Under what conditions will the purchase price payable by Circle K to the franchisee be reduced?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
(plus any other consideration provided for in the Price and Terms). Franchisor is not obligated to accept Franchisees's and offeror's agreed-upon value of any Exchange Property as may be specified in the Price and Terms and may demand a determination by a neutral third-party appraiser of the fair market value of the Exchange Property. Franchisee shall bear all costs and expenses required to determine the fair market value of any Exchange Property included in the Price and Terms; and (v) Franchisor will have the right to pay in cash at closing the full present value of any post-Transfer payments contemplated under the Price and Terms using a discount rate equal to then-current prime rate as published from time to time in the Money Rates section of The Wall Street Journal or a comparable index selected by Franchisor;
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Circle K retains the right to adjust the purchase price it pays to a franchisee under certain conditions related to the transfer of a franchise. Specifically, Circle K is not obligated to accept the franchisee's and offeror's agreed-upon value of any exchange property included in the proposed sale.
According to the FDD, Circle K can demand a determination of the fair market value of the exchange property by a neutral third-party appraiser. The franchisee is responsible for covering all costs and expenses associated with this appraisal. This means that if Circle K believes the value of the property being exchanged is inflated, they can have it independently appraised, and the franchisee will bear the cost of this appraisal.
Additionally, Circle K has the right to pay the full present value of any post-transfer payments in cash at closing, using a discount rate based on the then-current prime rate published in The Wall Street Journal or a comparable index selected by Circle K. This clause gives Circle K the option to accelerate payments and potentially reduce the overall purchase price by discounting future payments to their present value. These conditions protect Circle K from overpaying for assets or being tied to long-term payment obligations that may not be in their best interest.