Under what condition is a Circle K franchisee required to pay a Co-Branded Royalty Fee?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
ness from your Store. If we approve a separate food service business to be operated from your Store (such separate business, an "Additional Business"), you will be required to pay us a separate Co-Branded Royalty Fee as a percentage of the Additional Business's Gross Sales. This fee is due at the same time and under the same conditions as your Store Royalty Fee. TMC may, in its sole determination, approve an unaffiliated third-party operator of the Additional Business within the Store, subject to such terms and conditions as TMC may from time to time establish. You must provide a copy of your lease with the third-party Additional Business operator, and the third-party operator must provide its executed franchise agreement with the Additional Business franchisor to TMC prior to occupying the Store and/or must enter into an agreement with TMC in a form provided by TMC. Currently, we charge a Co-Branded Royalty Fee of 1% of an Additional Business's Gross Sales, but we reserve the right to charge up to 2% of an Additional Business's Gross Sales. If you meet certain criteria established by us (as amended from time to time) and you are approved by us, we may charge you a flat monthly fee (currently $500 per month, and we reserve the right to charge up to $5,000 per month) in lieu of the monthly 1.0% Co-Branded Royalty Fee on the sales generated by the Additional Business. We reserve the right to impose such other conditions and requirements (including insurance and indemnification requirements as well as inspection and audit rights for the benefit of TMC and its affiliates) as we elect in our sole discretion, with respect to any approve
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 is required to pay a Co-Branded Royalty Fee if Circle K approves a separate food service business to be operated from the Circle K store. This separate business is referred to as an "Additional Business." The Co-Branded Royalty Fee is calculated as a percentage of the Additional Business's Gross Sales and is due at the same time and under the same conditions as the store's regular Royalty Fee.
The standard Co-Branded Royalty Fee is currently 1% of the Additional Business's Gross Sales, but Circle K reserves the right to charge up to 2%. However, if a franchisee meets certain criteria and receives approval from Circle K, they may be charged a flat monthly fee instead of the percentage-based royalty. As of the disclosure document, this flat monthly fee is $500, but Circle K reserves the right to charge up to $5,000 per month.
Circle K may also approve an unaffiliated third-party operator to run the Additional Business within the store. In this case, the franchisee must provide a copy of their lease agreement with the third-party operator. The third-party operator must also provide their executed franchise agreement with the Additional Business franchisor to TMC (presumably Circle K's parent company) or enter into an agreement with TMC in a form provided by TMC. Circle K retains the right to impose other conditions and requirements, including insurance and indemnification, as well as inspection and audit rights, for any approved Additional Business.