What is an 'Adjacent Territory' in the context of a Canopy Lawn Care franchise agreement?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.3 Franchisee may be granted, at Franchisor's sole discretion, express permission to sell or service customers in an unsold territory adjacent to Franchisee's Territory ("Adjacent Territory"); provided that Franchisee agrees that when the Adjacent Territory is granted to another franchisee by Franchisor, Franchisee will, upon receipt of written notice from Franchisor, cease all its sales and service efforts within the Adjacent Territory and, within 10 days of such notice: (a) return to Franchisor all lists of customers and prospects within the Adjacent Territory; (b) assign all customer contracts within the Adjacent Territory to Franchisor or its designee; and (c) pay to Franchisor any amounts (or a pro rata portion of any amounts) paid by customers within the Adjacent Territory for Services Franchisee has not yet performed.
For example, if a customer pre-paid for services and Franchisee had performed half of the services, Franchisee must pay to Franchisor 50% of the amount the customer paid Franchisee.
Franchisee shall report Gross Revenues from sales in an Adjacent Territory on a separate reporting form.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, an 'Adjacent Territory' refers to an unsold territory that is next to a franchisee's existing territory. Canopy Lawn Care may, at its discretion, grant a franchisee express permission to sell or service customers in such an adjacent territory.
However, this permission is not guaranteed and comes with specific conditions. If Canopy Lawn Care grants the Adjacent Territory to another franchisee, the original franchisee must cease all sales and service efforts in that territory upon written notice. Within 10 days of such notice, the franchisee must return all customer and prospect lists for the Adjacent Territory to Canopy Lawn Care, assign all customer contracts within the Adjacent Territory to Canopy Lawn Care or its designee, and remit any amounts received from customers in the Adjacent Territory for services not yet performed.
For instance, if a customer pre-paid for services and the franchisee had completed half of the services, the franchisee must pay Canopy Lawn Care 50% of the amount the customer paid. Franchisees are also required to report gross revenues from sales in an Adjacent Territory on a separate reporting form. This arrangement allows Canopy Lawn Care flexibility in assigning territories while providing franchisees with a potential opportunity to expand their service area, albeit temporarily and under specific conditions.