Top 250 Franchise by Entrepreneur – Rank no.36 – Circle K – US
Products & Services: Convenience store
Number of Locations: 7,735
Total Investment: $210.5K – 1.6M
Began Franchising: 1995
About Circle K
The Circle K convenience store chain got its start in 1951, when Fred Hervey bought three Kay’s Food Stores in El Paso, Texas. Over the next few decades, he expanded the company throughout the Southwestern U.S. through a series of acquisitions, and took it international in 1979 with a licensing agreement that brought the stores to Japan.
The company began franchising in 1999, and today Circle K stores can be found throughout the Southern, Western and Southwestern U.S., as well as in six other countries.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $25,000
Ongoing Royalty Fee: 3.7-5.5%
Term of Franchise Agreement: 10 years, renewable
Net Worth: $500,000
Liquid Cash Available: $100,000
15% of all franchisees own more than one unit. Number of employees needed to run franchised unit: 10. Absentee ownership of franchise is NOT allowed..
|FINANCING TYPE||IN-HOUSE||THIRD PARTY|
How This Franchise Supports Franchisees
Franchise Ranking History
|Type||Wholly owned subsidiary|
|Industry||Retail (Convenience stores)|
|Founded||El Paso, Texas (1951)|
|Headquarters||Tempe, Arizona, United States|
|Number of locations||10,000+|
|Area served||United States, Guam, Japan, China, Taiwan, Hong Kong, Macau, Vietnam, Indonesia, United Arab Emirates, Honduras and Mexico|
Since the 1980s, Circle K has been the largest company-owned convenience-store chain (i.e. of non-franchised stores) in the U.S.It was second in overall number of U.S. stores to 7-Eleven. However by 1989, it faced strong competition from convenience stores owned by oil companies, and Circle K declared bankruptcy in 1990. By July 2010, Circle K had dropped to fourth rank in number of stores (3,455), then behind BP (4,730 stores) and Shell (4,630 convenience stores).
Some Circle K stores operate gasoline pumps selling Union 76-branded motor fuels; others sell Mobil, Marathon, ConocoPhillips,Irving, BP, Sunoco or Shell-branded fuel. Until mid-2006, nearly all Circle K stores in South Texas sold Citgo-branded fuel; however, those stores have dropped the Circle K name and now operate as Stripes Convenience Stores and are served by Valero-branded fuel. Circle K stores in northeast Ohio vary depending upon what stores they used to be: the majority are former Citgo/Holland Oil, whose gas is branded as Circle K; others are remnants of the Lawson’s/Dairy Mart chain, which sell gas from other companies. Some locations, especially older outlets in the company’s core markets of the American Southwest, do not sell gasoline.
The chain operates internationally, branching into Mexico and continents such as Asia. In Hong Kong the store is called OK in reference to the circle around the K. Taiwan used to operate under the Circle K brand but has since re-branded its stores to be called OK MART
Circle K was previously in the United Kingdom, Canada, Australia, and New Zealand, acting as the food-store portions of many Shellstations. The Circle K brand re-entered the Canadian market in 2008, in connection with Couche-Tard’s acquisition of Irving Oil‘s convenience store network, as discussed below.
The chain is primarily located in the Southern, Western, Southwestern, and Midwestern United States. In recent years, the company has acquired the 90-store Spectrum chain serving Georgia and Alabama, the CFM chain in Missouri, 35 Sterling Dairy locations inNorthwest Ohio, and 26 stores under various brands from Chico Enterprises of Morgantown, West Virginia. This all came after the 2005 rebranding of the various Couche-Tard stores (Mac’s, Bigfoot, Dairy Mart, and Handy Andy) under the more nationally-known Circle K brand.
Circle K started to appear on Long Island in New York in 2013 with a store in Long Beach.
Entrepreneur Fred Hervey purchased three Kay’s Food Stores in El Paso, Texas, in 1951. Hervey renamed the stores as “Circle K Food Stores, Inc.” rather than “Kay”. He grew the Circle K chain into neighboring New Mexico and Arizona, which has been the company’s home base since 1957 (Hervey would go on to serve two terms as mayor of El Paso).
According to the Circle K website, Circle K grew its retail network through a series of acquisitions conducted during the next few decades, which were incorporated into the Circle K brand. By 1975, there were 1,000 Circle K stores and 3,000 employees across the US. In 1979, Circle K entered the international market when a licensing agreement established the first Circle K stores in Japan; Circle K stores in Japan are run by the Circle K Sunkus Corporation, which licenses the Circle K brand from Alimentation Couche-Tard. In 1983, the number of stores increased to 2,180 with the purchase of the 960-store UtoteM chain.
The Thirst Buster fountain drink was introduced in 1983. It is one of Circle K’s flagship products today. Now known as “Polar Pop” in some areas, Circle K advertises that customers can buy any size for just a single price.
Karl Eller, a prominent Phoenix businessman, served as the company’s CEO from 1983-1990. During that time, Eller built Circle K into the second largest convenience store operation and the largest publicly owned convenience store chain in the U.S. with 4,631 stores in 32 states and an additional 1,300 or so licensed or joint venture stores in 13 foreign countries. Under Eller’s leadership, the company grew from annual sales of $747 million to over $3 billion.
Fortunes declined in the late 1980s as the US economy began to slow down, and Circle K filed for Chapter 11 bankruptcy protection in May 1990; Eller resigned as CEO. Some underperforming locations were sold or closed. In 1993 the company was purchased by Investcorp, an international investment group, and emerged from bankruptcy.
In 1996, Circle K was acquired by Tosco Corporation, an independent petroleum refiner and marketer, but kept its headquarters in Phoenix. Tosco was purchased in 2001 by Phillips Petroleum, which in 2002 merged with Conoco to form ConocoPhillips. In 2003, Circle K was purchased by Alimentation Couche-Tard (a large convenience store operator based in the Montreal area) for US$804 million.
In mid-2006, Alimentation Couche-Tard entered into a franchising agreement with ConocoPhillips to brand some of its company-owned stores as Circle K, in the western portion of the US. ConocoPhillips remodeled the stores into the Circle K scheme but continued to operate them. The stores continued to have the new ConocoPhillips unified canopy design and ProClean gasolines.
Another oil company, Canada-based Irving Oil, leased out its convenience stores operating under the Bluecanoe and Mainway banners in the United States and Atlantic Canada to Couche-Tard, which rebranded the locations to Circle K in July 2008, while still selling Irving-branded fuel. However, the Mainways in Newfoundland and Labrador did not change until summer 2010. The parties had earlier formed a similar partnership in Quebec, with the stores there operated as Couche-Tard.
In April 2009, ExxonMobil sold 43 Phoenix, Arizona stores to parent company Couche-Tard as part of a sale of the larger On the Run franchise. These 43 stores are to be rebranded under the Circle K name.
In the Counting Crows song “Cowboys” a reference is made to “Circle K killers”.
In “Isle Thing”, “Weird Al” Yankovic‘s parody of the Tone Loc song “Wild Thing“, he sings, “Met this fine young thing/at the local Circle K/She made a date for half-past eight/So I said ‘What the hey?'”
Californian hardcore punk band Rich Kids on LSD reference Circle K in the lyrics for the song “Take Me Home” from their album Riches to Rags.
American punk band Screeching Weasel mentions Circle K in the lyrics to “Crying in my Beer”.
Band Spiderbait has a song based on Circle K
Circle K convenience stores are known fondly and colloquially by Hong Kong locals as “O.K.”
Punk band Teenage Bottlerocket references Circle K in the lyrics for the song “Skate or Die”
On Season 3 of True Blood, The Vampire Queen of Louisiana, Sophie-Anne LeClerq (Evan Rachel Wood) is having fun with lottery tickets, wins another hundred dollars and yells for her human Hadley to “Run down to Circle-K and get me another hundred of these.”
Frosters and Polar Pops
The Polar Pop is Circle K’s name for the fountain drinks it sells in some markets, and most locations offer any size for between 0.49 and 0.59 and 0.79 cents, plus tax. Refills cost the same.
As a sponsor
Due to its sizable presence in Greater Cleveland from the former Lawson/Dairy Mart stores, Circle K sponsors the Cleveland Indians strikeout sign in center field at Progressive Field in Cleveland. Every time the Indians pitcher records a strikeout, a fan flips a sign to add the Circle K logo on the sign, as the strikeout in traditional baseball scorekeeping is the letter “K”.
It is also the Strikeout sponsor for the Arizona Diamondbacks. A large display shows a Circle K logo everytime a Diamondbacks pitcher records a stikeout. If 10 total stikeouts are obtained in one game, then the entire audience receives a voucher for a free polar pop at Circle K Stores.