What is the purpose of Article 2 in the Circle K Franchise Agreement?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
TIONS
In addition to terms defined elsewhere in this Agreement, the capitalized terms used in this Agreement shall have the definitions set forth in Schedule 1 attached hereto.
ARTICLE 2 GRANT OF LICENSE
2.1 Non-Exclusive License; Franchised Location; Store Opening. Subject to the terms and conditions herein, Franchisor hereby grants to Franchisee, and Franchisee hereby accepts, a non-exclusive license to establish and operate, during the Term, a Circle K Store, in conformity with the Business System, using the Marks (the "License"), at the location described in the Data Sheet attached hereto as Exhibit 1 (the "Franchised Location"). Franchisee agrees that the Store shall be constructed in accordance with the requirements of this Agreement and should be ready
to open within: (i) 1 year after the Effective Date, if the Store is a Conversion Store; or (ii) 2 years after the Effective Date, if the Store is a New Store. A failure to open a Conversion Store within one year or a New Store within two years will entitle Franchisor to immediately terminate this Agreement without Franchisor incurring any liability for such termination. If this Agreement is so terminated, Franchisee must comply with all post-termination obligations set forth herein, including but not limited to the payment of Liquidated Damages.
- 2.2 Franchisor's Reservation of Rights. Except for the limited License granted to Franchisee hereunder, all other rights related to the Business System and the Marks not specifically granted to Franchisee hereunder are expressly reserved by Franchisor and its Affiliates. Franchisee acknowledges that the License granted hereby relates solely to the Franchised Location, affords Franchisee no rights regarding other licenses or locations, and does not give Franchisee any exclusive right to market or sell to any prospective customers or any exclusive right to any territory. Without limiting the generality of the foregoing, Franchisee acknowledges and agrees that Franchisor and its Affiliates have expressly reserved certain rights to the use of the Marks, the Business Systems, the Methods, and Confidential Information in connection with their own convenience store and retailing operations, in connection with licensing the same or similar products or services utilizing the same or similar Marks, or any other trademarks, service marks or names, in connection with the manufacture and sale of products at wholesale and at retail, and in connection with granting such rights to others pursuant to a franchise agreement, some or all of which activities may compete, directly or indirectly, with Franchisee's operation of the Store. Franchisee agrees that it will not in any way interfere with the business operations of Franchisor, its Affiliates or other franchisees. Franchisor has the right to make such changes to the Business System as it deems appropriate, including without limitation, changes to the building appearance and "image" requirements. Because complete and detailed uniformity under many varying conditions may not be possible or practical, Franchisor has the right to vary the standards for any license owner based upon the peculiarities of a particular site or circumstance, density of population, business potential, population or trade area, existing business practices, governmental requirements, local ordinances, or any other condition that Franchisor deems to be potentially significant to the successful operation of a Circle K Store. A grant by Franchisor of one or more variances to one or more other franchisees will not entitle Franchisee to the same or a different variation.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, Article 2, titled "Grant of License," outlines the specifics of the non-exclusive license granted to the franchisee. This section details that Circle K grants the franchisee the right to establish and operate a Circle K store at a specific location, as defined in the Data Sheet (Exhibit 1), during the term of the agreement. The franchisee must operate in accordance with Circle K's Business System and use the brand's Marks.
Article 2 also specifies the timeframe for opening the store. A Conversion Store (an existing location converted to a Circle K) must open within one year of the Effective Date, while a New Store has two years. Failure to meet these deadlines allows Circle K to terminate the agreement without liability, and the franchisee must then adhere to post-termination obligations, including potential liquidated damages.
Furthermore, Circle K explicitly reserves all rights to the Business System and Marks not specifically granted to the franchisee in the agreement. The franchisee must operate the store under the "Circle K" name and cannot change it or use other names without prior written approval from Circle K. The franchisee also cannot operate any other business at the Franchised Location without Circle K's approval, nor can they sublease, subfranchise, or transfer the location without permission. Relocation of the store also requires prior written approval from Circle K, and if approved, the franchisee may have to pay a relocation fee equal to 50% of the then-current initial franchise fee and potentially execute Circle K's current franchise agreement.