What is the 'default rate' of interest charged by Canopy Lawn Care after a missed payment?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
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- In the event holder elects under 4A above to demand payment in full of the entire unpaid balance, holder will first provide maker with written notice of its election, demanding payment in full within 10 days. In the event a default exists after the 10-day notice period has expired, maker promises and agrees:
- A. That the entire outstanding principal and interest balances, including late charges, will bear interest from the original due date of the delinquent payment at the rate of 18% (default rate) per year (or if this rate exceeds the maximum permitted by law, then the interest rate will be the highest rate permitted by law); and
Source: Item 23 — RECEIPT (FDD pages 55–199)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, if a franchisee fails to make a payment and a default exists after a 10-day notice period, the outstanding principal and interest balances, including late charges, will bear interest at a default rate of 18% per year from the original due date of the delinquent payment. However, if this rate exceeds the maximum permitted by law, the interest rate will be the highest rate permitted by law.
This means that a Canopy Lawn Care franchisee who misses a payment could face a significantly higher interest rate on their outstanding balance, potentially increasing the overall cost of their financing. The 18% default rate is a substantial increase over typical interest rates and could create a financial strain on the franchisee if they are unable to catch up on payments quickly.
It is important for prospective Canopy Lawn Care franchisees to understand the terms of the promissory note and the consequences of late payments. Franchisees should ensure they have sufficient cash flow to cover their obligations and maintain a buffer for unexpected expenses to avoid triggering the default interest rate. Furthermore, franchisees should be aware of the maximum interest rate permitted by law in their jurisdiction, as this could override the stated 18% default rate.