In certain cases, a distributor may sell outside of its area of responsibility without being liable for pass-over charges or contract termination, both of which are addressed below. An example of such a case is a customer with centralized purchasing in the distributor's area of responsibility for facilities located outside this area of responsibility. In these types of cases, the distributor must inform, in writing, the relevant Watlow sales office(s) and Watlow corporate distributor management. Upon review, Watlow corporate distributor management will determine whether or not sufficient justification exists for the distributor to make such sales without liability.

If Watlow, in its sole discretion, finds there is evidence of a distributor selling outside of its area of responsibility without sufficient justification, a reasonable charge ("pass-over") will be assessed to be paid directly to the distributor(s) in the other adversely affected area(s). This pass-over charge will be based on Watlow's determination of operating costs, (using information available in the public domain) and order value(s).

In continuing and repeated instances of selling outside the distributor's area of responsibility without justification a distributor's contract may be terminated.

The location of the "buying influence" is the key to the intent of the distributor. Selling to the key buying influence within a defined area is perfectly acceptable, even if the product is eventually shipped to another area. This situation is also recognized in the policy's second paragraph concerning centralized purchasing for multiple user plant locations.

How should a centralized purchasing arrangement be documented?

A memo is required from the Watlow sales agent responsible for the territory where the centralized purchasing is located. The memo should be sent to Watlow corporate distributor management and the sales agent(s) of other territories affected by the centralized purchasing. The other sales agents are then responsible for keeping their distributors informed, so as not to waste sales time at the affected plants or unjustly accuse another distributor of violating their Area of Responsibility.

What if a distributor is unfairly accused?

Distributors will have ample opportunity to address problems. Watlow expects the process of problem resolution to work as follows:

1. Encourage involved distributors to resolve the conflict among themselves.
2. Appropriate Watlow sales agents will become involved to try to resolve problem.
3. Watlow corporate distributor management would then assess the reasonable charges if called for after a review of documentation & discussion with the involved distributors.

What about dealers or resellers?

Watlow recognizes that a distributor cannot control where its customers may resell the Watlow products they purchase. However, Watlow will address persistent problems a reseller presents by discussing alternatives with the distributor selling to the reseller in question.

What about unsolicited phone calls from another area?

This would still be considered knowingly selling outside a distributor's area. It does not matter if the phone call is solicited or not, it should still be referred to the appropriate distributor with the trust that all distributors will be reciprocating.

What if a new employee at a distributor breaks the policy?

Watlow recognizes that mistakes happen, especially with new employees. It is not Watlow's intent to penalize a reasonable or insubstantial mistake. If the situation occurs repeatedly, however, then Watlow will have to conclude that there is real intent to not conform to the policy.

What about bulk thermocouple wire business?

Very few distributors sell this type of product. It is a different business than Watlow's finished heater, sensor, and control products, and is not considered a part of these distributor policies.

What's Watlow's user referral practice?

Watlow will attempt to refer user calls to the distributor(s) covering that area. But if the customer persists, Watlow will accept user orders, notifying the distributor for future follow-up. The policy defining customers for distributors also lists criteria which may be used to determine that Watlow should handle a user order direct.