Can a Canopy Lawn Care franchisee pledge their business assets without approval?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
- 18.1 Franchisee hereby grants to Franchisor a security interest ("Security Interest") in all Vehicles, accounts, credit card receivables, cash, equipment, and franchise rights of the Lawn Care Business, together with all similar property now owned or hereafter acquired, additions, substitutions, replacements, proceeds, and products thereof, wherever located, used in connection with the Lawn Care Business. All items in which a security interest is granted are referred to as the "Collateral." Franchisor's Security Interest may be subordinated to any financing related to Franchisee's operation of the Lawn Care Business, including, but not limited to, a real property mortgage and Vehicle leases.
- 18.2 The Security Interest in the Collateral is to secure payment of the following (the "Indebtedness"):
- (a) All amounts due to Franchisor and its affiliates under this Agreement or otherwise by Franchisee;
- (b) All sums which Franchisor may, at its option, expend or advance for the maintenance, preservation, and protection of the Collateral, including, without limitation, payment of rent, taxes, levies, assessments, insurance premiums, and discharge of liens, together with interest, or any other property given as security for payment of the Indebtedness;
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, franchisees grant Canopy Lawn Care a security interest in the assets of their Lawn Care Business.
Specifically, Canopy Lawn Care franchisees grant a security interest in all vehicles, accounts, credit card receivables, cash, equipment, and franchise rights. This security interest extends to all similar property, additions, substitutions, replacements, proceeds, and products, regardless of location, used in connection with the Lawn Care Business. These items are collectively referred to as the "Collateral."
The security interest serves to secure the payment of all amounts due to Canopy Lawn Care and its affiliates, sums expended by Canopy Lawn Care for the maintenance and protection of the collateral, expenses incurred by Canopy Lawn Care in collecting any indebtedness, and all other present or future liabilities of the franchisee to Canopy Lawn Care. However, the document states that Canopy Lawn Care's security interest may be subordinated to financing related to the franchisee's operation of the Lawn Care Business, such as a real property mortgage and vehicle leases.