What is the exception if a Canopy Lawn Care franchisee understates gross revenue?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
ty amount exceeds the minimum. Gross Revenues do not include:
- (i) the amount of any tax imposed by any federal, state, municipal or other governmental authority directly on sales and collected from customers, provided that the amount of any such tax is shown separately and in fact paid by you to the appropriate governmental authority;
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Canopy Lawn Care franchise agreement specifies how gross revenues are calculated. Gross Revenues include all income from products and services sold through the Lawn Care Business, whether for cash, credit, or barter. Revenues are considered received when the service/product is delivered or the sale takes place, regardless of when actual payment is received.
However, the agreement provides an exception: Gross Revenues do not include taxes imposed directly on sales by a governmental authority (federal, state, or municipal), provided that the tax amount is shown separately and actually paid to the appropriate authority. This means that Canopy Lawn Care franchisees do not have to pay royalties on sales tax they collect and remit to the government.
Additionally, the Canopy Lawn Care agreement clarifies that there is no rollover credit for weeks in which the royalty amount exceeds the minimum. This means that if a franchisee's royalties are higher than the minimum for a given week, they cannot apply the excess amount to weeks where their royalties are lower. This policy ensures a consistent revenue stream for Canopy Lawn Care, regardless of fluctuations in individual franchisee performance.