Under what condition are transfer fees collectable for a Cordova franchise?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
th in this Agreement;
- (10) At the transferee's expense, the transferee, and the transferee's Managing Owner, managers and/or any other applicable employees of transferee's Cordova Business must complete any training programs then in effect for franchisees of Cordova Businesses upon terms and conditions set forth in this Agreement or as Franchisor otherwise reasonably requires;
- (11) Franchisee must pay a fixed sum of $20,000 to Franchisor (the "Transfer Fee");
- (12) Franchisor's approval of the material terms and conditions of the Transfer, and Franchisor determines in Franchisor's Reasonable Business Judgment that the price and terms of payment are not so burdensome as to be detrimental to the future operations of the Franchised Business by the transferee;
- (13) Transferee's employees, directors, officers, independent contractors, and agents who will have access to Confidential Information shall execute the Confidentiality
Source: Item 23 — RECEIPTS (FDD pages 44–195)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, a transfer fee is required when a franchisee seeks to transfer their franchise. Specifically, the franchisee must pay Cordova a fixed sum of $20,000 as a "Transfer Fee." This fee is required under the conditions outlined in Article 14.C.(11) of the franchise agreement.
Several conditions must be met for a transfer to be approved, in addition to paying the transfer fee. The franchisee must provide written notice to Cordova at least 30 days before the proposed transfer and fulfill obligations set forth in Article 14.F. All accrued monetary and outstanding obligations to Cordova and its affiliates must be satisfied. The franchisee, each owner, and each spouse must not be in default or material breach of the agreement. The transferee must be bound by all terms and conditions of the agreement, and their owners and spouses must execute the Franchise Owner and Spouse Agreement and Guaranty.
Furthermore, all obligations of the franchisee under the agreement must be assumed by the transferee, their owners, and their spouses in a manner satisfactory to Cordova. The franchisee, each owner, and each spouse must execute a General Release, releasing Cordova and its affiliates from any claims. If the transfer includes the franchise agreement, substantially all assets of the franchised business, or a controlling interest in the franchisee, Cordova may require the transferee to execute the then-current standard form franchise agreement. The transferee must also improve the Administrative Office to conform to Cordova's current standards and complete any required training programs. Cordova must also approve the material terms of the transfer and determine that the price and terms of payment are not detrimental to the future operations of the franchised business by the transferee.
These conditions ensure that Cordova maintains control over who becomes a franchisee and that the transfer does not negatively impact the brand or the financial stability of the franchise. The $20,000 transfer fee likely covers Cordova's administrative costs associated with reviewing and approving the transfer, as well as ensuring the new franchisee is properly trained and compliant with Cordova's standards.