To what is payment first credited when received for the Canopy Lawn Care promissory note?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
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- All payments, as of the date they are received, will first be credited to any late charges due; the balance, if any, will then be credited to the outstanding interest balance; and the balance, if any, will then be credited to the outstanding principal balance.
Source: Item 23 — RECEIPT (FDD pages 55–199)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, payments received on a promissory note are first applied to any outstanding late charges. If there is a remaining balance after covering late charges, the payment is then credited towards the outstanding interest balance. Finally, any remaining amount is applied to reduce the outstanding principal balance of the note.
This means that if a Canopy Lawn Care franchisee makes a late payment, the penalty fees are satisfied before any of the payment reduces the actual amount owed on the note. This is a typical practice, as it ensures that any penalties or fees are addressed before reducing the principal debt.
For a prospective Canopy Lawn Care franchisee, this highlights the importance of making timely payments on any promissory notes. Late payments will not only incur additional charges (10% of the late payment), but the payments will first go towards covering those charges rather than reducing the principal amount owed.