Under what conditions is Circle K's obligation to disburse the Conversion/Improvement Amount to the Purchaser dependent?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
forth in the Incentive Amounts Schedule, of all of the following conditions and the conditions contained in paragraph 1(c) below: (A) Purchaser shall have obtained, and provided to Seller written verification reasonably satisfactory to Seller that Purchaser has obtained, all approvals, permits, licenses, entitlements, and consents required to make the Improvements and/or Conversion. (B) Purchaser shall have duly executed and delivered to Seller (1) a promissory note in substantially the form attached hereto as Exhibit A and incorporated herein, in a principal amount equal to the Conversion/Improvement Amount ("Note"), and (2) a Security Agreement and Personal Guaranty in substantially the form attached to the Franchise Disclosure Document as Exhibit J. (C) Purchaser shall have provided Seller with reasonable proof the Purchaser has entered into all agreements using only Seller approved contractors and other third parties necessary for Purchaser to construct and install and/or make, at Purchaser's sole expense, the Improvements and/or Conversion set forth in the Conversion/Improvements Schedule. (D) Purchaser shall expend the Conversion/Improvement Amount solely for the purposes of constructing, installing and implementing the Improvements and/or performing the Conversion. Upon demand by Seller, Purchaser shall provide any documentation reasonably required by Seller to substantiate the expenditure of the Conversion/Improvement Amount for the purposes herein stated, including, without limitation, proof of payment for third-party invoices and related lien releases for work and materials for the Improvements and/or Conversion. (iii) Purchaser shall complete the Improvements and/or Conversion to the reasonable satisfaction of Seller no later than
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, Circle K's obligation to disburse the Conversion/Improvement Amount to the purchaser is contingent upon the purchaser fulfilling specific conditions outlined in the Incentive Amounts Schedule and paragraph 1(c) of the agreement. These conditions include obtaining all necessary approvals, permits, licenses, entitlements, and consents required for the improvements or conversion. The purchaser must provide Circle K with written verification that they have secured these items to Circle K's reasonable satisfaction.
Additionally, the purchaser is required to execute and deliver to Circle K a promissory note equal to the Conversion/Improvement Amount, along with a Security Agreement and Personal Guaranty. The purchaser must also provide reasonable proof that they have entered into agreements with Circle K-approved contractors and other third parties necessary for the construction, installation, and implementation of the improvements or conversion, all at the purchaser's sole expense.
Furthermore, the purchaser must use the Conversion/Improvement Amount exclusively for constructing, installing, and implementing the improvements or performing the conversion. Upon Circle K's request, the purchaser must provide documentation to substantiate these expenditures, including proof of payment for third-party invoices and related lien releases for work and materials. Finally, the purchaser must complete the improvements or conversion to Circle K's reasonable satisfaction by the specified Completion Deadline.
These conditions ensure that Circle K has reasonable assurance that the franchisee is capable of completing the conversion or improvements in accordance with Circle K's standards and that the funds are used appropriately. Failure to meet these conditions could delay or prevent the disbursement of the Conversion/Improvement Amount, potentially impacting the franchisee's ability to open or upgrade their Circle K location.