Margin Neutrality Clause Samples

Margin Neutrality. A Product's margin percentage is calculated by subtracting the Buyer's Product cost from the Product's retail price and dividing that result by the Product's retail price. A margin percentage is established with the initial sale of the Product at Buyer's corporate stores. If Buyer wishes to promote the Product thereafter by lowering the retail price of the Product, the Seller agrees to lower the cost of the Product for each unit sold during the promotion such that the Buyer’s originally calculated margin percentage remains neutral (i.e, the same as it was before Buyer lowered the retail price). The difference between the original Product cost and the reduced Product cost during the promotion multiplied by the units sold during the promotion period equal the markdown monies ("Markdown Monies") owed to Buyer from Seller. The units of Product sold during the promotion period will be based on (a) for franchise sales, units sold by Buyer to franchisees and (b) for corporate sales, units sold at corporate retail stores. All promotions will be available to franchise stores. Solely with regard to sales of the Product from the Buyer to franchisees, the promotional pricing for the Product will start two weeks prior to the start date of the promotion in corporate retail stores and end two weeks prior to the end date of the promotion in corporate retail stores. Markdown Monies will be paid by Seller based on units sold at the end of each month during the promotion. Payment will be automatically deducted by Buyer from Seller’s account via credit memo. If there is not an open balance to deduct against, Seller will issue a check payment in full within 30 days of Buyer's written notification.