How is the Supplemental Royalty Fee calculated for a Cordova franchise?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, franchisees are obligated to pay a Supplemental Royalty Fee if their Royalty Fees paid during a calendar year quarter do not meet the Minimum Quarterly Royalty Fee Requirement. The Royalty Fee is 10% of monthly Gross Sales. The Minimum Quarterly Royalty Fee Requirement varies depending on the number of territories in the Operating Territory, as detailed in a schedule within the FDD.
The Supplemental Royalty Fee is calculated as the difference between the Minimum Quarterly Royalty Fee Requirement for the applicable calendar year quarter and the total Royalty Fees paid during that quarter. This fee is due on the 15th of the month following the end of each calendar year quarter and will be automatically debited from the franchisee's bank account via ACH or other designated means.
For a prospective Cordova franchisee, this means that even with low sales in a given quarter, there is a minimum royalty payment that must be met. For example, if a franchisee with one territory has a Minimum Quarterly Royalty Fee Requirement of $5,000 in Year 1, but only pays $3,000 in royalties based on 10% of gross sales, they will owe a Supplemental Royalty Fee of $2,000. This ensures Cordova receives a minimum royalty amount regardless of the franchisee's quarterly performance. Franchisees should carefully consider their projected sales and the Minimum Quarterly Royalty Fee Requirements to understand their potential financial obligations.