Under what circumstances related to the Software Agreement must a Circle K franchisee assign the equipment lease or sell equipment to TMC upon termination or non-renewal?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise or other agreement* | Summary |
|---|---|---|
| its sublicense agreement, bankruptcy, assignment for benefit of creditors, garnishment of Branded Business. | ||
| i. Franchisee's obligations on termination / non renewal | Section 14.7; Sections 1.4, 2.3.6 & 3.3 of Software Agreement; Section 25(d) of Motor Fuel Agreement; Section 9(d) and (e) of Branding Agreement | Convenience Store Franchise Agreement: Payment of all amounts due, including liquidated damages as applicable and any reimbursement for Equipment/Construction Funding, complete de-identification, return all copies of Business Systems Manuals and other proprietary information, cease using the Circle K Marks (also see "r" below). Software Agreement: Return of TMC Software with executed certificate, assignment of equipment lease or sale of equipment to TMC, payment of any fees for disconnection and removal of equipment. Motor Fuel Agreement: Complete de-identification and cease using the Circle K Marks, payment of all amounts due including any incentive funding and liquidated damages. Branding Agreement: Complete de-identification and cease using the Circle K Marks, payment of all amounts due, including liquidated damages, and, at our option, require all retailers to de-identify or cease using the Circle K Marks. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 79–85)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, upon termination or non-renewal of the franchise agreement, a franchisee has specific obligations related to the Software Agreement. The franchisee is required to return the TMC Software with an executed certificate. Additionally, the franchisee must assign the equipment lease or sell the equipment to TMC. The franchisee is also responsible for the payment of any fees associated with the disconnection and removal of the equipment.
This requirement ensures that Circle K maintains control over its proprietary software and equipment even after a franchise agreement ends. By mandating the return of software, assignment of leases, or sale of equipment, Circle K protects its assets and operational standards. This is a fairly standard practice in franchising, as franchisors typically want to ensure consistency and prevent misuse of their systems and resources.
For a prospective Circle K franchisee, this means understanding that the end of the franchise relationship involves more than just ceasing operations. It includes a formal process of returning software, potentially transferring equipment leases, and settling any outstanding fees. Franchisees should carefully review the Software Agreement to fully understand their responsibilities upon termination or non-renewal to avoid any disputes or additional costs.