What are the three components of the Circle K Promotional Fee?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
terials submitted to us by you (Convenience Store Franchise Agreement, Section 6.4).
Marketing/Sales Promotions
The monthly Promotional Fee collected by us (see Item 6) will be used to establish and develop local, regional and national marketing, sales promotions, image/customer service programs, franchisee incentive programs, equipment upgrades and advertising. Currently, the Promotional Fee consists of three components: Tier I (General Promotion), Tier II (Local and Regional Promotion) and Tier III (National Promotional). These components are discussed below:
Tier I – General Promotion. You will pay a monthly fee of 0.25% of your Store's monthly Gross Sales (on Gross Sales of up to $125,000) for general promotional costs. We will use this fee for store image/ customer service inspections, incentive programs for franchisees, administrative costs associated with the Promotional Fund, and to pay for work done by outside advertising agencies in developing creative advertising concepts and in various promotional materials for the Circle K System.
Tier II – Local and Regional Promotion. The Tier II component covers local and regional promotional costs to promote Circle K Stores. The monthly fee for this component may
vary based on the particular Designated Marketing Area (DMA) in which your Store is located and is subject to change from time to time. You will pay up to 1.25% of your Store's monthly Gross Sales (on Gross Sales of up to $125,000) for regional promotional costs. All Circle K franchisees who have signed a single site franchise agreement located within a given DMA may not pay the same fee. The Tier II funds will be used to cover regional promotion and equipment upgrades for the Circle K Stores located in your region or DMA, which may also include radio, direct mailings, and newspaper advertising and other regional advertising efforts. At our option, and if there are surplus Local and Regional Promotional Fees, TMC may elect to direct a portion of the Local and Regional Promotional Fees to be used to fund the Local Store Marketing Program ("LSM"). The LSM will allow each franchisee the ability to use a portion of these funds on approved, store level marketing and promotional programs. LSM funds may not be available each year.
Tier III – National Promotion. This component of the Promotional Fees will be used primarily to conduct national advertising. The Tier III component is not currently in effect. If implemented (upon 60 days advance written notice), you
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 60–72)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the Promotional Fee that franchisees pay monthly is divided into three components: Tier I (General Promotion), Tier II (Local and Regional Promotion), and Tier III (National Promotional). These fees are intended to fund marketing, sales promotions, image/customer service programs, franchisee incentive programs, equipment upgrades, and advertising efforts at the local, regional, and potentially national levels. The franchisor retains decision-making authority over how these Promotional Fees are collected and spent.
Tier I, the General Promotion component, requires franchisees to pay 0.25% of their store's monthly Gross Sales (on Gross Sales of up to $125,000). These funds are used for store image and customer service inspections, franchisee incentive programs, administrative costs related to the Promotional Fund, and to compensate outside advertising agencies for developing creative advertising concepts and promotional materials for the Circle K system.
Tier II, the Local and Regional Promotion component, is used for promotional activities within the franchisee's Designated Marketing Area (DMA). Franchisees may pay up to 1.25% of their store's monthly Gross Sales (on Gross Sales of up to $125,000) for this tier, and the specific fee can vary depending on the DMA. These funds support regional promotions, equipment upgrades, and advertising efforts such as radio, direct mail, and newspaper advertising. Surplus funds may be directed to a Local Store Marketing Program (LSM), allowing franchisees to use a portion of the funds on approved store-level marketing programs, although LSM funds may not be available every year. Tier III, the National Promotion component, is not currently in effect, but if implemented, franchisees would pay up to 0.25% of their store's monthly Gross Sales (on Gross Sales of up to $125,000) for national advertising. Franchisees should note that Circle K does not guarantee direct or pro rata benefits from the Promotional Fund, and allocations may disproportionately benefit other stores.