Under what conditions can Circle K cancel the agreement due to governmental regulations affecting product pricing?
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 regulations affecting product pricing.
Specifically, Circle K may cancel the agreement if it determines that governmental regulations prevent it from increasing the price of any deliverable product by an amount sufficient to reflect increases in either the cost of the product to Circle K or its supplier, or the fair market value of the product. This decision is based on Circle K's judgment of the situation. In such a case, Circle K must provide the purchaser with thirty days' written notice before canceling the agreement. Alternatively, Circle K may choose to suspend the agreement while the price limitation is in effect rather than terminate it.
Additionally, Circle K has the right to terminate the agreement immediately 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 a product to be delivered under the agreement may be sold or limits Circle K's discretion to determine to whom they will sell such product(s) in any state where such product(s) is to be delivered. This provision gives Circle K broad latitude to terminate the agreement if new regulations impact their pricing or sales discretion.