Under what conditions will Circle K consider a payment of fees to be late, triggering default?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5.6 Interest on Unpaid Fees. If Franchisee fails to remit the fees required to be paid under this Agreement when due (including if insufficient funds are available in Franchisee's account to fully pay the amount owed when due), the applicable payment will be considered late, Franchisee will be in default hereunder and any unpaid and past due fees will bear interest at the rate of one and one-half percent (1½%) per month or the legal rate allowed by applicable law, whichever is lower.
- 5.7 Franchisee's Absolute Obligation to Pay. Franchisee's obligation to pay Franchisor the fees required hereunder will be absolute and unconditional. Franchisee will not, for any reason, withhold payment of any Royalty Fees, Promotional Fees or any other fees or payments due Franchisor under this Agreement or any other agreement. Franchisee will not have the right to "offset" any liquidated or unliquidated amounts allegedly due to Franchisee from Franchisor against the Royalty Fees, Promotional Fees or any other payments due to Franchisor under this Agreement or any other agreement. Franchisee must pay timely and in full all fees due under this Agreement regardless of any claims that Franchisee may allege against Franchisor. Except as noted above with respect to the Initial Franchise Fee, no fees paid by Franchisee hereunder are refundable under any circumstances.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, a franchisee's payment is considered late, leading to default, if the franchisee fails to remit fees when due. This includes situations where there are insufficient funds in the franchisee's account to cover the full amount owed at the time of payment.
When a payment is considered late, Circle K will charge interest on the unpaid amount. The interest rate is 1.5% per month, or the maximum legal rate allowed by applicable law, whichever is lower.
Circle K emphasizes that the franchisee's obligation to pay fees is absolute and unconditional. Franchisees are not allowed to withhold payments for any reason, including disputes with Circle K. They also cannot offset any amounts they believe Circle K owes them against the fees due. Franchisees must pay all fees in full and on time, regardless of any claims they may have against Circle K. The only exception to non-refundability is the initial franchise fee.