How does Cordova determine the amount of the Supplemental Royalty fee?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
by more than 10% per annum.
On a calendar year quarterly basis, if the aggregate amount of the Royalty Fees paid by you and received by us from your Cordova Business during the respective calendar year quarter does not equal or exceed the aggregate amount of your Minimum Quarterly Royalty Fee Requirement for each calendar year quarter, then you must pay to us the difference as a supplemental royalty fee (the "Supplemental Royalty Fee"). The Supplemental Royalty Fee is calculated as the difference between the amount of the Minimum Quarterly Royalty Fee Requirement for the applicable calendar year quarter, less the aggregate amount of the Royalty Fees that you paid to us during the respective calendar year quarter.
If any federal, state or local tax other than an income tax is imposed on the Royalty Fee which we cannot directly and, dollar for dollar, offset against taxes required to be paid under any applicable federal or state laws, you must compensate us in the manner prescribed by us so that the net amount or net effective Royalty Fees received by us is not less than the greater of: (a) 10% of your monthly Gross Sales; or (b) the applicable Minimum Quarterly Royalty Fee Requirement.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, the Supplemental Royalty Fee is determined by comparing the total Royalty Fees paid during a calendar year quarter to the Minimum Quarterly Royalty Fee Requirement. If the Royalty Fees paid are less than the Minimum Quarterly Royalty Fee Requirement, Cordova will charge a Supplemental Royalty Fee to cover the difference. This fee is calculated as the Minimum Quarterly Royalty Fee Requirement for the quarter, less the total Royalty Fees paid during that quarter.
The Minimum Quarterly Royalty Fee Requirement depends on the number of territories in the franchisee's operating territory. The royalty fee is 10% of gross sales. The Supplemental Royalty Fee is due on the 15th of the month following the end of each calendar year quarter and will be debited automatically from the franchisee's bank account via ACH or other means designated by Cordova.
For a prospective Cordova franchisee, this means that even with low sales, there is a minimum royalty payment required each quarter. Franchisees need to be aware of these minimums and factor them into their financial projections. The minimum quarterly royalty fee requirement for a single territory ranges from $5,000 in year 1 to $100,000 in years 7 to 10. For 5 territories, the minimum quarterly royalty fee requirement ranges from $25,000 in year 1 to $500,000 in years 7 to 10.