Can Cordova or its affiliates be designated as the exclusive supplier for the Cordova System?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
urchases and Leases – Generally**
We require that you purchase or lease certain source restricted goods and services for the development and operation of your Cordova Business. Source restricted goods and services are goods and services that must meet our specifications and/or must be purchased from an approved or designated supplier. We may designate a supplier (which may include us or our affiliates) as the exclusive supplier for the System. Our specifications and list of approved and designated suppliers is contained in our Manuals. We will notify you of any changes to our specifications or list of approved or designated suppliers. We may notify you of these changes in various ways, including written or electronic correspondence, amendments and updates to our Manuals, verbal and other forms of communication. We formulate and modify our standards and specifications for products and services based on our industry experience and our management decisions as to the overall operation and expansion of the System or as we may otherwise designate and approve in writing. If we have previously approved a supplier, and their standards fall below our designated standards, we will revoke our approval. We will notify you in writing of us revoking our approval.
Suppliers and Supplier Criteria
We may designate ourselves and our affiliates as exclusive suppliers of source restricted goods and services. We
may designate ourselves or a third party as exclusive supplier irrespective of the existence of competing suppliers. If, in the Manuals, we do not designate a supplier for a particular item, you will purchase all such products, supplies and services from suppliers who meet our specifications and standards. Currently, we are not and our affiliates are not approved suppliers of the source restricted goods and services identified below. Currently no officer of ours owns an interest in any of our designated suppliers. If we have previously approved a supplier, and their standards fall below our designated standards, we will revoke our approval. We will notify you in writing of us revoking our approval.
If you want to purchase or lease a source restricted item from a supplier that has not been previously approved or designated by us in writing, you must send us a written request for approval and submit additional information that we may request. We may charge you a supplier review and testing fee and we may request that you send us samples from the supplier for testing and documentation from the supplier for evaluation. We may also require, subject to our discretion, that we be allowed to inspect the supplier's facilities. We will notify you of our approval or disapproval within a reasonable time, not to exceed 60 days, after we receive your written request for approval and all additional information and samples that we may request. We may, in our discretion, withhold our approval. When evaluating the approval of a particular supplier, among other things, we consider: whether the supplier can demonstrate to our reasonable satisfaction the ability to meet our standards, specifications and production requirements, the supplier's quality control, whether or not we are the exclusive supplier of the particular item, whether or not our affiliate or affiliates are the exclusive supplier of the particular item, and whether or not the supplier's approval, in our sole determination, will allow us to advance the overall interests of the System.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, Cordova or its affiliates can be designated as the exclusive supplier for the Cordova System. Cordova requires franchisees to purchase or lease certain source restricted goods and services that meet Cordova's specifications from approved or designated suppliers. Cordova may designate a supplier, including themselves or their affiliates, as the exclusive supplier for the System.
This means that as a Cordova franchisee, you may be required to purchase certain goods and services exclusively from Cordova or its affiliates. This could impact your costs and potentially limit your ability to negotiate better prices with other suppliers. It is important to note that Cordova may receive rebates, payments, and other material benefits from suppliers based on franchisee purchases, and they reserve the right to institute and expand rebate programs in the future.
Cordova estimates that purchases from designated exclusive suppliers will represent approximately 75% of the initial investment in establishing the Franchised Business and about 30% of the ongoing operating expenses. Currently, Cordova requires franchisees to purchase or lease certain source restricted goods and services from either Cordova or their designated supplier.
If a franchisee wants to use a supplier that hasn't been approved, they must submit a written request to Cordova, potentially incurring a supplier review and testing fee. Cordova has the discretion to approve or disapprove the supplier, considering factors like the supplier's ability to meet Cordova's standards, quality control, and whether approving the supplier advances the overall interests of the System.