What costs does the Cordova audit fee cover?

According to Cordova's 2025 Franchise Disclosure Document, the audit fee covers costs incurred by Cordova for each financial audit, provided the audit determines underreporting of 2% or greater during any designated period. This includes expenses incurred by Cordova for the audit itself, legal fees, travel, and reasonable accommodations. The audit fee is payable on demand.

This means that if Cordova suspects a franchisee of underreporting gross sales by 2% or more, they can conduct a financial audit at the franchisee's expense. The franchisee will be responsible for not only the direct costs of the audit, but also Cordova's legal fees, travel expenses, and accommodation costs associated with conducting the audit.

This is a significant potential expense for a Cordova franchisee, as audit costs, legal fees, and travel expenses can be substantial. It is important for franchisees to maintain accurate and complete financial records to avoid triggering an audit. Franchisees should also ensure they understand Cordova's reporting requirements and comply with them fully. This audit provision is not uncommon in franchise agreements, as it protects the franchisor's revenue stream and ensures accurate royalty payments.