What must a Canopy Lawn Care franchisee do with gross revenues from sales in an Adjacent Territory?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.3 Franchisee may be granted, at Franchisor's sole discretion, express permission to sell or service customers in an unsold territory adjacent to Franchisee's Territory ("Adjacent Territory"); provided that Franchisee agrees that when the Adjacent Territory is granted to another franchisee by Franchisor, Franchisee will, upon receipt of written notice from Franchisor, cease all its sales and service efforts within the Adjacent Territory and, within 10 days of such notice: (a) return to Franchisor all lists of customers and prospects within the Adjacent Territory; (b) assign all customer contracts within the Adjacent Territory to Franchisor or its designee; and (c) pay to Franchisor any amounts (or a pro rata portion of any amounts) paid by customers within the Adjacent Territory for Services Franchisee has not yet performed.
For example, if a customer pre-paid for services and Franchisee had performed half of the services, Franchisee must pay to Franchisor 50% of the amount the customer paid Franchisee.
Franchisee shall report Gross Revenues from sales in an Adjacent Territory on a separate reporting form.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, a franchisee may be granted permission to sell or service customers in an unsold territory adjacent to their own, referred to as an "Adjacent Territory." However, this permission is at Canopy Lawn Care's sole discretion. If Canopy Lawn Care grants the Adjacent Territory to another franchisee, the original franchisee must cease all sales and service efforts in that territory upon written notice.
Within 10 days of receiving such notice, the franchisee must return all customer and prospect lists within the Adjacent Territory to Canopy Lawn Care. They must also assign all customer contracts within the Adjacent Territory to Canopy Lawn Care or its designee. Furthermore, the franchisee is required to pay Canopy Lawn Care any amounts (or a pro rata portion of any amounts) paid by customers within the Adjacent Territory for services the franchisee has not yet performed. For example, if a customer prepaid for services and the franchisee had performed half of them, the franchisee must pay Canopy Lawn Care 50% of the amount the customer paid.
Finally, the Canopy Lawn Care franchisee must report gross revenues from sales in an Adjacent Territory on a separate reporting form. This ensures that Canopy Lawn Care can accurately track revenue distribution and manage the transition of the Adjacent Territory to a new franchisee. This process protects Canopy Lawn Care's interests and ensures a smooth transition of territories between franchisees.