Under what conditions can a Circle K franchisee transfer their interest in the franchise, and what is the required action regarding franchisor consent?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
- (G) Right of First Refusal.
Franchisee will have first offered to sell the Franchisee Interest to Franchisor in accordance with Article 16 and Franchisor will have waived its right to purchase.
- (H) Upgrading.
Franchisee will have agreed to perform specified upgrading and/or renovation of the Franchised Location and the Store to conform to the current standards and image then required by Franchisor of its new franchisees.
All such upgrades and renovations shall be completed within nine months of the Transfer.
If the transferee-franchisee fails to timely complete the required upgrades and renovations, its royalty fee rate will be increased by 1% until such time as all required upgrades and renovations have been completed and the default is cured.
In addition, in such a situation, Franchisor will have the right to exercise all other rights available to it under the transferee's franchise agreement and applicable law, including the right to terminate the franchise agreement.
- (I) Releases and Subordination.
Franchisee and Guarantors will have executed a release of all claims related to this Agreement, in a form acceptable to Franchisor, and Franchisee will have subordinated its rights to all payments from the transferee to all obligations of the transferee to Franchisor.
- (J) Agreements.
Upon Franchisor's request, Franchisee will have provided Franchisor with a complete copy of all agreements and related documentation between Franchisee and the transferee relating to the Transfer.
- (K) Landlord Consent.
The proposed transferee must have been accepted by the landlord in writing as a substitute tenant for the Franchised Location.
Franchisor may refuse to consent to a Transfer if the proposed transferee is not acceptable to the landlord.
If Franchisor is the landlord, or sublessor, for the Franchised Location, it has the right to withhold its consent as a landlord in its sole discretion.
- (L) Payment of Outstanding Loans, Equipment/Construction Funding, and Fees.
Franchisee must have repaid the remaining balance on any loan or the unamortized portion of the Equipment/Construction Funding provided to Franchisee.
At the time of seeking Franchisor's consent to a Transfer hereunder, Franchisee must be current on all monthly fee payments due to Franchisor and its Affiliates.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, a franchisee can transfer their interest in the franchise, but only after meeting specific conditions and obtaining the franchisor's consent. The franchisee must first offer to sell their interest to Circle K, and Circle K must waive its right to purchase the franchise. The franchisee also needs to agree to upgrade or renovate the location to meet Circle K's current standards within nine months of the transfer. Failure to complete these upgrades on time will result in a 1% increase in the royalty fee until the upgrades are finished. Circle K also retains the right to exercise other options, including terminating the franchise agreement.
To facilitate the transfer, the franchisee and any guarantors must release all claims related to the franchise agreement and subordinate their rights to payments from the transferee to the transferee's obligations to Circle K. The franchisee must also provide Circle K with complete copies of all agreements and documentation related to the transfer. Additionally, the proposed transferee must be accepted by the landlord as a substitute tenant, and Circle K may withhold consent if the transferee is not acceptable to the landlord. If Circle K is the landlord, it has the right to withhold consent at its sole discretion.
Before seeking Circle K's consent, the franchisee must repay any outstanding loans or the unamortized portion of any equipment or construction funding provided by Circle K. All monthly fee payments due to Circle K and its affiliates must also be current. These stipulations ensure that Circle K maintains control over who operates a Circle K franchise and that the brand's standards are upheld even after a transfer. The detailed requirements protect Circle K's interests and ensure a smooth transition with minimal disruption to the brand's operations and image.