What two factors determine the monthly Royalty Fee for a Circle K franchise?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
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2 Your monthly Royalty Fee rate will depend on: (i) the amount of Equipment/Construction Funding you choose to accept from us, (ii) whether your Store is located in an area that prohibits or restricts the collection of royalties on the sale of alcoholic beverages, and (iii) whether we allow you to install gaming machines in the Store. Based on the level of Equipment/Construction Funding you accept from us, your Royalty Fee rate will be determined as follows: (a) If you are a single site operator and you choose not to accept any Equipment/Construction Funding from us, your Royalty Fee rate will be 3.0% of Gross Sales; (b) if you accept Level 1 Equipment/Construction Funding we offer to you, your Royalty Fee rate will be 3.75% of Gross Sales; (c) if you accept the Level 2 Equipment/Construction Funding we offer to you, your Royalty Fee rate will be 4.5% of Gross Sales; or (d) if you accept Level 3 Equipment/Construction Funding we offer to you, your Royalty Fee rate will be 5.5%.
See ITEM 10 for the definitions of the various levels of funding. In addition, if your Store is located in an area that prohibits or restricts the collection of royalties on the sale of alcoholic beverages, your Royalty Fee rate will be increased by 0.5%; provided the definition of Gross Sales (as outlined above) will not include any income from the sale of alcoholic beverages. Finally, if we allow you to install gaming machines in your Store, your Royalty Fee rate will be further increased by up to 1%.
Source: Item 6 — OTHER FEES (FDD pages 22–35)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the monthly Royalty Fee rate is primarily determined by two factors: the amount of Equipment/Construction Funding a franchisee chooses to accept from Circle K, and whether the store is located in an area that prohibits or restricts the collection of royalties on the sale of alcoholic beverages. A third factor is whether Circle K allows the franchisee to install gaming machines in the store.
Specifically, if a single-site operator chooses not to accept any Equipment/Construction Funding, the Royalty Fee rate will be 3.0% of Gross Sales. If the franchisee accepts Level 1, Level 2, or Level 3 Equipment/Construction Funding, the Royalty Fee rate will be 3.75%, 4.5%, or 5.5% of Gross Sales, respectively.
In addition, if the Circle K store is located in an area that prohibits or restricts the collection of royalties on the sale of alcoholic beverages, the Royalty Fee rate will be increased by 0.5%. However, the definition of Gross Sales will not include any income from the sale of alcoholic beverages in this case. Finally, if Circle K allows the franchisee to install gaming machines in the store, the Royalty Fee rate will be further increased by up to 1%. The monthly Royalty Fee will be the greater of $1,000 or the amount calculated based on the applicable percentage of Gross Sales.