factual

What is the Purchaser required to do to protect Circle K from losses, claims, and liabilities arising from the Purchaser's operation?

Circle_K Franchise · 2025 FDD

Answer from 2025 FDD Document

Purchaser shall indemnify, protect, defend, and save Seller harmless from and against any and all losses, claims, liabilities, environmental cleanup costs, fines, penalties, suits and actions, judgments and costs, including attorneys' fees and the costs of litigation, which shall arise from, or grow out of, any injury to or death of persons, or damage to or loss of property, or violation by Purchaser or any other person of any governmental statute, law, regulation, rule, or ordinance, directly or indirectly resulting from, or in any way connected with (i) Purchaser's performance of this Agreement, (ii) operation of Purchaser, or activities of any other person, at the Premises, or (iii) the condition of the Premises or of the adjoining streets, sidewalks or ways, irrespective of whether such injury, death, damage or loss is sustained by Purchaser or any other person, firm or corporation which may seek to hold Seller liable.

The existence or non-existence of any insurance required under this Agreement will not limit Purchaser's indemnity or other obligations under this Agreement.

This indemnity shall survive the termination or nonrenewal of this Agreement.

    1. Purchaser's Insurance Requirements.
  • (a) Purchaser 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) if Purchaser operates, or permits the operation of, a service bay and/or car wash on the Premises, Legal Liability Insurance covering fire, theft or collision, with a minimum limit of $500,000 per occurrence and coverage in the general aggregate amount of no less than $1,000,000; (iii) Automobile Liability Insurance, covering all owned, hired or otherwise operated non-owned automobiles, for death of or injury to any one person and liabilities for loss of or damage to property resulting from any one accident with a combined single limit of not less than $1,000,000 per occurrence, including MCS 90 endorsement or other acceptable evidence of financial responsibility as required by the Motor Carrier Act of 1980 and the Pollution Liability Broadened Coverage endorsement; (iv) Workers Compensation Insurance as required by law; (v) 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 (vi) environmental pollution/impairment insurance coverage in an amount of at least $1,000,000 on a continuous and uninterrupted basis insuring Purchaser 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 Purchaser's business at the Premises.

Source: Item 23 — RECEIPTS (FDD pages 100–359)

What This Means (2025 FDD)

According to Circle K's 2025 Franchise Disclosure Document, the Purchaser (franchisee) is required to indemnify, protect, defend, and save the Seller (Circle K) harmless from any losses, claims, liabilities, environmental cleanup costs, fines, penalties, suits and actions, judgments, and costs, including attorney's fees and the costs of litigation. This broad indemnification covers issues arising from injury to or death of persons, damage to or loss of property, or any violation by the Purchaser or any other person of any governmental statute, law, regulation, rule, or ordinance. This protection extends to issues directly or indirectly resulting from the Purchaser's performance of the agreement, the operation of the Purchaser's business, activities of any person at the premises, or the condition of the premises and adjoining areas.

In addition to the indemnification clause, the Purchaser is required to obtain and maintain several insurance policies. These include Comprehensive General Liability Insurance with minimum limits of $1,000,000 per occurrence and an aggregate coverage of no less than $2,000,000. If the Purchaser operates a service bay or car wash, they must also have Legal Liability Insurance with a minimum limit of $500,000 per occurrence and coverage in the general aggregate amount of no less than $1,000,000. Automobile Liability Insurance is required with a combined single limit of not less than $1,000,000 per occurrence, along with Workers Compensation Insurance as required by law and Employer's Liability Insurance with a coverage limit of the greater of the amount required by law or $500,000 per occurrence. Furthermore, the Purchaser must maintain environmental pollution/impairment insurance coverage in an amount of at least $1,000,000.

These requirements mean that a Circle K franchisee bears significant responsibility for any liabilities arising from their business operations. The indemnification clause essentially makes the franchisee responsible for covering Circle K's legal costs and potential payouts in the event of lawsuits or other claims related to the franchisee's business. The extensive insurance requirements further ensure that the franchisee has sufficient financial resources to cover potential liabilities. Prospective franchisees should carefully consider these obligations and ensure they have adequate insurance coverage and risk management strategies in place to protect themselves and Circle K from potential losses.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.