What is the threshold for underpayment of amounts owing to Circle K that triggers reimbursement for audit costs?

According to Circle K's 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has underpaid amounts owed under the Convenience Store Franchise Agreement, the franchisee may be responsible for covering the costs of the audit. This reimbursement is triggered if the underpayment is considered willful or exceeds two percent of the franchisee's actual Gross Sales.

If the underpayment meets either of these conditions, the franchisee must pay the full amount owed, along with interest, and reimburse Circle K for the cost of the audit. The audit costs include travel, lodging, meals, reasonable professional fees, salaries, and other expenses incurred by the individuals conducting the audit.

This policy incentivizes accurate financial reporting and compliance with the franchise agreement. Franchisees should ensure they have robust accounting practices to avoid unintentional underpayments that could lead to audit costs. The "willful" aspect also suggests that intentional underreporting of sales could lead to more severe financial repercussions beyond simply repaying the owed amount.