What is the Circle K franchisee's responsibility for paying vendors and suppliers?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon expiration or termination of this Agreement for any reason, Franchisee will:
- (A) within five (5) days, pay all Royalty Fees, Promotional Fees, and any other amounts owed to Franchisor, suppliers, or vendors, including the outstanding principal amounts and accrued interest on any notes or evidences of indebtedness of Franchisee payable to Franchisor or any Affiliates.
The payment to Franchisor of all amounts owing will be accelerated on all debt obligations which had been the subject of payment schedules even if payment was then being made promptly according to the agreed schedule.
Franchisee hereby grants to Franchisor a lien and security interest against any and all personal property, equipment, and fixtures owned by Franchisee and used in connection with the Store as security for the payment of such obligations;
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to the 2025 Circle K FDD, franchisees are responsible for paying vendors and suppliers, especially upon termination or expiration of the franchise agreement. Specifically, within five days of the agreement's termination or expiration, the franchisee must pay all amounts owed to suppliers and vendors. This includes outstanding principal amounts and accrued interest on any debts.
This requirement ensures that all financial obligations are settled promptly when the franchise relationship ends. Circle K also secures these payment obligations by granting the franchisor a lien and security interest in the franchisee's personal property, equipment, and fixtures used in connection with the store. This gives Circle K a legal claim against these assets if the franchisee fails to pay what is owed.
This is a fairly standard clause in franchise agreements, designed to protect the franchisor and its associated vendors. Prospective Circle K franchisees should be aware of this obligation and ensure they have a plan for settling all outstanding debts to vendors and suppliers should their franchise agreement end, whether by choice or circumstance.