What is the 'Depreciation Reserve' for Canopy Lawn Care credited against?

According to Canopy Lawn Care's 2025 Franchise Disclosure Document, a portion of each monthly rental payment, designated as the "Depreciation Reserve" on the applicable Schedule, is considered a reserve for depreciation. This reserve is credited against the Delivered Price of the Vehicle when computing the Book Value of the Vehicle under Section 3(c) of the vehicle lease agreement.

In simpler terms, Canopy Lawn Care franchisees lease vehicles, and part of their monthly payment goes into a 'Depreciation Reserve.' This reserve essentially reduces the initial price of the vehicle when calculating its 'Book Value.' The Book Value is a key figure when the lease ends, as it determines if the franchisee owes additional rent or is due a refund.

At the end of the lease term, the Book Value of the vehicle is compared to its wholesale value or 20% of its original Delivered Price (with some exceptions for high mileage or excessive wear). If the Book Value is higher, the franchisee pays the difference to Canopy Lawn Care. If the Book Value is lower, Canopy Lawn Care pays the difference back to the franchisee, subject to any outstanding obligations the franchisee has to Canopy Lawn Care. This mechanism ensures that the franchisee's payments reflect the actual depreciation of the vehicle during the lease term.