How much is the required reserve and when is it due to Cornwell Quality Tools?
Cornwell_Quality_Tools Franchise · 2025 FDDAnswer from 2025 FDD Document
| Amount | Method of Payment | When Due | To Whom Made | |
|---|---|---|---|---|
| Initial Franchise Fee (1) | $-0- | N/A | N/A | N/A |
| Training Expenses (2) | $0- | As | Prior to | Third-Parties |
| $5,000 | Incurred | start | ||
| Real Estate (3) | $-0- | N/A | N/A | N/A |
| Initial Inventory (4) | $60,000 - $65,000 | Lump Sum/ Note | When invoiced | Cornwell Tools |
| Vehicle (5) | $75,000 - $185,000 | Lump Sum/ Down Payment | Upon delivery | Owner/Leasing Company |
| Insurance (6) | $250 - $2,550 | Lump Sum | As premium payments become due | Insurance Company |
| Additional Funds – Three | $15,000 - | Lump | Prior to | Dealer’s Business |
| Months (7) | $35,000 | Sum | start | Account |
| Equipment/Clothing/ Fixtures/Other Fixed Assets (8) | $0 - $5,000 | As Incurred | As ordered | Supplier |
| Reserve (9) | $20,000 | Lump Sum | Prior to start | Cornwell Tools |
| Computer System (10) | $3,500 | Lump Sum | Prior to start | Cornwell Tools and Vendor printer and wireless card |
| Computer Software (11) | $275 | Lump Sum | Prior to start | $100 to Cornwell Tools for start-up costs and $175 for credit card servicing vendor software |
| Security & Utility Deposits/Business Licenses/Other Prepaid Expenses (12) | $500- $2,500 | As Incurred | Prior to start | Third-Parties |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 23–29)
What This Means (2025 FDD)
According to Cornwell Quality Tools' 2025 Franchise Disclosure Document, a new franchisee must establish a reserve with Cornwell Quality Tools in the amount of $20,000. This reserve is to be applied against further purchases of inventory during the first 13 weeks of the Dealership. However, this requirement may be waived by Cornwell Quality Tools.
If the franchisee meets normal credit requirements, Cornwell Quality Tools will finance up to $20,000 of the reserve. The reserve is applied to the franchisee's open account as a credit against further inventory purchases. This credit is applied weekly, equaling 65% of the increase in the franchisee's documented Time Payment (TP) Account balance over the previous high TP balance.
The reserve is maintained by Cornwell Quality Tools until it is exhausted or the Dealership Agreement is terminated, whichever occurs first. If the reserve is funded with a combination of cash and notes, the cash deposited will be applied first against further purchases of inventory. Any funds remaining in the reserve will be refunded if paid in cash or, if borrowed, credited at the franchisee's option to their open account or as a voluntary pre-payment under paragraph 1(c) of their note, if the Reserve has not been used in full upon the termination of the dealership Agreement. When the Reserve is established, it will be credited by Cornwell with a lumpsum amount.
In summary, the reserve is due prior to the start of the dealership and is intended to help manage customer time payment accounts during the initial period of operation. The reserve is refundable under specific conditions, providing some financial security to the franchisee.