When does the Circle K Security Deposit Agreement become effective and how long does it remain in effect?

According to Circle K's 2025 Franchise Disclosure Document, the Security Deposit Agreement becomes effective on the date first written in the agreement. It remains in effect until the termination or expiration of the Motor Fuel Agreement, provided that the purchaser (franchisee) has fulfilled all obligations required under the agreement.

This means that a Circle K franchisee's security deposit is tied to the duration and proper fulfillment of the Motor Fuel Agreement. The security deposit serves as a financial safeguard for TMC (the franchisor) against potential losses or non-payment by the franchisee under the Motor Fuel Agreement. The franchisee needs to be aware that the security deposit isn't just a one-time payment but an ongoing obligation linked to the Motor Fuel Agreement.

For a prospective Circle K franchisee, this highlights the importance of understanding the terms of both the Security Deposit Agreement and the Motor Fuel Agreement. Franchisees should clarify what constitutes fulfillment of all obligations to ensure the security deposit is released promptly upon termination or expiration of the Motor Fuel Agreement. Franchisees should also note that TMC has the right, but not the obligation, to draw upon the Security Deposit Account to cover any past due amounts, loss, damage, injury, or liability caused by the franchisee's failure to perform under the Motor Fuel Agreement.