How does Canopy Lawn Care determine the wholesale value of a vehicle at the end of the term?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
(c) Lessee agrees to pay Lessor within thirty (30) days after the end of the Term for each Vehicle, additional rent equal to the excess, if any, of the Book Value of such Vehicle over the greater of (i) the wholesale value of such Vehicle as determined by Lessor in good faith or (ii) except as provided below, twenty percent (20%) of the Delivered Price of such Vehicle as set forth in the applicable Schedule.
If the Book Value of such Vehicle is less than the greater of (i) the wholesale value of such Vehicle as determined by Lessor in good faith or (ii) except as provided below, twenty percent (20%) of the Delivered Price of such Vehicle as set forth in the applicable Schedule, Lessor agrees to pay such deficiency to Lessee as a terminal rental adjustment after the end of the applicable Term (subject to Lessor's right to recoup any amounts Lessor would owe to Lessee under this Section 3(c) against any obligations of Lessee to Lessor under this Agreement).
Notwithstanding the foregoing, if (i) the Term for a Vehicle is greater than forty-eight (48) months (including any extension of the Term for such Vehicle), (ii) the mileage on a Vehicle at the end of the Term is greater than 15,000 miles per year on average (prorated on a daily basis) (i.e., if the mileage on a Vehicle with a Term of thirty-six (36) months is greater than 45,000 miles) or (iii) in the sole judgment of Lessor, a Vehicle has been subject to damage or any abnormal or excessive wear and tear, the calculations described in the two immediately preceding sentences shall be made without giving effect to clause (ii) in each such sentence.
Source: Item 23 — RECEIPT (FDD pages 55–199)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, the wholesale value of a vehicle at the end of the lease term is determined by Canopy Lawn Care (referred to as the Lessor) in good faith. This valuation is used to calculate additional rent or a terminal rental adjustment between the franchisee (Lessee) and Canopy Lawn Care.
The franchisee may have to pay Canopy Lawn Care additional rent if the book value of the vehicle exceeds the greater of (i) the wholesale value determined by Canopy Lawn Care or (ii) 20% of the vehicle's delivered price. Conversely, Canopy Lawn Care may owe the franchisee a terminal rental adjustment if the book value is less than the greater of those two values.
However, the 20% of delivered price clause is waived under certain conditions: if the lease term exceeds 48 months, the vehicle's mileage exceeds an average of 15,000 miles per year, or Canopy Lawn Care judges the vehicle to have sustained damage or excessive wear and tear. In these cases, the comparison is made solely against Canopy Lawn Care's determined wholesale value. This determination of wholesale value by Canopy Lawn Care is critical, as it directly impacts potential financial obligations or returns for the franchisee at the end of the lease term.