What are the potential consequences for a Circle K licensee if they breach any agreement with TMC or its affiliates?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
(v) if Licensee breaches any provision of this Agreement, the Franchise Agreement, or other agreement between Licensee and TMC or its affiliates;
(e) Licensee understands and agrees that TMC is relying upon Licensee to pay to TMC the amounts set forth herein, and that the early termination of this Agreement will result in serious losses to TMC.
Licensee and TMC acknowledge that the amount of such losses is, and will be, difficult to determine.
Therefore, Licensee agrees that in the event of a termination of this Agreement, Licensee shall pay to TMC, as liquidated damages, and not as a penalty: the average monthly Licensing Fee payments (calculated in accordance with paragraph 6) payable by Licensee hereunder for the 12 months preceding the termination (during which time Licensee was in good standing under this Agreement), or for a shorter period commencing with the Effective Date of this Agreement if this Agreement is terminated in the first 12 months of the Term, multiplied by the lesser of (i) 48 or (ii) the remaining number of months under the Term of this Agreement, as measured from the time of termination to the date the Term would have ended but for the earlier termination.
If Circle K-branded motor fuel was never offered for sale at the Premises and therefore there is no history of Licensing Fee payments, the liquidated damages will be calculated based on an average monthly payment figure of $500.
- (C) Licensee has complied in good faith with all material terms and conditions of this Agreement throughout the Term of this Agreement and is not in default of this Agreement or any other agreement with TMC or its affiliates.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, a licensee faces several potential consequences for breaching the Branding Agreement, the Franchise Agreement, or any other agreement with TMC or its affiliates. One significant consequence is the potential termination of the Branding Agreement by TMC.
In the event of termination, the Circle K licensee may be required to pay liquidated damages to TMC. These damages are calculated based on the average monthly Licensing Fee payments over the 12 months preceding termination (if the licensee was in good standing) or for a shorter period if the termination occurs within the first 12 months of the agreement. This average is then multiplied by the lesser of 48 or the remaining number of months left in the agreement's term. If Circle K-branded motor fuel was never offered, the liquidated damages will be based on an average monthly payment of $500.
Beyond monetary damages, failure to comply with the terms of the Circle K Branding Agreement can also impact the licensee's ability to renew the agreement. To renew, the licensee must have complied in good faith with all material terms and conditions of the agreement and not be in default of this agreement or any other agreement with TMC or its affiliates. This emphasizes the importance of adhering to all agreements to maintain a good standing with Circle K and secure future renewals.