Josh: The first customer for Rexair Inc. is the Distributor (called an "RGD" for "registered general distributor"). Only an RGD can purchase a Rainbow from Rexair Inc. and the wholesale cost to the distributor is approximately $550. This amount changes due to contests that the Company runs, which changes the price slightly. The RGD then will resell the machine to either the ultimate consumer, or to an Area Distributor, who can then resell the machine to a Sub Distributor.
So if we follow the trail, you'll see why a machine that wholesales for $550 gets to $2400. The RGD sells the Rainbow to an Area Distributor for $950, who sells it to a Sub Distributor for $1300. That Sub Distributor has people in their 'pay chain' who all get a cut once a sale is made: The training manager, the salesman, the finance company (they hold back about $200 from each sale in a fund to offset the costs of repossession), the phone girl who sets the appointment, and the secretary who handles the paperwork after the sale. All these people get a cut of the profit. That's why a salesman only gets $200 out of a $2400 sale.
Interestingly, the warranty on a Rainbow is NOT granted to the Ultimate Consumer. Only to the RGD who originally purchased the machine from Rexair. And, the warranty BEGINS on the day it was sold and shipped from Rexair. The RGD's agreement with Rexair is that they MUST maintain a service center for their customers, however, Area Distributors and Sub Distributors are NOT customers of Rexair and have no agreement with them - and do not have to maintain a service center.
Rexair is very particular with their warranty requirements to the RGD. Many RGD's wind up fixing Rainbows at their own expense, simply because Rexair will not take anything back that was abused by the customer in any way. The RGD is almost forced to do this since the average loan on a new Rainbow is at least for three years, during this time the RGD does NOT want the customer to fail to make their payments. Repossessions are very draining on an RGD's account, and can make the amount taken by the Loan Companies increase dramatically if the 'fund' is used up (meaning too many repossessions). It's in the best interest of the RGD to only sell to people who will continue to make their monthly payments.