How long after the end of the term for each vehicle does Canopy Lawn Care have to pay additional rent?
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.
Source: Item 23 — RECEIPT (FDD pages 55–199)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, a franchisee, referred to as the Lessee, is obligated to pay additional rent to the Lessor within thirty days after the termination of the term for each vehicle. This additional rent is calculated as the excess, if any, of the vehicle's book value over the greater of its wholesale value (as determined by the Lessor in good faith) or 20% of the vehicle's delivered price as stated in the applicable Schedule.
However, if the book value of the vehicle is less than the greater of the wholesale value or 20% of the delivered price, the Lessor is responsible for paying the deficiency to the Lessee as a terminal rental adjustment after the term ends. This 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.
There are exceptions to the 20% rule. If the vehicle's term exceeds 48 months, the mileage is greater than 15,000 miles per year on average, or the Lessor determines the vehicle has been subjected to damage or excessive wear and tear, the calculation will be made without considering the 20% of the delivered price clause. Understanding these financial responsibilities and potential adjustments is crucial for franchisees managing their vehicle leases with Canopy Lawn Care.