What are the dependencies or prerequisites for a Circle K franchisee to be offered a secured promissory note?
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.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, Exhibit B outlines the Security Agreement between the Debtor (franchisee) and TMC Franchise Corporation, a subsidiary of Circle K Stores, Inc. This agreement pertains to the obligations and liabilities of the franchisee to TMC Franchise Corporation, whether direct or indirect, related to the Circle K Franchise Agreement, Motor Fuel Agreement, or any Credit Agreement. These agreements dictate the terms under which TMC Franchise Corporation extends funding or credit to the franchisee, including any promissory notes or instruments associated with these agreements.
The Security Agreement states that the term "Obligations" includes all forms of indebtedness, whether direct or indirect, joint or several, absolute or contingent, due or to become due, currently existing or arising in the future. These obligations arise under the Circle K Franchise Agreement, the Motor Fuel Agreement, and any Credit Agreement between TMC Franchise Corporation and the franchisee. The Credit Agreement encompasses any agreements by which TMC Franchise Corporation provides funding or credit to the franchisee, regardless of how the agreement is named. This also includes any promissory notes or other instruments executed in connection with these agreements.
In practical terms, this means that before a Circle K franchisee can be offered a secured promissory note, they must enter into a Franchise Agreement, potentially a Motor Fuel Agreement, and a Credit Agreement with TMC Franchise Corporation. The Security Agreement serves to secure the franchisee's obligations under these agreements, ensuring that TMC Franchise Corporation has a legal claim on the franchisee's assets in case of default. Prospective franchisees should carefully review these agreements to understand the full scope of their financial obligations and the conditions under which a secured promissory note may be offered.