Under what circumstances are the liquidated damages provisions waived for Circle K?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
The provisions of this Section 21 do not apply if the Agreement expires at the end of its initial Term or is terminated due to (i) Purchaser's (or if Purchaser is an entity, Purchaser's principal equity holder's) death; (ii) Purchaser's (or if Purchaser is an entity, Purchaser principal equity holder's) incapacity for at least 90 consecutive days, in either case which event results in Purchaser's (or if Purchaser is an entity, Purchaser's principal equity holder's) inability to personally operate the business hereunder; (iii) condemnation or other taking, in whole or in part, of the Franchised Location due to eminent domain; (iv) destruction of all or a substantial part of the Franchised Location through no fault of Purchaser; or (v) a determination made by Seller in good faith and in the normal course of business to withdraw from marketing in the geographical area
in which the Circle K Business is located. Notwithstanding the foregoing, if a court determines that the payment under this Section 21 is unenforceable, then Seller may pursue all other available remedies, including consequential damages to the extent proved.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the liquidated damages provisions are waived under specific circumstances related to the Purchaser or the Circle K business. These circumstances include the death or incapacity of the Purchaser (or the principal equity holder if the Purchaser is an entity) that results in the inability to personally operate the business. The waiver also applies if the Franchised Location is subject to condemnation or other taking due to eminent domain, or if the location is destroyed through no fault of the Purchaser.
Additionally, Circle K will waive the liquidated damages if the Seller (Circle K) makes a good faith determination in the normal course of business to withdraw from marketing in the geographical area where the Circle K Business is located. This clause protects the franchisee from penalties if Circle K decides to exit the market.
However, the document also states that if a court determines that the payment under this section is unenforceable, Circle K may pursue all other available remedies, including consequential damages to the extent proved. This means that while there are specific conditions under which liquidated damages are waived, Circle K retains the right to seek other forms of compensation if the liquidated damages clause is deemed unenforceable by a court.