Under the Circle K agreement, are the Purchaser's obligations joint and several?

According to Circle K's 2025 Franchise Disclosure Document, the obligations of the DEBTOR to TMC Franchise Corporation can be joint or several. This is detailed within Exhibit B to the Incentive and Amortization Agreement, specifically in the Security Agreement. The term "Obligations" is defined to include all indebtedness, obligations, and liabilities of the DEBTOR to TMC FRANCHISE CORPORATION, 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. These obligations arise under the Circle K Franchise Agreement, Motor Fuel Agreement, Credit Agreement, and any related promissory notes or agreements.

In practical terms, this means that if the DEBTOR consists of multiple parties (e.g., partners in a partnership or multiple individuals co-signing an agreement), each party could be held individually liable for the entire debt or obligation. Circle K (through TMC FRANCHISE CORPORATION) has the right to pursue any one or all of the debtors for the full amount owed, regardless of the internal arrangements between the debtors. This is a significant risk for franchisees who enter into agreements with multiple partners, as they could be held responsible for the entire debt even if their co-debtors fail to meet their obligations.

This clause is common in franchising to protect the franchisor's interests. By making the obligations joint and several, Circle K ensures that it has multiple avenues for recovering any amounts owed. Prospective franchisees should carefully consider the implications of this clause, especially if they are entering into the agreement with partners or co-signers. It is advisable to have a clear agreement among the debtors regarding the allocation of responsibilities and liabilities to mitigate the risk of one party bearing the entire burden.