When is the reserve payment due for a Cornwell Quality Tools dealership?
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 reserve payment of $20,000 is due prior to the start of the dealership. This reserve is applied against further inventory purchases during the first 13 weeks of operation. Cornwell Quality Tools may finance up to the full $20,000 of the reserve if the franchisee meets normal credit requirements.
The reserve is credited to the franchisee's open account as a credit against further inventory purchases. The credit is applied weekly, equaling 65% of the increase in the documented Time Payment (TP) Account balance over the previous high TP balance. Cornwell Quality Tools maintains the reserve until it is exhausted or the Dealership Agreement is terminated, whichever comes first.
If the reserve is funded with both cash and notes, the cash is applied first against inventory purchases. Any remaining funds are refunded if paid in cash or credited to the franchisee's open account or as a voluntary pre-payment under paragraph 1(c) of the note if borrowed, provided the reserve hasn't been fully used upon termination of the Dealership Agreement. The reserve is credited by Cornwell Quality Tools in a lump sum when it is established.