | $ 36,565,205 | $ 33,600,199 |
During 2017, the Company entered into an agreement with Couche-Tard Brands and Financing, sarl ("CTBF"), an affiliate owned by Couche-Tard, for certain merchandising and support services. The agreement is retroactively effective as of April 29, 2013. Merchandising and support services charged by CTBF was $12,781 in 2025, $15,036 in 2024, and a credit in 2023 of $445. The credit in 2023, was the result of a true-up in the prior years estimated service costs. In 2020, the Company entered into an agreement with Circle K Procurement and Brands Limited ("CKPB"), an affiliate owned by Couche-Tard, for certain merchandising and support services. Merchandising and support services charged by CKPB accumulated to $9,459,738, $9,160,149, and $5,486,180, respectively, for 2025, 2024 and 2023.
The Company is charged an annual trademark fee by Circle K Stores for the use of the "Circle K" tradename. The trademark expense is based on the percentage of franchise sites to total sites operating under the Circle K tradename. Trademark expenses represented $391,871, $408,796, and $447,750, respectively for 2025, 2024 and 2023.
The receivable from parent company represents the net balance resulting from various transactions between the Company and affiliates owned by Couche-Tard and transactions conducted by those affiliates on behalf of the Company.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 99–100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, several fees and expenses are detailed, but the document does not explicitly state the total royalty fees. However, it does mention expenses related to merchandising and support services, trademark fees, and advertising costs. For the year ended April 28, 2024, Circle K was charged $15,036 for merchandising and support services by Couche-Tard Brands and Financing, sarl (CTBF), and $9,160,149 for merchandising and support services by Circle K Procurement and Brands Limited (CKPB). Trademark expenses for the same period were $408,796. Advertising expenses paid by Circle K Stores on behalf of the Company amounted to $14,407,276.
Additionally, the consolidated balance sheets as of April 28, 2024, show accrued promotional expenses of $15,892,650 and rebates payable to franchisees of $11,602,740. These figures provide insight into the promotional activities and financial obligations related to franchisees. The financial statements also include a note agreement with Circle K Stores, where interest earned on the note was $240,308 for 2024.
While the FDD provides these specific figures, it's important to note that the exact royalty fees are not explicitly stated. A prospective franchisee should inquire with Circle K about the specific royalty fee structure and how it is calculated, as it is a crucial component of the overall investment and operational costs. Understanding the royalty structure, along with these other fees, will allow potential franchisees to assess the financial viability of a Circle K franchise.