What is the purpose of the secured promissory note offered by Circle K?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) The term "Obligations," as used herein, means all of the indebtedness, obligations and liabilities of DEBTOR to TMC FRANCHISE CORPORATION, individually or collectively, whether direct or indirect, joint or several, absolute or contingent, due or to become due, now existing or hereafter arising in any manner or at any time, including those arising under or in respect of the Circle K Franchise Agreement entered into between TMC FRANCHISE CORPORATION and DEBTOR (the "Franchise Agreement"), Motor Fuel Agreement entered into between TMC FRANCHISE CORPORATION and DEBTOR], any agreement or agreements by which TMC FRANCHISE CORPORATION extends any funding or credit to DEBTOR, no matter how such agreement is denominated (the "Credit Agreement"), any promissory notes or other instruments or agreements executed and delivered pursuant thereto or in connection therewith or this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the secured promissory note is connected to funding or credit extended to the franchisee. Specifically, the "Obligations" under the security agreement include all debts, obligations, and liabilities the franchisee owes to TMC Franchise Corporation, whether direct or indirect, existing now or in the future. These obligations arise from the Franchise Agreement, the Motor Fuel Agreement, or any credit agreements between Circle K and the franchisee.
This means that if Circle K provides funding or credit to a franchisee, the promissory note serves as a legally binding agreement where the franchisee promises to repay the borrowed funds. The security agreement further secures this promise by granting Circle K a security interest in the franchisee's assets, allowing Circle K to claim those assets if the franchisee defaults on the note.
For a prospective Circle K franchisee, this highlights the importance of understanding all the agreements involved, especially those related to financing. Franchisees should carefully review the terms of the Franchise Agreement, Motor Fuel Agreement, and any Credit Agreements, as these all contribute to the "Obligations" secured by the promissory note. It is also important to understand what assets are subject to the security agreement, and what events would trigger a default, potentially leading to the loss of those assets.