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Circle K Franchise Cost & Fees

Date of Incorporation: 1951

Franchising Since: 1999

Headquarters: Tempe, Arizona

 

Business Description: TMC Franchise Corporation is the franchisor. The franchisor operates a retail convenience store under the “Circle K” trade name and service marks and the Circle K business system. Circle K Stores Inc. is the parent company, the owner of all the franchisor’s common stock, and the owner of the Circle K trademarks.

 

Franchise Offer: The franchisor offers the franchisee the right to operate a single Circle K convenience store business. The franchisor may also enter into agreements with existing convenience store operators, existing dealers or existing marketers. Area development agreements are also granted to qualified franchisees, for the right to develop multiple Circle K Stores in a specific geographical area.

 

Financial Assistance: The franchisor offers an Equipment/Construction Funding program for the Convenience Store offering. If the franchisee accepts funding for the Store, the franchisor will use these funds to off-set the cost of equipment and construction at the Store, and pay invoices on the franchisee’s behalf. The amount of funding offered will depend on whether the Circle K Store is a newly constructed store or conversion Circle K Store. The franchisor has complied with the eligibility requirements of the SBA's Franchise Registry Program and has been approved for participation. Accordingly, Circle K franchisees who apply for SBA loans will receive the benefit of a streamlined loan process.

 

Training and Assistance: After the franchisee completes the pre-qualification process, as part of the franchise qualification process, he or she must participate in the Circle K Orientation Program, unless participation is waived by the franchisor, at which point, participation in the Orientation Program is at the franchisee’s option. Training includes two weeks of classroom training located in the Circle K Systems, Marketing, Accounting, Retailing and Training (SMART) Academy in Tempe, AZ. “On-the-Job” training accounts for up to two weeks (based on candidate's experience) located in various Circle K Stores. The franchisor may hold additional or refresher training courses from time to time, and may require that the franchisee and the store managers (or, if the franchisee a Multi-Site Operator, the designated trainer) attend these courses.

 

Territory: The franchisee will not receive an exclusive territory. The franchisee may face competition from other franchisees, from outlets that owned by the franchisor, or from other channels of distribution or competitive brands that the franchisor controls.

 

Term of Agreement and Renewal: The length of the initial franchise term is for 10 years from the date the Store opens. The franchisee can renew for one renewal term under the then-current franchise agreement, if in good standing.

 

Obligations and Restrictions: It is not required that the franchisee personally manage the store but they must be actively involved in the day-to-day operations of the store, and spend adequate management time required to maintain the standards of the Agreement. If the franchisee does not personally manage the Store, the business must be directly supervised “on-premises” by a manager who has successfully completed the training program and this person must be designated as the “Key Person” in the Convenience Store Franchise Agreement. The franchisor requires the franchisee to offer and sell at the Convenience Store only those products and services specified or approved, which will include those products and services generally offered at Circle K Stores. The franchisee must offer for sale all products and services designated as required for all franchisees.

 

Estimated Number of Units: 7,735

 

Investment Tables:

Initial Investment:

New or Rebuilt Convenience Store Locations

Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Travel and Living Expenses While Training $3,500 $15,500
Real Estate Varies
Construction, Remodeling, and Leasehold Improvements $175,000 $750,000
Other Site Development Costs $120,000 $250,000
Site Development Fee $0 $750
Furniture, Fixtures & Equipment $175,000 $280,000
EPOS and Computer Systems $38,000 $45,000
Signs $15,000 $65,000
Security Deposits and Licenses and Permits $2,000 $5,000
Utility Deposits $1,500 $3,000
Vendor Deposits $0 $16,000
Merchandise Inventory $60,000 $100,000
Professional Fees $1,000 $5,000
Insurance $4,500 $12,000
Grand Opening Costs $5,000 $10,000
Additional Funds (3 months) $10,000 $20,000
ESTIMATED TOTAL $631,000 $1,602,250

 

Convenience Store Conversions

Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Travel and Living Expenses While Training $3,500 $15,500
Real Estate Varies
Construction, Remodeling, and Leasehold Improvements $25,000 $260,000
Other Site Development Costs $15,000 $100,000
Site Development Fee $0 $750
Furniture, Fixtures & Equipment $50,000 $300,000
EPOS and Computer Systems $38,000 $45,000
Signs $5,000 $50,000
Security Deposits and Licenses and Permits $2,000 $5,000
Utility Deposits $1,500 $3,000
Vendor Deposits $0 $16,000
Merchandise Inventory $25,000 $50,000
Professional Fees $1,000 $5,000
Insurance $4,500 $12,000
Grand Opening Costs $5,000 $10,000
Additional Funds (3 months) $10,000 $20,000
ESTIMATED TOTAL $210,500 $917,250

 

Other Fees

Type of Fee Amount
Royalty Fees Single Site Operator: 3.7% to 5.5% of total Gross Sales;;
Multi-Site Operator: 2.5% to 5.5% of total Gross Sales.
Royalty for Co-branded Coffee/Pastry Offering 1.5% of total Gross Sales.
Optional Program Fees Varies depending on the program but currently ranges from 5% to 20%
Promotional Fees

General Promotional Fee:
0.25% of Gross Sales for general promotional costs.

Local and Regional Promotional Fee:
Up to 1.25% of Gross Sales for local and regional promotional costs.

National Promotional Fee:
Up to 0.25% of Gross Sales (or up to any amount so that General, Local and Regional, and National Promotional Fees do not exceed a total of 1.75% of Gross Sales during the term of the Convenience Store Franchise Agreement).
Interest Payments Lower of maximum legal rate allowed by law or 1.5% per month, not to exceed 18% per annum.
Late Fee $10 per day beginning on the 11th day after the due date.
Audits and Inspections Cost of audit plus late payments as noted above; cost of inspection.
Software License Fee $0 per month (currently.)
Transfer Fee The then-current Initial Franchise Fee, not to exceed $100,000 in the event of a multiple Store transfer.
Relocation Fee 50% of the Initial Fee paid at the time the franchisee signed the Convenience Store Franchise Agreement.
Liquidated Damages An amount equal to royalty payments for a period of 48 months or the remaining term of the Convenience Store Franchise Agreement based on the monthly Gross Sales for the most recent 12-month period or for a shorter period if the Convenience Store Franchise Agreement hasn't been in effect for 12 months.
Reimbursement of Equipment/ Construction Funding The remaining net value of the equipment which will be calculated as follows: the entire amount of the Equipment/ Construction Funding less 1/120 of the funding for each month the store was open and operating in full compliance with the terms of the Convenience Store Franchise Agreement.
Debranding Fee If the franchisee fails to debrand your site to the franchisor’s satisfaction, the franchisee must reimburse the franchisor for all costs incurred in removing from the convenience store items of trade dress (such a special valances, aimers, etc.), signs and other promotional materials bearing the Circle K Marks or otherwise related to the business system. This amount is estimated to be $10,000
Insurance $4,500 to $12,000
Renewal Fee Currently $0

The above information has been taken from the FDD of Circle K. Date of FDD: 2013

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