Are sales from other approved royalty-based franchises included in Circle K's Gross Sales calculation?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
and gaming machines;
- (ii) sales from other approved royalty-based franchises that require separate point-of-sale equipment as part of their business system (excluding any approved Additional Business (as defined below in Note 5) which is subject to the separate Co-Branded Royalty Fee noted in the table above);
- (iii) authorized cash or credit refunds made upon transactions that were previously included in Gross Sales, not exceeding the selling price of merchandise returned by the purchaser and accepted, which refunds may be deducted from Gross Sales in the month made;
- (iv) the amount of any separated, collected, and stated city, county, state, or federal sales, luxury, or excise tax on such sales, which you pay directly to the taxing authorities rather than to suppliers; provided, however, that no franchise or capital-stock tax or any other similar tax based upon income, profits, or gross sales shall be deducted from Gross Sales;
Source: Item 6 — OTHER FEES (FDD pages 22–35)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, sales from other approved royalty-based franchises that require separate point-of-sale equipment as part of their business system are excluded from the calculation of Gross Sales, which is used to determine the monthly Royalty Fee. However, this exclusion does not apply to any approved Additional Business that is subject to a separate Co-Branded Royalty Fee.
Circle K franchisees are prohibited from operating another business, including another royalty-based franchised business with separate point-of-sale equipment, at their store or franchised location without prior written consent from Circle K. If Circle K grants consent, it may condition its approval on the agreement that sales from the other business will be included in Gross Sales for the purposes of calculating Royalty and Promotional Fee payments. Operating another business without Circle K's consent constitutes a material breach of the Franchise Agreement.
In simpler terms, if a Circle K franchisee wants to operate another franchise within their Circle K store, they need Circle K's approval. If approved and the other franchise has its own point-of-sale system, its sales are generally not included in the Circle K store's Gross Sales calculation for royalty purposes. However, Circle K can change this and require those sales to be included as a condition of approval. This provision ensures Circle K maintains control over the revenue streams generated at its franchised locations and can adjust royalty calculations accordingly.
This policy has significant implications for prospective franchisees. It means that franchisees cannot simply add another business to their Circle K store without permission and that Circle K has the right to collect royalties on those additional sales if they choose. Franchisees need to carefully consider this policy when evaluating the potential profitability of a Circle K franchise and whether they might want to operate another business from the same location.