What is the required reserve amount for a Cornwell Quality Tools dealership?
Cornwell_Quality_Tools Franchise · 2025 FDDAnswer from 2025 FDD Document
this Disclosure.
Unless Cornwell waives the requirement, you must also establish a Reserve with Cornwell in the amount of $20,000, to be applied against the further purchase of inventory during the first 13 weeks of the Dealership. If you meet normal credit requirements, Cornwell will finance up to $20,000 of the Reserve. Unless waived, you must also verify at the outset of the Dealership that there is $15,000 on deposit in a business account and that you will only use those funds for business purposes on and after the first day of train
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 franchisee must establish a reserve of $20,000 with Cornwell, unless this requirement is waived. This reserve is intended to be used for purchasing inventory during the first 13 weeks of the dealership's operation. If the franchisee meets the standard credit requirements, Cornwell Quality Tools may finance up to the full $20,000 of the reserve.
In addition to the reserve, the franchisee must also verify that they have $15,000 on deposit in a business account. These funds are specifically designated for business purposes and can be used from the first day of training on the franchisee's route. This ensures that the franchisee has sufficient capital to manage the initial stages of the business.
The reserve is applied to the franchisee's open account as a credit against further inventory purchases. Each week, Cornwell Quality Tools will credit the account with an amount equal to 65% of the increase in the franchisee's documented Time Payment (TP) Account balance over the previous high TP balance. The reserve is maintained until it is either exhausted or the dealership agreement is terminated. Any remaining funds in the reserve will be refunded if paid in cash or credited to the franchisee's open account if borrowed, upon termination of the agreement.