Under what circumstances is a Circle K franchisee prohibited from subleasing or assigning occupancy rights?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
If you will occupy your Store under a lease negotiated by you with a third party, you must submit the lease to us for prior written approval. Our approval may be conditioned on the following terms and conditions appearing in the lease:
- (1) The initial term, or initial term with renewal terms, must be for at least 10 years, or the term of the Convenience Store Franchise Agreement, whichever is longer.
- (2) The Lessor consents to your use of the Marks and signs as required for a Circle K franchise, and to your operation of a convenience store on the premises.
- (3) You are prohibited from subleasing or assigning all or part of the occupancy rights or extending or renewing the lease without our prior written consent.
- (4) The Lessor must agree to provide to us copies of notices of default and any material breaches given to you under the lease.
- (5) We have the right to enter the premises to make necessary modifications to protect the Marks or the Business System or to cure any default under the Convenience Store Franchise Agreement or the lease.
- (6) We (or someone we designate) have the option, upon default, expiration or termination of the Convenience Store Franchise Agreement, and upon notice to the lessor, to assume your rights under the lease, including the right to assign or sublease. You must furnish us with a copy of any signed lease within 10 days after it is signed.
- (7) If you lose your lease for any reason, including your decision not to enter into a new term, before the end of the 10-year term of your Convenience Store Franchise Agreement, you will be responsible for the payment to TMC of all liquidated damages due under your Convenience Store Franchise Agreement, and the repayment of any unamortized Equipment/Construction Funding, if provided to you by TMC.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 45–52)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, a franchisee is prohibited from subleasing or assigning all or part of their occupancy rights, or extending or renewing the lease, without prior written consent from Circle K. This restriction applies if the franchisee occupies the store under a lease negotiated with a third party.
This requirement ensures that Circle K maintains control over the locations of its franchises and the parties operating within those locations. By requiring consent for subleasing or assignment, Circle K can vet potential sublessees or assignees to ensure they meet the brand's standards and will properly operate the franchise. This protects the brand's reputation and consistency.
For a prospective Circle K franchisee, this means that they cannot independently decide to sublease their store or assign their lease to another party. They must first obtain written approval from Circle K. This gives Circle K the ability to evaluate the proposed sublessee or assignee and ensure they are a suitable fit for the franchise system. Failure to obtain this consent could result in a breach of the franchise agreement.