Does Cordova have the right to control and administer a Brand Development Fund?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
Brand Development Fund We may control and administer a brand development fund (the "Brand Development Fund") (Franchise Agreement, Article 9.A.).
As disclosed in Item 6 of this Disclosure Document, you must contribute a monthly sum not to exceed 2% of your monthly Gross Sales to the Brand Development Fund.
We may use the Brand Development Fund for market studies, research, service development, product development, testing, research studies, technology development, advertising and public relations studies or services, creative production and printing of advertising and marketing materials, advertising copy and commercials, tracking costs, agency fees, advertising councils, franchisee advisory councils, administrative costs, which may include reimbursement for direct administrative and personnel costs associated with advertising and public relations, and any other costs associated with the development, marketing and testing of advertising, marketing and public relations materials, and the purchase of media placement, advertising time and public relations materials in national, regional or other advertising and public relations media in a manner determined by us, in our discretion, to be in the best interest of the franchisees and the System.
Our company and/or affiliate owned Cordova Businesses may but are not required to contribute to the Brand Development Fund.
The Brand Development Fund will be required to maintain unaudited financial records detailing its expenditures and will make available to you (no more frequently than one time in any 12-month period) an unaudited accounting of how the monies contributed to the Brand Development Fund were spent each year.
We are not required to segregate the Brand Development Fund from our general operating funds and we are not a fiduciary or trustee of the Brand Development Fund.
The Brand Development Fund will not be used to directly promote your Cordova Business or the marketing area in which your Cordova Business will be located. (Franchise Agreement, Article 9.A.).
We may utilize the Brand Development Fund to develop and test various media and technologies for potential utilization and/or improvement of the operations of Cordova Businesses and the marketing of Cordova Businesses.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 23–28)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, Cordova has the right to control and administer a brand development fund. The FDD states, "We may control and administer a brand development fund (the 'Brand Development Fund') (Franchise Agreement, Article 9.A.)."
Cordova franchisees may be required to contribute to this fund. The amount franchisees must contribute is "a monthly sum not to exceed 2% of your monthly Gross Sales to the Brand Development Fund." These funds can be used for various purposes, including market studies, research, service and product development, advertising, public relations, and administrative costs. Cordova may also use the Brand Development Fund to compensate themselves for administrative fees and internal employee salaries related to managing the fund.
Cordova is not obligated to segregate the Brand Development Fund from its general operating funds and is not considered a fiduciary or trustee of the Brand Development Fund. The Brand Development Fund will not be used to directly promote an individual franchisee's Cordova Business or its specific marketing area. However, Cordova may use the fund to develop and test various media and technologies that could potentially improve the operations and marketing of Cordova Businesses.
Cordova or its affiliated businesses may, but are not required to, contribute to the Brand Development Fund. Cordova is required to maintain unaudited financial records detailing the fund's expenditures and will make available to franchisees an unaudited accounting of how the funds were spent each year, but no more than once in any 12-month period. This arrangement is fairly typical in franchising, where brand development funds are common, but the specific terms regarding contribution amounts, usage, and financial reporting can vary significantly between franchise systems.