What is the exception to the 20% of Delivered Price calculation for Canopy Lawn Care?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
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 standard calculation for determining the terminal rental adjustment at the end of a vehicle lease term involves comparing the vehicle's book value to its wholesale value or 20% of its delivered price, whichever is greater. However, there are specific exceptions to using the 20% of the delivered price benchmark.
The 20% of delivered price calculation does not apply under the following conditions: (1) if the lease term for the vehicle exceeds 48 months, including any extensions; (2) if the vehicle's mileage at the end of the term is greater than 15,000 miles per year on average, calculated on a daily basis; or (3) if, in Canopy Lawn Care's judgment as the Lessor, the vehicle has sustained damage or abnormal and excessive wear and tear.
In these specific cases, the terminal rental adjustment will be calculated without considering the 20% of the delivered price. This means that the comparison will only be between the vehicle's book value and its wholesale value as determined by Canopy Lawn Care. This could potentially result in a higher terminal rental adjustment payment owed by the franchisee (Lessee) to Canopy Lawn Care, especially if the vehicle has depreciated significantly or has a low wholesale value due to the aforementioned conditions.