reDesign

June 27, 2011

My great Groupon customer service experience

Filed under: groupon — Rakesh Agrawal @ 7:28 pm

In early May, I bought a Groupon for Robb’s Really Good Food. It’s a food cart in Portland, Ore.

Before I got a chance to use it, Robb sold his food cart. (He plans to open a new one.) I knew something was up when I drove to the location to redeem it and Robb was nowhere to be found. I thought it’d be a good opportunity to test Groupon’s customer service. But given that I only paid $3 for the Groupon, it wasn’t high on my priority list.

Groupon actually found me. Last week, I got an email from Groupon:

Hi Rocky,

Thank you for purchasing the Robb’s Really Good Food Groupon.

We are writing to inform you that Robb’s Really Good Food is moving to a new location. Due to the location change, Robb’s Really Good Food will be closed until July 21. Fortunately, Robb’s Really Good Food has graciously decided to extend the expiration date from 11/04/11 to 12/04/11 to make up for lost time.

Here is the address for the new location:

SE Foster Rd. & 52nd Ave.
Portland, Oregon 97206

If you have not redeemed this Groupon and no longer wish to due to this new information, please email us at support@groupon.com and we’ll be happy to issue a refund to the original credit card used for the purchase or to your Groupon account to be used for future purchases.

Thank you for your continued support and let us know if you have further questions.

Regards,

Kate R
Groupon Customer Support

I responded that I wanted a refund. In less than an hour, I received this:

Hi Rocky,

No problem. I just issued you a full refund and removed this Groupon from your account. Please allow up to 10 business days for this to be reflected on your statement.

Regards,

Sarah-Kate H.
support@groupon.com

Less than 24 hours later, the money was back in my account.

As a consumer, I loved this. Proactive customer service is rare.

But as someone who analyzes this space, this is a red flag about the stability of the daily deal business. Many small businesses fail, especially within the first year of ownership. As I’ve written before, the optimal time to run a Groupon is if your business is going under and you can’t get a loan from a bank. Both create significant adverse selection problems. And such generosity to customers leaves Groupon holding a lot of risk.

About these ads

June 26, 2011

Things I love

Filed under: Uncategorized — Rakesh Agrawal @ 8:43 am

I know there has been a lot of negativity on this blog lately in connection with my coverage of the daily deals space. New readers may be wondering, what the hell? Does this guy like anything? Well, in fact I do. I have written about many of these. (All of the links are to pieces I’ve written.)

My Keen Newports at Cinnamon Bay in St. John

My Keen Newports at Cinnamon Bay in St. John

Here are some of them:

  • NEW Instagram. It’s a quick and easy way to share memories and connect with others.
  • NEW Chromebook. I was skeptical of the Chromebook when it first came out. But I recently took mine on a 2 1/2 week trip (along with my iPad mini) and it performed really well. At only $250, if I happen to forget it at a TSA checkpoint, I won’t lost sleep over it.
  • NEW iPad mini. The best tablet ever. Despite the lack of a retina display. When I pick up a regular iPad now, I notice its bulkiness more than I notice the display.
  • Sonos. Wireless networking and music is complicated. Unless you’re using Sonos. It, like Apple, makes the complex simple.
  • fitbit. This little gadget keeps track of my daily steps. Calling it a pedometer would be understating what it does. It’s an integral part of my batshit crazy challenge.
  • moo. The funky printing company makes high quality, full-color business cards. The cards are beautiful and their customer service is outstanding.
  • gogo. Suddenly, transcontinental flights go by in no time thanks to gogo inflight. I was so excited about the technology that I took a flight in 2008 just to test it out.
  • Costco. Great prices, great treatment of employees. For what reasons, other than low price point, do consumers shop at Costco?
  • Nordstrom and Nordstrom Rack. Wonderful service, friendly employees and fair pricing.
  • Square. A product that is optimal for its target market. What Square’s new Register and Card Case means for small businessesUpdate 5/5/13: I still love Square for use by small businesses. But I’m having a hard time justifying it given the valuation and the fact that they lose money on small dollar transactions.
  • foursquare. Constantly pushing the ball forward on mobile innovation. Foursquare 3.0 takes mobile ball to a whole new level. Update 5/5/13: I loved them when I wrote this post 2 years ago. But in that time, the company has failed to gain meaningful consumer traction and hasn’t come up with a business model.
  • Google. Incredible innovation that has transformed the world. Maps, Transit, Gmail are all amazing products. I really wish I’d been better friends with Larry Page in high school. I remember when I was at AOL and Maps launched. The head of Mapquest sent out an email saying nobody would ever use those features. I knew he was wrong. To be fair, there are products that I disagree with: Google Offers and Book Search. Google TV is a disaster and I don’t think Chromebooks are going anywhere. Update 5/5/13: I don’t see Chromebook Pixel going anywhere. Google Wallet’s strategy is one of the dumbest things I can think of in payments. (And there are a lot of dumb things in payments.)
  • Facebook. A revolutionary platform for social connectivity.
  • American Express. Really terrific customer service and great products. Innovation like its partnership with foursquare and the launch of Serve. I’ve been a cardmember since 1993 and currently have six different AMEX cards.
  • Netflix. Killed a multibillion dollar competitor and staved off threats from Wal-Mart and Amazon. It’s stock has outperformed Google by miles.
  • Quora. A new platform for creating, sharing and discovering high quality content.
  • Khan Academy. Talk about changing the world. One man on his quest to revolutionize education. It’s much needed.
  • Apple. Some mock Steve Jobs for hyperbole like “magical” and “revolutionary”. But he and Apple have created the most amazing products over the last few years. Apple was the first one to say to carriers, “Screw you. We’re going to build something consumers will love.” I knew when iPhone was announced that it would be huge. Despite naysayers, Apple has built the most successful retail presence ever. Unlike most companies, they focus on the full product experience.
  • Starwood Hotels and Resorts. They pioneered social media participation with William Sanders, the Starwood Lurker. He’s been helping consumers with travel since 1998. Their SPG loyalty is terrific and customer service has been largely excellent. Travel is a business that is highly dependent on people for execution. As a result, bad things will happen sometimes. But Starwood has always made it right for me.
  • Flipboard. These guys are going to revolutionize how we consumer content. Apple should just buy them already and embed Flipboard on every iPad shipped.
  • Virgin America. I don’t think it’s an exaggeration to say that Virgin is responsible for our in-flight Internet access. They were the first to have fleetwide WiFi. They gave gogo a lot of credibility. They’ve forced United to up its game on its transcontinental p.s. service from LAX and SFO. Their in-flight service goes to unheard of levels. They are master marketers who can even make daily deals work for them.
  • Keen Footwear. Incredibly comfortable shoes that fit even my wide feet. Great customer service to boot. I had a coupon for a free pair of socks up to $17. The pair I bought was $18. When I handed over my dollar, they said not to worry about it. (And, yes, they’re worth $18.)
  • Kindle. Kindle and digital books in general will fundamentally transform the way we learn. (A Kindle post has been on my to-do list.) It will also diminish the power of religious nuts on Texas schoolboards to dictate content and rewrite history for kids across the nation.

These are listed in stream-of-consciousness order.

One of my favorite quotes is from Tim O’Reilly: “Create more value than you capture.” I think these companies all do that to some extent. At the very least, they all provide incredible products backed by great customer service.

My fundamental problem with the daily deals business is that it’s exploitative at its core. Asking businesses to give up 75% of revenue for the theoretical benefit of new customers is just wrong — especially when many of the new customers have attitudes like this.

If you build a great product that delivers real value, you don’t have to sell it through high-pressure sales people who disguise key elements of the product. The world may not beat a path to your door, but your customers will surely tell others about how much they love you.

Disclosures: I’m friends with Tristan Walker at foursquare. I worked for Mike McCue at Tellme. My brother works on Chrome OS at Google. (Sorry to dis your product!)

June 24, 2011

Sam Altman will clean your house for $5

Filed under: mobile, mobile search — Rakesh Agrawal @ 5:57 pm
A screenshot of fake Loopt deal for Bi-Rite Creamery

A screenshot of fake Loopt deal for Bi-Rite Creamery


That’s right, the CEO of Loopt will personally clean your house for $5.

But only if 1,000 people sign up.

Only, I haven’t told him about the deal yet. He may not agree, but I’m using his name anyway. Hell, he doesn’t know I’ve put this offer out there.

Sound ridiculous? It is.

But that’s what Loopt is doing to popular San Francisco businesses. This “offer” came to me in a Loopt deal email.

In its bizarre reverse-Groupon model, they are trying to collect demand for businesses.

It would be sketchy but sort of acceptable if this were done behind the scenes. But they’re doing it out in the open using the businesses’ brand names with discounts the businesses didn’t agree to.

I wrote about the Loopt model the other day. One of the many challenges with Loopt’s u-Deals is that people would want discounts at popular places. Every time I’ve been to Bi-Rite Creamery, there’s been a long line out the door. They don’t need to discount like this.

Loopt is using the Bi-Rite name to build its mailing list. They are collecting people’s credit card numbers in conjunction with this purported deal. That is bordering on fraud. I would also consider it trademark infringement.

This has a lot of negative effects on unsuspecting businesses:

  • Having to deal with consumers who view it as a real offer. I called Bi-Rite and they said “We have nothing to do with that.” While the fine print implies that it’s not a real deal, to the casual reader it’s very confusing. Bi-Rite reported having turned away other consumers who referenced the deal.
  • Bi-Rite is a premium brand. Being associated with daily deals can dilute that.
  • Long term SEO impact. If “deals” like this manage to rank in search results, it further affects the brand and their ability to charge full price.

This is so wrong on so many levels. As readers of this blog know, I think Groupon does a lot of things that are bad for businesses. But they do get the business’s consent beforehand. The Groupon merchant agreement specifically includes a license of the business’s brand. (Section 1.6)

Update: Loopt has since removed this “offer.”

See also:

June 22, 2011

Virgin America knows how to make daily deals work

Filed under: advertising, airlines, groupon, local search — Rakesh Agrawal @ 10:10 pm

Virgin America cabinI admit it. I am in the bag for Virgin America. I have been since before they took off. (Literally.) I once live tweeted a flight to San Diego using their in-flight WiFi. Savvy travelers will recognize that the picture at right was taken on a Virgin flight.

Not only has Virgin set a new bar for in-flight service on domestic flights, they have done a terrific job of marketing their product to a young, tech savvy audience. Among their methods has been running daily deals:

All of these deals sold out. All 500 of today’s Loopt u-Deals sold out in less than an hour.

So why do I think that Virgin America’s daily deal marketing is brilliant when I think they are bad for many businesses? Economics, plane and simple.

  • Introductory offer on new routes. Many of the deals have been for new routes. These routes don’t have existing demand on Virgin to displace. (Today’s deal was different in that it was targeted at Virgin’s home base.)
  • Lock in on new routes. Whenever a carrier like Virgin launches in a new market, legacy carriers will dump extra capacity onto the route to keep their share and make life harder for the new guy. By having people pre-purchase these vouchers, it creates a powerful reason to try Virgin instead.
  • Higher purchase price. Although the deal price may be effectively 65% to 75% off the voucher value, you have to spend a lot more to use it. A SFO-LAX roundtrip on Virgin will cost you $158 plus taxes. The Loopt voucher saves you 40% at best. On a SFO-IAD flight, the savings drop below 20%. Virgin sometimes gives away 20% off vouchers, so this isn’t that much different from their regular marketing.
  • A lot of restrictions. As with many travel deals, Virgin’s daily deals come with a lot of restrictions. You can’t use them on First Class, Main Cabin Select or refundable fares. You can’t use them during the peak of summer demand. The restrictions on the Loopt deal are longer than this blog post. All of these serve to reduce cannibalization and try to drive incremental traffic.
  • Caps and cheap publicity. The deals are capped at relatively low numbers, but generate a fair amount of press coverage. This is especially important on new routes.

June 16, 2011

LivingSocial merchant agreement

Filed under: livingsocial — Rakesh Agrawal @ 12:51 am

See the Groupon, LivingSocial and daily deals merchant FAQ.

LivingSocial Merchant Agreement (US) v1.3 CONFIDENTIAL
LIVINGSOCIAL MERCHANT SERVICE AGREEMENT
Order Form

This LivingSocial Merchant Service Agreement Order Form is governed by the  attached  LivingSocial Merchant Service
Agreement Standard Terms & Conditions, which are incorporated herein by reference. The Order Form and Standard Terms
& Conditions together comprise a binding and enforceable agreement.
Effective Date:   9/[redacted]/2010
Parties:
Hungry Machine, Inc., d/b/a LivingSocial
829 7th Street, NW, 3rd Floor
Washington, DC 20001
Fax: 202-318-7758
Merchant
Name:  [redacted]
Address:
,
Check Payable to (if different from Merchant Name):
Address for receiving payment (if different from above):
,
[redacted]
Description of Deal Promotion:
Merchant Product/Service:  1 hour massage
1 hour massage or apply value towards longer massage
Deal Price (i.e., fees paid by consumer): $ 47
Deal Value (i.e., full value of Voucher or approximate value of Deal): $ 95
Multiple Offers:
Description:
Expiration Date: 12 Months from issue date on Voucher , or
Other:
Vouchers must be redeemed by the Expiration Date (or for redemptions requiring an appointment, the appointment must be
scheduled prior to the Expiration Date), except to the extent that applicable law requires that the Merchant extend the period
in which the Voucher may be redeemed.
Note: Merchant is solely responsible for ensuring that Voucher expiration complies with applicable federal and state
laws regarding gift certificates.
Commission Fee: 50% of paid Deal Price
Merchant Fan Program:  No
Opt-In Fan Discount / Program Fee: $
Redemption Options: Print Voucher;Call Number;Visit Website,
If Phone: [redacted]
If Email:
Number of Redemption Locations: 1
Maximum Vouchers (if applicable): No Max,
Limit of Vouchers per Purchaser: 1
Limit of Gifts per Purchaser: No Limit
Multiple Vouchers Can be Combined in One Purchase?: False
If so, how many?:
Deal Limitations: Limit 1 Per Person;Not Valid on Holidays, For new customers only
No partial redemption
Other Additions:
Will honor all purchased vouchers
[End of Order Form]

LIVINGSOCIAL MERCHANT SERVICE AGREEMENT
Standard Terms and Conditions (US) v.1.3
These LivingSocial Merchant Service Agreement Standard Terms & Conditions together with a Merchant Service Agreement
Order Form are collectively referred to herein as the “Agreement.”
1. Nature of Services
This Agreement relates to the placement of marketing and
promotion services by Merchant with LivingSocial.
LivingSocial will promote a  voucher for the Merchant
product or service with the particular deal characteristics
identified in the Order Form, in accordance with this
Agreement. The Merchant is the “issuer” of the voucher
for its Deal, and LivingSocial acts as the marketing agent
for the Deal.
2. LivingSocial Responsibilities
a. Deal Creatives. LivingSocial  may use Merchant Content
to  prepare one or more promotional creatives for the
particular Deal (“Deal Creatives”), in its discretion,
which may include a Deal page hosted on the
LivingSocial.com website or other websites offered with
our distribution partners, an email creative to be
distributed to potential purchasers of the Deal voucher, or
other similar creatives for online promotion of the Deal.
Deal Creatives will be subject  to Merchant’s prior
approval (which may be made by email), not to be
unreasonably withheld or delayed. Once a Deal Creative
has been approved, LivingSocial is deemed to have
approval to use and promote other Deal Creatives that are
substantially similar to the approved Deal Creative.
b. Promotion.   LivingSocial  will offer and promote the
Merchant product or service identified in the Order Form
(the “Merchant Product”) through LivingSocial’s online
platform on the terms and conditions described in the
Order Form and the Deal Creatives approved by Merchant
(the “Deal”), including the discounted price to be paid by
the purchaser (the “Deal Price”).   The scheduled time
period that each Deal is marketed and offered (the “Offer
Period”) will be designated solely by LivingSocial.
Without limiting the foregoing, an Offer Period is
typically 24 hours for Deals made available on Monday
through Thursday or 72 hours for Deals offered over a
weekend. Offer Periods are subject to scheduling change
or cancellation in  the sole discretion of LivingSocial.
LivingSocial will endeavor to notify Merchant in advance
of the Offer Period, however, LivingSocial provides no
guarantee that it will provide advance notice of Offer
Periods or changes to a planned Offer Period.
c. Vouchers.   LivingSocial will issue each purchaser of the
Merchant Product (each a “Purchaser”) a numbered
voucher for each purchase (each a “Voucher”).  Within
one business day following the end of the Offer Period,
LivingSocial will provide Merchant with the names of all
persons having the right to redeem the Vouchers and the
corresponding Voucher numbers.
d. Merchant Fan Program. If Merchant opts-in to the
Merchant Fan Program on the Order Form, then at the
time a Purchaser goes through the check-out process for
the Voucher, (s)he will be presented with an opportunity
to “like” (or equivalent) Merchant’s existing FaceBook
fan page in exchange for an extra promotional discount to
the Deal Price (the “Opt-In Fan Discount”). For
example, if the standard offer for a Deal is $25 for $50 of
value and the Opt-In Fan Discount is $5, then the Deal
would be $20 for $50 of value for the purchaser who has
opted into the Merchant Fan Program.
3.Merchant Responsibilities
a. Issuer.  Merchant agrees and acknowledges that Living
Social markets and facilitates the purchase of the Deal,
but that Merchant remains the  issuer of the Vouchers.
Accordingly Merchant agrees that it, and not Living
Social, is solely responsible to fulfill the Deal and provide
the Merchant Product to the individual redeeming each
Voucher in accordance with this Agreement.
b. Fulfillment. Merchant agrees to honor and fulfill all
Vouchers sold for the Deal in accordance with the terms
of the Deal,  the standard LivingSocial  Terms and
Conditions  [  http://www.livingsocial.com/terms ],  this
Agreement, and any applicable laws. Merchant agrees to
accept Vouchers in any form presented for redemption
that has been approved by LivingSocial, including,
without limitation,  a  physical printout of the Voucher or
by displaying the Voucher on a mobile device such as an
iPhone at the point of service. Merchant shall not treat
Voucher holders differently from other paying customers
in the scheduling (e.g., use of blackout dates and times) or
delivery of services, except as expressly set forth in the
Deal. For Deals that require advance scheduling,
Merchant shall use its best efforts to accommodate the
scheduling request of the Voucher holder. Except as
expressly set forth in the Deal, Merchant shall permit
Voucher holders to redeem Vouchers after the Expiration
Date for Vouchers that require advance scheduling if the
Voucher holder contacts Merchant prior to the Expiration
Date for the purpose of scheduling service.
c. Merchant Content. Merchant may be asked to provide a
logo, photograph, or other marketing materials
(“Merchant Content”) to be used in developing the Deal
Creatives.   Merchant hereby grants LivingSocial a nonexclusive worldwide license to reproduce, use, display,
perform, distribute, and create derivative works based
upon the Merchant Content for the purpose of developing,
distributing, and otherwise promoting the Deal Creatives
as LivingSocial deems appropriate.  After the term of this
Agreement, LivingSocial may continue to use and
distribute the Deal Creatives as exemplars and for general
promotional purposes.
d. Redemption Data. Merchant shall collect  and provide to
LivingSocial on a regular basis, no less frequently than
monthly, a list of the serial numbers of redeemed
Vouchers. Merchant may provide this information in
paper or digital form or, when available, using
LivingSocial’s merchant portal through which Merchant
can record such data.
4. Fees and Payment
a. Commission Fee. In consideration for fulfilling its
obligations under this Agreement, LivingSocial will be
entitled to retain the Commission Fee set forth in the
Order Form on all payments received from Purchasers of
the Vouchers and the Program Fee, if any.
b.Merchant Payment. Subject to Merchant’s performance of
its obligations under this Agreement,  LivingSocial shall
remit to Merchant all payments received from Purchasers
of Vouchers, minus the Commission Fee (the “Merchant
Payment”). Unless otherwise agreed by the Parties, the
amounts due Merchant will be paid by check.  The
Merchant Payment will be mailed to Merchant within
fifteen (15) business days after the end of the Offer
Period. In the event LivingSocial has received a
substantial number of customer complaints or requests for
refunds, as determined in its discretion, LivingSocial may
hold-back up to a third of the Merchant Payment until the
parties have reached a mutually acceptable plan for
resolving the complaints.
c. Taxes.   Merchant will be solely responsible for collecting
and remitting any value added, use or sales taxes owed to
federal, state, or local taxing authorities  in connection
with the sale or redemption of Vouchers.
5. Refunds
Merchant agrees that LivingSocial shall have the right to
refund the Deal Price to any Purchaser who is dissatisfied
with the experience of scheduling and using the Merchant
Product, provided that LivingSocial also refunds the
Commission Fee associated with such purchase. In such
cases, if the refund occurs before payment in full  of the
Merchant Payment has been made to Merchant, the
refunded fees (not including any refunded Commission
Fees) will be set-off against amounts owed to the
Merchant. If the Merchant has already been paid  the
Merchant Payment in full, it agrees promptly to repay to
LivingSocial the amount of refunded fees (not including
any refunded Commission Fees).
6. Representations and Warranties
a. General.  Each Party hereby represents and warrants that
(a) it has the authority to enter into this Agreement and to
fully perform its obligations hereunder, (b) this
Agreement does not and will not conflict with any of the
Party’s other obligations to any third parties, and (c) it
complies and will comply with all applicable laws and
regulations.
b. Service Warranties.  Merchant additionally represents and
warrants that: (a) it will provide the Merchant Product in a
safe and professional manner; (b)  the Merchant Content
does not infringe or misappropriate any third party
copyright, trademark, right of publicity, moral right, trade
secret, or other proprietary right, and (c)  it will  comply
with applicable federal and state laws related to
redemption of  the Vouchers, including those related to
deceptive trade practices, unclaimed property liability
associated with Vouchers that  have not been redeemed,
alcohol related service and discounting, and expiration of
gift cards.    Merchant acknowledges that the Deal terms
will state in the  Deal Creatives and printed on the
Voucher that all or a portion of the Voucher expires after
a stated Expiration Date, and if required by law, that the
Deal Price does not expire, if at all, until a later date.
Merchant is responsible to ensure that it enforces
expiration of the Vouchers only in accordance with
applicable federal and state laws.  In addition, federal
and/or state laws may require that the  Merchant, upon
request, provide the Purchaser or holder of a Voucher
cash redemption for all or some portion of the Voucher.
Merchant, and not LivingSocial, is responsible to comply
with any cash redemption requirements.
7. Indemnification
a. Indemnity. Merchant shall indemnify, defend, and hold
harmless LivingSocial, its directors, officers, employees,
and agents from and against any and all claims, demands,
causes of action, or liabilities, and expenses, including
reasonable attorney’s fees, to the extent arising out of the
Deal, the  Voucher, the Merchant Product and  the
fulfillment thereof, and/or any breach or alleged breach of
any Merchant obligation, representation, or warranty
under this Agreement.
b. Process.  LivingSocial must notify Merchant promptly in
writing of any claim for indemnification hereunder, and
provide, at  Merchant’s expense (to the extent of out-ofpocket expenses only), all reasonably necessary
assistance, information and authority to allow Merchant to
control the defense and settlement of such claim, provided
that the failure of  LivingSocial to promptly inform
Merchant of any claim shall not excuse  Merchant of its
obligations under this Section except to the extent such
failure materially prejudices  Merchant.  Notwithstanding
the foregoing,  Merchant shall not enter into any
settlement of the defense of such action, other than with
respect to the payment of monies, without LivingSocial’s
prior written consent, which consent shall not be
unreasonably withheld or delayed.   LivingSocial may
participate at its expense in the defense and/or settlement
of any such action with counsel of its choosing and at its
sole expense
8. Limitation of Liability
NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL OR EXEMPLARY
DAMAGES (EVEN IF THAT PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF  SUCH
DAMAGES), ARISING FROM BREACH OF THIS
AGREEMENT, OR ARISING FROM ANY OTHER
PROVISION OF THIS AGREEMENT, SUCH AS, BUT
NOT LIMITED TO, LOSS OF REVENUE OR
ANTICIPATED PROFITS OR LOST BUSINESS
(COLLECTIVELY, “DISCLAIMED DAMAGES”).
LIVING SOCIAL’S CUMULATIVE LIABILITY
RELATED TO DIRECT DAMAGES WILL BE
LIMITED TO THE COMMISSION FEES RECEIVED
BY LIVING SOCIAL RELATED TO THE DEAL SET
FORTH IN THE ORDER FORM.  THESE
LIMITATIONS SHALL NOT APPLY TO ANY
INDEMNIFICATION OBLIGATION.
9. Term
a. Term.  This Agreement shall commence on the Effective
Date and end on the Expiration Date.
b. Termination.  Either party may terminate this Agreement
upon breach by the other party.   LivingSocial may cancel
this Agreement, in its discretion, upon notice to Merchant
at any time prior to the Offer Period.
c. Survival. Sections  3(d), 5, 6, 7, 8, 9(c), and 10 shall
survive expiration or termination of this Agreement. In
addition, following termination or expiration, Merchant
shall continue to honor all Vouchers, according to their
terms, for which Merchant Payments have been remitted
by LivingSocial.
10. Miscellaneous
a. Confidentiality.  The terms of this Agreement are to be
treated by Merchant as confidential. The Deal, Deal Price,
and Offer Period are also to be treated as confidential
until the Deal has been publicly promoted by
LivingSocial.  Merchant agrees not to disclose any such
confidential information to any third party, other than its
legal, tax, and accounting advisors who are bound by a
duty of confidentiality or as required by applicable law.
b. Entire Agreement. This Agreement is the entire
agreement of the Parties with respect to the subject matter
hereof, and supersedes any and all prior agreements
and/or understandings, whether written or oral.  This
Agreement  shall not be modified except by a written
agreement dated subsequent hereto signed on behalf of
each Party by their duly authorized representatives.
c. Notices.   All notices and requests in connection with this
Agreement will be deemed given as of the day they are
received either by facsimile, messenger, delivery service,
or in the Mail, postage prepaid, certified or registered,
return receipt requested, and addressed  to a Party at the
address specified in the Order Form or such other address
as a Party may designate pursuant to this notice provision.
d.Waiver.  No waiver of any term or condition hereof shall
be effective unless in writing and signed by the authorized
representative of the Party against whom such waiver is
asserted.  Any waiver shall be specifically limited to its
terms, and shall not be deemed applicable to subsequent
like circumstances.
e. Governing Law. This Agreement shall be governed by the
laws  of  the District of Columbia, without reference to
principles of conflicts of  law, and the Parties further
consent to the exclusive jurisdiction  of the local  and
federal courts located in Washington, DC to resolve any
dispute that may arise between the Parties relating to this
Agreement.
f. Counterparts.  This Agreement may be executed in one or
more counterparts, which may be exchanged by facsimile
or other electronic means, each of which shall be deemed
an original and which together shall constitute one and the
same agreement.
[End of Standard Terms and Conditions]
Authorization & E-Signing
I represent that I am a duly authorized representative of Merchant and that my act of  e-signing this
document shall be a binding commitment of Merchant under the terms of this LivingSocial Merchant
Service Agreement Order Form and Standard Terms & Conditions.
{{_es_signer1_signatureblock}}
_____________________________________
(Signature)
{{*_es_signer1_LegalBusinessName}}
_______________________________________
(Legal Business Name)
{{*_es_signer1_BusinessType}}
_______________________________________
Business Type (Individual/Sole proprietor, Corporation, LLC)
{{*_es_signer1_SSN_EIN}}
______________________________________
(Social Security/Employer Identification Number)

June 15, 2011

Revised Groupon merchant agreement

Filed under: groupon — Rakesh Agrawal @ 10:33 pm

Here is a sample merchant agreement that I received. This one is from January 2011.

Merchant Agreement
Date of Agreement: 1/XX/2011
Merchant Name(herein referred to as “Merchant”):

This “Merchant Agreement” or “Agreement”, effective as of the above date (“Effective Date”), is entered into by [redacted] and between Groupon, Inc., a Delaware corporation with principal offices at 600 West Chicago Ave., Suite 620, Chicago, IL 60610 and Merchant (“Merchant”). The parties shall be referred to collectively as the “Parties.”

Merchant wishes to offer its products or services for sale through vouchers (the “Voucher(s)”) which can be redeemed for Merchant’s goods and/or services at a discount, which are offered to the public for purchase at http://www.groupon.com (the “Website”) and are activated (“Activated”) only upon reaching an agreed upon volume of purchasers (“Volume Threshold”) and an agreed upon discount; and Groupon wishes to sell Merchant’s Voucher to the purchasers at the Website, the Merchant being the seller of the goods and the services, and Groupon being the seller of the intangible rights contained in the Merchant’s Voucher.  Therefore, in consideration of the mutual covenants of the Parties and other valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the Parties agree as follows:

Definitions:
“Merchant Offering” means  - $20 for [redacted].

“Unit Price” means $20.00.

“Volume Threshold” means 75.

“Maximum Number of Vouchers” means .

“Voucher Expiration Date” means 12 months from date of feature.

“Remittance Amount” means $12.00 for each unit collected by Groupon for each Voucher minus a 1.9% credit card fee from the total.

“Total Remittance Amount” means the aggregate total Remittance Amounts collected by Groupon for all Vouchers.

“Special Instructions” means Limit 1 per person, may purchase additional as gifts. [Redacted]

1. Voucher Program.

1.1. Voucher Information

Groupon shall promote the Voucher per Section 1.2. Merchant is the seller of the goods and services described in Voucher. The Voucher itself will be sent to the purchaser electronically. The purchaser will then redeem the Voucher from the Merchant.

a. Merchant is making the Merchant Offering available pursuant to the Vouchers.

b. Merchant’s obligations under this Merchant Agreement (and with respect to any Voucher) are contingent upon selling the Volume Threshold by the Volume Threshold Deadline.

c. Delivery of deals: Groupon may offer the Merchant’s Voucher up to the maximum quantity listed above in a variety of formats: through its feature deal-of the day, through its various side deals, through its marketplace, or through its affiliate network. All of these formats may be offered to part or all of Groupon’s subscriber base, or the communities associated with Groupon’s affiliates. Merchant will be notified prior to any new delivery of deal for final approval.

d. Each Voucher will be subject to no restrictions other than as provided herein. Each Voucher will expire on the Voucher Expiration Date. However, after the Voucher Expiration Date, Merchant shall, for the amount of time required by applicable law: (1) continue to allow unredeemed Vouchers to be redeemed for the product or service specified on the Voucher or (2) allow the Voucher to be redeemed to purchase goods or services from Merchant for up to the amount the purchaser paid for the Voucher.  Merchant is aware and acknowledges that the law may require Merchant to redeem Vouchers beyond their stated expiration dates, and Merchant agrees to do so (to the extent applicable law requires).

e. Partial redemptions: If a customer redeems a Voucher for less than its face value, the Merchant will be responsible for issuing a credit or cash equal to the difference between the face value and the amount redeemed if required by law.

f.   Merchant agrees that in providing the goods/services that are the subject of the Voucher, it will not impose any extra or additional fees or charges that contradict the terms set forth on the face of the Voucher.

g. Merchant will comply with the Special Instructions (if any).

1.2 Voucher Sale. Merchant authorizes Groupon to offer, sell and distribute Vouchers, in accordance with this Agreement and subject to the ”Terms of Sale” located at http://www.groupon.com/terms and the restrictions set forth in this Agreement. Merchant acknowledges that Groupon may terminate the publication or promotion of the Voucher at any time. Groupon reserves the right to increase the Volume Threshold at its sole discretion.

1.3 Voucher Publication and Delivery. Vouchers shall be published on the Website in accordance with Section 1.1.  Groupon will offer the Vouchers for sale on dates in its discretion.  If there is a Maximum Number of Vouchers designated, Groupon will use reasonable efforts to cease publishing the Voucher once it has received offers to buy that number of Vouchers equal to the Maximum Number of Vouchers.. The last date on which Groupon publishes the Voucher for sale to its users shall be considered the “Run Date”.  The Voucher shall be activated, which means capable of being used for purchases with the Merchant in accordance with the terms of the Voucher, only when the Volume Threshold of purchasers has been met. At the time that the Volume Threshold has been met; Groupon will electronically deliver the Voucher to the purchaser.  Once a Voucher is Activated and delivered to the purchaser, Merchant shall be solely responsible for all customer service in connection with the Voucher and for supplying all goods and services specified in the Voucher. Groupon further reserves the continuing right, but shall not be obligated, to reject, revise, or discontinue publishing any Voucher and to require Merchant to edit or modify the same for any reason, including, without limitation, to conform the Voucher to Groupon specifications or applicable Laws.

1.4  Payment. Groupon shall remit payment to Merchant according to the schedule and terms set forth in this Section 1.4. Groupon will pay Merchant the Remittance Amount for each Voucher properly activated for which a purchaser has fully paid Groupon.  Merchant is registered for sales and use tax collection purposes, and shall be responsible for paying all sales and use taxes related to the goods and services described in the offer. Groupon shall forward one-third of the then-collected Remittance Amount Total to Merchant within five (5) business days after the Run Date, one-third of the then-collected Remittance Amount Total within thirty (30) business days after the Run Date, and one-third of the then-collected Remittance Amount Total within sixty (60) business days after the Run Date.  However, Merchant agrees and acknowledges that in the event Merchant is either unwilling or unable to perform its obligations under this Agreement Merchant shall reimburse Groupon and/or its customers any and all funds for any and all unredeemed Vouchers.  Amounts retained by Groupon are compensation to Groupon for the service of advertising and selling the Vouchers for Merchant.

1.5  Deposit. The Parties agree to the installment payment schedule described in Section 1.4 and acknowledge that the staggered payments will result in Merchant holding funds, which have been received from Groupon in advance of Merchant’s performance.  In the event of a bankruptcy proceeding or other liquidation of Merchant before Merchant has fulfilled its obligation under this Agreement, the Parties agree that such funds will be deemed to have been held in trust by Merchant for Groupon and Groupon shall have uncontested title and ownership on all such funds.  Further, should the amount of the Deposit exceed $50,000 in the aggregate, Groupon reserves the right to review Merchant’s credit history prior to advancing funds.

1.6  License. Merchant grants to Groupon a non-exclusive worldwide license and right to use, reproduce, license, display, distribute and transmit the Merchant’s name, logo and any trademarks (“Merchant Marks”) and any photographs, graphics, artwork, text and other content provided or specified by Merchant (“Content”) in connection with the marketing, promotion, sale or distribution of Vouchers, in any and all media or formats in which such Vouchers are marketed, promoted, transmitted, sold, or distributed, including but not limited to, on the Groupon Website.

2. Term and Termination. This Agreement shall continue in effect for the longer of one (1) year following the Effective Date or the last date when a customer of Groupon redeems a Voucher offered by Merchant through Groupon.  Groupon may terminate this Agreement at any time for any reason by giving the Merchant written notice of such termination.  The expiration of the Term shall not in any way affect the purchaser’s usage of the Voucher, or Merchant’s obligation for redemption of the Voucher.  Upon execution of the Agreement, Merchant agrees that Merchant will not promote an online offer with respect to the products or services described in this Agreement of similar or greater value for a period up to 90 days from the Effective Date, plus a minimum of 90 days following the Merchant’s date of feature on the Groupon Website. Sections 3, 4, 5, 6 and any claims for payments due Groupon, including but not limited to section 1.5 hereunder shall survive any expiration or termination of this Agreement.

3. Merchant Representations and Warranties, and Indemnification.

3.1 Merchant represents and warrants throughout the Term that: (a) Merchant has the right, power and authority to enter into this Agreement; (b) Merchant is registered for sales and use tax collection purposes in all states in which Merchant’s goods and services will be provided pursuant to the terms and presentation of the Voucher; (c) the Voucher, upon being Activated and delivered by Groupon shall be available immediately for redemption by the purchaser; (d) the terms and conditions of the Voucher, including any discounts or goods and services offered thereunder, comply with all, and do not and will not violate any, local, state or federal law, statute, rule, regulation, or order (“Laws”), including but not limited to, any law and/or regulation governing the use, sale, and/or distribution of alcohol, any Laws governing vouchers, gift cards, coupons, and/or gift certificates; (e) Merchant owns all right, title and interest in the Marks and Content and has the right to grant the licenses in the Marks and Content stated in this Agreement; (f) the Vouchers and any advertising or promotion of Merchant’s products and services relating thereto will not constitute false, deceptive or unfair advertising or disparagement under any applicable Laws; and (g) the Marks and the Content do not and will not violate any copyright, trademark, or other intellectual property right or right of privacy or publicity of any third party or any Laws.

3.2 Merchant agrees to defend, indemnify and hold Groupon, its affiliated and related entities, and any of their officers, directors, agents and employees, harmless from and against any claims, lawsuits, investigations, penalties, damages, losses or expenses (including but not limited to attorney’s fees and costs) arising out of or relating to any of the following: (a) any breach or alleged breach by Merchant of this Agreement or the representations and warranties stated in Section 3.1; (b) any claim for state sales or use tax obligations (“Taxes”) arising from the sale and subsequent redemption of a Voucher; (c) any claim by any local, state or federal governmental entity for unredeemed Vouchers or unredeemed cash values of Vouchers or any other amounts under any applicable abandoned or unclaimed property or escheat law, including but not limited to any claims for penalties and interest (“Abandoned Property Claims”); (d) any claim arising out of a violation of law and/or regulation governing the use, sale, and/or distribution of alcohol; or (e) any claim arising out of or relating to the products and services provided by Merchant, including but not limited to, any claims for false advertising, product defects, personal injury, death, or property damages. Without limiting the foregoing, Merchant shall pay any monies owed to any party, as well as all attorney’s fees, related to any action against, or determinations against, Groupon related to any action to pursue Groupon for Taxes or Abandoned Property Claims.

4. Compliance with Gift Card, Gift Certificate and Abandoned Property Laws. Merchant further agrees to comply with the Voucher terms and conditions as set forth on the Website, and to ensure that the Vouchers comply with any and all Laws that govern vouchers, gift cards, coupons, and/or gift certificates, including but not limited to, the Credit Card Act of  2009 and any state or local Laws governing the imposition of expiration dates, service charges, dormancy fees or other terms and conditions of the Voucher. Merchant shall allow the purchaser to redeem the Groupon with Merchant for the amount paid by purchaser for the Voucher (i.e. the cash or redemption value of the Voucher) for the applicable term specified under applicable state or federal Laws and shall allow the cash redemption of the Vouchers as required by applicable state or federal Laws. To the extent required by applicable escheat or abandoned or unclaimed property Laws, Merchant shall be solely responsible for and agrees to report and pay over to the applicable local, state or federal governmental agency any unredeemed cash value of any Voucher issued under this Agreement. Merchant is responsible for keeping track of the cash amount paid by the purchaser for the Voucher and any unredeemed balance of that cash amount to ensure compliance with this section 4. Furthermore, Merchant agrees that so long as an appointment is made for the redemption of a voucher before the expiration date, the voucher will be fully honored without restriction even though the services may be fulfilled after the redemption date.

5. Confidentiality and Intellectual Property Rights.

5.1 The terms of this Agreement are confidential, and Merchant agrees to not disclose the terms described herein to any party (other than its employees, parent companies, and shareholders on a need-to-know basis only after each has taken the necessary precautions of the kind generally taken with confidential information to preserve the confidentiality of the information made available to such individuals).  The terms contained herein are confidential between Groupon and Merchant and not known to the general public outside of this Agreement, thus any breach of this confidentiality provision by Merchant shall be considered a material breach of this Agreement and will result in irreparable and continuing damage to Groupon for which there will be no adequate remedy at law; and in the event of such breach, Groupon will be entitled to injunctive relief and/or a decree for specific performance, and such other and further relief as may be proper (including monetary damages if appropriate).

5.2 Merchant agrees and acknowledges that Groupon owns all right, title, and interest in the Groupon Website, Groupon trademarks, and any software, technology or tools used by Groupon to promote, market, sell, generate, or distribute the Vouchers (collectively the “Groupon IP”). Merchant shall not rent, lease, sublicense, distribute, transfer, copy, reproduce, download, display, modify or timeshare the Groupon IP or any portion thereof, or use such Groupon IP as a component of or a base for products or services prepared for commercial sale, sublicense, lease, access or distribution. Merchant shall not prepare any derivative work based on the Groupon IP. Merchant shall not translate, reverse engineer, decompile or disassemble the Groupon IP.

6.Limitation of Liability. EXCEPT FOR INDEMNIFICATION OBLIGATIONS HEREUNDER, IN NO EVENT SHALL EITHER PARTY BE LIABLE OR OBLIGATED TO THE OTHER PARTY OR ANY THIRD PARTY IN ANY MANNER FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE, OR INDIRECT DAMAGES OF ANY KIND REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT PRODUCT LIABILITY, OR OTHERWISE, EVEN IF INFORMED OF THE POSSIBILITY OF ANY SUCH DAMAGES IN ADVANCE, GROUPON’S SOLE AND COMPLETE LIABILITY TO MERCHANT FOR ANY CLAIMS ARISING OUT OF RELATING TO THIS AGREEMENT OR ANY ERRORS, OMISSIONS OR MISPLACEMENTS OF THE VOUCHERS SHALL BE LIMITED TO THE AMOUNT OF OPPORTUNITY FEES PAID HEREUNDER. THIS LIMITATION OF LIABILITY SHALL APPLY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND NOTWITHSTANDING THE FAILURE OF ANY LIMITED REMEDY.

Any claim arising out of or relating to any error or omission in a Voucher must be made within one (1) year of first publication of the Voucher. Otherwise, the claim shall be deemed waived by Merchant.

7. Other. The Parties are independent contractors. Nothing in this Agreement shall be construed to create a joint venture, partnership, franchise, or an agency relationship between the Parties. Neither Party has the authority, without the other Party’s prior written approval, to bind or commit the other Party in any way.

This agreement constitutes the entire agreement between the parties relating to its subject matter and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. This agreement may be amended or modified only by mutual agreement of authorized representatives of the Parties in writing.

Merchant may not assign or transfer its rights or obligations under this Agreement, whether by operation of law or otherwise, without Groupon’s prior written consent.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. GROUPON DOES NOT WARRANT OR GUARANTEE THAT THE SERVICES OFFERED ON OR THROUGH THE WEBSITE SHALL BE UNINTERRUPTED OR ERROR-FREE, THAT THE VOUCHERS WILL BE ERROR-FREE OR THAT ANY ERRORS, OMISSIONS OR MISPLACEMENTS IN THE VOUCHER WILL BE CORRECTED, OR THAT VOUCHERS WILL RESULT IN ANY REVENUE OR PROFIT FOR MERCHANT.

This Agreement shall be governed by the laws of the State of Delaware, without giving effect to any principles that may provide for the application of the laws of another jurisdiction.  Any disputes, controversies, or claims in connection with or arising out of this Agreement, its negotiation, breach, existence, validity or termination, shall be referred to and finally determined by arbitration in Chicago, Illinois before a single arbitrator who is a member of the American Arbitration Association, from which arbitration there shall be no appeal.  Such arbitration shall be held in Chicago, Illinois, in accordance with the Commercial Rules of the American Arbitration Association, with the governing law to be that of the State of the defendant and the laws of the United States applicable therein.  The award rendered by the arbitrator shall be final and binding on all parties, and judgment upon the reward rendered by the arbitrator may be entered in any court of competent jurisdiction.

June 10, 2011

Shop Talk: A conversation with a Groupon merchant

Filed under: groupon — Rakesh Agrawal @ 5:34 am

I apologize for the poor audio quality in the video. Yes, I know I should have put a mic on her, but this was shot with a point-and-shoot digital camera without an external mic jack.

The TechCrunch story has biggest takeaways. Here are my other notes from the video. The number in brackets refers to the video segment in which the comment was made.

Why Groupon?

  • [1] She signed up for Groupon because a pizzeria across the street had run a Groupon and a friend who worked at Posies said that the pizza place had been busy since the Groupon.

The deal launch

  • [1] In Jessie’s case, Groupon was an anti-yield management play. Because Groupon dictates the scheduling of a deal, her deal started about the same as another local event. It added more demand at a time of peak demand versus providing customers when the business was otherwise empty. Between the two events, there was a line out the door the whole weekend.
  • [2] She didn’t make any effort to get people to follow her on Twitter and Facebook.

Existing versus new customers

  • [1] She had no real way of tracking existing versus new customers.
  • [1] She didn’t advertise the Groupon to Facebook or Twitter followers.
  • [2] She had no way of tracking if Groupon customers came back and paid full price.

Customer quality

  • [1] Customers abused the system with some buying more than one deal in violation of the terms. Others printed multiple copies and tried redeeming them. Sometimes it was easier to take the loss than fight with customers in line.
  • [1] Groupon told her that something like 98% spent more than the value of the Groupon. “You think maybe like $5 above the value, not like 10 cents.” In her experience, customers tried to get as close to the $13 mark as possible.
  • [1] One customer tried to use three Groupons at once. She said, “What are you going to get for $39? Do you want the whole shop? And they were really offended.”
  • [1] “Most people took a trek here. This is definitely a neighborhood shop. People don’t come here from other parts of town just to get coffee.” … [2] “They would come and want to spend all of the money at once because they wanted a deal and not because they wanted to make this a regular spot.”
  • [3] “Even though we’d gotten some good customers, we had a lot of really bad customers that exploited the system, were rude to the staff, didn’t tip the staff at all.”

Reputation

  • [2] Groupon customers lowered her ratings on Yelp. “Things did not look good for Posie’s on Yelp after doing a Groupon.”

Interactions with the Groupon team

  • [1] She was advised by her sales rep that they didn’t usually do small amounts like $5 and that consumers responded best to deals that were 50% off.
  • [1] Groupon initially asked for 100% of the sale value, which Jessie said she couldn’t do. After negotiation, email from her rep said “I gave this some more thought. Understanding that your business in newer, I decided to split the revenue with you. So, you’ll be getting $3 of the $6 we charge the customers. Also, we incur a standard credit card processing fee of 2.5%. So your check will actually be for half the revenue less the cc fee (it only comes to 15 cents per transaction) This should make this campaign even better for your business.” Note that Groupon is charging the merchant credit card fees even on the portion of the transaction it keeps.
  • [1] Groupon’s merchant training was a video link. It provided advice to bulk up on staff, but not when typical peaks occurred. (At the start of a deal and right at the end before promotional value expires.)
  • [2] Groupon did not provide any guidance on laws about expiration of Groupons. “The onus of responsibility shouldn’t be entirely on this little business that doesn’t know the laws in the first place.”
  • [2] Groupon recently called her to ask if she wanted to run a Groupon. She suggested that he Google “Posies Cafe.” The rep responded a few hours later with “A simple Google search showed that I’m an idiot. I’m really sorry.”
  • [3] Her rep didn’t tell her about the ability to cap the deal.
  • [3] In interactions with Groupon CEO Andrew Mason: “This isn’t a newspaper ad where most people know how to do that. You’ve revolutionized marketing. So nobody knows the parameters unless you tell them. No one told me the parameters.”
  • [3] Her Groupon rep told her that she could only do one Groupon in the life of the business.

Reaction from other businesses to her blog post

  • [4] “A lot of them had had similar experiences. What was the saddest part of it for me was that this had had happened to a lot of businesses but because no one had ever said anything we all just assumed (and myself included) we just assumed we were bad business people. That we just didn’t know what we were doing. If everyone loves Groupon so much, we must be wrong.”
  • [4] “In all honesty, relative to a lot of these people, I didn’t lose as much as most of these people. We did lose $10,000 hard cost.

Other

  • [2] “There is no risk on anybody’s part except the business. In the product that you give away, the follow up with customers who are upset. It’s all in us, even though we only get a very small fragment [of the regular price].”
  • [2] A longtime customer her encouraged her to write the blog post after hearing about the economics of the Groupon deal.
  • [3] “I think it’s helpful for people to know that you’re not actually giving someone $6, you’re giving someone $3 in our case.”
  • [3] “I feel like it’s a corrupt business model. My husband refers to it like locusts. They’re going to go through and tap all of these business until they can’t survive anymore.”
  • [4] “Our most successful advertising is through Facebook. And that’s free. Even offering deals through Facebook, which is also free.”

June 7, 2011

A look at Groupon’s extremely lopsided merchant agreement

Filed under: groupon — Rakesh Agrawal @ 1:00 pm

See the Groupon, LivingSocial and daily deals merchant FAQ.

Last night I posted a Groupon merchant contract  I received. When reading this analysis, please keep in mind that I am not a lawyer and this is not legal advice. It’s simply an analysis of the key points of the agreement.

My background is in product management and business development. I’ve read a lot of contracts. I focus on things like pricing, payment terms, exclusivity, branding, intellectual property, liabilities and indemnification. I usually gloss over things like implied warranties because that tends to be boilerplate and if there’s something wonky, I don’t have the expertise to catch it anyway.  Also keep in mind that this agreement is a bit more than a year old. There are likely newer forms out there.

Overall impressions

The Groupon merchant agreement is incredibly lopsided in favor of Groupon, as are most agreements where one party doesn’t really have the ability to negotiate.

Groupon puts the onus of incredibly complex issues like taxation, compliance with gift card regulations and escheat on the merchant. These are issues that multinationals with armies of lawyers struggle with. If you’re running a small coffee shop, restaurant or nail salon, you likely have no idea what any of this stuff means.

Because Groupons are so new, no one really does. Groupon’s stance is that it’s the merchant’s issue, not ours. And if somehow it becomes our issue, you, the merchant owe us money to fix the issue. That’s a potentially serious obligation to be signing up for given the uncertainty in the legal and tax treatments of Groupons.

As a large company with access to greater legal resources, Groupon is in a much better position to make recommendations to merchants. But they’re not doing that. (So as not to be liable.) Spending money on a lawyer to analyze these terms would make no financial sense for a merchant.

The most important thing for merchants is that this is not a standard advertising agreement. Evaluate it as if you were taking out a $10,000-$15,000 loan.

What’s negotiable and what’s not

The formatting and structure of the agreement implies that the parts in “Groupon Terms and Conditions” are negotiable and the ones in the section labeled “Merchant Agreement” are not. The first section is what’s known as a “Term Sheet.” A local sales rep is not likely to be able to change the terms in the “Merchant Agreement” section. (Of course, for large national deals, everything is negotiable.)

Groupon Terms and Conditions 

The key components of the Groupon Terms and Conditions are the value of the offer, the duration, the revenue split, any special restrictions, the tipping point (volume threshold) and payment terms.

The revenue split varies. I’ve talked to businesses who were asked for 100% of the revenue generated from a Groupon, but 50% is more common. On average, across all deals, Groupon is taking 42% of the deal. A small business is not likely to do much better than 50%, unless it’s a special case. That doesn’t mean you should do a deal that is bad for you — see best practices for businesses considering daily deals.

The tipping point is largely useless as most deals nowadays will hit the tipping point and Groupon can unilaterally change it.

I was surprised to see the payment terms in this section of the agreement. This is especially important now that Google is offering merchants 80% of their share within four days of the offer. In this agreement, the merchant gets only 1/3 within 5 days. Note that the merchant here is paying for the credit card fee on the entire transaction (even the portion Groupon keeps). And the merchant is paying for sales taxes, if any, on the entire transaction. We’ll talk more about taxes in a bit.

This agreement doesn’t show it, but merchants can also cap the number of deals that they sell. This is important because it can reduce your potential liability. If you don’t cap your deal, you may have a lot more customers than you can deal with.

Merchant Agreement

No guarantee that the offer will run. (1.1) Just because you do the deal doesn’t mean Groupon will run the offer. It has the option to, but it doesn’t have to.

Termination. (2) Groupon can terminate the voucher and the entire agreement at its discretion, but the merchant cannot.

Exclusivity. (2) It’s weird to see exclusivity buried under a heading of “Term and Termination”. Note that the agreement has two dates, the date of the agreement and the date that the offer runs. Because merchants have no control over the scheduling of the offer, they could be tied to an exclusivity for months in which they can’t run any other online deals. Read literally, merchants couldn’t even Tweet out an offer to followers about a special they were offering for the night. (In a typical commercial agreement, exclusivity would be limited to a list of named competitors, such as LivingSocial and Google Offers. This language is wide open.) Merchants are bound by this exclusivity even if Groupon never runs their offer. If Groupon were devious, they could go around town and sign up various merchants with very generous terms and never run them, just to keep them out of the hands of competitors. Exclusivity is one-way. While you can’t run offers in other online venues, Groupon can run offers for your competitors until the cows come home.

Taxes. (3.1) Merchants are on the hook for sales and other related taxes. This is a complex area. What is the taxable value? Is it the face value of the Groupon? Is it the price paid by the consumer? Is it the value that the merchant receives? Who knows. I would guess that it’s either the price paid or what the merchant receives. (The difference between the face value and the face price paid by the consumer should be considered a store discount.) I’ve found that some merchants ignore this altogether and just deduct the full value from the ticket before calculating sales and other taxes. That’s clearly wrong.

Compliance with local liquor laws and other regulations. (3.1)  Some states prohibit discounts on alcohol or require merchants to maintain certain proportions of food to alcohol sales. It’s up to the merchant to figure this out. (I had to look up “refulation” to make sure it wasn’t some new thing I hadn’t heard of. It’s a typo.)

Indemnification. (3.2) If something goes wrong and somebody sues Groupon or the tax authorities go after Groupon, the merchant pays Groupon for its costs and attorney’s fees. The indemnification has no limit of liability. It’s common to limit liability to the value received from the deal or some multiple of it. Indemnification is one way. If Groupon screws something up and someone sues the merchant, the merchant is on its own.

Gift cards, certificates and escheat. (4) Because Groupons are so new, their legal treatments is uncertain. They could be considered gift cards, which are subject to federal and state regulations regarding validity periods. The CARD Act of 2009 put into place a national standard. Whether CARD even applies to Groupons or not isn’t known. States are free to have tougher standards. The National Conference of State Legislatures also tracks this. Escheat laws may also apply. If escheat applies, any unused funds goes to the state. Again, figuring all of this out is the merchant’s responsibility.

Even if we knew definitively what laws apply, there’s no clear tracking of any of the obligations. If a consumer walks in with a printed voucher, is that enough to prove value? Is it the merchants records? Is it Groupon’s records?

Revenue and profit. (6) You may see no money and make no profit from running a Groupon. This is pretty much boilerplate in such agreements, but given Groupon’s economics, I want to point this out as a high likelihood, not a remote risk.

Groupon’s liability. (6) If something goes wrong and you happen to be able to sue them for something, Groupon’s liability is limited to the Opportunity Fee. What’s an Opportunity Fee? Who knows? That’s a term that should be defined somewhere in the agreement. (I really hope they’ve cleaned this up in later versions of the agreement; this is incredibly sloppy lawyering, as is a reference to “GROUPOIN”.) My guess based on the marketing speak  is that it’s Groupon’s cut of the deal. So if a merchant does a deal with $10,000 in face value with a 50/50 split, Groupon’s maximum liability would be $2,500. So merchants have unlimited liability to Groupon and Groupon has $2,500 liability to the merchant.

Jurisdiction. (6) If something goes wrong, sue Groupon in Illinois.

Some things not addressed in the agreement:

Fraudulent redemption of offers. Merchants have been eating the loss on fraud from people printing multiple copies of offers. Groupon offers ways to alleviate this risk, but some merchants don’t have the infrastructure in place to take advantage of online validation.

Disparagement. There’s no non-disparagement clause. Say all of the bad things you want about Groupon. But it also works in reverse. I’ve heard merchants complain that if things go wrong, Groupon has sent emails to all purchasers disparaging the business, saying that the business didn’t meet quality standards. Groupon has the email addresses and the business doesn’t. This presents a reputation risk to your business if something bad happens.

Refunds and chargebacks. There’s no information in this agreement on who is responsible for customer service refunds provided by Groupons under the Groupon Promise. I’ve got to believe that new versions of the agreement have addressed this.

See also:

How daily deal companies could improve the merchant experience — and why they won’t

Filed under: groupon, livingsocial — Rakesh Agrawal @ 3:33 am

There are a number of ways that daily deal companies could improve the economics for merchants.

  1. Limit the number of deals people can buy in a set period of time. This would discourage deal habituation. (Of course, this isn’t in the deal company’s interests. Hardcore cheapskates would just setup multiple accounts.)
  2. Limit the distance from the business that a purchaser can be. e.g. you can only buy deals within 5 miles of your home. This would discourage people who are 30 miles away and are willing to drive to save a few bucks one time. The farther away you are, the less likely you are to become a regular. (Of course, this isn’t in the deal company’s interests.)
  3. Limit customers based on demographic criteria. (Of course, this isn’t in the deal company’s interests.)
  4. Reduce the minimum discount for the offer. (This will drive down volume.)
  5. Provide customer contact information to merchants so that they can follow up and invite repeat visits. This has privacy issues and would reduce the need for a business to do another run with deal company.
  6. Train businesses on best practices for inspiring repeat visits, such as getting follows/likes, collecting email addresses. This would have operational impact (training time) plus it reduces the need to do another placement with the deal company.
  7. Send out reminder emails. Hey, it’s been 3 months since you redeemed the Groupon at X. Have you thought about going back there? (They’d rather sell you a deal for another restaurant where they can make a fat margin.)
  8. Restrict deals to new customers only. This, in my mind, is the most dangerous part of Groupon and the like. You give up 75% of revenue to “acquire” customers you already had. I was talking to one merchant and he was visibly despondent when he was talking about seeing his regulars in line with a Groupon.
  9. Advise businesses to set their Groupon redemption value such that it doesn’t entirely cover the cost of meals and the customer has to pay some portion at regular retail. Cheapskates will check out the restaurant’s Web site and see that this won’t be a freebie and won’t buy the Groupon. (Deal site loses twice: discouraged cheapskates who don’t buy and commission on the portion that is paid at full retail.)
  10. Allow users to opt-in to a business’s email list at the time they purchase the deal. (This would mean losing some grip over the customer relationship.)
  11. Prompt users to follow business on Twitter at time they purchase.
  12. Force tipping at the time of purchase. A standard tip based on retail price could be added at time of sale. (This would deter cheapskates from buying deals.)
  13. Enforce restrictions at the point of purchase. If a business has stated only 1 item can be purchased, this should be enforced to the best of the systems ability, like checking email addresses and credit card numbers across accounts. (This would eliminate some transactions.)
  14. Focus sales efforts on categories where the daily deal creates a real win-win, as opposed to preying on businesses who don’t know better. (This would dramatically reduce volumes and revenue.)

There are lots of things the deal companies can do. But none of them are in their financial interests in the short term.

The core problem is that the interests of the deal companies are directly opposed to the interests of the business. The deal companies want to sell as many deals as possible to all comers. Not only does this generate more revenue, it’s more operationally efficient. (It’s much easier to write one description for 2,000 coupons than 20 descriptions for deals of 100 each.)

Businesses want a much smaller number of ideal customers.

There’s also a bit of game theory involved. The daily deal sites are dependent on cheapskates for revenue growth. If you make it harder for the cheapskates, they’ll use some other site.

If you look at the mean purchases per user in the Groupon S-1, they’re just below 2 in established markets and a large portion (80%) of registered have never purchased anything. That likely means that a small number of people are buying a lot of deals… exactly what merchants don’t want.

June 6, 2011

A sample Groupon merchant agreement

Filed under: groupon — Rakesh Agrawal @ 8:18 pm

See the Groupon, LivingSocial and daily deals merchant FAQ.

Please note that this agreement is a bit more than a year old. I also published a Groupon agreement from January 2011.

If anyone has a fresher one and wants to share, please let me know. (And if you want me to delete your personal details, please let me know that.)

See also:

Groupon Terms and Conditions

I. Voucher Information

Groupon shall promote the Voucher per Section 1.2 of the Merchant Agreement. Merchant is the seller of the goods and services described in Voucher. The Voucher itself will be sent to the purchaser electronically. The purchaser will then redeem the Voucher from the Merchant.

  1. Merchant offer is as follows: [redacted] $[x] for $[xx]
  2. The offer by Merchant is contingent upon a minimum number of units sold (the “Volume Threshold”), which is agreed to be 50.
  3. Expiration date: Merchant agrees that the offer will be available per the terms above for a period of at least 6 months from feature date and subject to no further restrictions by the Merchant. To the extent required by applicable law, after the Opportunity Expiration Date, Merchant shall permit the purchaser to redeem the Voucher for the goods and services of the Merchant in the amount of the cash paid by purchaser, until that cash amount is redeemed in full.
  4. Partial redemptions: If a customer redeems a Voucher for less than its face value, the Merchant will not be responsible for issuing a credit or cash equal to the difference between the face value and the amount redeemed, unless otherwise required by law. However, the Merchant will be required to permit the purchaser to redeem the Voucher in the amount of the cash paid by the purchaser, as noted in Section 3 above.
  5. Special Instructions or limitations (if any): – 1 per person, multiples as gifts-No cash back. Must use in single visit-Not valid w/ other offers

II. Payment

Groupon will pay Merchant $[X] for each Voucher properly activated for which a purchaser has fully paid Groupon, less a 2.5% of total sales credit card processing fee (the “Remittance Amount”) in accordance with this paragraph. Merchant is registered for sales and use tax collection purposes, and shall be responsible for paying all sales and use taxes related to the goods and services described in the offer. Groupon shall forward one-third of the Remittance Amount to Merchant within five (5) business days from the Run Date (as that term is defined in Section 1.2 of the Merchant Agreement), an additional one-third within thirty (30) business days of the Run Date, and the final one-third within sixty (60) business days of the Run Date. Amounts retained by Groupon are compensation to Groupon for the service of advertising and selling the Groupons for Merchant.

Merchant Agreement

Date of Agreement: [redacted]

Merchant Name(herein referred to as “Merchant”):

[merchant info redacted]

This Merchant Agreement, effective as of the above date (“Effective Date”), is entered into by and between Groupon, Inc., a Delaware corporation with principal offices at 600 West Chicago Ave., Suite 725, Chicago, IL 60610 and Merchant, a retailer doing business in the state of (“Merchant”). The parties shall be referred to collectively as the “Parties.”

Merchant wishes to offer its products or services for sale through vouchers (the “Voucher(s)”) which can be redeemed for Merchant’s goods and/or services at a discount, which are offered to the public for purchase at www.groupon.com (the “Website”) and are activated (“Activated”) only upon reaching an agreed upon volume of purchasers (“Volume Threshold”) and an agreed upon discount; and Groupon wishes to sell Merchant’s Voucher to the purchasers at the Website, the Merchant being the seller of the goods and the services, and Groupon being the seller of the intangible rights contained in the Merchant’s Voucher.  Therefore, in consideration of the mutual covenants of the Parties and other valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the Parties agree as follows:

 

1. Voucher Program.

1.1 Voucher Sale. Merchant authorizes Groupon to offer, sell and distribute the Voucher, in accordance with this Agreement and subject to the restrictions set forth in the Groupon Terms and Conditions. Merchant acknowledges that Groupon may terminate the publication or promotion of the Voucher at any time. All terms contained in the attached Groupon Terms and Conditions, including Sections I and II (Voucher Information and Payment) (collectively, the “Terms”) are incorporated hereto and made a material part hereof.  Groupon reserves the right to increase the Volume Threshold at its sole discretion.

1.2 Voucher Publication and Delivery. Vouchers shall be published on the Website in accordance with the Terms. The last date on which Groupon publishes the Voucher and offers it to its users shall be considered the Run Date.  The Voucher shall be activated, which means capable of being used for purchases with the Merchant in accordance with the terms of the Voucher as set forth in the Terms, only when the certain Volume Threshold of purchasers has been met. At the time that the Volume Threshold has been met; Groupon will electronically deliver the Voucher to the purchaser.  Once a Voucher is Activated and delivered to the purchaser, Merchant shall be solely responsible for all customer service in connection with the Voucher and for supplying all goods and services specified in the Voucher. Groupon further reserves the continuing right, but shall not be obligated, to reject, revise, or discontinue publishing any Voucher and to require Merchant to edit or modify the same for any reason, including, without limitation, to conform the Voucher to Groupon specifications or applicable Laws.

1.3  Payment. Groupon shall remit payment to Merchant according to the schedule and terms set forth in the Terms. Amounts retained by Groupon are compensation to Groupon for the service of advertising and selling the Vouchers for Merchant.

1.4  License. Merchant grants to Groupon a non-exclusive worldwide license and right to use, reproduce, display, distribute and transmit the Merchant’s name, logo and any trademarks (“Merchant Marks”) and any photographs, graphics, artwork, text and other content provided or specified by Merchant (“Content”) in connection with the marketing, promotion, sale or distribution of Vouchers, in any and all media or formats in which such Vouchers are marketed, promoted, transmitted, sold, or distributed, including but not limited to, on the Groupon Website.

2. Term and Termination. This Agreement shall continue in effect for the longer of one (1) year following the Effective Date or the last date when a customer of Groupon redeems a Voucher offered by Merchant through Groupon.  Groupon may terminate this Agreement at any time for any reason by giving the Merchant written notice of such termination.  The expiration of the Term shall not in any way affect the purchaser’s usage of the Voucher, or Merchant’s obligation for redemption of the Voucher.  Upon execution of the Agreement, Merchant agrees that Merchant will not promote an online offer with respect to the products or services described in the Terms of similar or greater value for a period up to 60 days from the Effective Date, plus a minimum of 60 days following the Merchant’s date of feature on the Groupon Website. Sections 3, 4, 5, 6 and any claims for payments due Groupon hereunder shall survive any expiration or termination of this Agreement.

3. Merchant Representations and Warranties, and Indemnification.

3.1 Merchant represents and warrants throughout the Term that: (a) Merchant has the right, power and authority to enter into this Agreement; (b) Merchant is registered for sales and use tax collection purposes in all states in which Merchant’s goods and services will be provided pursuant to the terms and presentation of the Voucher; (c) the Voucher, upon being Activated and delivered by Groupon shall be available immediately for redemption by the purchaser; (d) the terms and conditions of the Voucher, including any discounts or goods and services offered thereunder, comply with all, and do not and will not violate any, local, state or federal law, statute, rule, refulation, or order (“Laws”), including but not limited to, any Laws governing vouchers, gift cards, coupons, and/or gift certificates; (e) Merchant owns all right, title and interest in the Marks and Content and has the right to grant the licenses in the Marks and Content stated in this Agreement; (f) the Vouchers and any advertising or promotion of Merchant’s products and services relating thereto will not constitute false, deceptive or unfair advertising or disparagement under any applicable Laws; and (g) the Marks and the Content do not and will not violate any copyright, trademark, or other intellectual property right or right of privacy or publicity of any third party or any Laws.

3.2 Merchant agrees to defend, indemnify and hold Groupon, its affiliated and related entitites, and any of their officers, directors, agents and employees, harmless from and against any claims, lawsuits, investigations, penalties, damages, losses or expenses (including but not limited to attorney’s fees and costs) arising out of or relating to any of the following: (a) any breach or alleged breach by Merchant of this Agreement or the representations and warranties stated in Section 3.1; (b) any claim for state sales or use tax obligations (“Taxes”) arising from the sale and subsequent redemption of a Voucher; (c) any claim by any local, state or federal governmental entity for unredeemed Vouchers or unredeemed cash values of Vouchers or any other amounts under any applicable abandoned or unclaimed property or escheat law, including but not limited to any claims for penalties and interest (“Abandoned Property Claims”); or (d) any claim arising out of or relating to the products and services provided by Merchant, including but not limited to, any claims for false advertising, product defects, personal injury, death, or property damages. Without limiting the foregoing, Merchant shall pay any monies owed to any party, as well as all attorneys fees, related to action against, or determinations against, Groupon related to any such action to pursue Groupon for Taxes or Abandoned Property Claims.

4. Compliance with Gift Card, Gift Certificate and Abandoned Property Laws. Merchant further agrees to comply with the Voucher terms and conditions as set forth on the Website, and to ensure that the Vouchers comply with any and all Laws that govern vouchers, gift cards, coupons, and/or gift certificates, including but not limited to, the Credit Card Act of  2009 and any state or local Laws governing the imposition of expiration dates, service charges, dormacy fees or other terms and conditions of the Voucher. Merchant shall allow the purchaser to redeem the Groupon with Merchant for the amount paid by purchaser for the Voucher (i.e. the cash or redemption value of the Voucher) for the applicable term specified under applicable state or federal Laws and shall allow the cash redemption of the Vouchers as required by applicable state or federal Laws. To the extent required by applicable escheat or abandoned or unclaimed property Laws, Merchant shall be solely responsible for and agrees to report and pay over to the applicable local, state or federal governmental agency any unredeemed cash value of any Voucher issued under this Agreement. Merchant is responsible for keeping track of the cash amount paid by the purchaser for the Voucher and any unredeemed balance of that cash amount to ensure compliance with this section 4.

5. Confidentiality and Intellectual Property Rights.

5.1 The terms of this Agreement are confidential, and Merchant agrees to not disclose the terms described herein to any party (other than their employees, parent companies, and shareholders on a need-to-know basis only after each has taken the necessary precautions of the kind generally taken with confidential information to preserve the confidentiality of the information made available to such individuals).  The terms contained herein are confidential between Groupon and Merchant and not known to the general public outside of this Agreement, thus any breach of this confidentiality provision by Merchant shall be considered a material breach of this Agreement and will result in irreparable and continuing damage to Groupon for which there will be no adequate remedy at law; and in the event of such breach, Groupon will be entitled to injunctive relief and/or a decree for specific performance, and such other and further relief as may be proper (including monetary damages if appropriate).

5.2 Merchant agrees and acknowledges that Groupons owns all right, title, and interest in the Groupon Website, Groupon trademarks, and any software, technology or tools used by Groupon to promote, market, sell, generate, or distribute the Vouchers (collectively the “Groupon IP”). Merchant shall not rent, lease, sublicense, distribute, transfer, copy, reproduce, download, display, modify or timeshare the Groupon IP or any portion thereof, or use such Groupon IP as a component of or a base for products or services prepared for commercial sale, sublicense, lease, access or distribution. Merchant shall not prepare any derivative work based on the Groupon IP. Merchant shall not translate, reverse engineer, decompile or disassemble the Groupon IP.

6. Other. The Parties are independent contractors. Nothing in this Agreement shall be construed to create a joint venture, partnership, franchise, or an agency relationship between the Parties. Neither Party has the authority, without the other Party’s prior written approval, to bind or commit the other Party in any way.

This agreement constitutes the entire agreement between the parties relating to its subject matter and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. This agreement may be amended or modified only by mutual agreement of authorized representatives of the Parties in writing.

Merchant may not assign or transfer its rights or obligations under this Agreement, whether by operation of law or otherwise, without Groupon’s prior written consent.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. GROUPOIN DOES NOT WARRANT OR GUARANTEE THAT THE SERVICES OFFERED ON OR THROUGH THE WEBSITE SHALL BE UNINTERRUPTED OR ERROR-FREE, THAT THE VOUCHERS WILL BE ERROR-FREE OR THAT ANY ERRORS, OMISSIONS OR MISPLACEMENTS IN THE VOUCHER WILL BE CORRECTED, OR THAT VOUCHERS WILL RESULT IN ANY REVENUE OR PROFIT FOR MERCHANT.

EXCEPT FOR INDEMNIFICATION OBLIGATIONS HEREUNDER, IN NO EVENT SHALL EITHER PARTY BE LIABLE OR OBLIGATED TO THE OTHER PARTY OR ANY THIRD PARTY IN ANY MANNER FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE, OR INDIRECT DAMAGES OF ANY KIND REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT PRODUCT LIABILITY, OR OTHERWISE, EVEN IF INFORMED OF THE POSSIBILITY OF ANY SUCH DAMAGES IN ADVANCE, GROUPON’S SOLE AND COMPLETE LIABILITY TO MERCHANT FOR ANY CLAIMS ARISING OUT OF RELATING TO THIS AGREEMENT OR ANY ERRORS, OMISSIONS OR MISPLACEMENTS OF THE VOUCHERS SHALL BE LIMITED TO THE AMOUNT OF OPPORTUNITY FEES PAID HEREUNDER. THIS LIMITATION OF LIABILITY SHALL APPLY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND NOTWITHSTANDING THE FAILURE OF ANY LIMITED REMEDY.

Any claim arising out of or relating to any error or omission in a Voucher must be made within 120 days of first publication of the Voucher. Otherwise, the claim shall be deemed waived by Merchant.

This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to the conflict of law principles thereof. The parties irrevocably consent to the exclusive personal jurisdiction (except as to actions for the enforcement of a judgement, in which case the jurisdiction will be non-exclusive) of the federal and state courts located in the State of Illinois. This Agreement may be executed in one or more counterparts and each party consents to electronic message (e-mail or otherwise) as acceptable means to constitute a written acceptance of an authorized person for such party. Each party represents and warrants that the person executing on behalf of such party has been duly authorized to execute this Agreement.

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