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When joining a Network Marketing company, you are effectively signing a contract,
and if you dont know what to look for in the Policies and Procedures that you
are agreeing to, you dont really know how to do your due diligence on any MLM
company. Only by becoming educated in that process can you know what kind of
legal phrases and gotchas to look for.
A good Policy Guide will protect both the company and the associate. The problem
with most Policy Guides is that they are "one-sided", and only favor the company;
therefore, associates from countless Network Marketing companies have summarily
been dismissed (terminated), and have lost their organizations, and incomes, for no
justifiable reason, other than the company got in a financial pinch, or the company
owner simply got greedy.
This is not a small problem. Many have been cheated by a number of company
owners to the tune of millions of dollars. They built up incomes of $100,000/year
(or, $100,000 per month), only to see the company go down because of poor
management.
One successful Rep was the number two money earner in his young company, and
was earning $18,000.00 a month. The owner turned off his website, along with
those of several other associates, effectively "stealing" their incomes! The owner
simply wanted the money for himself. There was nothing any of the associates
could do because they had all agreed to the company's Policies and Procedures.
One well known and highly respected associate (who now owns his own MLM
company) had his website turned off and lost $20,000 a month from a Network
Marketing company he was involved with.
The point is, in each of these examples, the company owner had the right to do
what he did, because of unfair clauses in the Policy Guides. These associates were
dismissed at the sole discretion of the owner, and below, you will see some of the
actual clauses you need to look out for when checking out any Network Marketing
company. Reading (studying), and understanding, the Policy Guide (legal contract)
is the most important single thing you can do before deciding to join any company.
During the many years that MLM (Network Marketing) has been around (over 60
years) - and out of the thousands of Policy Guides that have been written - to our
knowledge, very few have "measured up" as being fair to ASSOCIATES (while at
the same time, protecting the company). Having a fair Policy Guide is extremely
important.
The risk factor is simply too high in choosing a company with an unfair Policy Guide,
and not only do you want to protect your own interests, you should feel obligated to
look out for those who will eventually be part of your Team of associates.
You cannot blame someone who does not know what to look for in a Policy Guide,
but after reading this, you will know.
By choosing the right company, not only are you protecting yourself, but also
your business partners, and also, your children and your grandchildren, who can
receive the fruits of your labors for generations to come!
MLM attorneys generally write Policy Guides, and they are designed to protect the
company (not the associate). After reading enough of them, you begin to see how
most of them were written by the same 3-5 top MLM attorneys. In fact, many Policy
Guides are copied "word for word", except for minor changes, like the name of the
MLM company.
There are at least five (5) categories to look for when analyzing a Policy Guide
(more, if you really want to 'dig deep' into what makes a "winning" Policy Guide):
1) Length or number of pages and the readability of the Policies and Procedures
2) Clauses that mention termination or non-renewal
3) Ongoing responsibilities
4) Unusual responsibilities
5) Miscellaneous red flags and warnings
Some Policy Guides are 50+ pages long, without even paragraphs, or spacing. This
makes them unreadable. By the time you labor through such a document, you are
mentally exhausted - and still not "understanding" what you read!
And if the Policy Guide is written in this kind of "legalese" - which most are - do not
sign it - because you wont understand it, and you can be almost certain that it is
written in that manner to take "advantage" of unsuspecting associates later.
Every word and every paragraph is either going to be used - for you - or against
you, and when you get into court, it is going to be used against you.
So read (study) your Policy Guide as if you were "standing in court", and you were
trying to get the company to pay you money that they owe you. Ask yourself Am I signing something that can be used against me in future?
One Policy Guide that was reviewed (from a large and well-established company)
had 40 red flags in their Policy Guide - and some MLM companies wont actually let
you even "see" the Policies and Procedures until after you join the company!
Many people (falsely) believe that their company will simply never "enforce" their
Policy Guide - but if they are not going to enforce them, why are those clauses IN
there? The brutal truth is - they will enforce them any time they want your money!
You signed the contract - and they can do it, legally. It's HIDDEN - on purpose!
It doesnt matter how good your product, service or compensation plan is, one BAD
phrase, or term, or clause in the Policy Guide negates all of the GOOD you may find
in a company! Now, lets take a look at some of those evil clauses that show up in
almost all MLM company Policy Guides:
Termination or Non-renewal
-- The company reserves the right to reject any application for a new distributor or
application for renewal. (If they want your money, they will "not renew" your
contract.)
-- The company reserves the right to terminate or suspend any distributor at any time.
Such termination or suspension shall be made by the company at its sole discretion. (If
you are making money, and they want it, they will terminate you!)
-- The company may elect to not renew any distributorship for any reason it deems to be
in the best interest of the company, its customers and other distributors." (If they want
your money, it will be in the best interest of the company.) "These reasons may
include, but are not limited to the following:
1- Failure to use best efforts to promote the companys products and services.
any content in his or her account. (So if you decide they have wrongfully dismissed
you, and you want to take them to court, you cannot subpoena any records from
the company because they have legally purged your records.)
-- Should an associate bring a suit against the company, he or she forfeits the right to
trial by jury. (A judge has to follow rules and case law; a jury has the right to think
about what is fair, and even decide against the Policy Guide if they think it is in the
best interests of justice. This happens to many associates, where they are
prevented from having a jury - and in many (perhaps most) cases, based upon the
facts, they would likely have WON their case in front of a jury!
ONGOING Responsibilities
First, you need to ask yourself - Can I ever RETIRE from this company? Can I take a
(well deserved) lengthy vacation from this company? There are MLM clauses that
state that if you take a vacation for say, two months, and do not talk to your group
during that time, you can be TERMINATED - much less being able to retire!
-- An associate must demonstrate regular leadership and guidance. (This phrase is
totally open-ended, and all the company has to do is say that, in their opinion, or
according to their definition of regular leadership and guidance - you failed their
requirements. This phrase has been used to terminate many associates, sadly.)
-- Associates must have ongoing contact and communication with the associates in
their downline organization. Examples of such contact and communication may include,
but are not limited to: newsletters, written correspondence, personal meetings,
telephone contact, voice mail, electronic mail and the accompaniment of downline
associates to company meetings, training sessions and other functions. Upline
associates are also responsible to motivate and train new distributors regarding
company product knowledge, effective sales techniques, company marketing and
compensation plan and compliance with company Policies and Procedures.
In reality, very few people can fulfill this requirement, because they dont have the
knowledge, the training, or the skills. Most Network Marketers do not come from
sales trainer or executive backgrounds. To further explain the matter, if you signed
up with a company today, and you were lucky enough to sign up a new associate
tomorrow, how could you motivate and train that person in sales, compensation
plan, and Policies and Procedures - when you have only one day in the business?
Especially when the company does not give you the training and guidelines that
you are supposed to give to others!
Here is a real example: There was a couple that worked together for a number of
years for an established and well-known large MLM company. They were quite
successful, but the wife got sick with cancer, and could no longer work, and the
husband took six months off to be with his wife until she died. When he returned to
resume working his MLM business, it was not there. GONE!
He had been terminated because he had not maintained his "ongoing contact"
with the company. The company was not interested in his explanation. He could
however, start again from scratch if he wanted to. (Even if this didnt happen to you
personally, is this the kind of company you want to be in business with?)
When MLM companies have these kinds of P&P clauses, they are putting associates
into positions they cannot possibly fulfill, and it can (it often will) be used "against"
you. This is a tragedy, and it does affect peoples financial (and emotional) lives!
There are a number of well-known MLM companies that "require" you to bring in
new business each month. We all know that life sometimes gets' in the way', like
the forgoing example. Just remember, if you sign such a contract, and for some
reason fail to bring in new business one month - and you lose your check - whose
fault is it? YOU signed the contract - a bindingl (one-sided) LEGAL agreement.
One well-known MLM company has a clause that will finally let you retire, after ten
(10) years of bringing in new business - every single month!
The object of Network Marketing is to have your own business, and achieve the
lifelong DREAM of both "time" and "financial" FREEDOM. You want to build it once,
build it right, and build it to provide a financial future for your childrens children. If
you are with a company that does not allow that, then you are in the wrong place.
Furthermore, most of the Policy Guides dont really allow you to own your OWN
business - the company virtually owns YOU! Yes, you become an IC (Independent
Contractor) - but you're not truly an IBO (Independent Business Owner). It's all
spelled out in the vast majority of (harsh) Policies and Procedures documents.
Unusual Responsibilities
-- While you are with this company, you are free to pursue any other Network Marketing
company that you like, but you may not recruit people in your downline and this
restriction remains in effect for six months after you leave this company for any reason.
(First of all, you wouldnt leave that company if you were making money, and what
kind of company would restrict you from building your business "for six (6) months"
after you left them? You do after all have to feed your family!)
and events annually at his or her expense at the direction of the company. (The
company can tell you where to go, even cross country, to a company convention,
and how many times. Failure to do so is a legal reason for termination. Wow)!
-- Associates must monitor the associates in their downline organization to be sure that
downline associates do not make improper product or business claims or engage in any
illegal or inappropriate conduct. (This clause turns you into a "compliance officer" and when you are first starting your business, this might be possible to a degree but when you have thousands in your organization, it will be virtually impossible.
Just another way to legally steal your hard earned income.)
-- The associate is responsible to pay the bill on their customers if they are delinquent
or default on their payment. (If the customer realizes that he or she doesnt have to
pay, what kind of a position does that put YOU in?)
will normally give you more money, and at the same time, may give less money
to your upline leader. What happens if your upline leader doesnt want to lose that
money - and says NO to your advancement?)
-- If an associate has a high percentage of customers with defaults, the money owed will
The PHP compensation plan (the generally preferred UNILEVEL model) rewards the
acquisition of new customers, and the recruitment of new associates, through a 10
level model, with a number of different bonuses and financial incentives. It favors
both part-timers and full-timers, and it is both fair and balanced.
4) The fourth pillar is the Policy Guide. As already mentioned, the best Policy
Guide will protect both the MLM company and the associates - but not at the
"expense" of each other. It will honor the associates and protect their interests,
while at the same time, requiring the associates not to misrepresent the company
and do things that will jeopardize the business for everyone.
It protects against unjust termination, dilution of products, change of compensation
and method of doing business. When you read through the PHP Policy Guide (only
12-pages of actual "policies"), you will see immediately that it does all of this - and
if you are a Policy Guide "expert", you will see it is a very "associate friendly"
document
5) The fifth pillar is timing in the marketplace. Most experts advise that you
should only join a company that is at least five (5) years old. That is because the
first five years for any company are the most difficult, and by then, you can look at
their track record and get a pretty good idea of how stable they are. You're looking
for a company with a track record of stability, a sterling reputation, and a likelihood
of remaining in business for many years to come.
This is a general rule only, because many MLM companies fail "after" reaching five
years in business, and there are brand new companies that will succeed. If the first
four (4) pillars of a company are exceptionally strong, then a younger company can
still be a good choice, especially if they have the right leadership and a good Policy
Guide.
Older Companies - Even though an "established" company (say, 40 years, or more)
might seem to be a safer bet for long term stability - it may also be a little "too
mature" and too set in its ways, for you to really benefit from fresh, innovative
thinking.
Also, very often, an older company will create a "spin-off" company - one that could
end up competing directly with you for new Affiliates and retail sales. Always check
for both "recent" and "continuing" growth.
Growth Rate - There are basically four (4) phases of growth that MLM companies
can experience - Formulation - Concentration - Momentum - Stability. Ideally, the
MOMENTUM phase is the best one to be involved in, but "identifying" it is difficult.
CONCLUSION
Please conduct careful due diligence" BEFORE joining any MLM company - especially
when it comes to their Policies and Procedures (the binding legal document that
you must "agree" to). These (mostly archaic, boiler-plate, unjust) contracts need to
be re-visited regularly by ALL Network Marketing companies (owners).
In the vast majority of cases, these contracts should be totally re-thought - better
designed - written more clearly (in a lay person's language) - and in a much more
respectful tone for their associates.
The GOAL should be - to bring about a better, more authentic, long term "business
partnership" environment - one where INTEGRITY reigns supreme, in every single
paragraph within the Policy Guide - and where a solid "trust" is fostered between
the MLM company and its valued associates. Period.
MLM - The GOOD - The CONCEPT behind the Network Marketing "business model"
remains brilliant. Ii is one of the finest creations ever developed by the human mind
- regardless of whether you build it ONline, or OFFline, or both. It embraces three
(3) powerful factors - LEVERAGE + COMPOUNDING + RESIDUAL (Passive) INCOME all mixed together - which almost NO other business program today can offer.
- Network Marketing has many advantages over traditional businesses. For
example, the start-up costs are low -- the opportunity for "expansion", through
TEAM building, is enormous -- the operating costs are reasonable -- there is usually
NO stocking or inventory of products -- NO need to get bank financing -- NO need to
ship products -- NO accounts receivable -- NO need to pay royalties -- NO need to go
to expensive meetings / conventions [although that's a personal choice] -- NO need
to distribute audios / videos / brochures / CDs [but again, that's a personal choice]
-- NO need to collect taxes -- NO need to hire employees, etc., etc.
- Network Marketing is perhaps the last bastion left, in the Free Enterprise System,
The truth is - these P&P contracts will reveal to you, the MLM owners' whole
"attitude" towards their associates - their real "intentions" - their "thinking" - their
"heart" - the good / bad / ugly of it all. Hopefully, as mentioned above, the BAD
ones (which are in the majority, unfortunately) - will change, for the better.
MLM - Evaluation - Please examine ALL of the (positive) factors that make for a
GOOD Network Marketing company, including the FIVE PILLARS above. But your
absolute #1 priority should be to do an "autopsy" on the Policies & Procedures. Do
these things (your "due dilligence") - before joining any MLM company. Go over the
P&Ps with a fine tooth comb - clause by clause. Dig deeper! Pick them apart!
YOUR Company? - If you're already "with" an MLM company - you need to do the
same thing (look at your P&Ps - find out if you're "safe" with that company).
If you discover that you have a BAD contract - as difficult as this may sound - you
need to "address" this immediately. To ignore this is to place yourself in jeopardy.
Recommendation - Go to your company management - ask them questions point out any "gotchas" - give them your strong concerns - demand good answers.
You are "entitled" to a full (and respectful) hearing. There's a lot at stake here.
A Responsibility - Beyond that, you would not want to "expose others" (especially
good friends, or family) to a situation where they too, could get hurt. It becomes an
an "obligation" that you owe to them, and to your organization, and to yourself!
------------ // ----------
The FUTURE - The Home Business industry (and Network Marketing in particular)
is the perfect place for those with an "entrepreneurial spirit" - who wish to increase
their financial security and personal freedom - by working part-time or full-time.
Global estimated retail sales topped US$178 billion in 2013, up 8.1 % from 2012,
according to the most recent data from the World Federation of Direct Selling
Associations (WFDSA). The worldwide sales force also grew, up 7.2 % to 96 million
independent contractors.
Both are record numbers of growth, with a bright future ahead, despite (or perhaps
'because of') the still weak economy. The time is NOW.
"The future belongs to those who believe in the beauty of their dreams". -- (Eleanor Roosevelt)
( ANMP.com )
Note: This PDF is not the property of PURIUM. Their P&P details can be seen on their website.