What information must the lessor provide to Circle K regarding the franchisee's lease?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
If you will occupy your Store under a lease negotiated by you with a third party, you must submit the lease to us for prior written approval. Our approval may be conditioned on the following terms and conditions appearing in the lease:
- (1) The initial term, or initial term with renewal terms, must be for at least 10 years, or the term of the Convenience Store Franchise Agreement, whichever is longer.
- (2) The Lessor consents to your use of the Marks and signs as required for a Circle K franchise, and to your operation of a convenience store on the premises.
- (3) You are prohibited from subleasing or assigning all or part of the occupancy rights or extending or renewing the lease without our prior written consent.
- (4) The Lessor must agree to provide to us copies of notices of default and any material breaches given to you under the lease.
- (5) We have the right to enter the premises to make necessary modifications to protect the Marks or the Business System or to cure any default under the Convenience Store Franchise Agreement or the lease.
- (6) We (or someone we designate) have the option, upon default, expiration or termination of the Convenience Store Franchise Agreement, and upon notice to the lessor, to assume your rights under the lease, including the right to assign or sublease. You must furnish us with a copy of any signed lease within 10 days after it is signed.
- (7) If you lose your lease for any reason, including your decision not to enter into a new term, before the end of the 10-year term of your Convenience Store Franchise Agreement, you will be responsible for the payment to TMC of all liquidated damages due under your Convenience Store Franchise Agreement, and the repayment of any unamortized Equipment/Construction Funding, if provided to you by TMC.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 45–52)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, if a franchisee occupies their store under a lease negotiated with a third party, the lessor must agree to provide Circle K with copies of notices of default and any material breaches given to the franchisee under the lease. This requirement ensures that Circle K is informed of any potential issues with the franchisee's lease obligations.
This provision is crucial for Circle K because it allows them to monitor the franchisee's compliance with the lease terms and take necessary actions to protect their brand and business system. For example, if a franchisee is consistently late on rent payments, Circle K would be notified and could intervene to help the franchisee resolve the issue or, if necessary, take steps to terminate the franchise agreement. This protects Circle K from potential disruptions to the business and maintains the integrity of the franchise network.
Furthermore, Circle K retains the right to enter the premises to make necessary modifications to protect the Marks or the Business System or to cure any default under the Convenience Store Franchise Agreement or the lease. Circle K (or someone they designate) also has the option, upon default, expiration, or termination of the Franchise Agreement, and upon notice to the lessor, to assume the franchisee's rights under the lease, including the right to assign or sublease. These stipulations provide Circle K with significant control over the leased premises and ensure the continued operation of the Circle K store even if the franchisee defaults or the franchise agreement is terminated.