What is the formula for calculating the additional rent Canopy Lawn Care must pay?
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.
The "Book Value" of a Vehicle means the sum of (i) the "Delivered Price" of the Vehicle as set forth in the applicable Schedule minus (ii) the total Depreciation Reserve paid by Lessee to Lessor with respect to such Vehicle plus (iii) all accrued and unpaid rent and/or other amounts owed by Lessee with respect to such Vehicle.
Source: Item 23 — RECEIPT (FDD pages 55–199)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, the formula for calculating additional rent involves comparing the Book Value of a vehicle to its wholesale value or a percentage of its Delivered Price. Specifically, the franchisee (Lessee) may have to pay additional rent to the franchisor (Lessor) at the end of the term for each vehicle. This additional rent is equal to the amount by which the Book Value of the vehicle exceeds the greater of either the wholesale value of the vehicle (as determined by the Lessor) or 20% of the vehicle's Delivered Price.
Conversely, if the Book Value is less than the greater of the wholesale value or 20% of the Delivered Price, Canopy Lawn Care (Lessor) may owe the franchisee (Lessee) a terminal rental adjustment. This adjustment is subject to the Lessor's right to offset any amounts owed to the Lessee against any outstanding obligations the Lessee has to the Lessor under the agreement.
However, the calculation changes under certain conditions. If the vehicle's term exceeds 48 months, the mileage is greater than 15,000 miles per year on average, or the vehicle has sustained damage or excessive wear and tear (as determined by the Lessor), the 20% of Delivered Price clause is disregarded. The "Book Value" of a Vehicle means the sum of (i) the "Delivered Price" of the Vehicle as set forth in the applicable Schedule minus (ii) the total Depreciation Reserve paid by Lessee to Lessor with respect to such Vehicle plus (iii) all accrued and unpaid rent and/or other amounts owed by Lessee with respect to such Vehicle.
This additional rent or credit calculation is a critical component of the vehicle lease agreement, impacting the overall cost for the Canopy Lawn Care franchisee. Franchisees should carefully consider these factors and understand how vehicle usage and condition can affect their financial obligations at the end of the lease term.