Instrument Rental Affiliate Program

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Veritas Instrument Rental Incorporated

v9.0 (5/11)

Instrument Rental

Affiliate Program

Veritas Instrument Rental Incorporated

3670 131st Ave North • Clearwater FL 33762

Toll Free 877-727-2798 • Toll Free Fax 877-272-7203

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Make Money Renting

School Band & Orchestra Instruments

Make Money Renting

School Band & Orchestra Instruments

Looking for a great way to increase sales, service, profits and your customer base?

Within as little as one week, Veritas Instrument Rental can custom build (or rebuild) a highly competitive rental program for your business complete with full color brochures, inventory and the forms,

documentation & training necessary to get rolling. Your customers will think you’ve been doing this for years. Your competition will never see you coming!

What makes Veritas one of the fastest growing providers in the nation? Our relationships. Our objective is to cultivate & maintain mutually profitable relationships with our affiliated retailers & service professionals. The operation of this program has been readily simplified over the years based on the ideas & suggestions of our affiliates. The result: A well documented, streamlined,

turnkey rental program that works. We regard each and every affiliate as a partner in success, not just another agent working on our behalf.

Shared Knowledge. Shared Sucess.

There’s only so much one can learn from a manual. We go the extra mile to include interactive web-based training, quarterly service & marketing seminars at our training facility and even in-store presentations. Because we’re only as strong as our weakest link, we want to be sure our affiliates are empowered with confidence as they greet their new rental customers.

Operate your own program? Working with another company? Just getting started? Let's talk. Most independent rental operations are plagued by poor cash flow, aging inventory and collections nightmares. Several Veritas affiliates, once frustrated with their own program, are making more money now than ever. While their greatest fears included giving up control and profits, all they really gave up was the administrative stress & overhead. Many satellites for other companies are either experiencing recourse on uncollectable accounts or finding themselves competing against their provider's retail stores. We handle all of the billing & collections and have no retail stores to compete against. Because there is no franchise fee, inventory outlay or initial expenses required to participate in this program, the startup business owner can immediately offer a proven rental program to his or her customers with no

financial commitment or advance market research.

What separates Veritas from the others? We eat, sleep and breathe this stuff!

In addition to a high-percentage monthly commission & per-contract bonus, Veritas affiliates also benefit from updated school market data, rental brochure distribution to the schools within their market,

cooperative advertising opportunities such as imprinted music folios, outdoor banners, teacher planning calendars and access to vast industry resources offered by national organizations & manufacturers.

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Professional Marketing Support

You’ll be provided with valuable school market data identifying the music programs and teacher contact names in your area. Custom flyers (with your store name and logo) are mailed to every school band and orchestra director on your behalf at no cost to you. Cooperative opportunities include music folders, teacher planning calendars, cable television templates and community sponsorships.

No Collection Hassles

Our experienced collection department handles all of the billing, late notices, reminder phone calls and repossessions. There is no recourse to you when a rental account is uncollectable.

Educator-Approved Name Brands

We have the brands teachers want like Selmer, Bach, King, Conn, Artley,Armstrong, Benge, Holton, Vito, Besson, Buffet, J. Keilwerth, Jupiter, Gemeinhardt, Emerson, Regent, Knilling, Hermann Beyer, Scherl & Roth and more. In addition to beginner model instruments, we also rent-to-own upgrades and specialty instruments. Our in-house upgrade exchange promotions will ensure your customers will never outgrow your program.

Flexible Service Arrangements

Our first priority: Fast friendly service. Are you equipped to service instrument repairs? We’ll compensate you for taking care of the service needs of your new customers. Looking for repair training? Come on down to our facility for personal one-on-one repair training (no classrooms!) and stay as long as you like. Would rather have us repair the instruments? No problem. We utilize the United Parcel Service ARS system and can quickly take care of your customer’s service needs, regardless of location.

Paramount Affiliate Support

Veritas Instrument Rental will provide continuous training to familiarize you and your employees with our program. Other areas of support include monthly newsletters, in-store promotions, a yearly affiliate seminar/convention and seasonal marketing memorandums.

Increased Convenience & Buying Power

All of our inventory including new, like new, used, display and loaner instruments are available for

immediate rental or sale at a substantial savings. You’ll never have to worry about a master order again! Pay Nothing to Get Started

Franchise fees? Inventory investments? No way! Everything you need to get started as a Veritas affiliate including instruments, training, flyer distribution and market data will be provided to you at no cost. THE BEST PART: The Monthly Commission You Deserve!

Each month, you’ll receive a detailed receivable statement showing exactly how much rent we’ve collected from your customers. Because we offer outstanding in-house collections, a high-percentage monthly commission and a bonus for every new contract you write, we’re confident that we are

the industry leader in profitability.

Veritas Affiliate Program

Features & Benefits

Veritas Affiliate Program

Features & Benefits

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Are you living in a collections and master order nightmare? Is your volume outgrowing your inventory, payroll and repair capabilities? Would you like a stream-lined band instrument rental operation without the hassles and overhead? Veritas can help. Consider these benefits:

Say Goodbye to Collections, Inventory Commitments and Cash Flow Problems

Imagine never having to make another collections call on a Saturday afternoon, never having to deal with master order-hungry vendor reps & poor cash flow due to outrageous intro offers. While we're convinced our program is more profitable than most independent operations, the increased "opportunity profit" or gained time that can be spent promoting business, alone, makes us worth serious consideration. The AMS Connection

Account Management Solutions (AMS) is our sister company specializing in the billing & collection of your receivable accounts. By use of state-of-the art information technology, paramount customer service and years of experience in the rent-to-own industry, not only can we dramatically reduce your operating expenses, but also improve efficiency, time management and overall profitability. AMS is not a factoring company and we do not buy paper. We simply keep a small portion of what we collect on your behalf. It's that simple!

Inventory Acquisition

Looking to liquidate your inventory? Veritas might be able to acquire your instruments through field transfers, purchase at time of rental or outright cash purchases. Want to continue renting your own instruments? No problem. The flexible nature of our program allows you to think of us more as a partner, and not so much as a provider.

Increased Convenience & Buying Power

Depending on your terms and discount levels, you may be able to buy single instruments from Veritas at a discount extending beyond your current master order pricing.

Operating Your Own Program?

Is your rental provider looking out for your best interests? Is your rental pricing competitive?

Are you competing with their retail stores? Is anyone helping you with your marketing and advertising? The Best in Quality, Value and Service

Whether you're a band parent or an affiliate, you'll appreciate our quality selection of brand name instruments, affordable rent-to-own programs free of interest charges and/or service fees,

flexible credit requirements and friendly customer service. Never a Conflict of Interest

Our partnerships are mutually profitable. Veritas has no retail stores to compete with, credits all internet activity to the nearest "brick & mortar" affiliate and protects your operating area from affiliate saturation. Working Behind the Scenes

Band parents usually don't know (much less care) who Veritas is, but may recognize you as the local expert of musical instruments. And because we have no motivation to promote our name to the end-user, all marketing and advertising support from Veritas is aliassed as your business and promotes your

trade name (unlike most satellite programs).

Working With Another Provider?

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The Cost of Doing Business: Is It Worth It?

The following examples outline average commission totals for several levels of rental volume. The projections for managing an independent rental operation are extremely conservative and do not include inventory overhead, financing (if applicable), or management expenses

Typical Monthly Commission Totals

for Veritas Affiliates at Various Volumes

(with average base rent of $20/mo. and a $5 per new contract bonus over a one year period)

Store 1

Example

Store

150

$650 mo.

$0

500

$2200 mo.

$0

1000

$4400 mo.

$0

Total Active

Rentals

Total Monthly

Commission

Collections

Recourse

Store 2

Store 3

Data Entry

Employee

Title

Posting payments, recording and files sales, returns, exchanges and upgrades

Recording purchases & payables, payroll, and sales tax reports. Assists with data entry

$8 per hour 10 hours weekly $320 gross monthly $20 per hour 10 hours weekly $800 gross monthly

Job

Description

Monthly Income

per 40hr Week

Accounting

10, 15, 30, 60, and 90-day phone & written late notices, certified letters and repossessions

$8 per hour 15 hours weekly $480 gross monthly

Collections

Servicing all rental & billable repairs, recycles rental returns, gives repair estimates

Repair Tech

Updates school database and market research, advertising and promo, display merchandising

Marketing

Recording new inventory into database, conduct quarterly physical inventory, and troubleshoot discrepancies/shrinkage

Inventory

Control

The Cost of Doing Business: Is It Worth It?

Approximate Monthly Overhead for a Typical

Rental Department Effectively Managing 300+ Accounts

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Can retailers earn higher returns on their capital by outsourcing their instrument rental program? The addition of an in-house instrument rental program should include careful consideration of the cost of capital. We believe an efficient combo retailer can earn much more with their capital dollars

invested in standard retail inventory (high-turn instruments, sheet music/method books and related accessories) rather than band & orchestra (B&O) instruments to be rented on a month-to-month basis. The National Association of Music Merchants (NAMM) has reported that combo MI retailers typically have a 1.7 inventory turn. In other words, the retailer's entire inventory (dollar equivalent) is sold

1.7 times per year. NAMM also reports overall gross margins are approximately 37%. With this in mind while investing $50k into B&O rental inventory, 138 instruments could be purchased at an average cost of $365.00 and rented at an average monthly rate of $23.75 (including any maintenance fees).

In a perfect world, where all 138 instruments are rented and bringing in $23.75 per month all year, the monthly gross revenue would be $3,277.50 or $39,330.00 annually. However, the gross profit would only be $21,631.50 (with a 55% gross margin and 43% gross return on capital). The same $50k invested into standard retail inventory could yield a gross profit of $49,920.63 or a 99.84% gross return on capital. Further, by outsourcing the retailer's instrument rental program, the profit potential continues to grow to a 115% gross return on capital as illustrated below (based only on $50k of investing dollars, not the entire retail operation):

Retailer Outsourcing Rental Program

Annual sales from $50K invested in inventory Cost of goods sold

Gross profit on sales

Commission from outsourced rental program

(138pcs=$39,330.00 with a commission rate of 20%) Gross profit on rental program (no capital invested)

Total gross profit

Retailer Maintaining Rental Program In-House

Annual rental income

(138pcs rented at $23.75 for 12 months) Allocated cost (55% gross Margin) Gross profit

Veritas instrument return ratios vary from market to market. Most school music dealers would agree, however, that up to 50% of their rentals will be returned during the first year (10% within the first

three months and 35-40% within the first 12 months). Add the cost of financing, payroll, and collections to the equation and you'll see why many independent rental operations are looking to outsource.

This analysis is for illustration purposes only. Actual numbers, formulas and results may vary. Please consult your accountant or financial planner with questions.

B&O or Combo?

Where Should You Put Your Money?

B&O or Combo?

Where Should You Put Your Money?

$134,920.63 $85,000.00 $49,920.63 $7,866.00 $7,866.00 $57,786.63 $39,330.00 $17,698.50 $21,631.50

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Question

Do you own any retail stores that I'll end up competing with?

Am I required to participate in collections process?

Is there any recourse on uncollectable accounts?

Are there any franchise fees and/or startup costs?

Is your business part of a multi-tier or publicly traded entity?

Will you provide me with a list of schools with music programs?

Do you partner with your affiliates at MEA conferences?

Will you distribute flyers to schools on my behalf (at no cost)?

Do you have the best deal on custom imprinted music folders?

Do you offer free repair & sales training throughout the year?

Will you include a per-contract bonus with my commission?

Do you offer interactive online training to your affiliates?

Can I also sell the rental instruments you send to my store?

Will you help me participate in school bids & lease quotations?

Do you offer an accessory catalog I can brand with my name?

Can you react quickly to changes in the market during season?

Do you provide educator-approved name brand instruments?

Veritas

NO

YES

Others

______

How do other providers compare to the Veritas Instrument Rental Program? Be sure to ask the following questions while shopping around:

Beware to Compare

Without Asking These Questions

Beware to Compare

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Nobody beats our selection and quality of band & orchestra instruments. In addition to brand new and like-new student instruments, we offer hidden model upgrade instruments to meet the needs of your rental customers. By using non-published models, competition with deep-discount catalog companies is minimized. We also offer a huge assortment of harmony, specialty and low brass instruments such as bass clarinets, soprano saxophones, cornets, baritones, french horns, euphoniums and even 3/4 tubas!

And talk about brands! We have what the music directors want such as:

Veritas Offers Only the Best

in Quality & Value

Veritas Offers Only the Best

in Quality & Value

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Is the Veritas Instrument Rental Affiliate Program Right forYou?

Now that you've become more familiar with the resources and potential of our program, you should consider the time & resources you are willing to invest into its development within your business. While we market ourselves to prospects, like yourself, as offering the most complete & comprehensive rental program in the industry, it is important to understand that it will not operate successfully by itself. Thus, your daily participation in the areas of administration, customer service and market development is required. Here's a brief overview of what we look for in a prospect:

Knowledge of Basic Business Practices

From time to time, affiliates are asked to assist with administrative tasks such as physical inventories, reconciling & resolving discrepancies and customer service. Although our program is well-documented and readily simplified through the use of multi-part forms, operational manuals and proper training, we ask for good recordkeeping, archiving and inventory control skills from our affiliates.

Establishing Relationships

Any successful school music vendor will agree that the school music market is relationship-driven. Local music educators are the gatekeepers to your customers (music students & their parents in need of instruments, related accessories and private instruction).Thus, it's no surprise that our TopTen producing affiliates have cultivated lasting relationships with the educators.They call on schools, participate in rental meetings, support & sponsor activities and even host educator socials. Prospects not currently engaging music educators would be expected to knock on doors as a Veritas affiliate. Communication

The success of any partnership (business or personal) will depend on the frequency and depth of communication (for better or worse) between the parties. Because we're dealing with month-to-month rental agreements and tenacious collections procedures, timely paperwork mailings are required from our affiliates. It is also necessary to contact our staff members on a regular basis for the purposes of requesting additional inventory & marketing assistance as well as mediating customer inquiries. Performance

Each market is unique and deserves the benefit of a complete analysis before any expectations are outlined. In regard to population, number of programs and competition, for example, it would be unfair to size up Atlanta, Texas as having the same potential as Atlanta, Georgia. Nonetheless, it is necessary to establish a benchmark of performance that makes sense to Veritas and its affiliates.With this in mind, we're looking for prospects who can realistically produce a minimum of 100-150 rentals during the back-to-school season (typically August through October). At this level, our inventory outlay is justified and the affiliate's commissions are worth while.

The Veritas Affiliate:

What We’re Looking For

The Veritas Affiliate:

What We’re Looking For

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Complete and mail to:

Veritas Instrument Rental 3670 131st Ave N

Clearwater FL 33762

Fax to:

877-272-7203

Affiliate Application

Business Name: ____________________________________________________________________ Business Address: _________________________ City: _______________ State: _____ Zip: _______ County: _____________________ Years at Present Location: _______ Years in Business: _______ Business Phone: ( ) ________________________ Business Fax: ( ) _____________________ Company Website Address: _____________________________________ Sales Tax Rate (%): _____ Business Category(s): ______Retail ______Repair Tech ______Lesson Studio ______Road Rep Type of Business: ________ Sole Proprietor ________ Partnership ________ Corporation If Subsidiary, Name of Parent Company: _________________________________________________ Currently Renting Instruments? _____ If yes, what is your rental volume from Aug-Oct? __________ Are you working with another rental company? _____ If yes, with whom? ______________________ Please list your (possible) competitors: __________________________________________________ Number of school music programs in your area? ______ Elementary ______ Middle ______ High Are you currently in contact with music educators? _______ If yes, in what capacity? ____________ ________________________________________ If no, are you willing to initiate contact? ________ Are music educators hosting rental meetings at the school? ______ If yes, will you attend? ________ School music market observations: _____________________________________________________ How did you hear about us? __________________________________________________________ Principals of Business (Please provide your HOME address and telephone information):

Name: ___________________________________________ Title: __________________________ Home Address: ___________________________ City: _______________ State: _____ Zip: _______ Home Phone: ( ) ______________ Email: ____________________ SS Number: _____________ Please note that by signing this Application, you are authorizing Veritas Instrument Rental Incorporated to conduct a business and/or personal credit check.

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Affiliate Competition Analysis

Your Store Name: ________________ Y

our Name: ___________

To be completed and returned with the

Af

filiate

Applicatio

n.

Include any print advertising (rental brochures) from your

competition.

Competitor One

Store Name: _______________________________________

Address: __________________________________________ Phone: ________________________

Clarinet Base Rent: ____________ M&R Fee: ____________ Sales

Tax: ____________

Total Monthly Charge: ____________

Alto Sax Base Rent: ____________ M&R Fee: ____________ Sales

Tax: ____________

Introductory Of

fer Details (Include total intro payment and breakdown of fees): _______________________________________________________________________

Number of Months

Applied to Purchase: _______ Months

Applied to Exchanges: _______ Interest, Cost of Lease Services and/or Other Fees: _________________

Brands Of

fered: ________________________________________________________________________________________________________________________

Credit Requirements (Circle all that apply): Driver License Social Security Number Major Credit Card Checking

Account Own Home Utility Bill Credit Report

Repairs In-House? ____________

Turnaround

Time on Repairs? _____________ Loaners Provided? ____________ Road Rep V

isiting School? _____________

Is Replacement Included? ______ If

Yes, is there a deductible? ______ Qualifying Loss (Circle all that apply):

Theft Loss Damage Beyond Repair

Notes and Other Info: ____________________________________________________________________________________________________________________

Competitor T

wo

Store Name: _______________________________________

Address: __________________________________________ Phone: ________________________

Clarinet Base Rent: ____________ M&R Fee: ____________ Sales

Tax: ____________

Alto Sax Base Rent: ____________ M&R Fee: ____________ Sales

Tax: ____________

Introductory Of

fer Details (Include total intro payment and breakdown of fees): _______________________________________________________________________

Number of Months

Applied to Purchase: _______ Months

Applied to Exchanges: _______ Interest, Cost of Lease Services and/or Other Fees: _________________

Brands Of

fered: ________________________________________________________________________________________________________________________

Credit Requirements (Circle all that apply): Driver License Social Security Number Major Credit Card Checking

Account Own Home Utility Bill Credit Report

Repairs In-House? ____________

Turnaround

Time on Repairs? _____________ Loaners Provided? ____________ Road Rep V

isiting School? _____________

Is Replacement Included? ______ If

Yes, is there a deductible? ______ Qualifying Loss (Circle all that apply):

Theft Loss Damage Beyond Repair

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Veritas Instrument Rental Incorporated

3670 131st Ave North • Clearwater FL 33762

Toll Free 877-727-2798 • Toll Free Fax 877-272-7203