CUSTOM LEATHERCRAFT MINIMUM ADVERTISED PRICE POLICY
EFFECTIVE JANUARY 1, 2016
In order to promote the advertising of CLC, CLC licensed brands (DeWalt), and Wild River branded products by its customers, Custom LeatherCraft Manufacturing Company Inc. (“CLC”) provides co-op advertising Accruals (as defined in Section A below) and other advertising benefits to certain of its customers. Co-op advertising Accruals are based solely on compliance with this policy and are not performance or incentive rebates. To qualify for these co-op advertising Accruals and other advertising benefits, advertising of CLC products within the United States of America by a Qualified Customer (as defined in Section A below) must comply with CLC’s Minimum Advertised Price Policy (M.A.P.P.). M.A.P.P. does not affect the prices at which CLC’s customers may sell CLC products. CLC’s customers are free to sell CLC products at any prices that they choose.
A. CO-OP ADVERTISING ACCRUAL AND OTHER ADVERTISING BENEFITS
CLC will establish an annual co-op advertising accrual (the “Accrual”) for each Qualified Customer equal to a percentage of the Qualified Customer’s quarterly purchases (net of returns) of CLC products. A “Qualified Customer” is (i) a direct ship or drop ship customer whose quarterly net purchases of CLC products exceeds the minimum volumes established by CLC, or (ii) a customer who purchases indirectly and whose quarterly net purchases of CLC products exceeds the minimum volumes established by CLC. Quarterly net purchases start anew at the beginning of each quarter and are not cumulative. The Accrual is available to cover Complying Advertising (as defined in Section C below) that is published during the same quarter in which the Accrual is established. From time to time CLC may also provide its customers, including Qualified Customers, with other advertising benefits, such as those set forth in CLC’s Authorized Reseller Policy, to assist its customers in their advertising of CLC products.
B. ACCRUAL PAYMENT OPTIONS THE FOLLOWING ACCRUAL PAYMENT OPTIONS ARE AVAILABLE.
OPTION 1 – ACCRUAL PAYMENT:
The Qualified Customer’s quarterly Accrual will be paid by check or processed as a deduction periodically with no submission of advertising required. The deduction amount will be communicated by CLC. No automatic deductions will be accepted from any Qualified Customer for any reason. If any of the Qualified Customer’s advertising of CLC products during a quarter is not Complying Advertising, the Qualified Customer may forfeit all of its Accrual for that quarter as provided in Sections D and E below.
OPTION 2 – REIMBURSEMENT PAYMENT:
Instead of Option 1, CLC will reimburse the Qualified Customer its actual costs of Complying Advertising during the quarter up to the amount of the Accrual for that quarter. If any advertising is not Complying Advertising, the claim for the non-complying advertising may not be paid as provided in Sections D and E below. A Qualified Customer will be deemed to have elected Option 1 for each calendar year unless it registers for Option 2 by written notification to CLC by November 1 of the previous year. If a Qualified Customer so elects Option 2, the election will become effective as of January 1st of the next year. An election for Option 2 will remain in effect until the Qualified Customer notifies CLC in writing of its election for Option 1, which will become effective as of the beginning of the next calendar year following the notification, provided that it is given before November 1st. All notifications should be sent to: CLC Co-op Advertising, 10240 S. Alameda St., South Gate, CA 90280. No automatic deductions will be accepted by any customer for any reason.
C. COMPLYING ADVERTISING
Complying Advertising is advertising (as defined below) of CLC products to end-users that complies with the identification and M.A.P.P. requirements outlined below.
Advertising covered by this policy includes all references to CLC products in retail advertisements and fliers, catalogs, newspapers, magazines, television, radio, mail order catalogues or any other run of press and on the internet if it is received or is viewable by end-users located in the United States of America. Internet advertising includes references to CLC products on search engines, in banners, in blast e-mails, broadcast e-mails or “click for” e-mails, on shopping engines and on or through a Qualified Customer’s web site’s home and product pages (including “click for price” screens and pop-up advertisements) that are viewable by end-users in the United States of America. It does not include web screens, such as the “shopping cart,” “see price in cart” screens, and secure server screens, shown after the end-user has made a decision to purchase a Designated Product.
Complying Advertising must contain a proper description of the CLC product and the entire CLC model number of the product. The model number may be omitted if and only if the ad contains a retail item number that may be easily cross-referenced back to the CLC model number (for example, a retail internet site showing the retailer’s model number, which when clicked on, directs the user to a site showing CLC’s model number).
Designated Products are only those CLC products designated on the attached schedule. Designated Products must be sold by the Qualified Customer in the same configuration and packaging as it was purchased from CLC, and if the model number is used to describe the product, it must be the model number designated by CLC. CLC may add products to the Designated Product schedule upon 30 days written notice to its Qualified Customers. CLC may delete products from the Designated Product schedule and may change the M.A.P.P. prices of Designated Products due to competitive situations and market changes at any time. CLC also may announce short-term exceptions to M.A.P.P. requirements with respect to identified Designated Products from time to time.
Complying Advertising must not advertise a price for a Designated Product that is below the M.A.P.P. price for that Designated Product or indicate that the price for a Designated Product is below its M.A.P.P. price (e.g. advertising that the price of a Designated Product is “too low to advertise” or advertising that shows a M.A.P.P.-compliant price that is less that the “manufacturer’s suggested retail price” stricken through). Online retailers who are Qualified Customers violate M.A.P.P. by displaying a price for a Designated Product that is below its M.A.P.P. price in a shopping engine search, as a stated price on auction websites such as e-Bay and on any web screen that the end user sees before making a decision to purchase the Designated Product (e.g. any screen that precedes the shopping cart screen) or if any such earlier screen otherwise indicates that the price of a Designated Product is below its M.A.P.P. price.
D. M.A.P.P. VIOLATIONS – INTERNET
CLC will notify its Qualified Customers Advertising on the internet that constitutes a M.A.P.P. violation (an “Internet M.A.P.P. Violation”). Each twenty-four hour period following notice of an Internet M.A.P.P. Violation during which the Internet M.A.P.P. Violation continues will be considered a subsequent violation.
- The first Internet M.A.P.P. Violation committed by a Qualified Customer during any quarter will result in a warning.
- The second Internet M.A.P.P. Violation committed by a Qualified Customer during any quarter (including the failure to discontinue an Internet M.A.P.P. Violation within twenty-four hours of the Qualified Customer having received a warning) will result in CLC removing the Qualified Customer from CLC’s websites, including in the retailer locator, featured retailer and product referral sections of CLC’s web sites and also may result in the termination for up to 30 days of all permission and licenses granted by CLC to use artwork, graphics and text provided to the Qualified Customer that relates to each Designated Product with respect to which M.A.P.P. has been violated.
- The third Internet M.A.P.P. Violation committed by a Qualified Customer during any quarter (including the failure to discontinue timely an Internet M.A.P.P. Violation with respect to which the Qualified Customer has received a warning) will result in the forfeiture of all of the co-op advertising benefits for the quarter in which the violation occurred, as set forth in Section B above and also may result in the termination for 30 days of all permission and licenses granted by CLC to use artwork, graphics and text provided to the Qualified Customer that relates to CLC products.
E. M.A.P.P. VIOLATIONS – OTHER
CLC will notify its Qualified Customers of a M.A.P.P. violation in Advertising other than on the internet (an “Other M.A.P.P. Violation”). Each Other M.A.P.P. Violation committed in a calendar quarter will result in a forfeiture of all of the quarterly co-op adverting benefit for that calendar quarter, as set forth in Section B above. An Other M.A.P.P. Violation may result in CLC removing the Qualified Customer from CLC’s web sites, including in the retailer locator, featured retailer and product referral sections of CLC’s web sites and also may result in the termination for up to 30 days of all permission and licenses granted by CLC to use artwork, graphics and text provided to the Qualified Customer that relates to each Designated Product with respect to CLC products.
F. EXAMPLES OF M.A.P.P. VIOLATIONS
The following are examples of M.A.P.P. violations.
A blanket discount program (whether paid in cash or with product) is a program occasionally offered by the Qualified Customer that provides discounts off or rebates of the prices of a category of products that is broader than Designated Products (e.g. all tool bags, all CLC products, or all fishing tackle bags). A blanket discount program is more than occasional if it applies to a category of products for more than thirty days without a thirty consecutive day period during which that category of products is not covered by a blanket discount. Blanket discount programs cannot be advertised in direct connection with a Designated Product if the application of the blanket discount results in advertising a net price for the Designated Product below its M.A.P.P. price. Blanket discount programs may, however, be advertised in advertising that also includes Designated Products so long as the blanket discounts are not directly connected with a Designated Product (e.g. the advertising does not apply the blanket discount to the price of the Designated Product to show a net price below its M.A.P.P. price) and CLC is notified in writing of the blanket discount program and its effective dates on forms available from CLC at least fourteen days prior to its commencement. Blanket discounts that apply to a Designated Product and reduce the net price of a Designated Product below its M.A.P.P. price may not be advertised on the internet if they result in showing the net price of the Designated Product below its M.A.P.P. price. M.A.P.P. Violation Example: M.A.P.P. price for the Designated Product equals $99.00. Ad states a retail price for the Designated Product of $99.00 minus a blanket discount of any specified dollar amount or percentage and applies the discount to show the net price of the Designated Product at less than its M.A.P.P. price. Example of No M.A.P.P Violation: An internet web site shows a Designated Product at its M.A.P.P. price and also advertises a discount on purchases of all tackle bags over $79.00. The web site does not show the application of the discount to the M.A.P.P. price. In the shopping cart, the price for the Designated Product is shown at its M.A.P.P. price and the discount is subtracted at the bottom of the shopping cart entries from all purchases eligible for the discount.
BUNDLED DESIGNATED PRODUCTS
Advertising the sale of more than one Designated Product in a bundled offering violates M.A.P.P. unless the advertised bundled price equals or exceeds the sum of the M.A.P.P. prices of all of the bundled Designated Products. M.A.P.P. Violation Example: M.A.P.P. price for a tool pouch that is a Designated Product equals $20.00. Ad states that the consumer can purchase four of the tool pouches for a price that is less than $80.00.
VALUE ADDED PROGRAMS
Value added programs (other than those sponsored by CLC) can violate M.A.P.P. in certain situations. M.A.P.P. is violated when the advertised aggregate price of a Designated Product and the value added goods is less than the M.A.P.P. price of the Designated Product plus the value of the value added goods. M.A.P.P. Violation Example: M.A.P.P. price for the Designated Product equals $49.00 and the normal retail price for a pair of work gloves is $19.00. Ad states that the consumer can purchase the Designated Product for $49.00 and gets a pair of work gloves for free or at less than their normal retail price.
SHIPPING AND HANDLING
Advertising free or discounted shipping and handling is permitted so long as the advertised price of a Designated Product is not shown net of the value of the free or discounted shipping and handling so that the advertised net price of the Designated Product is not less than its M.A.P.P. price. M.A.P.P. Violation Example: M.A.P.P. price for the Designated Product equals $99.00. Advertising states a retail price for the Designated Product of $79.00 plus $20.00 shipping and handling. Example of No M.A.P.P. Violation: The advertising states a retail price for the Designated Product of $99.00 plus free handling and shipping.
If an online retailer’s homepage, a product homepage, a category homepage, category lists or similar page within that web site advertises a price for a Designated Product that is less than the M.A.P.P. price, or indicates that the price is “too low to show” (or similar words), in order to attempt to avoid a M.A.P.P. violation, M.A.P.P. is violated. If a Google or other similar search engine search of a Designated Product produces results that are advertisements for Designated Products at less than the M.A.P.P. price, or indicates that the price is “too low to show” (or similar words), in order to attempt to avoid a M.A.P.P. violation, then M.A.P.P. is violated by the advertiser to whom the link connects. M.A.P.P. Violation Example: M.A.P.P. price for the Designated Product is $129.00. A Google search results in a link to a retailer’s website and in the link advertises that the Designated Product is available for $119.00. M.A.P.P. Violation Example: An online retailer offers a Designated Product for sale, and on the product page indicates that the price is “too low to show, click for price;” when the customer clicks for the price, the retail price is lower than the M.A.P.P. price for the Designated Product. Not a M.A.P.P. Violation: An online retailer offers a Designated Product for sale, and on the product page no price is shown, but there is a link to “click to see price in cart; when clicked, another window is opened on screen, placing the user “in the cart” and a price lower than the M.A.P.P. price is advertised.
INVENTED MODEL NUMBERS OR SKUS.
Designated Products must be sold by the Qualified Customer in the same configuration and packaging as it was purchased from CLC, and if the model number is used to describe the product, it must be the model number designated by CLC. Selling a portion of a Designated Product at a price less that the M.A.P.P. price for the entire Designated Product is a M.A.P.P. violation. M.A.P.P. Violation Example: A Qualified Customer purchases the WT3604 Nomad Tackle Back Pack with Trays, which includes 4 separate storage trays which has a M.A.P.P. price of $179.00. The Qualified Customer then breaks down the back pack and trays separately, using invented model numbers, each at a price less than the M.A.P.P. price.
M.A.P.P. SANCTIONED PROMOTIONS.
In the event of a M.A.P.P.-sanctioned promotion, in which a Designated Product is sold to a Qualified Customer along with a non-Designated Product (as in a “buy one, get one free” promotion), the Qualified Customer cannot use the separate sale of the non-Designated Product to make up for deep discounts offered on the Designated Product, in violation of this Policy. M.A.P.P. Violation Example: As part of a promotion offered by CLC, a Qualified Customer purchases DG5543, which is a Designated Product with a M.A.P.P. price of $29.99, and gets DG5121, a non-Designated Product, free. Subsequently, rather than selling both products to their customers in the same “buy one, get one free” promotion, the Qualified Customer elects to sell both the Designated Product and the non-Designated Product separately. Because the Qualified Customer did not pay for the DG5121, it elects to sell the DG5543, a Designated Product at a significant discount, in violation of M.A.P.P., and uses the price received for the non-Designated Product to make up for the deep discount offered on the DG5543.
G. DISCONTINUED PRODUCTS
Discontinued products purchased from CLC are not subject to M.A.P.P.
H. WHOLESALER / DISTRIBUTOR
A wholesaler/distributor is a business that sells to hardware/industrial dealers who, in turn, re-sell to end-users. Wholesale does not include selling direct to the end-user even if the end-user has a business license. Advertising by a wholesaler/distributor to an authorized CLC customer falls outside M.A.P.P. and still qualifies for co-op advertising Accruals. Advertising by a wholesaler/distributor to end-users is subject to M.A.P.P.