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The ability to recruit new Franchisees is an important
opportunity for Publishing Partners. But, since only one Publishing Partner will
be granted franchise rights to any particular territory, this opportunity is a
limited by geography and by time. Details of this arrangement are are governed
by the franchise agreement, but highlights include:
 | Definitions: a Level 1-Recruit describes a new publisher
who is referred by an existing Publishing Partner and whose application is
accepted, and to whom franchise rights are granted. A level 2-Recruiti is a
new publishing partner who is referred by a Level 1-Recruit and whose
application is accepted, and to whom franchise rights are granted. |
| After a period of time defined by the Franchise Agreement,
Franchisees may refer themselves for additional
territories. In such cases, the franchisee
himself (or herself) will be considered to be his or her own Level
1-referral. |
Although results are certainly not guaranteed, and although actual results will
most certainly vary, a hypothetical example of
the results of a successful referral program is as follows:
Hypothetical Referral Income from Book Sales
| |
Level 1 Recruits |
Level 2 Recruits |
| Number of Recruits |
5 |
25 |
| Quantity of Books Sold by Each
Recruit |
5,000 |
5,000 |
| Total Books Sold |
25,000 |
125,000 |
| Payments per Book Due Under
Current Revenue Sharing Agreement |
$.10 |
$.05 |
| Revenue from Book Sales |
$2,500 |
$6,250 |
| Total
(from Both Categories of Recruits) of Referral Income from Book Sales |
$8,750 |
|
Hypothetical Referral Income from Ad Sales
| |
Level 1 Recruits |
Level 2 Recruits |
| Number of Recruits |
5 |
25 |
| Total Pages of Ads Sold by
Each Recruit |
100 |
100 |
| Total Ad Pages Sold |
500 |
2,500 |
| Payments per Ad Page Due Under
Current Revenue Sharing Agreement |
$1.00 |
$.50 |
| Revenue from Ad Sales |
$500 |
$1,250 |
| Total (from Both
Categories) of Referral Income from Ad Sales |
$1,750 |
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Summary Analysis of Hypothetical Referral Income
| |
Level 1 Recruits |
Level 2 Recruits |
|
Number of Recruits |
5 |
25 |
| Revenue from Book Sales |
$2,500 |
$6,250 |
| Revenue from Ad Sales |
$500 |
$1,250 |
| Total |
$3,000.00 |
$7,500.00 |
| Average per Recruit |
$600.00 |
$300.00 |
| Grand Total (Both Categories of Recruits) |
$10,500 |
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Note: In the above example, the total Referral Income from all
categories equals $10,500 per yr. or
$2,100 per Level 1 Recruit. As previously
mentioned, these calculations are hypothetical; actual results will vary
significantly. Obviously, as an increasing number of
territories are granted by ELP, the ability to enlist new Recruits will be
diminished.
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