Under what circumstances can Circle K assume a franchisee's rights under a lease?

According to Circle K's 2025 Franchise Disclosure Document, Circle K (or someone they designate) has the option to assume a franchisee's rights under a lease under specific circumstances. These circumstances arise upon the default, expiration, or termination of the Convenience Store Franchise Agreement. To exercise this option, Circle K must provide notice to the lessor, indicating their intent to assume the franchisee's rights, including the right to assign or sublease the property.

This provision is crucial for prospective franchisees as it outlines a scenario where Circle K can step into their lease agreement. This could occur if the franchisee fails to meet the obligations of the franchise agreement, if the agreement expires, or if it is terminated for any reason. The franchisee loses control of the lease to Circle K, who can then assign or sublease the property to another operator.

It is also important to note that the franchisee is responsible for providing Circle K with a copy of any signed lease within 10 days after signing it. This ensures that Circle K has the necessary documentation to exercise its option to assume the lease if the need arises. This clause protects Circle K's interests by allowing them to maintain control over the store location even if the franchisee-franchisor relationship ends.

Furthermore, if a franchisee loses their lease for any reason, including their decision not to enter into a new term, before the end of the 10-year term of the Convenience Store Franchise Agreement, they will be responsible for the payment to TMC of all liquidated damages due under their Convenience Store Franchise Agreement, and the repayment of any unamortized Equipment/Construction Funding, if provided to them by TMC. This highlights the importance of carefully considering the lease terms and the potential financial consequences of losing the lease before the franchise agreement's full term.