What constitutes 'Financed Equipment Collateral' in the Circle K agreement?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
"Financed Equipment Collateral" means all goods (i) sold by Franchisor to Franchisee at any time pursuant to this Agreement, or (ii) purchased by Franchisee in whole or in part with proceeds of any loan or advance by Franchisor to Franchisee pursuant to this Agreement, regardless of whether such proceeds are paid by Franchisor directly to a seller, by Franchisor to Franchisee to enable the purchase of such goods, by Franchisor to Franchisee to replenish funds expended by Franchisee for such purchase, or otherwise, together with all additions, substitutions and replacements thereof, and all attachments, components, parts, and accessories and other goods installed thereon or affixed thereto or intended to be installed thereon or affixed thereto, in each case regardless of whether such goods constitute "purchase-money collateral" as defined in the UCC.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, 'Financed Equipment Collateral' refers to all goods sold by Circle K to the franchisee at any time under the Franchise Agreement. It also includes goods purchased by the franchisee using loan or advance proceeds from Circle K, regardless of how those proceeds are distributed (whether directly to a seller, to the franchisee for purchase, or to replenish funds). This definition applies whether or not the goods qualify as 'purchase-money collateral' under the Uniform Commercial Code (UCC).
This collateral encompasses not only the initially purchased or financed equipment but also any additions, substitutions, or replacements made to that equipment. Furthermore, it includes all attachments, components, parts, accessories, and other goods installed on or affixed to the equipment, or intended to be installed or affixed. This broad definition ensures that Circle K has a security interest in a wide range of items related to the financed equipment.
For a prospective Circle K franchisee, this means that any equipment acquired through financing from Circle K, as well as any related parts or replacements, serves as collateral for the financing. If the franchisee defaults on the financing agreement, Circle K has the right to seize these assets. It is important for franchisees to understand the full scope of what constitutes 'Financed Equipment Collateral' to be aware of their obligations and the potential consequences of default.