Does the Circle K agreement obligate the Seller to extend credit to the Purchaser?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
agree that this Note and the Loan Documents are a product of their joint effort. As a result, any rules of construction, including but not limited to Civil Code section 1654 and the rule that a contract should be construed against the drafter, shall not apply.
| Average Gross Sales (last 12 months) | Maximum Amount Available | |
|---|---|---|
| $50,000 or less | Up to 0.5 times Gross Sales | |
| $50,001 to $75,000 | Up to 0.6 times Gross Sales | |
| $75,001 to $100,000 | Up to 0.7 times Gross Sales | |
| $100,000+ | Up to 0.75 times Gross Sales | #### Exhibit B to Incentive and Amortization Agreement |
SECURITY AGREEMENT
______________________ (the "DEBTOR") and TMC Franchise Corporation, a wholly owned subsidiary of Circle K Stores, Inc., an Arizona corporation, and any affiliated or related companies ("TMC FRANCHISE CORPORATION") agree as follows:
- 1. Definitions. All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Franchise Agreement, Motor Fuel Agreement or Credit Agreement. In addition:
- (a) The term "State," as used herein, means the State of «State_2».
- (b) All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9.
- (c) The term "Obligations," as used herein, means all of the indebtedness, obligations and liabilities of DEBTOR to TMC FRANCHISE CORPORATION, individually or collectively, whether direct or indirect, joint or several, absolute or contingent, due or to become due, now existing or hereafter arising in any manner or at any time, including those arising under or in respect of the Circle K Franchise Agreement entered into between TMC FRANCHISE CORPORATION and DEBTOR (the "Franchise Agreement"), Motor Fuel Agreement entered into between TMC FRANCHISE CORPORATION and DEBTOR], any agreement or agreements by which TMC FRANCHISE CORPORATION extends any funding or credit to DEBTOR, no matter how such agreement is denominated (the "Credit Agreement"), any promissory notes or other instruments or agreements executed and delivered pursuant thereto or in connection therewith or this Agreement.
- (d) The term "Event of Default," as used herein, means the failure of DEBTOR to pay or perform any of the Obligations as and when due to be paid or performed under the terms of the Franchise Agreement Motor Fuel Agreement or Credit Agreement.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the Security Agreement outlines the obligations between the Debtor (franchisee) and TMC Franchise Corporation, a subsidiary of Circle K Stores, Inc. The agreement defines 'Obligations' as all debts, liabilities, and responsibilities of the franchisee to TMC Franchise Corporation. This includes those arising from the Franchise Agreement, Motor Fuel Agreement, any credit agreements, promissory notes, or other related instruments.
Specifically, the document mentions a 'Credit Agreement' as one way TMC Franchise Corporation may extend funding or credit to the franchisee. This implies that while not mandatory in every case, Circle K (through TMC Franchise Corporation) does have the option to provide credit to franchisees under certain agreements. The terms and conditions of such credit extensions would be detailed within the Credit Agreement itself.
Furthermore, the Motor Fuel Agreement includes an exhibit detailing an 'Incentive and Amortization Agreement' where Circle K may loan a 'Conversion/Improvement Amount' to the franchisee for store improvements. This loan is subject to an amortization schedule for repayment. This suggests that Circle K may provide financial assistance for specific purposes like store upgrades, with repayment terms clearly defined.
In summary, while the standard Circle K franchise agreement may not automatically obligate Circle K to extend credit, there are provisions and related agreements that allow for the possibility of Circle K providing financial assistance or credit to franchisees, particularly for specific purposes like store improvements or under a separate Credit Agreement. Prospective franchisees should carefully review all related agreements and exhibits to understand the specific terms and conditions under which credit may be extended.