MINNESOTA COMMERCE - Unhappy Franchisee

The purchase of initial inventory fromMateo constitutes a range of approximately 26% to 63% of the cost of
the establishing the Distributorship. Purchases of the Products throughout the term of the Distributorship will
constitute approximately 61 % of the annual cost of operating the Distributorship.
Mateo will derive income from the sale of the Products by charging you wholesale prices that exceed Mateo's
costs of supplying the Products. In the fiscal year ended December 31,20402011, Mateo's total revenue from
the sale of Products to its franchise distributors was $3-3^v90S256,223,000; or 82.21% of Mateo's total revenue
of $2^0.^312,082,000^ as reflected in Mateo's audited financialstatements.
Our District Managers. who..work.,with distributors in,.their „areas,,,districts or region, may receive a portion of
their compensation based on the net sales of produ_cts sold bv Mateo to th.e_Diat.ributors in the District
Manager's district.
You are required to license, install, and utilize the MDBS Software (as described in Items 5 and 6 of this
Disclosure Document) in your business. The software license fee amount is income to Mateo, and constitutes
less than 1% of the cost of establishing the Distributorship, and less than 1% of the ongoing cost of operating
the Distributorship. In the fiscal year ended December 31, 2O4-O2011, Mateo's total revenue from software
license fees and software maintenance charges received from its distributors was $778,212792.700, or
approximately 0.3% (three-tenths of one percent) of Mateo's total revenue.
As discussed in Item 5, when you sign the Distributorship Agreement, you must also sign the Mateo Web Page
Agreement, which permits you to establish a subpage on Mateo's website. You must pay Mateo a one-time
web page set-up fee of $ 195. If you continue to utilize a subpage, and neither we nor you cancel the Web Page
Agreement, you must pay Mateo an annual $195 maintenance fee. In fiscal year 204-02011, Mateo received
$213,^30220 in web page fees (initial and maintenance fees) from franchisees.This amount was less than onetenth
of one percent (0.1%) of Mateo's total revenue.
Mateo also requires during the term of your franchisethat you subscribe, at your expense, to a reliable highspeed
Intemet service provider (cable, DSL or high-speed cellular) or other electronic commimications
provider or service and maintain an active e-mail account. In addition, you are required to subscribe to a
cellular Intemet service provider in order to connect to the Intemet while on your route. Both the service and
provider may be designated by Mateo. Mateo makes or plans to make information available to you on the
Intemet at Mateo's expense. Also, Mateo may require that any and all communications between you and
Mateo be made through the Intemet or such other electronic medium as Mateo may designate. You will be
required to access the Intemet or other electronic information on a regular basis to obtain full benefit of the
System. Many documents, such as weekly statements, will be delivered via e-mail. You must immediately
notify Mateo's customer service department of any change to your e-mail address. Mateo is not liable for any
damage to you including lost profits, delayed orders or the like which are the result of any outage or delay
related to electronic transmission of information, whether by the Intemet or otherwise.
You must purchase or lease certain equipment and supplies (including, for example, business cards and
stationery) that meet Mateo's specifications. You must purchase or lease a vehicle Preferred to as the "Mobile
Store'l and computer hardware which meet Mateo's specifications and you must carry minimum insurance
coverages on these and other items (as described in Item 7). Mateo's specifications for the vehicle, computer
hardware and other equipment and supplies are based on Mateo's prior experience, requirements relating to the
operation of the Distributorship, the supplier's ability to deliver, service, and support the items, and quality and
uniformity considerations. Catalogs, promotional literature, and other sales materials used in the operation of
your Distributorship must comply with Mateo's standards, and may either be purchased from Mateo or from
other sources who meet Mateo's standards. Upon request, you can receive fromMateo a written listing of its
specifications and standards for equipment and supplies after you sign the Distributorship Agreement, to the
extent the specifications and standards have been developed. Mateo will update the specifications and
standards from time to time in writing as may be required to respond to requirements for operating the
Distributorships. While Mateo does not have a formal process for evaluating suppliers, and does not generally
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Mateo 2012.FDD/PK 44^3444^44^49051.8 03/09/4412