What happens if Cordova does not institute the Brand Development Fund?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor is not required to conduct any marketing on behalf of Franchisee or the System.
9.A. BRAND DEVELOPMENT FUND
At all times and from time to time, as determined by Franchisor, in Franchisor's Reasonable Business Judgment, Franchisor may institute, implement, maintain, delegate and administer a brand development
fund (the "Brand Development Fund"). The following shall apply to the Brand Development Fund at all times throughout the Term:
(1) If Franchisor institutes the Brand Development Fund, Franchisee shall pay, on the Due Date, a mandatory and continuing fee to the Brand Development Fund in an amount equal to a percentage of Gross Sales (as determined and designated by Franchisor in Franchisor's Reasonable Business Judgment) for each monthly Accounting Period (the "Brand Development Fund Fee"), provided, however, Franchisee will not be required to contribute more than 2% of the Gross Sales for each monthly Accounting Period;
(2) Franchisor will provide Franchisee with written notice of the percentage of Gross Sales that Franchisee is required to contribute to the Brand Development Fund.
Source: Item 23 — RECEIPTS (FDD pages 44–195)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, Cordova is not required to conduct any marketing on behalf of the franchisee or the system. Cordova has the option to institute, implement, maintain, delegate, and administer a brand development fund (the "Brand Development Fund") at any time, as determined by Cordova in its reasonable business judgment.
If Cordova does institute the Brand Development Fund, franchisees would be obligated to pay a mandatory and continuing fee. This fee would be a percentage of gross sales, determined and designated by Cordova, but it cannot exceed 2% of gross sales for each monthly accounting period. Franchisees will receive written notice specifying the percentage of gross sales they must contribute, and this percentage will remain in effect until Cordova provides written notice of a change.
However, the FDD does not specify any consequences if Cordova chooses not to institute a Brand Development Fund. In the absence of a Brand Development Fund, franchisees may need to rely more on their local marketing efforts, for which they must spend not less than $1,000 per Territory per month. Prospective franchisees should clarify with Cordova what marketing support, if any, is provided if the Brand Development Fund is not implemented.