Does the Cordova Royalty Fee have a minimum quarterly requirement?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
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. Each year thereafter, i.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, the Royalty Fee does have a minimum quarterly requirement. Franchisees must pay a continuing royalty fee equal to 10% of monthly Gross Sales, but this is subject to a Minimum Quarterly Royalty Fee Requirement. If the aggregate amount of Royalty Fees paid during a calendar year quarter does not meet or exceed the Minimum Quarterly Royalty Fee Requirement, the franchisee must pay the difference as a Supplemental Royalty Fee. This Supplemental Royalty Fee is the difference between the Minimum Quarterly Royalty Fee Requirement and the amount of Royalty Fees already paid during that quarter.
The Minimum Quarterly Royalty Fee Requirement varies depending on the number of territories in the Operating Territory and the year of operation. For example, for a Cordova business with one territory, the minimum quarterly royalty fee is $5,000 in Year 1, increasing to $7,500 in Year 2, $12,500 in Year 3, $20,000 in Year 4, $50,000 in Year 5, $75,000 in Year 6, and $100,000 in Years 7 to 10. These amounts increase with each additional territory.
This minimum quarterly royalty fee requirement means that even if a Cordova franchise location has low sales in a particular quarter, the franchisee must still pay at least the minimum amount. This could create a financial strain on the franchisee if sales are consistently low. The franchisee is required to grant Cordova permission to automatically debit their bank account for payment of all fees, including any Supplemental Royalty Fees. Prospective franchisees should carefully consider these minimum requirements and ensure they have sufficient capital to meet these obligations, especially during the initial years of operation.