Who bears the expense of obtaining the required insurance for a Circle K franchise?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
otor fuel or motor fuel products purchased from Seller hereunder. Seller reserves the right to market or sell, and authorize others to market or sell, motor fuel or motor fuel
products in any manner Seller chooses, including through its own retail outlets or through designated wholesalers or other retailers.
- Confidential Information. The confidentiality obligations of the Franchise Agreement apply to any nonpublic information received by or made available to Purchaser hereunder.
29. Purchaser's Insurance Requirements.
- (a) Purchaser shall, at its sole expense, obtain insurance from a reputable insurance carrier authorized to do business in the state in which the Premises is located providing full and continuous coverage for the full Term and all renewal periods thereof equivalent to the: (i) Comprehensive General Liability Insurance covering the Premises, all operations at the Premises, products completed operations liability, products liability, contractual liability, fire, explosion and collapse liability, as well as coverage on all contractor's equipment (other than motor vehicles licensed for highway use) owned, hired, or used in connection with this Agreement, bodily injury, and property damage, with minimum limits of at least $1,000,000 per occurrence, and an aggregate coverage of no less than $2,000,000; (ii) if Purchaser operates, or permits the operation of, a service bay and/or car wash on the Premises, Legal Liability Insurance covering fire, theft or collision, with a minimum limit of $500,000 per occurrence and coverage in the general aggregate amount of no less than $1,000,000; (iii) Automobile Liability Insurance, covering all owned, hired or otherwise operated non-owned automobiles, for death of or injury to any one person and liabilities for loss of or damage to property resulting from any one accident with a combined single limit of not less than $1,000,000 per occurrence, including MCS 90 endorsement or other acceptable evidence of financial responsibility as required by the Motor Carrier Act of 1980 and the Pollution Liability Broadened Coverage endorsement; (iv) Workers Compensation Insurance as required by law; (v) Employer's Liability Insurance against common law liability, in the absence of statutory liability, for employee bodily injury arising out of the master-servant relationship with a coverage limit of the greater of such amount required by law or $500,000 per occurrence; and (vi) environmental pollution/impairment insurance coverage in an amount of at least $1,000,000 on a continuous and uninterrupted basis insuring Purchaser for all environmental liabilities arising out of, but not limited to, the storage, handling, dispensing, and/or sale of motor fuel products and lubricants at the Premises, and/or the ownership and operation of Purchaser's business at the Premises. Such environmental/pollution impairment coverage shall extend at least two (2) years beyond the expiration, termination, or nonrenewal of this Agreement. Purchaser may meet the requirements for environmental pollution/impairment coverage for underground storage tanks by participating in the federal Environmental Protection Agency ("EPA") approved state financial assurance fund or other EPA approved method to demonstrate financial responsibility or by satisfying any of the other financial assurance test requirements of the EPA's Financial Responsibility Regulations (40 CFR Part 280).
- (b) Purchaser understands and agrees that any insurance coverage purchased by Seller shall not contribute to Purchaser's coverage requirements under subparagraph (a) above. All insurance policies covered by subparagraph (a) will name Seller and its affiliates as additional insured and will be primary as to any other existing, valid and collectible insurance. All such insurance shall contain provisions whereby the insurer releases all rights of subrogation against Seller. The foregoing requirements are minimum insurance requirements only and may or may
not adequately meet the entire insurance needs of Purchaser. Seller may require Purchaser to carry additional types and amounts of insurance coverage, including modifications to any existing insurance required under subparagraph (a)
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the franchisee, referred to as the 'Purchaser' or 'Licensee,' is solely responsible for the expense of obtaining the required insurance coverage. This insurance must be secured from a reputable carrier authorized to conduct business in the state where the Circle K premises are located and must provide continuous coverage throughout the full term and all renewal periods of the franchise agreement.
The required insurance includes several types of coverage with specific minimum limits. These include Comprehensive General Liability Insurance with minimum limits of $1,000,000 per occurrence and an aggregate coverage of no less than $2,000,000. If the Circle K location has a service bay or car wash, Legal Liability Insurance with a minimum limit of $500,000 per occurrence and coverage in the general aggregate amount of no less than $1,000,000 is required. Automobile Liability Insurance with a combined single limit of not less than $1,000,000 per occurrence is also mandated, along with Workers Compensation Insurance as required by law and Employer's Liability Insurance with a coverage limit of the greater of the amount required by law or $500,000 per occurrence. Furthermore, environmental pollution/impairment insurance coverage in an amount of at least $1,000,000 is necessary to cover environmental liabilities related to the storage, handling, dispensing, and sale of motor fuel products and lubricants.
Circle K also requires that the insurance policies obtained by the franchisee name TMC as an additional insured and be primary to any other existing insurance. These policies must contain provisions that waive the insurer's rights of subrogation against TMC. While these are minimum requirements, Circle K retains the right to mandate additional types and amounts of insurance coverage. If a franchisee fails to obtain the necessary insurance, Circle K has the option, but not the obligation, to secure the coverage on the franchisee's behalf, with the franchisee then required to reimburse Circle K for all associated costs and expenses.