Convenience stores and gas stations are generally one-piece businesses. Since they are part of an essential piece of daily life, they are great businesses when they are pieced together.
Circle K is one of those convenience stores that are extremely popular all around the globe.
Even though they are mainly a convenience store brand, some of its locations also come with an additional gas station.
They are everywhere, and their popularity makes it obvious that they are a great business to own.
That’s why you might want to consider having a Circle K franchise branch to take a piece of the revenue.
This article will shed light on Circle K and its franchise business to help you determine if it’s a good business or not.
About Circle K
Circle K is essentially a convenience store chain that operates globally in many countries.
They are headquartered in Arizona, the United States, and are currently owned by Alimentation Couche-Tard.
Even though they are a convenience store, they also offer fuel services and operates gas stations in several locations.
In some of these fuel service locations, they also offer automated fuel dispensers, car washes, and other services.
The company has over 15,000 stores worldwide, making it one of the largest convenience store chains in the world.
The brand is famous for its convenience stores that offer a variety of products such as snacks, beverages, tobacco, and personal care items.
Circle K is committed to providing its customers with a convenient and enjoyable shopping experience by ensuring the stores are clean, well-stocked, and staffed with friendly and helpful employees.
Circle K also offers its customers various promotions and loyalty programs to create a loyal customer base with repeat purchases.
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Circle K History
Circle K was founded in 1951 by Fred Hervey in El Paso, Texas. The journey started with Fred buying Kay’s Food stores in Texas.
This would be the start of a small convenience store called Circle K. Circle K quickly grew thanks to its unique enterprise spirit.
The company reached the 1,000-store mark by 1975 and expanded to international markets through licensing agreements in 1979.
With the global expansion and increasing sales, the company managed to hit $1 billion in sales in 1984.
The first franchise operations outside of licensing agreements were established in 1999 after filing for bankruptcy in 1990 and were sold to Investcorp in 1993.
They changed hands several times until 2003, when Alimentation Couche-Tard bought the company, and they still own it.
The company kept growing through both franchising and company-owned stores, and now they have over 15,000 stores in many different countries.
Franchise Model Table
| Initial Investment | $268,500-$4.8 million |
| Franchise | YES |
| Franchising Since | 1999 |
| Franchise-Fee | $25,000 |
| Royalty-Fee | 3.5% or $1,500/business |
| Liquidity | $100,000 |
| Estimated Outlets | 15,000+ |
How Much Does It Cost To Open A Circle K Franchise?
Since Circle K is an international business that franchises in many different locations across the globe, it is hard to determine a certain number.
However, Circle K provides an average number that they got from their franchisees. The numbers vary by location, the number of employees, and the size of the store.
You can expect to spend anywhere between $268,500 and $4.8 million to open a Circle K franchise.
This number includes the one-time $25,000 franchise fee and any other operational costs. The biggest differentiator is your property and its lease and the number of employees.
Circle K Franchise Requirements
To be eligible to be a Circle K franchise is mostly about financial requirements.
They are not looking for a comprehensive personal background such as industry experience or experience with the store. Their most important part is the financial requirements.
You need to have at least a $1 million net worth and liquid assets of $100,000. Liquid assets are cash or cash-relevant funds that you can access quickly, and net worth is the total worth of everything you own.
In addition to these, you also need to prove that you have an entrepreneurial spirit.
This is where an entrepreneur’s background helps in either the same or a different industry because it increases your chances.
Circle K Profit & Revenue
Because Circle K is owned and operated by Alimentation Couche-Tard, there is no separate information about Circle K’s revenue and profit numbers.
However, according to Alimentation’s latest financial report, we can see how much they make and have an assumption about Circle K.
The latest report for the second quarter of 2023 shows a net profit of $810 million, about 100$ million increase from the same quarter in 2022.
Alimentation reached $4.1 billion in revenues from merchandise and service sales in the same period of 2023. This shows an increase of 2.3% overall from the previous year.
Since Alimentation operates thousands of stores under different brands, it is hard to calculate the revenue and profit numbers per store for Circle K.
However, looking at their overall profit, we can conclude an average number for each store, considering they have over 15,000 stores running.
Circle K Franchise Training and Support
Circle K offers both training and ongoing support for prospective franchisees. The training starts before the operations of the franchise branch started.
This means you have to take them before starting your operations. It has to be the franchisee or the operations manager of the branch that has to complete the necessary training.
The classroom training is remote or in physical locations determined by the franchisor.
After the classroom training, there is also a two-week practical in-store training by the authorized trainers of the franchisor.
This training focuses on daily operations and keeping up with quality standards. There might be additional in-store training based on the franchisee’s experience.
In addition, Circle K provides ongoing operational support such as proprietary software, extra training, marketing, and others.
Circle K Franchise Terms of Agreement and Renewal
The initial franchise agreement’s term will be for ten years. This agreement gives you the right to use the brand’s name for ten years for the first term.
At the end of the first ten years, you will have the option to renew for another ten-year period.
The renewal process depends on your situation with the franchisor and if you are doing a good job as a franchisee.
The franchisor has the right to not renew your agreement if they don’t see you as fit to represent the brand and follow the guidelines.
Circle K Franchise Obligations and Restrictions
After the start of the operations, the franchisor does not expect the franchisees to run the store personally, but they have to be involved in the daily operations.
If the franchisee can’t be involved in the operations, they have to designate a key person who has completed the necessary training by the franchisor.
In addition, this person also has to be determined as the key person in the agreements.
The franchisees are not allowed to sell any products or services that the franchisor doesn’t approve of.
The franchisee also has to offer all the products and services that Circle K wants you to.
Additionally, the store plan must be in accordance with the plan specifications that the franchisor approves during the preparation phases.
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Circle K Franchise Financial Assistance
Circle K offers direct financial assistance but only to qualified franchisees through a funding program.
The financial assistance covers the improvements, equipment, construction, or conversion costs of the store and not other operational costs.
The exact amount the franchisee will receive depends on the condition of the premises and the exact requirements.
Circle K Comparison
| Company | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| AMPM | $35,000-$70,000 | 11-14% | $1.7 million-$7.6 million |
| 7-Eleven | $25,000 | 50% | $53,600-$1.1 million |
| Circle K | $25,000 | 3.5% or $1,500/business | $268,500-$4.8 million |
Conclusion
Circle K is by far one of the biggest franchise businesses in the world, with stores all around the globe.
This also shows in their revenue and profit numbers, and it is clear that they are a good business to own.
Thankfully, Circle K franchises across different locations enable quick growth and give individuals the option to run a Circle K business.
All you need is $1 million in net worth and a liquid asset of $100,000 with a little bit of entrepreneurial background.
Then, if you can cover the initial investments, you can start your Circle K franchise business after getting approved.
Because of their popularity, they provide a high return on investment in most locations.
FAQ
Who is the CEO of Circle K?
Brian Hannasch is the current CEO of Alimentation Couche-Tard, which owns Circle K.
That’s why he is also the CEO of Circle K and other associated brands. He has been the CEO since September 2014.
How much does it cost to open a Circle K franchise?
The total initial investment expected to open a Circle K franchise is between $268,500 and $4.8 million.
Depending on the size of the store and the location, it could well be outside of these ranges, too.
Can anyone open a Circle K franchise?
If you can manage to fill in the financial and personal requirements, then you can open it. If you can’t, then you will not be approved to be a Circle K franchise.
Sources
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.