Effective Date: October 2017
This JUUL Labs Authorized Reseller Policy (“Reseller Policy”) contains the terms and conditions applicable to all customers that purchase portable vaporization products and accessories manufactured by JUUL Labs, Inc. (the “Company”) for resale. Please read it carefully because it impacts your relationship with the Company.
Definitions Capitalized terms shall have the meaning described herein. The following definitions shall apply in this Reseller Policy:
“Authorized Resellers” shall be defined as Resellers that have agreed to comply with the terms of this Reseller Policy and that have complied with the terms of this Reseller Policy.
“Authorized Sub-Distributors” shall be defined as any Reseller, other than a Retailer or Distributor, which may, pursuant to the Company’s written authorization only, purchase Company Products from a Distributor and sell Company Products to other Resellers.
“Distributor” shall be defined as any Reseller that has entered in a written contract with the Company to buy Company Products directly from the Company and which may, pursuant to written authorization from the Company, sell Company Products to Retailers and Authorized Sub-Distributors.
“Company Products” shall mean portable vaporization products and accessories manufactured by the Company.
“NTM Flavors” shall be defined as those products that are non-tobacco and non- menthol- based flavored Company Products which the Company shall identify and update from time to time.
“Reseller” shall mean any Distributor, Authorized Sub-Distributor, or Retailer that purchases Company Products for resale.
“Retailer” shall be defined as any Reseller that sells Company Products directly to end user consumers through brick-and-mortar Stores and/or other physical locations.
“Store” shall be defined as an individual retail location of a Retailer.
Policy Terms All Resellers must comply with the applicable terms of this Reseller Policy. Failure to comply with all of the applicable terms of this Reseller Policy may result in escalation of penalties up to and including suspension or termination of your business relationship with the Company and a notification of all Authorized Resellers of the revocation of your status as an Authorized Reseller. This Reseller Policy is subject to change by the Company in its sole discretion.
1. Maintain Current Business Information. Disclose All Locations That Carry Company Products and Conduct Sales from a Commercial Business Address.
All Resellers must maintain accurate and up-to-date company information and disclose all retail locations or Reseller customers that carry Company Products throughout the term of the Reseller relationship with the Company.
Qualifying retail locations can only be physical brick-and-mortar Stores and may not sell Company Products online. Each Store associated with a Reseller must also adhere to the terms and conditions of this Reseller Policy. Retailers may not use or provide a delivery service unless subject to a separate agreement with the Company.
Retailers must conduct sales of Company Products only from a commercial business address. If the Company discovers that the Retailer is conducting business from a non-commercial address, the Company will notify the Retailer in writing. The Retailer must provide the following information within two (2) weeks of receipt of the notice: (i) the correct business address and (ii) a copy of one of the following official documents: (a) utility bill of the registered commercial business address, (b) official business license and/or reseller permits, (c) certification of incorporation (if applicable), or any other business registration document with the correct commercial business address and name of sole or co-owner. Accounts identified as selling from a non-business address that do not address the violation within the 2-week period will be suspended indefinitely pending corrective action.
2. Security Measures for Age Verification and Fraud Protection
Company Products are age-restricted products and Retailers must implement and have in place, prior to selling any Company Product, a robust age-verification system and policies to ensure age verification occurs during each sale of Company Products, in compliance with relevant laws and regulations (referred to herein as “Age Verification Policies”). The Company will monitor for such compliance through review of FDA enforcement actions and controlled monitoring by the Company. If a Retailer does not conduct appropriate age verification, the Company will institute appropriate enforcement measures as described below. Enforcement measures may include remediation training (at Retailer’s cost), restriction or suspension of the supply of Company Product to Retailer, or termination of the Retailer relationship. Retailer must also ensure industry- standard security and fraud protection measures are in place, including authorized territory shipping restrictions and customer fraud resolution procedures.
3. Required Training and Enforcement
Reseller represents and warrants that all individuals, including all employees of any Reseller, that sell or are involved in the commercialization of Company Products are trained at regular intervals on proper sales techniques for regulated products, including required age verification and product placement (for Retailers, examples include: WeCard Training, FDA “This is our watch,” etc.). Resellers shall at all times have written records of such training available for inspection and audit. Failure to conduct such training may result in removal of authority to sell Company Products. The
Company also recommends that Retailers undergo training that restricts bulk sales during onboarding.
4. Bulk Sales Restrictions
Retailers shall cooperate with the Company in preventing unauthorized or illegal sale or exportation of Company Products. Purchases from Retailers above a personal use limit are prohibited. A violation of the Company’s established limits would include any sale by a Retailer which exceeds (i) four (4) JUULpod packages (i.e., up to four (4) Refill Kits) and one (1) JUUL device or (ii) one (1) Starter Kit in a single transaction (referred to herein as “Bulk Sales Restrictions”). Retailers shall use their best efforts to maintain an internal database to obtain the following information: a unique transaction identifier; SKU names; the quantity of Company Products sold; and the date of each transaction. Retailers should have a written policy to comply with Bulk Sales Restrictions. Chain Retailers shall make a best effort to partner with the Company to audit transaction-level data to ensure compliance with Bulk Sales Restrictions.
5. The 3 Strikes Enforcement Policy: Penalties for Violations of Bulk Sales Restrictions and Age Verification Policies.
The Company will conduct internal reviews and/or secret shopping programs to identify a violation of the Company’s Bulk Sales Restrictions or Age Verification Policies (each a “Strike”) and will assess penalties consistent with this Section. The penalties are as follows:
First Strike: The Company will issue a first warning letter notifying the Store of its Bulk Sales Restrictions and/or Age Verification Policies violation and reiterating the Company’s youth prevention policies and penalty escalation structure.
Second Strike (within 12 months of the First Strike): The Company will issue a second warning letter to the Store, and the Store will be removed from the Company’s promotional activities for six (6) months (two (2) promotional cycles). The Company will communicate the Age Verification Policies non-compliance to the FDA for a Company-sponsored Age Verification inspection failure.
Third Strike (within 12 months of the First Strike): The Company will issue a third letter to the Store and reject all future purchase orders from the violating Store, as well as notify all Wholesalers, Distributors and Authorized Sub-Distributors to stop sales of Company Product to the violating Store via addition to a No-Sale List (Section 18) for one (1) year. The Company will communicate the Age Verification Policies non-compliance to the FDA for a Company-sponsored Age Verification inspection failure.
Additionally, the FDA may conduct its own inspections for violations of the Age Verification Policies. Each FDA inspection failure based on a violation of the Age Verification Policies is considered a violation under this Section and shall count as a Strike in the 3 Strikes Enforcement Policy.
The enforcement of penalties for Age Verification Policies violations shall commence on October 1, 2019. The enforcement of penalties for Bulk Sales Restrictions violations shall commence on January 1, 2020.
6. JUUL Labs Trademark and Brand Policy
Reseller has been provided with a copy of the JUUL Labs Trademark and Brand Policy (“Brand Policy”). Reseller must comply with the Brand Policy and represent itself as an Authorized Reseller in all advertising and sales collateral.
Setting up businesses, registering domain names, or adopting social media usernames that contain any Company trademarks or create the impression that Reseller is directly affiliated with the Company is prohibited unless agreed otherwise, in each instance, by the Company in writing. To ensure compliance with the Reseller Policy, Reseller should request and display marketing materials that are approved by the Company.
7. JUUL Labs Minimum Advertised Price Policy
The Company has instituted a Minimum Advertised Price Policy (“MAP Policy”). Resellers should familiarize themselves with the MAP Policy.
8. Only Sell to End User Consumers, Authorized Resellers, and/or Authorized Sub-Distributors
Retailers may not sell Company Products to other Resellers. Retailers may sell directly to end user consumers only.
Distributors may not sell to end user consumers except with written authorization from the Company and may only sell to Retailers or Authorized Sub-Distributors.
9. Retailers Only Purchase Company Products from the Company Directly or From Distributors or Authorized Sub-Distributors
A Retailer is in violation of this Reseller Policy if it buys Company Products from any source other than the Company, Distributors, or Authorized Sub-Distributors.
10. Only Sell Company Products in Original Packaging
Resellers may not alter original Company Product packaging in any way prior to reselling Company Products. Removing Company Products from packaging and reselling Company Products in a different packaging, or under a different name, is strictly prohibited.
11. No Bundling or Giveaways of Company Products Without Obtaining Permission
Reseller must not re-SKU or bundle Company Products without receiving prior written permission from the Company. Reseller also agrees not to make available to others, or otherwise use or exploit, any Company Product for any contests, sweepstakes, and/or giveaways (or similar events) without the prior written authorization from the Company.
12. Customer Confusion
Reseller will not advertise, market, display, or demonstrate products that are not Company Products together with Company Products in a manner that could create the impression that the non-Company Products are made by, endorsed by, sold by, or associated with the Company.
13. No Sale on Website(s)
Resellers may not sell Company Products on consumer-facing ecommerce enabled web pages, hosted websites, or any third-party sites (eBay, Amazon, Alibaba, etc.), through drop- ship accounts (Buy.com, Newegg.com, Overstock.com, etc.), or via direct messages on any social or other electronic forums, all of which are strictly prohibited.
14. Sell to Customer(s) Within the Assigned Geographic Territory
Without the prior written consent of the Company, Resellers shall not ship or sell Company Product outside of the USA or sell Company Product that it knows (or should know) will be sold or shipped outside of the USA. Any sale of Company Product outside of the USA must be authorized in advance by the Company in writing and must be accompanied with policies and procedures ensuring that compliant, appropriately-labeled Company Product is sold in each applicable geographic territory.
15. Report Sell-Through for Physical Retail Location(s)
If required by the Company, Reseller, or each Store, must provide sell-through information by SKU and Store, and such other sales and financial information and reports as reasonably requested by the Company. The Company reserves the right to perform an audit of sales and other financial reports pertaining to the Company sales or Reseller’s business operations (including all reasonable aspects of its conduct of its business) to ensure compliance with this Reseller Policy.
16. Additional Reseller Obligations for JUUL Labs Dealer Locator
Retailer Stores may be listed in the JUUL online dealer locator at the sole discretion of the Company. If a Retailer violates this Reseller Policy or markets any product that is not a Company Product and which consumers would understand is intended to be an add-on, accessory, or compatible product to Company Products, it will forfeit the opportunity for its Stores to be listed on the JUUL online dealer locator and the Company may take other remedial actions consistent with this Reseller Policy.
17. Obey the Law, Abide by Policy Rules & Serve Customer Needs
Resellers must (a) comply with all applicable laws, rules, regulations and policies related to advertising, sales, and marketing of Company Products (including, but not limited to, those promulgated by the US Food and Drug Administration) and (b) provide a level of sales support and customer support for Company customers that, at a minimum, demonstrates industry best practices.
18. Comply with the Company’s Restrictions on Sales to Retailers
Company Products may not be sold by Resellers that fail to follow the law or comply with the terms of this Reseller Policy. Additionally, specific Company Products may not be sold by Retailers unless they have met certain additional compliance-related qualifications and have been approved in advance as a seller of such products by the Company. Distributors and Authorized Sub-Distributors shall familiarize themselves with the following:
No-Sale List: The Company shall maintain a list of Resellers that the Company has identified as posing a high risk for compliance violations and that are not authorized to sell Company Product (“No-Sale List”). Resellers identified in the No-Sale List are added either as a result of past or current violations of the law, or violations of this Reseller Policy. The Company will include its rationale for each Reseller identified in the No-Sale List. It shall be a violation of this Reseller Policy to sell Company Product to any Reseller identified in the then-effective No-Sale List.
Distributors found to have violated the terms of this Section 18 will be subject to either liquidated damages or reductions of their discretionary rebate, depending upon whether the Reseller has executed a Distributor Compliance Agreement.
Effective: August 26, 2019