For how long must a Circle K licensee's environmental pollution/impairment insurance coverage extend beyond the expiration, termination, or nonrenewal of the License Agreement?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
, credit identifications, fleet cards, debit cards, pre-paid cards or other similar transaction authorization cards, Licensee shall accept and honor all such cards pursuant to the terms and conditions contained in this paragraph 7(f). The term "Transaction Cards" shall be understood to include all such CIRCLE K cards.
- (g) Financial Reports –Within 90 days after the end of its fiscal year, Licensee must provide TMC with Licensee's year-end balance sheets, statements of income and cash flow. At TMC's request, Licensee must audit its year-end balance sheet, statement of income and cash flow.
- (h) Insurance Licensee shall, at its sole expense, obtain insurance from a reputable insurance carrier authorized to do business in the state in which the Premises is located providing full and continuous coverage for the full Term and all renewal periods thereof equivalent to the: (i) Comprehensive General Liability Insurance covering the Premises, all operations at the Premises, products completed operations liability, products liability, contractual liability, fire, explosion and collapse liability, as well as coverage on all contractor's equipment (other than motor vehicles licensed for highway use) owned, hired, or used in connection with this Agreement, bodily injury, and property damage, with minimum limits of at least $1,000,000 per occurrence, and an aggregate coverage of no less than $2,000,000; (ii) Workers Compensation Insurance as required by law; (iii) Employer's Liability Insurance against common law liability, in the absence of statutory liability, for employee bodily injury arising out of the master-servant relationship with a coverage limit of the greater of such amount required by law or $500,000 per occurrence; and (iv) environmental pollution/impairment insurance coverage in an amount of at least $1,000,000 on a continuous and uninterrupted basis insuring Licensee for all environmental liabilities arising out of, but not limited to, the storage, handling, dispensing, and/or sale of motor fuel products and lubricants at the Premises, and/or the ownership and operation of Licensee's
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, a licensee's environmental pollution/impairment insurance coverage must extend for at least two years beyond the expiration, termination, or nonrenewal of the License Agreement. This requirement ensures that any environmental liabilities that may arise from the licensee's operation of the Circle K business at the premises are covered even after the agreement has ended. The minimum coverage amount required is $1,000,000.
This extended coverage is crucial because environmental issues may not be immediately apparent and can take time to manifest. By maintaining coverage for two years post-termination, Circle K aims to protect itself and the licensee from potential long-term environmental liabilities related to the storage, handling, dispensing, and/or sale of motor fuel products and lubricants at the premises. Licensees have the option to meet these requirements through participation in EPA-approved state financial assurance funds or other EPA-approved methods, or by satisfying the financial assurance test requirements of the EPA's Financial Responsibility Regulations.
For a prospective Circle K licensee, this means factoring in the cost of maintaining environmental pollution/impairment insurance for the duration of the license agreement plus an additional two years. This cost should be considered as part of the overall financial planning for the franchise. It is also important to understand the various methods available to meet the insurance requirements, such as participating in state financial assurance funds, to potentially reduce costs while remaining compliant with Circle K's requirements and EPA regulations. Failing to maintain adequate insurance coverage could result in Circle K obtaining coverage on the licensee's behalf, with the licensee responsible for reimbursing all associated costs and expenses.