Under what conditions is Circle K required to pay the Competitive Allowance to the Purchaser, as outlined in the Incentive Amounts Schedule?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
thereof, whether at law or in equity.
| TMC: TMC FRANCHISE CORPORATION | PURCHASER: | ||
|---|---|---|---|
| By: | By: | ||
| Title: | Title: |
Exhibit 2 to Motor Fuel Agreement
CREDIT NETWORK AGREEMENT
[Attached as Exhibit 6 to the Convenience Store Franchise Agreement]
Exhibit 3 to Motor Fuel Agreement
INCENTIVE AND AMORTIZATION AGREEMENT
| 5.2 | Royalty Fees. | As set | forth in | Section | 7.6, | Franchisor may | offer |
|---|
- (i) By their initials in the space provided above for application of this paragraph 1(a) and their execution of this Agreement, Seller and Purchaser agree as follows. Seller agrees to pay unto Purchaser the competitive allowance specified in the Incentive Amounts Schedule, attached hereto and made a part hereof, for each gallon of product purchased from Seller under the Motor Fuel Agreement (said competitive allowance referred to herein as the "Competitive Allowance").
- (ii) Seller agrees to pay unto Purchaser the amount equal to the Competitive Allowance set forth in the Incentive Amounts Schedule, provided that, as of the time each such payment is due from Seller to Purchaser as set forth in the Incentive Amounts Schedule, Purchaser has satisfied those conditions contained in paragraph 1(c) and in the Incentive Amounts Schedule.
- (iii) Seller may, at any time, in its sole discretion and upon thirty (30) days' prior written notice, modify the Competitive Allowance amount payable hereunder or terminate the obligation to make any further Competitive Allowance payment to Purchaser without any liability to Purchaser. If the Motor Fuel Agreement or this Agreement is terminated or not renewed, Seller's obligation to pay, and Purchaser's entitlement to receive, the Competitive Allowance shall immediately terminate or expire, without notice, concurrently therewith.
- (iv) Purchaser shall not be obligated to reimburse to Seller the Competitive Allowance, or any portion thereof, received from Seller.
- (b) Conversion/Improvement Amount. The terms of this paragraph 1(b) shall apply only if the following blanks are initialed by both Seller and Purchaser:
| Seller's Initials | Purchaser's Initials |
|---|
- (i) By their initials in the space provided above for application of this paragraph 1(b) and their execution of this Agreement, Seller and Purchaser agree as follows. Seller agrees to loan Purchaser the "Conversion Amount" and/or the "Improvement Amount" (collectively, the "Conversion/Improvement Amount"), as defined in subparagraph (ii) below. Purchaser desires to make certain improvements at the Premises as set forth more fully in the Conversion/Improvements Schedule attached hereto and made a part hereof (the "Improvements") and/or desires to convert the Premises to Seller's requirements for marketing motor fuel under the Proprietary Marks, including Seller's Image Standards (such conversion hereinafter referred to as the "Conversion").
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the payment of the Competitive Allowance to the Purchaser is subject to specific conditions outlined in Item 23, specifically within the Incentive Amounts Schedule and related paragraphs. Circle K agrees to pay the Competitive Allowance as specified in the Incentive Amounts Schedule for each gallon of motor fuel purchased from Circle K under the Motor Fuel Agreement, provided that the Purchaser has satisfied the conditions in paragraph 1(c) and the Incentive Amounts Schedule. These conditions likely involve meeting certain performance metrics or adhering to specific operational standards. The exact gallon amount that must be purchased to receive the allowance is not specified in this excerpt.
However, Circle K retains the right to modify the Competitive Allowance amount or terminate the obligation to make further payments at any time, at its sole discretion, with thirty days' prior written notice, without incurring any liability to the Purchaser. The obligation to pay the Competitive Allowance also terminates immediately and without notice if the Motor Fuel Agreement or the overall Agreement is terminated or not renewed. The Purchaser is not obligated to reimburse any Competitive Allowance already received.
Additional conditions for Circle K's obligation to pay the Competitive Allowance include the premises being approved for marketing motor fuel under Circle K's Proprietary Marks, maintaining a current and effective Motor Fuel Agreement, and the Purchaser not being in default of any agreement with Circle K, including timely payments. The Purchaser must also comply with Circle K's Image Standards and pay all income and other taxes associated with the Competitive Allowance payments. These conditions ensure that the franchisee is operating in compliance with Circle K's standards and maintaining a good business relationship to be eligible for the Competitive Allowance.