Under the Circle K Incentive and Amortization Agreement, when will payments to Circle K or its affiliates be required?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
ng on each particular loan and the related circumstances (Section 6 of Incentive and Amortization Agreement).
- (3) You will not make any payments to us or our affiliate under the terms of the Incentive and Amortization Agreement, provided an Acceleration Event (as defined in Section 2(c) of the Incentive and Amortization Agreement) does not occur. Provided an Acceleration Event has not occurred, a portion of the Incentive / Conversion Funding offered to you, plus all accrued interest, will be forgiven each year at the rate set forth in the Amortization Schedule attached to the Incentive and Amortization Agreement. The total number of payments will depend on the term of your loan and will be designated in Section 6 of the Incentive and Amortization Agreement.
- (4) Provided an Acceleration Event has not occurred, no payment obligations exist under the terms of the Incentive and Amortization Agreement.
- (5) In connection with obtaining Incentive /Conversion Funding, you must execute a Security Agreement covering, among other things, all accounts, inventory, equipment, furniture, fixtures, tangible property, general intangibles, chattel paper and other instrument (a sample copy of which is included in Exhibit B to the Incentive and Amortization Agreement) and a Promissory Note (a sample copy of which is included as Exhibit A to the Incentive and Amortization Agreement). In addition, the personal guaranty (a sample copy of which is included as Exhibit J to the Franchise Disclosure Document) that all of your owners must sign in connection with entering into the Convenience Store Franchise Agreement will apply to your obligations under the Incentive/Conversion Funding, including the Security Agreement and the Promissory Note.
- (6) In the event of any default under the terms of the Incentive and Amortization Agreement (as defined in Section 2(c) of the Incentive and Amortization Agreement), we will have the right to: (i) require immediate payment of all amounts owing under the Incentive and Amortization Agreement, (ii) collect all amounts owing from you or any guarantor of the Incentive and Amortization Agreement, (iii) file suit and obtain judgment, (iv) take possession of any collateral, or (iv) sell, lease or otherwise dispose of any collateral at public or private sale, with or without advertisement. We will have the right to exercise any other rights under the Incentive and Amortization Agreement, Security Agreement or Personal Guaranty. This may include, among other things, foreclosing on any or all of your assets and/or taking any legal action against one or more guarantors for payment of all amounts due, and/or exercising our rights under the Security Agreement and/or Personal Guaranty.
- (7) A default under the terms of the Incentive and Amortization Agreement will constitute a default of your obligations under your Motor Fuel Agreement. A default of the Incentive and Amortization Agreement will not constitute a default of your obligations under your Convenience Store Franchise Agreement.
Tax issues may arise with respect to receipt of the Funding from us.
Source: Item 10 — FINANCING (FDD pages 55–60)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, under the Incentive and Amortization Agreement, a franchisee will not make payments to Circle K or its affiliates unless an Acceleration Event occurs, as defined in Section 2(c) of the Incentive and Amortization Agreement. If no Acceleration Event occurs, a portion of the Incentive/Conversion Funding, along with accrued interest, will be forgiven annually based on the Amortization Schedule attached to the agreement. The total number of payments and the loan term will be specified in Section 6 of the Incentive and Amortization Agreement.
An Acceleration Event triggers immediate payment of all outstanding amounts under the Incentive and Amortization Agreement. In the event of default, Circle K has the right to demand immediate payment of all outstanding amounts, collect these amounts from the franchisee or any guarantor, initiate legal action to obtain a judgment, and take possession or dispose of any collateral. These rights are further detailed in Section 2(c) of the Incentive and Amortization Agreement.
Furthermore, a default under the Incentive and Amortization Agreement constitutes a default under the Motor Fuel Agreement but does not trigger a default under the Convenience Store Franchise Agreement. Franchisees are required to execute a Security Agreement covering various assets and a Promissory Note in connection with obtaining Incentive/Conversion Funding. The personal guaranty signed for the Convenience Store Franchise Agreement also applies to obligations under the Incentive/Conversion Funding, including the Security Agreement and Promissory Note.