What must Cordova franchisees do with the Gross Sales of their Cordova Business?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
|# Explanatory Notes to Item 6
Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. Payment is subject to our specification and instruction, including, our election to have all fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 4) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Cordova Business into the designated bank accounts that are subject to our ACH authorization. You must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate and require in the operation of your Cordova Business. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.
Note 2: Royalty Fee and Supplemental Royalty Fee – You must pay to us a continuing royalty fee (the "Royalty Fee") equal to 10% (the "Royalty Rate") of your monthly Gross Sales and subject to minimum quarterly Royalty Fee requirements (the "Minimum Quarterly Royalty Fee Requirement"). The Minimum Quarterly Royalty Fee Requirement depends on the number of Territories comprising your Operating Territory and is determined in accordance with the following schedule:
| Total | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Years 7 to 10 |
|---|---|---|---|---|---|---|---|
| Territories | |||||||
| 1 | $5,000 | $7,500 | $12,500 | $20,000 | $50,000 | $75,000 | $100,000 |
| 2 | $10,000 | $15,000 | $25,000 | $40,000 | $80,000 | $120,000 | $200,000 |
| 3 | $15,000 | $22,500 | $37,500 | $60,000 | $130,000 | $200,000 | $300,000 |
| 4 | $20,000 | $30,000 | $50,000 | $80,000 | $160,000 | $250,000 | $400,000 |
| 5 | $25,000 | $37,500 | $62,500 | $100,000 | $200,000 | $350,000 | $500,000 |
Quarterly Requirement – The dollar amounts set forth in the above table are quarterly requirements within each identified year.
Year – The 12 month period commencing on the opening of the Franchised Business.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, franchisees are required to deposit the Gross Sales of their Cordova business into specific bank accounts that are subject to ACH authorization. This means Cordova has the right to electronically debit these accounts for fees payable to them or their affiliates. Franchisees must also install and use pre-authorized payment systems designated by Cordova, including point-of-sale, credit card processing, and electronic funds transfer systems. Franchisees are responsible for all service charges and fees from their bank to ensure Cordova can electronically debit the account.
Gross Sales for a Cordova business include the total dollar sales from all business and clients, encompassing revenues, receipts, and sales from any source. This includes cash, credit, agreements to pay, or other forms of consideration, such as the retail value of goods or services traded. Gross Sales also account for business conducted within or outside the franchisee's operating territory related to the Cordova business or any competitive business.
However, Gross Sales do not include sales taxes that the franchisee collects and remits to the proper taxing authority, nor do they include authorized promotional discounts provided to clients. This definition is important because several fees, such as the royalty fee (10% of Gross Sales) and the Brand Development Fund fee (up to 2% of Gross Sales, though currently not assessed), are calculated based on Gross Sales. Therefore, accurately tracking and depositing Gross Sales is crucial for Cordova franchisees to meet their financial obligations to the franchisor.