What constitutes a 'change in control' of a Circle K licensee that triggers assignment requirements?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Subparagraph (a) above applies if any change in the control of the Licensee occurs including, without limitation, the sale, conveyance, alienation, transfer or other change of interest in, or title to, or beneficial ownership of, any voting stock, membership interest, or partnership interest, of or in the Licensee, whether voluntarily, involuntarily, by operation of law, merger or otherwise. A "change in the control" of Licensee shall be deemed to occur whenever a
party gains the ability to influence the business and affairs of Licensee directly or indirectly. A party who owns, or otherwise possesses, twenty-five percent (25%), or more, of the voting stock, membership interest, partnership interest, or beneficial interest shall be deemed to have such ability.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, a change in control of a licensee that triggers assignment requirements occurs if there is any change in the control of the Licensee. This includes, but is not limited to, the sale, conveyance, alienation, transfer, or other change of interest in, or title to, or beneficial ownership of, any voting stock, membership interest, or partnership interest of the licensee. This can occur voluntarily, involuntarily, by operation of law, merger, or otherwise.
Specifically, a "change in the control" of the Circle K Licensee is deemed to occur whenever a party gains the ability to influence the business and affairs of the Licensee directly or indirectly. The agreement clarifies that a party who owns, or otherwise possesses, twenty-five percent (25%), or more, of the voting stock, membership interest, partnership interest, or beneficial interest is considered to have such ability to influence the business.
This provision is important for prospective Circle K franchisees because it restricts their ability to transfer ownership or control of their business without the franchisor's consent. If a franchisee plans to sell a significant portion of their business or bring in partners, they must be aware that this could trigger the assignment requirements and necessitate approval from TMC Franchise Corporation. This ensures that Circle K maintains control over who operates its branded locations and that any new controlling party meets their qualifications.