How many successor terms can a Canopy Lawn Care franchisee potentially obtain?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
proval of Franchisor, which approval may be granted or withheld in Franchisor's sole discretion.
3. TERM OF THE AGREEMENT AND LICENSE
- 3.1 This Agreement and the License granted shall continue for a period of ten years ("Initial Term"). This Initial Term shall begin on the date this Agreement is executed by Franchisor, subject, however, to termination in accordance with the provisions of this Agreement. When the Initial Term expires Franchisee shall have the option to extend its rights to operate the Lawn Care Business for two additional terms for a period of five years each ("Successor Term"), provided Franchisor determines in its sole and absolute discretion that Franchisee has met all of the following requirements:
- (a) Franchisee has not failed to remedy any breach of this Agreement specified by Franchisor in a written notice to Franchisee as per Sections 17.1 or 17.2;
- (b) Franchisee has not committed and received notice of three or more breaches of this Agreement in the 12 months prior to the end of the current Initial Term, even if such breaches were timely remedied;
- (c) Franchisee has given Franchisor a written notice of intent to extend its rights to operate the Lawn Care Business no less than two months or more than six months prior to expiration of the Initial Term;
- (d) Franchisee is current in its payment obligations to Franchisor, Franchisor's Affiliates, and Franchisee's trade creditors;
- (e) Franchisee has met Franchisor's then-current qualifications for new or renewing Canopy® franchisees;
- (f) Franchisee executes a successor franchise agreement ("Successor Franchise Agreement") and all other agreements in the form then being used by Franchisor in granting new franchises, which may contain materially different terms and conditions than this Agreement, provided that Franchisee will pay Franchisor the Successor Franchise Fee (defined below) instead of the Initial Franchise Fee and the Successor Term will be no less than five years, as described above.
- (g) Franchisee pays Franchisor the successor franchise fee equal to the greater of $10,000 or 20% of the then existing Initial Franchise Fee as described in the Franchisors then existing Franchise Agreement ("Successor Franchise Fee"), which is due and payable to Franchisor at the time of signing the Successor Franchise Agreement;
- (h) Franchisee executes a general release of all claims Franchisee may have against Franchisor, its officers, directors, members, shareholders, agents, Affiliates, and employees, whether in their corporate and/or individual capacities. This release shall include all claims arising under any federal, state, or local law, rule, or ordinance arising out of or concerning this Agreement (to the fullest extent permitted by law) and shall be in a form satisfactory to Franchisor;
- (i) Franchisee has upgraded the computer system and Vehicles used in operations of the Business to Franchisor's then-current standards;
- (j) Franchisee has provided Franchisor with proof of current licenses, insurance and any necessary permits; and
- (k) Franchisee has met any other conditions that Franchisor reasonably requires.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, a franchisee has the option to extend their rights to operate the Lawn Care Business for two additional terms of five years each, following the initial ten-year term. These additional terms are referred to as "Successor Terms." However, the franchisor's discretion is the determining factor in granting these extensions.
Several conditions must be met for a franchisee to be eligible for a Successor Term. These include rectifying any breaches of the agreement, limiting the number of breaches within a year, providing timely written notice of intent to extend, maintaining current payment obligations, meeting the franchisor's qualifications for new or renewing franchisees, and executing a Successor Franchise Agreement. The Successor Franchise Agreement may contain different terms and conditions than the original agreement, and the franchisee will be required to pay a Successor Franchise Fee.
However, a Successor Addendum to the Successor Franchise Agreement states that the franchisee has no rights to any additional successor terms upon the expiration or termination of the Successor Franchise Agreement. Despite this, Canopy Lawn Care reserves the right to offer additional successor terms at its discretion. This addendum modifies the terms of the Successor Franchise Agreement, specifically regarding the franchisee's rights to additional terms and the franchise fee.
In summary, while the initial agreement allows for two potential successor terms of five years each, a subsequent addendum clarifies that franchisees have no guaranteed right to additional terms beyond those two. The franchisor retains the right to offer further extensions, but this is not an assured part of the franchise agreement.