Under the Circle K security agreement, which state's law governs the agreement?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
Exhibit B to Incentive and Amortization Agreement
SECURITY AGREEMENT
_________________________ (the "DEBTOR") and TMC Franchise Corporation, a wholly owned subsidiary of Circle K Stores, Inc., an Arizona corporation, and any affiliated or related companies ("TMC FRANCHISE CORPORATION") agree as follows:
- **1.
Definitions.** All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Franchise Agreement, Motor Fuel Agreement or Credit Agreement.
In addition:
(a) The term "State," as used herein, means the State of «State_2».
(b) All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein.
However, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9.
Source: Item 23 — RECEIPTS (FDD pages 100–359)
What This Means (2025 FDD)
According to the 2025 Circle K Franchise Disclosure Document, the security agreement is governed by the Uniform Commercial Code of the state in which the Debtor (the franchisee) is located. Specifically, Exhibit B to the Incentive and Amortization Agreement defines "State" as the State of «State_2». This means the laws of the state where the franchisee's business is situated will dictate the terms and enforcement of the security agreement.
This is important for prospective Circle K franchisees because it clarifies which state's laws will apply to the Security Agreement. The agreement itself is between the franchisee (referred to as "DEBTOR") and TMC Franchise Corporation, a subsidiary of Circle K Stores, Inc. The security agreement outlines the obligations and liabilities of the franchisee to TMC Franchise Corporation, especially concerning the Circle K Franchise Agreement, Motor Fuel Agreement, and any credit agreements.
Understanding which state's laws govern the agreement is crucial for franchisees. Laws vary by state, and this clause ensures that the legal framework is clearly defined. Franchisees should consult with legal counsel in their state to fully understand their rights and obligations under the Security Agreement, as it will be interpreted and enforced according to their local laws. This also means that any disputes related to the Security Agreement would likely be resolved in the state where the Circle K store is located, which can impact the cost and convenience of legal proceedings.
In summary, the governing law provision in the Security Agreement is a standard legal clause that has significant practical implications for Circle K franchisees. It ensures that both parties understand which jurisdiction's laws will apply, providing a clear legal framework for their business relationship.