What assets does Canopy Lawn Care have the option to purchase from a franchisee?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.2 Upon any event described in this Section 16.2, Franchisor shall have the option to purchase all of Franchisee's rights, title and interest in the Business, and all its improvements, furniture, fixtures, equipment and products, and all of Franchisee's accounts, contract rights, customer and vendor lists, work in progress and other business assets.
- 16.3 The purchase price for assets itemized in Section 16.2 will be, subject to Section 16.4: (i) the current fair market value if Section 16.1(a) is applicable; or (ii) the price specified in the Purchase Offer received by Franchisee if Section 16.1(b) is applicable. If Franchisee and Franchisor cannot agree on fair market value within a reasonable time, an independent appraiser will be designated by each of Franchisee and Franchisor and an average of the 2 appraised values will be binding. Appraised values will exclude any and all consideration for goodwill or going concern value created by the Marks and business system licensed to Franchisee.
- 16.4 If Franchisor elects to exercise any option to purchase provided in this Section 16 Franchisor will have the right to set off all amounts due from Franchisee under this Agreement or any other agreements between the parties, any commissions or fees payable to any broker, agent or other intermediary and the cost of the appraisal, if any, against any payment. Franchisee shall also have the right to substitute cash for any other form of consideration specified in the Purchase Offer and to pay in full the entire purchase price at the time of closing.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, Canopy Lawn Care has the option to purchase a franchisee's business under certain conditions. Specifically, Canopy Lawn Care can exercise this right if the franchise agreement expires without renewal or is terminated for any reason. This also applies if Canopy Lawn Care receives a purchase offer for the franchise from a third party.
If Canopy Lawn Care exercises its option to purchase, it can acquire all of the franchisee's rights, title, and interest in the business. This includes all improvements, furniture, fixtures, equipment, products, accounts, contract rights, customer and vendor lists, work in progress, and other business assets. The purchase price will be the current fair market value if the option is exercised due to expiration or termination. If the option is triggered by a third-party purchase offer, the price will be that specified in the offer.
The 2025 FDD specifies that if Canopy Lawn Care and the franchisee cannot agree on the fair market value, an independent appraiser will be designated by each party. The average of the two appraised values will then be binding. However, the appraised values will exclude any consideration for goodwill or going concern value created by the Canopy Lawn Care marks and business system. Canopy Lawn Care also has the right to offset any amounts due from the franchisee, commissions, fees, and appraisal costs against any payment. The franchisee can substitute cash for any other form of consideration in the purchase offer and pay the entire purchase price at closing.