What is the definition of 'Book Value' for a vehicle leased by Canopy Lawn Care?

According to Canopy Lawn Care's 2025 Franchise Disclosure Document, the 'Book Value' of a leased vehicle is a key factor in determining potential end-of-lease payments or credits. The Book Value is calculated by starting with the 'Delivered Price' of the vehicle, as specified in the lease schedule. From this price, Canopy Lawn Care deducts the total Depreciation Reserve paid by the franchisee (Lessee) to the franchisor (Lessor) over the lease term. To this result, Canopy Lawn Care adds any accrued and unpaid rent or other outstanding amounts owed by the franchisee for the vehicle.

At the end of the lease, this Book Value is compared to the wholesale value of the vehicle (as determined by the franchisor) or 20% of the original Delivered Price, whichever is greater. If the Book Value exceeds this greater value, the franchisee must pay the franchisor the difference as additional rent. Conversely, if the Book Value is less, the franchisor is obligated to pay the franchisee the difference as a terminal rental adjustment.

However, these calculations are subject to certain conditions. If the lease term exceeds 48 months, the vehicle's mileage is greater than 15,000 miles per year on average, or the franchisor deems the vehicle to have suffered damage or excessive wear and tear, the 20% of Delivered Price clause is disregarded. This means the Book Value is then only compared to the wholesale value determined by the franchisor, potentially increasing the franchisee's financial responsibility at the end of the lease. Prospective franchisees should carefully consider these factors and the potential for additional costs when evaluating the vehicle lease agreement.