Does the Circle K franchisor have a set-off right regarding payments owed by the franchisee?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5.8 Franchisor's Set-Off Right. Franchisor, in its sole discretion, may withhold, setoff or recoup any amount it owes to Franchisee under this Agreement (including without limitation any discounts, rebates and allowances under Section 6.6) from or against any amount owed by Franchisee to Franchisor (including without limitation pursuant to any indemnification obligation of Franchisee) or held by Franchisor on Franchisee's behalf.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, Circle K has the right to set off any amounts it owes to a franchisee against any amounts the franchisee owes to Circle K. This means that if Circle K owes a franchisee money for any reason, such as discounts, rebates, or allowances, Circle K can deduct that amount from any payments the franchisee owes to Circle K, including payments for indemnification obligations.
This set-off right is at Circle K's sole discretion. This means Circle K can choose whether or not to exercise this right. It is also important to note that the franchisee does not have the right to offset any amounts they believe Circle K owes them against payments due to Circle K. The franchisee's obligation to pay Circle K is absolute and unconditional.
This clause is fairly standard in franchise agreements. It protects Circle K's financial interests by ensuring that it can recover any debts owed by the franchisee. Prospective franchisees should be aware of this right and understand that Circle K can use it to offset any amounts it owes to them against any amounts they owe to Circle K.