Does Circle K require a Personal Guaranty, and if so, under which agreements is it required?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
require, including without limitation, the identity of the Principal Equity Holders in Franchisee, the percentage of ownership interest held by each Principal Equity Holder, and Franchisee's governing documents.
- 8.13 Guaranties. If Franchisee is a corporation, a limited partnership whose general partner is a corporation, or a limited liability company or other entity, each Principal Equity Holder of such corporation, limited partnership, limited liability company or other entity will: (i) approve this Agreement in writing; (ii) furnish any personal financial information reasonably requested by Franchisor; and (iii) execute Personal Guaranty attached to this Agreement as Exhibit 5 (the "Guaranty"), pursuant to which each shall personally guarantee Franchisee's payments and performance obligations under this Agreement, any related agreement entered into between Franchisee and Franchisor, or any Affiliate, and any agreement executed upon renewal. Persons or entities that subsequently become Principal Equity Holders will execute the Guaranty within thirty (30) days after becoming a Principal Equity Holder.
- 8.14 Initial Training.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, a personal guaranty is typically required from Principal Equity Holders if the franchisee is a corporation, limited partnership (where the general partner is a corporation), or a limited liability company. This requirement is detailed in Section 8.13 of the franchise agreement. These individuals must approve the agreement in writing, provide personal financial information if requested, and execute the Personal Guaranty attached as Exhibit 5 to the Franchise Agreement. This guaranty ensures that the Principal Equity Holders will personally guarantee the franchisee's payment and performance obligations under the Franchise Agreement, any related agreements with Circle K or its affiliates, and any agreements executed upon renewal.
The purpose of the personal guaranty is to provide Circle K with additional security and assurance that the franchisee will meet its financial and operational obligations. By requiring the Principal Equity Holders to personally guarantee the franchisee's obligations, Circle K reduces its risk in the event that the franchisee defaults on its obligations. This is a common practice in franchising, as it aligns the interests of the franchisor and the individuals who control the franchisee entity.
The Personal Guaranty itself, as detailed in Exhibit J, makes the guarantors jointly, individually, and severally liable for the franchisee's obligations. This means that Circle K can pursue any one or all of the guarantors for the full amount of the franchisee's debt or non-performance. The guarantors also waive certain rights, such as the right to receive notice of demand or default, and the right to require Circle K to first pursue action against the franchisee. This further strengthens Circle K's position and simplifies the process of enforcing the guaranty.
Exhibit 5, titled "Personal Guaranty," is attached as Exhibit J to the Franchise Disclosure Document. Additionally, the FDD defines "Guarantor" or "Guarantors" as all persons or entities that execute a Personal Guaranty attached as Exhibit 5. This clarifies who is subject to the personal guaranty requirement and reinforces the importance of this document in the overall franchise agreement.