Must the insurance policy for Canopy Lawn Care name the Lessor as a loss payee?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
Lessee agrees that each required policy of insurance will by appropriate endorsement or otherwise name Lessor and any other person or entity designated by Lessor as additional insureds and loss payees, as their respective interests may appear. Further, each such insurance policy must provide the following: (i) that the same may not be cancelled, changed or modi ed until after the insurer has given to Lessor, Servicer and any other person or entity designated by Lessor at least thirty (30) days prior written notice of such proposed cancellation, change or modi cation, (ii) that no act or default of Lessee or any other person or entity shall affect the right of Lessor, Servicer, any other agent of Lessor or any of their respective successors or assigns to recover under such policy or policies of insurance in the event of any loss of or damage to any Vehicle and (iii) that the coverage is "primary coverage" for the protection of Lessee, Lessor, Servicer, any other agent of Lessor and their respective successors and assigns notwithstanding any other coverage carried by Lessee, Lessor, Servicer, any other agent of Lessor or any of their respective successors or assigns protecting against similar risks. Original certi cates evidencing such coverage and naming Lessor, Servicer, any other agent of Lessor and any other person or entity designated by Lessor as additional insureds and loss payees shall be furnished to Lessor prior to the Delivery Date, and annually thereafter and/or as reasonably requested by Lessor from time to time. In the event of default, Lessee hereby appoints Lessor, Servicer and any other agent of Lessor as Lessee's attorney-in-fact to receive payment of, to endorse all checks and other documents and to take any other actions necessary to pursue insurance claims and recover payments if Lessee fails to do so. Any expense of Lessor, Servicer or any other agent of Lessor in adjusting or collecting insurance shall be borne by Lessee.
Source: Item 23 — RECEIPT (FDD pages 55–199)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, the franchisee (Lessee) is required to secure insurance policies that name the Lessor and any other entities designated by the Lessor as additional insureds and loss payees. This requirement ensures that the Lessor's interests are protected in the event of any damage, claim, suit, action, or liability related to the vehicles used in the Canopy Lawn Care business.
Specifically, the insurance policies must include endorsements or other provisions that designate the Lessor as an additional insured and loss payee, reflecting their respective interests. Furthermore, the policies must provide that they cannot be canceled, changed, or modified without at least thirty days' prior written notice to the Lessor, Servicer, and any other designated entities. The insurance coverage must also be primary, meaning it takes precedence over any other coverage held by the Lessee, Lessor, Servicer, or other designated agents.
To ensure compliance, Canopy Lawn Care franchisees must furnish original certificates of insurance to the Lessor before the Delivery Date, annually thereafter, and as reasonably requested by the Lessor. These certificates must evidence the required coverage and name the Lessor, Servicer, and any other designated entities as additional insureds and loss payees. In the event of default by the franchisee, the Lessor is appointed as the attorney-in-fact to handle insurance claims and recover payments. Any expenses incurred by the Lessor in adjusting or collecting insurance will be borne by the franchisee.
This requirement is a standard practice in franchising where leased assets are involved, as it protects the Lessor's financial interests in the equipment. Franchisees should ensure they understand these insurance obligations and factor the costs into their business planning.