Under what circumstances will a Circle K franchisee be required to reimburse Circle K for the cost of an audit?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
If an audit reveals that you have underpaid us for amounts owing under your Convenience Store Franchise Agreement, and the underpayment is willful or exceeds two percent (2%) of your actual Gross Sales, in addition to paying the full amount owing, with interest, you must reimburse us for the cost of the audit, including travel, lodging, meals, reasonable professional fees, salaries, and other expenses of the persons conducting the audit.
Source: Item 6 — OTHER FEES (FDD pages 22–35)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, a franchisee may have to reimburse Circle K for audit costs under specific conditions. If an audit reveals that the franchisee has underpaid amounts owed to Circle K under the Convenience Store Franchise Agreement, the franchisee will be responsible for covering the expenses of the audit.
However, this reimbursement requirement is not automatic. It is triggered only if the underpayment was willful or exceeds two percent of the franchisee's actual Gross Sales. If either of these conditions is met, the franchisee must pay the full amount owed, including interest, and reimburse Circle K for the cost of the audit.
The costs that the franchisee would be responsible for include travel, lodging, meals, reasonable professional fees, salaries, and other expenses incurred by the individuals conducting the audit. This provision is designed to protect Circle K from significant financial losses due to underreporting of sales or willful underpayment of fees by franchisees.