Under what conditions can Circle K cancel the agreement due to governmental price regulations?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) If at any time Seller determines that due to governmental regulations, it is unable to increase the price of any of the product(s) deliverable under this Agreement by an amount which is sufficient in Seller's judgment to reflect increases in either (i) the cost of such product(s) to Seller or Seller's supplier or (ii) the fair market value of such product(s), which have occurred since the date of this Agreement or the date of the last increase in the price of such product(s) whichever is later, Seller may cancel this Agreement upon thirty (30) days' written notice to Purchaser, or may suspend this Agreement while such limitation is in effect.
- (b) Notwithstanding any other provision of this Agreement, if any state or local law, rule, regulation, or order (i) regulating the price at which a product(s) to be delivered hereunder may be sold, or (ii) limiting the discretion of Seller to determine to whom they will sell such product(s) becomes effective during the Term of this Agreement in any state in which such product(s) is to be delivered hereunder, Seller shall have the right to terminate this Agreement immediately.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, Circle K has the right to cancel the agreement under specific conditions related to governmental price regulations.
Specifically, Circle K may cancel the agreement if it determines that governmental regulations prevent it from increasing the price of products deliverable under the agreement. This inability to increase prices must be to an extent that, in Circle K's judgment, it cannot reflect increases in either the cost of the products to Circle K or its supplier, or the fair market value of those products. In such a case, Circle K can cancel the agreement by providing the purchaser with thirty days' written notice or suspend the agreement while the limitation is in effect.
Additionally, Circle K can immediately terminate the agreement if any state or local law, rule, regulation, or order becomes effective during the term of the agreement that either regulates the price at which the products can be sold or limits Circle K's discretion in determining to whom they will sell the products. This condition applies in any state where the products are to be delivered under the agreement. This protects Circle K from being forced to sell products at a loss or under conditions that restrict their business operations due to governmental intervention.