When must Canopy Lawn Care pay additional rent equal to the excess of the book value?
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.
The "Book Value" of a Vehicle means the sum of (i) the "Delivered Price" of the Vehicle as set forth in the applicable Schedule minus (ii) the total Depreciation Reserve paid by Lessee to Lessor with respect to such Vehicle plus (iii) all accrued and unpaid rent and/or other amounts owed by Lessee with respect to such Vehicle.
Source: Item 23 — RECEIPT (FDD pages 55–199)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, as the lessee, you must pay the lessor additional rent for each vehicle within thirty (30) days after the end of the term. This additional rent is equal to the amount by which the book value of the vehicle exceeds the greater of either the wholesale value of the vehicle (as determined by the lessor in good faith) or twenty percent (20%) of the delivered price of the vehicle as stated in the applicable schedule.
This means that at the end of your lease term for a vehicle, Canopy Lawn Care will assess the vehicle's book value against its current wholesale value or 20% of its original price. If the book value is higher, you're responsible for paying the difference as additional rent. The "Book Value" of a Vehicle means the sum of (i) the "Delivered Price" of the Vehicle as set forth in the applicable Schedule minus (ii) the total Depreciation Reserve paid by Lessee to Lessor with respect to such Vehicle plus (iii) all accrued and unpaid rent and/or other amounts owed by Lessee with respect to such Vehicle.
However, there are exceptions. If the term for a vehicle is greater than forty-eight (48) months, the mileage exceeds 15,000 miles per year on average, or the vehicle has sustained damage or abnormal wear and tear, the calculation will be made without considering the 20% of the delivered price clause. This could potentially increase the amount of additional rent owed if the book value exceeds the wholesale value alone. Canopy Lawn Care franchisees should carefully monitor vehicle usage and condition to avoid these exceptions and manage potential end-of-term costs.
Conversely, if the book value is less than the greater of the wholesale value or 20% of the delivered price, the lessor will pay the deficiency to the lessee as a terminal rental adjustment after the end of the term, subject to the lessor's right to recoup any amounts owed to the lessee against any obligations of the lessee to the lessor under the agreement.