MINNESOTA COMMERCE - Unhappy Franchisee

a Ride-Along Acknowledgement tsee Appendix K to this Disclosure Document^ that vou either did a ridethrough
of vour List of Calls or chose not to do so.
In addirion to the Distributorships, Mateo also sells the Products through its Commercial Sales Department.
The Commercial Sales Department generally sells tools to companies, insurance replacement companies,
government agencies, or other entities or businesses that purchase tools for their internal use. The tools are not
generally the personal property of the mechanics employed by such companies. Generally, the prospective
purchasers from the Commercial Sales Department are companies, insurance replacement companies,
government agencies, and similar entities that may purchase tools from other national tool companies, or
factory and warehouse distributors, but not from individual distributors. Mateo also serves the vocational
school marketplace through a direct sales program. Products are sold to technical schools or training facilifies,
and/or directly to the individuals attending such schools or facilities. Products sold to frill-timestudents and
schools may be discounted in order to remain compedtive. Commercial sales customers also may include auto
and truck dealerships that participate in dealer equipment service or sales programs operated in conjunction
with original equipment manufacturer (or "OEM") relationships. OEM programs may include tool storage,
shop equipment and other products normally purchased by the business at national account discounts. Mateo
may fromtime to time develop coupon or incenrive programs with various narional accounts or manufacturers.
Several other tool suppliers may compete for these accounts, and pricing is very competitive and significantly
below list price. This generally prevents a single distributor frombeing competitive in such markets. Mateo
presently has a distributor commission program which permits its distributors to join forces with Mateo to
assist in closing sales to accounts where a single distributor working alone would be unable to do so. This
program provides an opportunity for you to receive a commission on industrial account sales and/or vocational
school sales closed by Mateo, with your assistance, with a business identified on your List of Calls.
Commissions will consist of a credit posted to the Distributor's Open Purchase Account on products or
services delivered to a location on the List of Calls. Commissions are not based on the Billing or
Administrative Office address of the industrial account purchaser. The Distributor may be required to provide
service to technicians, students or instructors, and on products delivered to the location in order to receive
commissions. The actual service schedule will be determined by the business, government agency, or school
during the sales process. Service requirements may include unpacking and set-up of the initial and/or on-going
orders, warranty service, and/or participation in tool shows or seminars. The Commercial Sales Commission
Program (which may include vocational sales) may change during the term of your Distributorship. The
Distributor must be registered in the system as the "servicing distributor," and actively promote the sales, in
order to receive commissions on any commercial or vocational sales.
A Distributorship generally competes with mobile tool vendors who sell to professional mechanics and are
associated with national tool companies other than Mateo. Other sources of competition include independent
mobile tool vendors who are not associated with a national tool company, local automotive tool and equipment
warehouses, local automotive parts stores, local department and hardware store chains and mail order catalogs.
Your List of Calls and Potential Customer List may already be served by competidve tool vendors.
To operate the Distributorship, you will have to comply with various state and local laws such as those relafing
to driver's licensing, vehicle licensing, vendor licensing, and automobile insurance requirements, zoning
restricrions as well as parking, vehicle weight limitadons and any applicable hazardous material transportation
and pollution laws. In some states, a physical examinadon may be required to obtain a license to drive a
commercial vehicle. There may be federal license or motor carrier regulations that apply to you, and these
may include compliance with drug or substance abuse testing rules. (As noted in Item 5 below, Mateo requires
that a prospective franchisee undergo and pass a drug and alcohol test before Mateo will grant a
distributorship.) Most states require liability insurance coverage for both the driver and vehicle. Insurability
and insurance rates will generally be dependent upon your past driving record. There may be other laws
applicable to your business including those relating to home-based business or the credh you grant, and Mateo
urges you to make WKtajresinauirisiS about these laws.
Mateo 2Q12.FDD/PK ^4^3^.10^44^9051 S 03/09/4412