What is the scope of the Circle K purchaser's obligation to indemnify the seller against environmental liabilities?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
(f) Purchaser shall, if requested by Seller, cooperate in all current and future environmental protection programs established by Seller and/or Seller's supplier.
- (g) Purchaser shall properly maintain all USTs, hoses, connections, and associated equipment at the Premises. Seller may, without liability to Purchaser, refuse to make delivery of
products covered under this Agreement if Seller believes any UST, hose, connection, or associated equipment is not safely maintained or in compliance with applicable safety standards.
(h) Purchaser shall indemnify, defend, protect and hold Seller, its employees, officers, directors, shareholders, agents and affiliates harmless from and against any and all liabilities, losses, obligations, claims, damages (consequential or otherwise), penalties, suits, actions, judgments, costs and expenses (including attorneys' fees) of whatever nature for personal injury (including death) of persons (including, without limitation, agents and employees of Seller or Purchaser) or property damage (including, without limitation, damage to the property of Seller or Purchaser), which may be imposed on, incurred by or asserted against Seller directly or indirectly, (i) caused in whole or in part by Purchaser's failure to comply with the terms of this paragraph or with any local, state or federal law, statute, regulation or ordinance, whether currently in effect or which may come into effect, related to environmental protection or environmental compliance or (ii) for any releases or discharges of motor fuel or motor fuel products into the environment caused, in whole or in part, by the acts or omissions of Purchaser, its employees, agents, contractors, customers, licensees, or invitees. This indemnity in no way limits and is intended to be within the scope of the general indemnity set forth in paragraph hereof.
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) has a broad obligation to indemnify, defend, protect, and hold harmless the seller (Circle K), along with its employees, officers, directors, shareholders, agents, and affiliates, from various environmental liabilities. This includes protection against all liabilities, losses, obligations, claims, damages (consequential or otherwise), penalties, suits, actions, judgments, costs, and expenses (including attorneys' fees). This obligation extends to any of these issues that may be imposed on, incurred by, or asserted against Circle K either directly or indirectly.
The franchisee's indemnification responsibilities are triggered in two primary scenarios: first, if the liabilities are caused in whole or in part by the franchisee's failure to comply with the terms outlined in the agreement or with any local, state, or federal environmental laws, statutes, regulations, or ordinances, whether currently in effect or implemented in the future. Second, the franchisee is responsible for any releases or discharges of motor fuel or motor fuel products into the environment, if these are caused in whole or in part by the actions or omissions of the franchisee, its employees, agents, contractors, customers, licensees, or invitees.
This environmental indemnity is designed to be within the scope of the general indemnity agreement outlined elsewhere in the document, providing Circle K with comprehensive protection against environmental liabilities arising from the franchisee's operations. It is important to note that this indemnification obligation survives the expiration or termination of the franchise agreement, meaning the franchisee's responsibility continues even after the agreement is no longer in effect. This extended liability is a significant consideration for prospective franchisees, highlighting the importance of strict adherence to environmental regulations and best practices to avoid potential financial exposure.
Furthermore, Circle K retains the right to refuse product delivery if it believes that any UST (underground storage tank), hose, connection, or associated equipment is not safely maintained or compliant with safety standards. This clause underscores Circle K's proactive approach to environmental safety and compliance, placing the onus on the franchisee to maintain equipment to a high standard. The franchisee's responsibility extends to promptly notifying Circle K and relevant governmental agencies of any inventory loss or conditions suggesting a leaking UST or equipment failure, and to undertake immediate measures to mitigate any spills or releases. These combined obligations highlight the significant environmental responsibilities assumed by a Circle K franchisee.