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Page 3: Multi Level Marketing

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Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation.[1] Other terms for MLM include pyramid selling,[2][3][4][5][6] network marketing,[7][8][9] and referral marketing.[10]

Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing.[1] Some people use direct selling as a synonym for MLM, although MLM is only one type of direct selling, which started centuries ago with peddling.[1][7][11]

MLM companies have been a frequent subject of criticism as well as the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price fixing of products, high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales, encouraging if not requiring salespeople to purchase and use the company's products, potential exploitation of personal relationships which are used as new sales and recruiting targets, complex and sometimes exaggerated compensation schemes, and cult-like techniques which some groups use to enhance their members' enthusiasm and devotion.[10][12]

In contrast to MLM is single-level marketing, where the salesperson is rewarded for selling the product directly to the consumer.[13]

Contents 1 Direct selling, network marketing, and multi-level marketing 2 History

3 Setup

4 Income levels

5 Legality and legitimacy

o 5.1 USA

6 Criticism

Page 4: Multi Level Marketing

7 See also

8 Notes

9 External links

Direct selling, network marketing, and multi-level marketing"Network Marketing" and "Multi-level Marketing" have been described by author Dominique Xardel as being synonymous, and as methods of direct selling.[1] According to Xardel, "direct selling" and "network marketing" refer to the distribution system, while the term "multi-level marketing" describes the compensation plan.[1] Other terms that are sometimes used to describe multi-level marketing include "word-of-mouth marketing", "interactive distribution", and "relationship marketing". Critics have argued that the use of different terms and "buzzwords" is an effort to distinguish multi-level marketing from illegal Ponzi schemes, chain letters, and consumer fraud scams.[14] Some sources classify multi-level marketing as a form of direct selling rather than being direct selling.[13][15][16]

The Direct Selling Association, an American industry body, reported that in 1990 twenty-five percent of members used MLM, growing to 77.3 percent in 1999.[17] Companies such as Avon, Electrolux, Tupperware,[18] and Kirby all originally used single level marketing to sell their goods and later introduced multi-level compensation plans.[19] By 2009, 94.2% of members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales.[20] The DSA has approximately 200 members [21] while it is estimated there are over 1000 firms using multi-level marketing in the US alone.[22]

HistoryIt is generally accepted that the first multi-level marketing plan was introduced in 1945 by the California Vitamin Company (shortly afterwards to become Nutrilite).[13][23] The plan allowed Nutrilite distributors with at least 25 regular customers to recruit new distributors and draw a 3 percent commission from their sales. Unlike traditional direct selling, this was an ongoing payment whenever the customer re-ordered, allowing direct sellers to build a sales organization that could generate a residual-like income.[23]

SetupIndependent, non-salaried salespeople of multi-level marketing, referred to as distributors (or associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, etc.), represent the company that produces the products or provides the services they sell. They are awarded a commission based upon the volume of product sold through their own sales efforts as well as that of their downline organization.

Independent distributors develop their organizations by either building an active customer base, who buy direct from the company, or by recruiting a downline of independent distributors who

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also build a customer base, thereby expanding the overall organization. Additionally, distributors can also earn a profit by retailing products they purchased from the company at wholesale price.

Income levelsSeveral sources have commented on the income level of specific MLMs or MLMs in general:

The Times : "The Government investigation claims to have revealed that just 10% of Amway's agents in Britain make any profit, with less than one in ten selling a single item of the group's products."[24]

Scheibeler, a high level "Emerald" Amway member: "UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, 'only about 90 made sufficient incomes to cover the costs of actively building their business.' That's a 99.7 percent loss rate for investors."[25]

Newsweek : based on Mona Vie's own 2007 income disclosure statement "fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week."[26]

Business Students Focus on Ethics: "In the USA, the average annual income from MLM for 90% MLM members is no more than US $5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)"[27]

USA Today has had several articles:

"While earning potential varies by company and sales ability, DSA says the median annual income for those in direct sales is $2,400."[28]

In an October 15, 2010 article, it was stated that documents of a MLM called Fortune reveal that 30 percent of its representatives make no money and that 54 percent of the remaining 70 percent only make $93 a month. The article also states Fortune is under investigation by the Attorneys General of Texas, Kentucky, North Dakota, and North Carolina with Missouri, South Carolina, Illinois, and Florida following up complaints against the company.[29]

A February 10, 2011 article stated "It can be very difficult, if not impossible, for most individuals to make a lot of money through the direct sale of products to consumers. And big money is what recruiters often allude to in their pitches." [30]

"Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing": "You'd be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope."[30]

Legality and legitimacy

USA

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MLM businesses operate in all 50 states[citation needed]. New businesses may use terms such as "affiliate marketing" or "home-based business franchising". Many pyramid schemes try to present themselves as legitimate MLM businesses.[11] However, there are people who hold that all MLMs are essentially pyramid schemes even if legal.[10][31][32][33]

The United States Federal Trade Commission states "Steer clear of multilevel marketing plans that pay commissions for recruiting new distributors. They're actually illegal pyramid schemes. Why is pyramiding dangerous? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people - except perhaps those at the very top of the pyramid - end up empty-handed."[34]

In a 2004 Staff Advisory letter to the Direct Selling Association, the FTC states:

Much has been made of the personal, or internal, consumption issue in recent years. In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme. The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture.[35]

The FTC warns "Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It's best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products."[36] and states that research is your best tool, giving eight steps to follow:[36]

1. Find — and study — the company’s track record2. Learn about the product

3. Ask questions

4. Understand any restrictions

5. Talk to other distributors (beware of shills)

6. Consider using a friend or adviser as a neutral sounding board or for a gut check

7. Take your time

8. Think about whether this plan suits your talents and goals

CriticismThe FTC issued a decision, In re Amway Corp., in 1979 in which it indicated that multi-level marketing was not illegal per se in the United States. However, Amway was found guilty of price fixing (by effectively requiring "independent" distributors to sell at the same fixed price) and making exaggerated income claims.[37][38]

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The FTC advises that multi-level marketing organizations with greater incentives for recruitment than product sales are to be viewed skeptically. The FTC also warns that the practice of getting commissions from recruiting new members is outlawed in most states as "pyramiding".[39] In April 2006, it proposed a Business Opportunity Rule intended to require all sellers of business opportunities—including MLMs—to provide enough information to enable prospective buyers to make an informed decision about their probability of earning money. In March 2008, the FTC removed Network Marketing (MLM) companies from the proposed Business Opportunity Rule:

The revised proposal, however, would not reach multi-level marketing companies or certain companies that may have been swept inadvertently into scope of the April 2006 proposal.[40]

Walter J. Carl stated in a 2004 Western Journal of Communication article that "MLM organizations have been described by some as cults (Butterfield, 1985), pyramid schemes (Fitzpatrick & Reynolds, 1997),[41] or organizations rife with misleading, deceptive, and unethical behavior (Carter, 1999), such as the questionable use of evangelical discourse to promote the business (Hopfl & Maddrell, 1996), and the exploitation of personal relationships for financial gain (Fitzpatrick & Reynolds, 1997)".[41][42] In China, volunteers working to rescue people from the schemes have been physically attacked.[43]

MLM's are also criticized for being unable to fulfill their promises for the majority of participants due to basic conflicts with Western cultural norms.[44] There are even claims that the success rate for breaking even or even making money are far worse than other types of businesses:[45][46][47] "The vast majority of MLM’s are recruiting MLM’s, in which participants must recruit aggressively to profit. Based on available data from the companies themselves, the loss rate for recruiting MLM’s is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from the company."[45] In part, this is because encouraging recruits to further "recruit people to compete with [them]"[10] leads to "market saturation."[12]

Another criticism is that MLM has effectively outlived its usefulness as a legitimate business practice. The argument is that, in the time when America was a series of relatively small, isolated towns and rural areas not easily accessible to small companies, MLM was a useful way to let people know of and buy products or services. But the advent of internet commerce, with its ability to advertise and sell directly to consumers, has rendered that model obsolete. Thus, today, nearly all modern MLMs ostensibly sell vastly overpriced goods and services (if there even is a real product or service involved at all) as a thin cloak of legitimacy, while their members are driven to recruit even more people into the MLM, effectively turning these programs into pyramid schemes.[32]

Because of the encouraging of recruits to further recruit their competitors, some people have even gone so far as to say at best modern MLMs are nothing more than legalized pyramid schemes [10] [31] [32] [33] with one stating "Multi-level marketing companies have become an accepted and legally sanctioned form of pyramid scheme in the United States"[31] while another states "Multi-Level Marketing, a form of Pyramid Scheme, is not necessarily fraudulent."[33]

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In October 2010 it was reported that multilevel marketing companies were being investigated by a number of state attorneys general amid allegations that salespeople were primarily paid for recruiting and that more recent recruits cannot earn anything near what early entrants do.[48]

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List of multi-level marketing companies From Wikipedia, the free encyclopediaJump to: navigation, search

This is a list of Wikipedia pages about companies which use multi-level marketing (also known as network marketing,[1][2][3][4][5] direct selling,[3][6] referral marketing,[7] and pyramid selling[8]

[9][10][11][12]) for most of their sales.

5LINX

ACN Inc.

AdvoCare

Agel Enterprises LLC

Amsoil

Amway [13]

Amway Global , previously known as Quixtar

Avon Products

Beachbody [14]

BioPerformance

Discovery Toys [13]

Dynamic Essentials (Company dissolved in 2003)

Equinox International (dissolved 2004)

Forever Living Products

FreeLife

Fuel Freedom International

Fund America, Inc.

European Grouping of Marketing Professionals/CEDIPAC SA

Market America

Mary Kay [13]

Metabolife (Company dissolved in 2005)

MonaVie

National Safety Associates

Neways

Nu Skin Enterprises [13] [15]

Oriflame

Primerica [13]

Reliv

Scentsy Inc.

Shaklee Corporation [13]

Stream Energy

Success University

Sunrider International [13]

Tahitian Noni [16]

Telecom Plus

The Pampered Chef [13]

Unicity International

United Sciences of America, Inc.

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5LINX From Wikipedia, the free encyclopediaJump to: navigation, search

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2011)

5LINX Enterprises

Type PrivateIndustry TelecommunicationsFounded 2001

Founder(s) Jeb Tyler, Craig Jerabeck, and Jason Guck

Headquarters Rochester, U.S.A

Area servedEurope, United States, Puerto Rico, US Virgin Islands, and 75 various countries

Key people Craig Jerabeck, Chief Executive OfficerProducts IP devices

Services

Mobile communications, DSL, Mobile Home Security (Powered by Protect America), ID Guard, Satellite TV, High Speed Internet, Energy

Employees 100,000

Subsidiaries 5LINX Canada5LINX Limited

Website 5linx.com

5LINX Enterprises is an American small business multi-level marketing company headquartered in Rochester, New York, which provides home services across the United States and in 20 countries abroad.[citation needed] The company owns a small business VoIP phone company called Globalinx. 5LINX was a Inc. 500 fast-growing company in 2006 until 2009. In 2010,

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5LINX slipped out of the Inc. 500, ranking 1044th in the Inc. 5000 and 2419th in 2011.[1] In 2011, 5LINX was ranked on the Rochester Top 100 list of fastest growing companies in the region.

Contents 1 History 2 Culture

3 Apps

4 See also

5 References

6 External links

History5LINX was founded in 2001, by Jeb Tyler (Executive Vice President of Marketing), Craig Jerabeck (President and CEO)[2], and Jason Guck (Executive Vice President of Sales).[citation needed]. 5LINX follows a multilevel marketing model.[3]

Culture5LINX has a seasonal journal, INVISION which documents company growth. 5LINX was featured in Home magazine.[citation needed]

AppsStarting in 2009, 5linx added apps for iOS and Android.[4][5] This includes the Globalinx app for the:

IPhone 4 IPod Touch

IPad 2

IPhone 4S

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ACN Inc. From Wikipedia, the free encyclopediaJump to: navigation, search For other uses, see ACN (disambiguation).

ACN, Inc.

Type PrivateIndustry TelecommunicationsFounded Incorporated 1992Headquarters Concord, North Carolina, USA

Key people

Charles Barker, CEORobert Stevanovski, ChairmanGregory Provenzano, PresidentAnthony Cupisz, VPMichael Cupisz, VP[1][2]

Revenue US$ 550 million (2010)[3]

Employees 1300 (2010)[4]

Website www.acninc.com

ACN, Inc. is a Multi-level marketing (MLM) company that provides telecommunications, television, energy and other services through a network of independent sales agents known as "Independent Business Owners" (IBOs), who themselves recruit new sales agents below them. Based in Concord, North Carolina, USA, ACN began operations in the U.S in 1993 as American Communications Network. It extended operations to Europe in 1999 and to Asia-Pacific in 2004, and now operates in 23 countries, on 4 continents.[5] As a reflection of its international operations, it changed its name to just the initial letters ACN.[citation needed] The company is a member of the Direct Selling Associations in North America [6][7] and Europe.[8] In the United States, ACN is an accredited member of the Better Business Bureau, where it currently has an A rating.[9] In 2010, ACN was placed #21 on Direct Selling News' Global 100 list of the top 100 direct selling companies worldwide based on its revenue.[10]

Contents 1 Company structure 2 History

3 Services

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4 Criticism

o 4.1 Legal cases

5 References

6 External links

Company structureBased in Concord, North Carolina, United States, ACN has international expansion offices located in Montreal, Quebec, Canada; Amsterdam, the Netherlands; Sydney, Australia; Åmål, Sweden; Wrocław, Poland; and Seoul, South Korea.

HistoryIn 1992, Robert Stevanovski, Greg Provenzano, J.D. Sullivan and twin brothers Tony and Mike Cupisz, founded the American Communications Network, Inc. ACN opened for business in January, 1993 with twenty initial "independent representatives". In its first year it achieved revenues of two million dollars. ACN's initial business was as a marketing arm for a long-distance reseller called LCI Communications. This relationship lasted for five years until LCI was acquired by Qwest Communications.[2] By 1998, ACN was listed in Inc. Magazine's Inc. 500 list as No. 22 in this annual list of the 500 fastest growing private companies in America,[11] with an annual revenue of $98.1 million.

Formerly ACN, through the subsidiaries ACN Energy and ACN Utility Services, operated as a gas and electricity retailer. ACN's energy assets were acquired by Commerce Energy Group in 2006.[12]

Since 2006, ACN has been endorsed by multi-billionaire and Apprentice executive producer, Donald J. Trump. He has gone on to speak at several ACN International Training Events at which he has praised the company's founders, business model and video phone.[13]

In 2008, ACN moved its headquarters from Farmington Hills, Michigan to Concord, North Carolina.[14][15]

On December 13, 2008, ACN committed to purchase in excess of $50 million dollars worth of videophone equipment from WorldGate Communications (stock symbol WGAT). As part of the agreement, ACN, through its investment proxy WGI Investors, purchased all outstanding debentures of WorldGate's senior secured creditor, YA Global Investments, LP (f/k/a Cornell Capital Partners, LP) and acquired a controlling interest (63% of its common stock) in WorldGate, among other conditions. Under the proposed action ACN acquired the right to name four of the seven members of WorldGates's board of directors.[16][17][18]

In September 2010, ACN officially launched operations in South Korea and opened an office in Seoul.[19]

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ServicesACN offers landline telephone service (local and long distance), Voice over Internet Protocol (VoIP), including video phone service, high-speed internet, satellite television, cellular phone, and home security services, primarily to consumers, and secondarily to small businesses. Beginning in 2011, ACN also began offering an ACN-branded international calling smartphone app available for iPhone, Android and Symbian, reselling WiMAX wireless Internet, and technical support service for personal and business computers, as well as getting back into the energy reselling market.[20]

With variations depending upon the country of operation, provision of ACN's services follows three models:

1. The reselling of ACN-branded services ultimately originating in an incumbent provider. This is exemplified by local and long-distance telephone, where ACN buys local telephone service from an incumbent provider such as Qwest or AT&T, and bills customers in its own name. This model was made possible by telephone industry deregulation beginning in 1996; prior to this, ACN was involved solely in reselling long-distance telephone service. It was the expansion of deregulation internationally that made it possible for ACN to begin to operate outside the United States.

2. Acting as a sales agent for the actual service provider, where an ACN representative sells the service, but order fulfillment, billing, and servicing is performed by the branded provider. ACN resells wireless plans from Verizon Wireless, Sprint Nextel, and T-Mobile USA,[21] satellite television providers DirecTV and Dish Network,[22] and the largest home security provider, ADT.[23] ACN now also resells energy (electricity and natural gas) through Planet Energy and Xoom. In 2012 ACN will have the largest footprint of any other direct seller and electricity and gas with 14 states and 40 utility markets. [24]

3. The selling of ACN-branded and provided services. These are Voice over Internet Protocol [25] and the Iris 5000 Videophone,[26] in which ACN resells consumer equipment manufactured to their specifications, but owns and maintains its own network of servers. Starting in January 2011, ACN has also added an ACN-branded computer technical support service to its service offerings.[27]

CriticismACN requires a $499 startup fee to become an Independent Business Owner which the company says is for overhead, representative support and setup of the Independent Business Owner's global online virtual store. The emphasis is on selling telecommunications and energy services and recruiting new representatives to pay the upfront fees and join the structure below the person who recruited them.[28] Phil Shuman of Fox News 11 in Los Angeles claimed in an investigative news report that ACN is a company that has left a trail of people claiming they were misled about money making opportunities.[28]

Critics of ACN have complained that few ACN representatives make a profit, as is the case with virtually all MLM-based businesses, due to the nature of the pyramidal business model and the

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fact that those recruited often have little or no business knowledge or experience.[citation needed] The chairman of ACN's Legal Advisory Committee, Bob Stephan, who served as Attorney General of the state of Kansas for 16 years, acknowledged in an interview in a local Fox news investigative report that the majority of representatives probably do not make money, but defended ACN by declaring that it is simply offering business opportunities and that it complies with multilevel marketing laws. In addition, no money is earned at ACN unless customers are acquired.[28] ACN's own representative recruiting materials bear the warning that "[n]ot all ACN Independent Representatives make a profit and no one can be guaranteed success as an ACN Independent Representative."[29]

In response to criticism posted on the Internet, ACN's Global General Counsel, Colleen Jones, states that "ACN is aware of the bad press that's out there on the internet, and we pretty much ignore it." [30] ACN also has a website which is dedicated entirely to its "commitment to integrity." [31]

Legal cases

Since its founding in 1993 ACN has been subjected to five legal allegations regarding its MLM business operation.

In August, 2010 the Montana Commissioner of Securities and Insurance Monica Lindeen (D) announced the issuance of a Cease and Desist Order and Notice of Proposed Agency Action against ACN, Inc. and several of its founders for allegedly operating a "pyramid scheme." [32] However, by September, 2010 the Commissioner moved to vacate the Cease and Desist Order, which was unopposed. [33] In the course of the Commissioner's investigation, the Commissioner determined that the actions giving rise to the initial concerns were not part of the ACN business model, but instead were isolated instances taking place by certain ACN's independent representatives in Montana. The Commissioner and ACN agreed that ACN will implement additional training with its independent representatives to assist them in better understanding their responsibilities as ACN independent representatives, and that ACN would contact its Montana video phone customers to assist them with installation of their service. The Better Business Bureau reported that "Both the Commissioner and ACN are pleased with this positive outcome, and the Commissioner's efforts to protect Montana residents." [34]

In Canada in 2002 [35] and in Australia in 2004,[36] ACN defeated allegations that it was operating an illegal pyramid scheme.[37] The Australian case is considered a landmark decision in defining the difference between legitimate multi-level marketing and a pyramid scheme.[38]

On June 13, 2002, ACN settled a case with the Bureau of Consumer Services in Pennsylvania. The exact details of the settlement are under court seal. However, the suit alleged that approximately 135 informal complaints were filed with the Bureau of Consumer Services (BCS) between June 2000 and November 2001. According to the representations made in the informal complaints, 22 consumers alleged that ACN Energy switched their generation service without authorization (a process known as "slamming"), 81 instances of overcharging ("cramming") were alleged, and 32 complaints with allegations of various violations of the Commission's regulations contained in Chapter 54, 56, and 57 of Title 52 of the Pennsylvania Code.[39]

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SAS ACN Communications France (ACN France) was found guilty of false or misleading advertising by the Tribunal de Grande Instance [ District Court ] of Paris on March 19, 2007. ACN France was ordered by the court to pay a sum of €15,000 .[40]

In a televised interview with France 2 2010, French barrister Jérémie Assous said This is not a direct pyramid. It may be regarded as a hidden pyramid. It is obvious that your only goal is not to sell telephone lines and you will not waste your time trying to sell telephone lines for €2.50 per month but on the contrary to persuade new people to enter the network. ACN charged him for oral defamation. The district court of Nanterre found neither Mr Assous nor France 2 guilty, and ACN did not get any expectation damages[41]

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AdvoCare From Wikipedia, the free encyclopediaJump to: navigation, search

Companies portal

AdvoCare International

Type PrivateIndustry Nutrition & Skin Care productsFounded Carrollton, TX (1993)Founder(s) Charles E. RagusHeadquarters Plano, TX, United StatesArea served United StatesKey people Richard H. Wright, President & Chief Executive OfficerProducts Weight management, nutritional supplements, personal careRevenue US$ <100 million (est.) (2009)[1]

Employees 247 (est.) (2009)[2]

Website www.advocare.com

Coordinates: 33.01053°N 96.676928°W

AdvoCare International, L.P. is a nutrition, weight-loss, energy and sports performance products company. The company was founded in 1993 by Charles Ragus and employs around 247 people in the United States. In a statement, AdvoCare claims net sales of USD under 100 million in 2009[1] and its corporate headquarters are in Plano, TX, USA.

The company distributes its products in the United States through a network of approximately 100,000 independent distributors, some of whom earn profit on product sales and additional commission from a multi-level marketing (MLM) compensation structure. The company slogan is, "We Build Champions."

Contents 1 History

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2 Products

3 Controversy

4 Business

o 4.1 Sports endorsement

o 4.2 Sponsorships

5 References

6 External links

HistoryIn 1993, Charles Ragus founded AdvoCare as a multi-level marketing company[3] that distributes health and wellness products. Ragus was a Herbalife distributor from 1983 to 1989.[4] Charles Ragus died on June 1, 2001 at the age 58.[5]

In May 2007, Richard H. Wright joined AdvoCare as President and CEO.[1]

ProductsThe AdvoCare product categories include Trim, Active, Well, and Performance Elite. Several AdvoCare products[6] are certified by the INFORMED-CHOICE Certification Program to be regularly tested for substances considered prohibited in sport and that the products have been manufactured to high quality standards.[7] The Scientific & Medical Advisory Board is composed of individuals with backgrounds and experience in the fields of medicine, nutrition and science.

In 2011 AdvoCare OmegaPlex was noted in "A Smart Guide to Buying Supplements" which was highighted on the Dr. Oz Show.

ControversyOlympic swimmer, Jessica Hardy, was notified on July 23, 2008 that her blood tests tested positive for clenbuterol. Although other athletes have been banned or suspended for using the breathing enhancer, clenbuterol, Hardy has claimed innocence and said she has never even heard of clenbuterol,[8] attributing her positive drug result to either a tainted nutritional supplement or sabotage.[9] Hardy was taking AdvoCare supplements at the time, and sued AdvoCare, claiming that the supplements were tainted.[10] AdvoCare countersued Hardy for making false claims.[11] An arbitration hearing reduced Hardy's suspension after acknowledging that Hardy met the burden of proof that the AdvoCare supplements were tainted. AdvoCare disputed the findings of the panel. Allison Levy (AdvoCare General Counsel) said the testimony offered by Hardy's scientific experts is "in direct conflict with testing conducted by two independent laboratories,

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both of which found no evidence that Clenbuterol was present in the AdvoCare supplements consumed by Ms. Hardy." [12]

AdvoCare's product "KickStart Spark" formula was targeted to youth age 4-11 containing 60 mg of Caffeine and came under scrutiny from pediatricians for the high dosage of this stimulant. AdvoCare no longer offers this product.[13]

Regarding AdvoCare's weight loss program titled the 24-Day Challenge, Dr. Wendy Miller, a health expert at Beaumont Weight Control Center, says AdvoCare's cleanse is probably safe for many users. However she questions if the same results couldn’t be achieved without the products. “I’m not sure though you wouldn’t get the same results though if you just followed the healthy food guidelines, increased exercise and drink lots of water,” Miller said.[14]

BusinessAdvoCare is a multi-level marketing company.[3] In addition to profits from product sales, AdvoCare distributors can earn additional commissions from sales by their 'downline' distributors.

AdvoCare is an active member of the Direct Selling Association (DSA). The company was a DSA Award recipient in 2002 for the DebtBuster® System in 2008 for the AdvoBus program, and was a participant in the 2010 DSA Code of Ethics Communication Initiative.

In June 2011, AdvoCare President and CEO Richard Wright was elected to serve on the DSA Board of Directors.

Sports endorsement

AdvoCare has a number of professional athletes, coaches, and entertainers that endorse the use of at least one of AdvoCare's products.[15] The AdvoCare Sports Advisory Council is composed of strength and conditioning coaches and athletic trainers from across the United States.

On March 30, 2010, New Orleans Saints quarterback Drew Brees became the national spokesperson for AdvoCare.[16]

Sponsorships

On May 21, 2009, AdvoCare became the title sponsor of the NCAA college football Independence Bowl, renaming it to the AdvoCare V100 Independence Bowl.[17] AdvoCare has extended its title sponsorship of the Independence Bowl through 2011.[18]

AdvoCare pledged $250,000 in 2010 and 2011 to support U.S. troops and their families through Operation Homefront, a military support nonprofit.[19] AdvoCare donated $100,000 during their Success School national conference in February 2011 and pledged a total of $250,000 in support.[20]

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AdvoCare provided the founding grant to help establish the College Football Assistance Fund (CFAF) in 2010. The College Football Assistance Fund (CFAF) is a non-profit tax exempt organization dedicated to the support of football players who have sustained serious injuries through college football.[21]

In 2011, AdvoCare became the title sponsor of the Atlanta Motor Speedway's NASCAR Sprint Cup Series race.[22] The innaugural AdvoCare 500 was completed on Sept. 6, 2011.

In 2012 Advocare announced a sponsorship deal of Nascar Driver Austin Dillon.

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Agel Enterprises, LLC From Wikipedia, the free encyclopedia  (Redirected from Agel (MLM company))Jump to: navigation, search

This article appears to be written like an advertisement. Please help improve it by rewriting promotional content from a neutral point of view and removing any inappropriate external links. (March 2010)

Agel Enterprises, LLCType LLCIndustry Multi-level marketingFounded Provo, Utah (2005)Founder(s) Glen Jensen, CEOHeadquarters Lehi, Utah, U.S.

Key peopleGlen Jensen, CEOCraig Bradley, PresidentDarren Jensen, COO

Products Nutritional supplementsRevenue US$150 Millon (2009)Employees 130+Website www.agel.com

Agel Enterprises, LLC, a nutritional supplement supplier, is a multi-level marketing (MLM) company which was founded in March 2005 in Provo, Utah, United States.[1]

Contents 1 History 2 Business model

3 Criticism

4 See also

5 References

HistoryThe founder, Glen Jensen, previously worked in other MLM companies such as Nu Skin Enterprises and Neways [2] and recently joined the World Federation of Direct Selling Associations.[3]

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In September 2008, Agel Enterprises, LLC moved its global headquarters from Provo, Utah to Lehi, Utah.

Business modelThe company follows the structure of a multi-level marketing two-leg commission model where the recruited sales force is broken down into a "stronger" and "weaker" leg by which participants receive 10% commission from their "weaker" leg of recruited sales force.[4]

CriticismThere are questions regarding the effectiveness of Agel products. For example, their FIT product uses hydroxycitric acid to promote weight loss. Trials were done on rats, but extrapolating that to human effectiveness has been controversial.[citation needed] Along with trials on rats, several human studies have been done showing lack of efficacy of low dosages of hydroxycitric acid.[5]

Page 24: Multi Level Marketing

Amsoil From Wikipedia, the free encyclopediaJump to: navigation, search

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (July 2009)

AMSOIL Inc.Type PrivateIndustry oil and chemicalGenre Automotive serviceFounded 1972Founder(s) Albert J. AmatuzioHeadquarters Superior, Wisconsin, United States

Area served United States, Canada, and the Commonwealth of Puerto Rico

Productssynthetic motor oil, synthetic grease, oil filters, air filters, natural fertilizers, nutritional products

Divisions ALTRUM - Health Division of AMSOIL Inc.

Subsidiaries AGGRANDWebsite http://www.amsoil.com/

AMSOIL Inc. is an American corporation based in Superior, Wisconsin that primarily formulates and packages synthetic lubricants and filters. The company's advertising slogan is The First in Synthetics.

Contents 1 History 2 Corporate structure

3 AMSOIL defined MLM customer categories

o 3.1 Dealer

o 3.2 Preferred Customers

o 3.3 Retail accounts

o 3.4 Commercial accounts

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o 3.5 Catalog customers

4 Distribution

5 Industry Approved Lists, Certifications & Licenses

6 References

7 External links

HistoryFounder, President and CEO of AMSOIL, Inc., Albert J. Amatuzio, was introduced to synthetic lubricants used in the jets he flew as a fighter pilot for the US Air Force. He later founded his company, AMMOIL which would later be changed to AMZOIL, Inc., which would later be changed to AMSOIL, Inc., due to trademark concerns brought forth by Pennzoil. Mr. Amatuzio went on to formulate a synthetic motor oil for use in automobiles in a joint effort with the Hatco Corporation [1] . AMZOIL 10W-40 grade 100 percent synthetic motor oil became available to the general public in 1972 as the first synthetic motor oil in the United States to meet American Petroleum Institute (API) requirements. Today AMSOIL, Inc., markets the OE and XL line of API certified synthetic motor oil [2] as well as many other oil formulations which meet or exceed current API requirements.

Corporate structureAMSOIL markets their products through a Multi-Level Marketing (MLM) network of dealers who sell to defined customer types known as wholesale customers, retail accounts and commercial accounts.

AMSOIL also wholly owns and manages an MLM subsidiary called ALTRUM, which markets nutritional supplements. AMSOIL also owns a natural liquid organic fertilizer division called AGGRAND, used in home, gardens, greenhouses, golf courses, lawncare, crop farms, ranches, and commercial farming.

AMSOIL defined MLM customer categories

This unreferenced section requires citations to ensure verifiability.

Dealer

An Independent Dealer sells products to customers bypassing the typical price mark-up in general distribution. A Dealer, as with all of the following accounts, must be sponsored by another Dealer. The sponsoring Dealer receives a commission from sales of his sponsored Dealers and accounts. There are no territories to restrict Independent Dealers operations.

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Preferred Customers

A Preferred Customer (PC) is someone who wants to purchase AMSOIL products at wholesale cost, but is not interested in reselling AMSOIL products or sponsoring other accounts. An upgrade for a nominal fee and submitting signed documents can be initiated that will facilitate subscribing new accounts.

Retail accounts

Retail-On-The-Shelf Accounts (ROTS) are physical retail outlets such as an independent parts store, repair shop, or oil change shop that carry and retail AMSOIL products. These establishments must be sponsored by a dealer as the dealer gets a commission on everything the ROTS account purchases, except promotional products.

Commercial accounts

Commercial accounts (CAs) are for businesses that wish to be an end-user of AMSOIL products. Commercial accounts get a wholesale discount, much like PCs and ROTS, however, CAs are not authorized to resell AMSOIL products.

Catalog customers

Catalog customers (CRs) is the term used for individual customers who pay retail price for AMSOIL products. These customers can be serviced through a local dealer and physically receive the product from them. Or, this customer can order through AMSOIL directly and be assigned a local dealer in which case that dealer gets a commission on the commission credits assigned to the products of that customer's order.

DistributionAMSOIL manufactures its products in Superior, Wisconsin and then ships these products to their regional distribution centers; AMSOIL has 14 of these centers worldwide. Once at the product distribution centers, the products are stored until they are ordered. Once ordered, the items are drop shipped prepaid, directly to customers.

Industry Approved Lists, Certifications & Licenses NSF-ISR ISO 9001:2000 Certification Mack EO-N Premium Plus

API license

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Amway From Wikipedia, the free encyclopedia

Jump to: navigation, search

amway

Type Private

Industry Direct selling

Founded 1959

Founder(s)Rich DeVosJay Van Andel

Headquarters Ada, Michigan, United States

Area served Worldwide

Key peopleSteve Van Andel (Chairman)Doug DeVos (President)

ProductsAmway Home, glister, G&H, Nutrilite, Artistry, AmwayQueen, eSpring, ATMOSPHERE...

Revenue US$ 10.9 billion (2011)[1]

Employees 20,000[2]

Parent Alticor

Website Amway.com

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Headquarters in Ada, Michigan

Amway is a direct selling company that uses network marketing to sell a variety of products, primarily in the health, beauty, and home care markets.[3][4][5] Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company and family of companies under Alticor reported sales growth of 9.5%, reaching US$9.2 billion for the year ending December 31, 2010.[1] Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004, health and beauty products accounted for nearly 60% of worldwide sales.[6]

[dead link] Amway conducts business through a number of affiliated companies in more than a hundred countries and territories around the world.[7][dead link] Amway was ranked No.114 among the largest global retailers by Deloitte in 2006, and No.32 among the largest private companies in the U.S. by Forbes in 2010.[8]

Contents 1 History

o 1.1 Founding

o 1.2 International expansion

o 1.3 Quixtar

2 Global markets

o 2.1 Amway Australia

o 2.2 Amway China

3 Brands

o 3.1 Household cleaners

o 3.2 Health and beauty

3.2.1 Artistry

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o 3.3 Nutrilite

o 3.4 eSpring

o 3.5 Atmosphere

4 Ditto Delivery

5 Business model

6 Commercial sponsorships

o 6.1 Orlando Arena naming rights

o 6.2 San Jose Earthquakes

o 6.3 Los Angeles Sol

o 6.4 Detroit Red Wings

7 Politics and culture

o 7.1 Political causes

o 7.2 Religion

o 7.3 Chamber of Commerce

o 7.4 Environmental initiatives

8 Controversy

o 8.1 Pyramid scheme accusations

8.1.1 FTC investigation

8.1.2 Amway India (Andhra Pradesh and Kerala)

8.1.3 Class action settlement

o 8.2 Canadian tax case

o 8.3 RIAA lawsuit

o 8.4 Procter & Gamble

o 8.5 Amway UK

o 8.6 Welcome to Life (Poland)

o 8.7 Dr. Phil and Shape Up

o 8.8 Other issues

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9 See also

10 References

11 Books

12 Documentaries

13 External links

o 13.1 Government documents

o 13.2 Profiles

History

Founding

Amway Japan Head Office.

Amway Vietnam (Hồ Chí Minh since 2008).

Jay Van Andel and Richard DeVos, friends since school days, had been business partners in various endeavors including a hamburger stand, air charter service, and a sailing business. In 1949 they were introduced by Neil Maaskant (Van Andel's second cousin) to the Nutrilite Products Corporation. Nutrilite was a California-based direct sales company founded by Dr. Carl Rhenborg, developer of the first multivitamin marketed in the United States. In August 1949, after a night-long talk, DeVos and Van Andel signed up to become distributors for Nutrilite food supplements.[9][page needed] They sold their first box the next day for $19.50, but lost interest for the

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next two weeks. Shortly thereafter, at the urging of Maaskant, who had become their sponsor, they traveled to Chicago to attend a Nutrilite seminar. The meeting was at a downtown hotel, with over a hundred people in attendance. After seeing promotional filmstrips and listening to talks by company representatives and successful distributors, they decided to pursue the Nutrilite business opportunity with enthusiasm. They sold their second box of supplements on their return trip to Michigan, and rapidly proceeded to develop their new business further.[9][page needed]

In 1949, DeVos and Van Andel had formed Ja-Ri Corporation (abbreviated from their respective first names) for importing wooden goods from South American countries. After their trip to the Nutrilite seminar, they dropped[clarification needed] this business and Ja-Ri became their Nutrilite distributorship.[10] In addition to profits on each product sold, Nutrilite also offered commission on the sales of products by new distributors introduced to the company by existing distributors—a system today known as multi-level marketing or network marketing. By 1958, DeVos and Van Andel had built an organization of over 5,000 distributors. However, following concerns about the stability of Nutrilite, in April 1959 they and some of their top distributors formed The American Way Association to represent the distributors and look for additional products to market.[11]

Their first product was called Frisk, a concentrated organic cleaner developed by a scientist in Ohio. DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later changed the name to LOC (Liquid Organic Concentrate).[12] They subsequently formed Amway Sales Corporation to procure and inventory products and to handle the sales and marketing plan, and Amway Services Corporation to handle insurance and other benefits for distributors (Amway being an abbreviation of "American Way").[13] In 1960 they purchased a 50% share in Atco Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its name to Amway Manufacturing Corporation.[14] In 1964 the Amway Sales Corporation, Amway Services Corporation, and Amway Manufacturing Corporation merged to form a single entity, Amway Corporation[15] Amway bought control of Nutrilite in 1972 and full ownership in 1994.[16]

International expansion

Amway expanded overseas to Australia in 1971, to Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to Russia in 2005, and to Vietnam in 2008.

Quixtar

Main article: Amway Global

In 1999 the founders of the Amway corporation established a new holding company, named Alticor, and launched three new companies: a sister (and separate) Internet-focused company named Quixtar, Access Business Group, and Pyxis Innovations. Pyxis, later replaced by Fulton Innovation, pursued research and development and Access Business Group handled manufacturing and logistics for Amway, Quixtar, and third party clients.[17]

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The main difference was that all "Independent Business Owners" (IBO) could order directly from Amway on the internet, rather than from their upline "direct distributor," and have products shipped directly to their home. The Amway name continued being used in the rest of the world. After virtually all Amway distributors in North America switched to Quixtar, Alticor elected to close Amway North America after 2001. In June 2007 it was announced that the Quixtar brand would be phased out over an 18 to 24 month period in favor of a unified Amway brand (Amway Global) worldwide.

In 2006, Quixtar published The Quixtar Independent Business Owner Compensation Plan, in which the company reported that the average monthly gross income for "Active" IBOs was $115.[18]

Global marketsAccording to the Amway website, as of 2011 the company operates in over 80 countries and territories, organized into regional markets: the Americas, Europe, greater China, Japan and Korea, and SE Asia/Australia.

In 2008, Alticor announced that two-thirds of the company's 58 markets reported sales increases, including strong growth in the China, Russia and India markets.[19]

Amway Australia

See Amway Australia Pty Ltd

Amway China

Amway grew quickly in China from its market launch in 1995. In 1998, after abuses of illegal pyramid schemes led to riots, the Chinese government enacted a ban on all direct selling companies, including Amway.[20] After negotiations, some companies like Amway, Avon, and Mary Kay continued to operate through a network of retail stores promoted by an independent sales force.[21] China introduced new direct selling laws in December 2005, and in December 2006 Amway was one of the first companies to receive a license to resume direct sales. However, the law forbids teachers, doctors, and civil servants from becoming direct sales agents for the company and, unlike in the U.S., salespeople in China are ineligible to receive commissions from sales made by the distributors they recruit.

In 2006, Amway China had a reported 180,000 sales representatives, 140 stores, and $2 billion in annual sales.[22] In 2007 Amway Greater China and South-east Asia Chief Executive Eva Cheng was ranked No.88 by Forbes magazine in its list of the World's Most Powerful Women.[23] In 2008, China was Amway's largest market, reporting 28% growth and sales of ¥17 billion (US$2.5billion).[24] According to a report in Bloomberg Businessweek in April 2010, Amway had 237 retail shops in China, 160,000 direct sales agents, and US$3 billion in revenue.[25]

Brands

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Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later the hair care product Satinique (1965) and the cosmetics line Artistry (1968). Today Amway manufactures over 450 products, with manufacturing facilities in China, India and the United States, as well as Nutrilite organic farms in Brazil, Mexico and the United States (California and Washington State). Amway brands include: Artistry, Atmosphere, Body Blends, Body Works, Clear Now, eSpring, Fulton Street, Glister, iCook, Kahve, Legacy of Clean, Nutrilite, Peter Island, Perfect Empowered Drinking Water, Personal Accents, Ribbon, Satinique, Tolsom, XS, and Zsenso

Household cleaners

Amway is best known in North America for its original multi-purpose cleaning product LOC, SA8 laundry detergent, and Dish Drops dishwashing liquid. In the January 2007 issue of Consumer Reports, SA8 with Bioquest was rated the best-performing laundry detergent, scoring 99 out of a possible 100 points.[26] Consumer Reports did, however, criticise SA8's pricing, a situation which was disputed by Amway.[27] Consumer Reports conducted blind testing of detergents in 2010 and ranked versions of Amway's Legacy of Clean detergents 9th and 18th of 20 detergents tested. Consumer Reports program manager Pat Slaven recommended against buying the products because consumers can "go to the grocery store and get something that performs a whole lot better for a whole lot less money."[28][29]

Health and beauty

Amway's health and beauty brands include Artistry, Beautycycle, Time Defiance, Artistry Essentials, Pure White, Satinique, Tolsom, Body Series, Glister, Moiskin (South America),[30] Nutrilite, Nutriway (Scandinavia and Australia/New Zealand), eSpring, Atmosphere and iCook as well as XL and XS Energy drinks.

ArtistryMain article: Artistry (cosmetics)

Amway's Artistry products include skin care, cosmetics, and anti-aging creams and serums.

Nutrilite

Main article: Nutrilite

Amway's largest selling brand is the Nutrilite range of health supplements (marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded US$3billion globally.[31] In 2001, five Nutrilite products were the first dietary supplements to be certified by NSF International.[32] Surveys by independent group Consumerlab.com since 2002 have rated Nutrilite as having the highest customer satisfaction rating (96% in 2006) in the direct selling/MLM brand category.[33][34] In 2006, 2007, 2008, and 2009 in the nutrient and health food category, Nutrilite won "Platinum" and "Gold" awards in Malaysia, China, Taiwan, Thailand, and Asia overall in the Reader's Digest "Trusted Brands of Asia" survey.[35] In 2008 Nutrilite scientists, in partnership with Alticor subsidiary Interleukin Genetics won the 12th John M. Kinney Award for

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Nutrition and Metabolism for their research into the interaction between nutrition and genetics.[36]

In January 2009, Amway announced a voluntary recall of Nutrilite and XS Energy Bars after learning that they had possibly been manufactured with Salmonella-contaminated ingredients from Peanut Corporation of America. The company indicated that it had not received any reports of illness in connection with the products.[37]

eSpring

Amway's eSpring water filter, introduced in 2000, was the first home water treatment system to incorporate a carbon block filter and Ultraviolet disinfection unit, becoming the first home system to achieve certification for ANSI/NSF Standards 42, 53 and 55.[38] The unit was also the first commercial product to include sister company Fulton Innovations eCoupled wireless power induction technology. Fulton Innovation introduced the technology in other consumer electronic products at the 2007 International Consumer Electronics Show. Companies licensing this technology include General Motors, Motorola and Visteon.[39][40] In 2006 eSpring was named Product of the Year by the Poland-based non-profit World Foundation of Health, Heart and Mind.[41] eSpring has won numerous Gold and Platinum awards in the Reader's Digest Most Trusted Brand Asia surveys.[42]

Atmosphere

In 2008 Amway's Atmosphere Air Purifier became the first air cleaner certified Asthma and Allergy Friendly by the Asthma and Allergy Foundation of America.[43][44]

Ditto DeliveryAmway owns a patent on the online shopping method of Ditto Delivery, which allows consumers to specify an automatic monthly delivery of each product.[45] In May 2001, Ditto Delivery accounted for 30% of Quixtar's North American sales.[46]

Business modelAmway combines direct selling with a (network marketing) strategy. "Independent Business Owners" (IBOs) may market products directly to potential customers and may also recruit (sponsor) and train other people to become IBOs. IBOs may earn income both from the retail markup on any products they sell personally, plus a performance bonus based on the sales volume they and their downline (IBOs they have sponsored) have generated.[3] People may also register as IBOs to buy products at discounted prices.[citation needed]

Commercial sponsorships

Orlando Arena naming rights

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In December 2006, Alticor secured the naming rights for the 17,000-seat basketball arena in Orlando, Florida – home of the Orlando Magic, which are owned by the family of Rich DeVos. The arena, formerly known as the TD Waterhouse Centre became known as the Amway Arena. It is scheduled for demolition by implosion in March 2012, following the 2010 opening of its successor, Amway Center.[47]

San Jose Earthquakes

Prior to the 2009 Major League Soccer season, Amway Global signed a three-year deal with the San Jose Earthquakes to become the team's official jersey sponsor.[citation needed]

A major part of the partnership is focused on community initiatives in the Bay Area. As a result, Amway Global is now also the official sponsor of the team's Kicks for Kids program that focuses on fitness and healthy lifestyles, as well as bringing underprivileged children to Earthquakes games.[citation needed]

The partnership also saw the creation of the Amway Global Street Team, which appears at all Earthquakes home games and at a number of soccer and non-soccer events throughout the Bay Area. The members of the Amway Global Street Team give away Earthquakes-branded merchandise and provide soccer skills demonstrations at each event.[48]

Los Angeles Sol

In March 2009, Amway Global signed a multi-year deal to become the official presenting partner of the Los Angeles Sol of Women's Professional Soccer.[49] The deal, however, would last only one year, as the Sol folded after the 2009 season.

Detroit Red Wings

Prior to the 2011–12 season, Amway signed a three-year deal to be the presenting sponsor of the National Hockey League's Detroit Red Wings.[50]

Politics and culture

Political causes

In the 1990s, the Amway organization was a major contributor to the Republican Party (GOP) and to the election campaigns of various GOP candidates. Amway and its sales force contributed a substantial amount (up to half) of the total funds ($669,525) for the 1994 political campaign of Republican congresswoman and Amway distributor Sue Myrick (N.C.).[51] According to two reports by Mother Jones magazine, a liberal news organization, Amway distributor Dexter Yager “used the company’s extensive voice-mail system to rally hundreds of Amway distributors into giving a total of $295,871” to Myrick’s campaign.[51][52] According to a campaign staffer quoted by the magazine, Myrick had appeared regularly on the Amway circuit, speaking at hundreds of rallies and selling $5 and $10 audiotapes.[51] Following the 1994 election, Myrick maintained

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“close ties to Amway and Yager”, and raised $100,000 from Amway sources, “most notably through fundraisers at the homes of big distributors”, in the 1997–98 election cycle.[52]

In October 1994, Amway gave the biggest corporate contribution recorded to that date to a political party for a single election – $2.5 million to the Republican National Committee – and was the number one corporate political donor in the U.S.[51] In the 2004 election cycle, the organization contributed a total of $4 million to a conservative 527 group, Progress for America.[53]

In July 1996, Amway co-founder Richard DeVos was honored at a $3 million fundraiser for the Republican Party, and a week later, it was reported that Amway had tried to donate $1.3 million to pay for Republican "infomercials" and televising of the GOP convention on Pat Robertson's Family Channel, but backed off when Democrats criticized the donation as a ploy to avoid campaign-finance restrictions.[51][54]

In April 1997 Richard DeVos and his wife, Helen, gave $1 million to the Republican National Committee,[52][54] which at the time was the second-largest soft-money donation ever, behind Amway's 1994 gift of $2.5 million to the RNC.[52] In July 1997, Senate Majority leader Trent Lott and House Speaker Newt Gingrich slipped a last-minute provision into a hotly contested compromise tax bill that granted Amway a tax break on its Asian branches, saving it $19 million.[52]

In a column published in the Fort Worth Star-Telegram newspaper in August 1997,[55] reporter Molly Ivins wrote that Amway had "its own caucus in Congress...Five Republican House members are also Amway distributors: Reps. Sue Myrick of North Carolina, Jon Christensen of Nebraska, Dick Chrysler of Michigan, Richard Rombo of California, and John Ensign of Nevada. Their informal caucus meets several times a year with Amway bigwigs to discuss policy matters affecting the company, including China's trade status."[56]

A 1998 analysis of campaign contributions conducted by Businessweek found that Amway, along with the founding families and some top distributors, had donated at least $7 million to GOP causes in the preceding decade.[54] Political candidates who received campaign funding from Amway in 1998 included Representatives Bill Redmond (R-N.M.), Heather Wilson (R-N.M.), and Jon Christensen (R-Neb).[52]

According to a report by the Center for Public Integrity, in the 2004 election cycle, members of the Van Andel and DeVos families were the second, third and fifth largest donors to the Republican party.[56]

Dick DeVos, son of Amway founder Richard DeVos and past president of the company, served as Finance Chairman of the Republican National Committee,[57] and his wife Betsy DeVos served as chair of the Michigan Republican Party from 1996 to 2000 and 2003 to 2005.[58]

In May 2005, Dick DeVos ran against incumbent Governor Jennifer Granholm in Michigan's 2006 gubernatorial election. DeVos was defeated by Granholm, who won 56% of the popular vote to Devos' 42%.[59]

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In January 2012, Amway contributed $500,000 to National Organization for Marriage, a political organization which opposes legalization of same-sex marriage in the United States.[60]

Religion

Several sources have commented on the promotion of Christian conservative ideology within the Amway organization.[52][61][62][63] Mother Jones magazine described the Amway distributor force as "heavily influenced by the company's dual themes of Christian morality and free enterprise" and operating "like a private political army."[52] In The Cult of Free Enterprise, author (and former Amway distributor) Stephen Butterfield wrote “[Amway] sells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism.”[61] Philadelphia City Paper correspondent Maryam Henein stated that “The language used in motivational tools for Amway frequently echoes or directly quotes the Bible, with the unstated assumption of a shared Christian perspective.”[62]

Businessweek correspondents Bill Vlasic and Beth Regan characterized the founding families of Amway as “fervently conservative, fervently Christian, and hugely influential in the Republican Party”, noting that “Rich DeVos charged up the troops with a message of Christian beliefs and rock-ribbed conservatism.”[54]

High-ranking Amway leaders such as Richard DeVos and Dexter Yager were owners and members of the board of Gospel Films, a producer of movies and books geared towards conservative Christians, as well as co-owners (along with Salem Communications) of a right-wing, Christian non-profit entity called Gospel Communications International.[52][62][64][65][66]

Rolling Stone's Bob Moser reported that former Amway CEO and co-founder Richard DeVos is connected with the Dominionist political movement in the United States. Moser states that DeVos was a supporter of the late D. James Kennedy, giving more than $5 million to Kennedy's Coral Ridge Ministries.[67][68][68] DeVos was also a founding member and two-time president of the Council for National Policy, a right-wing Christian-focused organization.[69]

Sociologist David G. Bromley calls Amway a "quasi-religious corporation" having sectarian characteristics.[70][71] Bromley and Anson Shupe view Amway as preaching the Gospel of Prosperity.[72] Patralekha Bhattacharya and Krishna Kumar Mehta, of the consulting firm Thinkalytics, LLC, reasoned that although some critics have referred to organizations such as Amway as "cults" and have speculated that they engage in "mind control", there are other explanations that could account for the behavior of distributors. Namely, continued involvement of distributors despite minimal economic return may result from social satisfaction compensating for diminished economic satisfaction.[73]

Chamber of Commerce

Amway co-founder, Jay Van Andel (in 1980), and later his son Steve Van Andel (in 2001) were elected by the board of directors of the United States Chamber of Commerce as chairman of the private American lobbying organization.[74]

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Environmental initiatives

Amway emphasizes the environmental benefits of many of its products, and in June 1989 the United Nations Environmental Program's Regional Office for North America recognized it for its contributions to the cause of the environment.[75]

Controversy

Pyramid scheme accusations

Amway has several times been accused of being a pyramid scheme. A 1979 FTC investigation in the United States (see below), a 1997 Belgian court[76] and a 2008 court judgement in the United Kingdom all dismissed these claims.[77]

Harvard Business School of Leadership, which described Amway as “one of the most profitable direct selling companies in the world", noted that Amway founders Van Andel and DeVos:

"...accomplished their success through the use of an elaborate pyramid-like distribution system in which independent distributors of Amway products received a percentage of the merchandise they sold and also a percentage of the merchandise sold by recruited distributors. DeVos was an extremely charismatic speaker and used this ability to mobilize and motivate Amway distributors."[78]

DeVos responded to the pyramid scheme accusations about Amway in a 2009 interview with Grand Rapids Press reporter Chris Knape.[77]

Knape: "Amway has been accused of being a pyramid scheme, of tax evasion and a host of other things. How much of the problems Amway has had over the years can you attribute to the decisions that you made or Jay Van Andel made?"

DeVos: "We failed to come down hard enough, quick enough, to stamp that sort of thing out. That was a sin of omission. We failed to discipline the organization."

FTC investigationMain article: In re Amway Corp.

In a 1979 ruling,[15][79] the Federal Trade Commission found that Amway does not qualify as a pyramid scheme because distributors were not paid to recruit people and had to sell products to get bonus checks, and the company was committed to buying back its distributors' excess inventory.[80]

The FTC did, however, find Amway "guilty of price-fixing and making exaggerated income claims";[81] the company was ordered to stop retail price fixing and allocating customers among distributors and was prohibited from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such

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statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.[82][83]

Amway India (Andhra Pradesh and Kerala)

In September 2006, following a public complaint, Andhra Pradesh state police (CID) initiated raids and seizures against Amway distributors in the state, and submitted a petition against them, claiming the company violated the Prize Chits and Money Circulation Schemes (banning) Act.[84]

They shut down all offices of firm Amway, and Arijit Saha writes that "with it the fate of 80,000 distributors of the company has been indefinitely sealed".

The enforcement said that the business model of the company is illegal.[85][86] The Reserve Bank of India (RBI) had notified the police that Amway in India may be violating certain laws regarding a "money circulation scheme" and the IB Times article writes that "some say ... Amway is really more about making money from recruiting people to become distributors, as opposed to selling products."[86] The complaint was initiated following a dowry dispute between a local man and his wife, an Amway distributor.[87]

Following a petition by Amway, the state High Court issued an injunction against the CID and stated the Act did not prima facie apply,[88] however after Amway requested the CID petition be dismissed the High Court declared that if police allegations were true, Amway's Indian subsidiary would be in violation of the act and the investigation should continue. On August 14, 2007, the Supreme Court of India ordered the state police to complete the investigation against Amway in 6 months.[89] In 2008, citing the High Court decision, the Andhra Pradesh state government enacted a ban on Amway media advertisements.[84] Amway challenged the ban and in July 2009 the AP High Court refused a petition the ban should be enforced.[90] As of June, 2009 the original 2006 CID case was still pending at the Chief Metropolitan Magistrate Court in Hyderabad.[91]

On August 6, 2011 Kerala Police sealed the offices of Amway at Kozhikode, Kannur, Kochi, Kottayam, Thrissur, Kollam and Thiruvananthapuram following complaints.[92][93][94] As a result of it government formed a committee to form guidelines in direct selling in Kerala.[95]

The Kerala High Court on November 9 directed the DGP, Kerala Police to file a statement regarding the status of the investigation initiated against the multi-level marketing companies.A Division Bench comprising Acting Chief Justice Manjula Chellur and Justice C N Ramachandran Nair issued the directive while considering a petition challenging the government order regarding the Kerala direct selling regulations.[96]

Class action settlement

On November 3, 2010, Amway announced that it had agreed to pay $56 million – $34 million in cash and $22 million in products – to settle a class action that had been filed in Federal District Court in California in 2007.[97] The class action, which had been brought against Quixtar and

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several of its top-level distributors, alleged fraud, racketeering, and that the defendants operated as an illegal pyramid scheme.

While noting that the settlement is not an admission of wrongdoing or liability, Amway acknowledged that it had made changes to its business operations as a result of the lawsuit. The settlement is subject to approval by the court, which is expected in early 2011.[98] The economic value of the settlement, including the changes Amway made to its business model, totals $100 million.[99]

Canadian tax case

In 1983, Amway pleaded guilty to criminal tax evasion and customs fraud in Canada, resulting in a fine of $25 million CAD, the largest fine ever imposed in Canada at the time. In 1989 the company settled the outstanding customs duties for $45 million CAD.[100][101] In a 1994 interview, Amway co-founder Rich DeVos stated that this incident had been his greatest "moral or spiritual challenge", first in "soul searching as to whether they had done anything wrong" and then for pleading guilty for technical reasons, despite believing they were innocent of the charges. DeVos stated he believed that the case had been motivated by "political reasons".[102]

RIAA lawsuit

The Recording Industry Association of America (RIAA), as part of its anti-piracy efforts, sued Amway and several distributors in 1996, alleging that copyrighted music was used on "highly profitable" training videotapes.[103] Amway denied wrongdoing, blaming the case on a misunderstanding by distributors, and settled the case out of court for $9 million.[104] In a related lawsuit initiated by the distributors involved, the Court established that Mahaleel Lee Luster, who had been contracted to make the videotapes, had violated copyright without the knowledge of three of the five of those distributors.[105]

Procter & Gamble

Some Amway distributors were involved with an urban legend that the (old) Procter & Gamble service mark was in fact a Satanic symbol or that the CEO of P&G is himself a practicing Satanist. (In some variants of the urban legend, it is also claimed that the CEO of Procter & Gamble donated "satanic tithes" to the Church of Satan.)[106] Procter & Gamble alleged that several Amway distributors were behind a resurgence of the urban legend in the 1990s and sued several independent Amway distributors and the company for defamation and slander.[107] The distributors had used Amway's Amvox voice messaging service to send the rumor[citation needed] to their downline distributors in April 1995. After more than a decade of lawsuits in multiple states, by 2003 all allegations against Amway and Amway distributors had been dismissed. In October 2005 a Utah appeals court reversed part of the decision dismissing the case against the four Amway distributors, and remanded it to the lower court for further proceedings.[108] On March 20, 2007, Procter & Gamble was awarded $19.25M by a U.S. District Court jury in Salt Lake City, in the lawsuit against the four former Amway distributors.[109][110] On November 24, 2008, the case was officially settled.[111]

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Amway UK

In May 2007, the UK Department of Trade and Industry (DTI) accused Amway and distributor organizations Britt WorldWide and Network TwentyOne UK of "objectionable practices" and petitioned to wind up the companies.[112] The case against Amway was dismissed in 2008[113] on the condition that a full earnings disclosure is published publicly, no registration or renewal fees are charged and that the sale of business support materials are prohibited. The case against Network 21 was dismissed in 2009.[114]

Welcome to Life (Poland)

In 1997, Amway Poland and Network TwentyOne separately sued the makers of a Polish film Welcome to Life for defamation and copyright violations. The director and producer were later acquitted on the charge of disseminating false information.[115][116] The film, banned for 12 years, was one of the highly anticipated movies of 2009's Warsaw Film Festival and was dubbed by the promoters as a "scary movie about brainwashing"[115] that depicts hard-sell "pep rallies" and distributors stating meetings were operated similar to the Communist Party and methods of recruitment that confusingly resembled those of a sect.[117] A best-seller on the local video black market.,[118] the film was banned while the suit proceeded.

In 2001 a regional court ruled in favor of Network 21; however, in 2004 the Warsaw Regional Court dismissed Amway's civil lawsuit. On appeal Amway won the case and the producers were ordered to pay a fine to a children's charity and publish a public apology.[119][120] As of 2009 the film was still banned due to an ongoing case brought by "private individuals" ridiculed in the film.[121]

Dr. Phil and Shape Up

In March 2004, TV personality Phil McGraw (aka Dr. Phil) pulled his “Shape Up” line of supplements off the market in the face of an investigation by the U.S. Federal Trade Commission (FTC). The supplements were manufactured by CSA Nutraceuticals, a subsidiary of Alticor’s Access Business Group.[122] The FTC later dropped the probe; however, in October 2005, a class-action lawsuit was filed against McGraw by several people who used the products and claimed that the supplements, which cost $120 per month, did not stimulate weight loss.[123] In September 2006, a $10.5 million settlement was reached, in which Alticor agreed to provide $4.5 million in cash and $6 million in Nutrilite products to disgruntled users of Shape Up.[124][125][126][127]

Other issues

In 2004, Dateline NBC featured a critical report based on a yearlong undercover investgation of business practices within the Amway organization.[128] The report noted that the average distributor makes only about $1,400 per year and that many of the “high level distributors singing the praises of Quixtar [Amway]” are actually “making most of their money by selling motivational books tapes and seminars; not Quixtar’s cosmetics, soaps, and electronics.”

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"In fact, about twenty high level distributors are part of an exclusive club; one that those hundreds of thousands of other distributors don’t get to join. For years only a privileged few, including Bill Britt, have run hugely profitable businesses selling all those books tapes and seminars; things the rank and file distributors can’t sell themselves but, are told over and over again, they need to buy in order to succeed."

It was also revealed that an Amway recruiter featured in the report (Chris Fredericks) made misleading and inconsistent statements about Amway earnings during a recruitment meeting and had an outstanding arrest warrant for drug dealing.[128]

Some Amway distributor groups have been accused of using cult-like tactics to attract new distributors and keep them involved and committed.[61][129][130][131] Allegations include resemblance to a Big Brother organization with paranoid attitude to insiders critical of the organization,[131] seminars and rallies resembling religious revival meetings [61] [131] and enormous involvement of distributors despite minimal incomes.[61][130][131] An examination of the 1979–1980 tax records in the state of Wisconsin showed that the Direct Distributors, reported a net loss of $918 on average.[70][130]

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Amway Global From Wikipedia, the free encyclopedia

Jump to: navigation, search

This article's factual accuracy may be compromised due to out-of-date information. Please help improve the article by updating it. There may be additional information on the talk page. (May 2010)

Amway Global

Type Private

Industry Multi-level marketing

Founded 1959

Headquarters Ada, Michigan, USA

Area served Worldwide

Key people

Steve Van AndelDoug DeVosJim PayneRon and Georgia Lee PuryearBrad and Julie Duncan

Parent Alticor

Website Amway.com

Amway Global (formerly known as Quixtar North America) is a multi-level marketing (MLM) or network marketing company, founded 1959 in Ada, Michigan, United States. It is privately owned by the families of Rich DeVos and Jay Van Andel through Alticor which is the holding company for businesses including Amway, Amway Global, Fulton Innovation, Amway

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Hotel Corporation, Gurwitch Products, Hatteras Yachts and manufacturing and logistics company Access Business Group.[1] After the launch of Amway Global originally operating under the name Quixtar, it replaced the Amway business in United States, Canada and the Caribbean, with the Amway business continuing to operate in other countries around the world. Company officials confirmed in June 2007 that, over the subsequent 18 to 24 months, Quixtar will merge with its sister companies of Amway organizations around the globe to form under one new name Amway Global.[2][dated info]

Amway Global is also a member of the Direct Selling Association [3] and the Better Business Bureau.[4]

Contents 1 History 2 Products

3 Business model

o 3.1 Income of Quixtar IBOs

o 3.2 IBO Association International

o 3.3 Accreditation

4 Sales and ranking

o 4.1 Promotion

o 4.2 Sports Interests

4.2.1 Orlando Arena naming rights

4.2.2 San Jose Earthquakes

4.2.3 Los Angeles Sol

5 Controversies

o 5.1 Litigation

o 5.2 FTC investigations

o 5.3 Income from tools and business support materials

o 5.4 Disputes with TEAM

6 See also

7 References

8 External links

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HistoryRich DeVos and Jay Van Andel initially founded the Ja-Ri Corporation, a multi-level marketing distributorship for Nutrilite products, in 1949. Ja-Ri was incorporated in 1959, and changed its name to "Amway" in 1963. As of 2007, Amway operates in more than 80 countries around the world. In 1999, the founders of the Amway corporation launched a sister Internet-based company named Quixtar. The Alticor corporation owns both Amway and Quixtar, plus several other concerns. Quixtar replaced the North American business of Amway in 2001 after the majority of the distributors moved to Quixtar, with Amway operating in the rest of the world.

On June 13, 2007, the Associated Press confirmed that over the next 18 to 24 months, the Quixtar business would be phased out in favor of a unified Amway Global brand in North America. According to Chairman Steve Van Andel and President Doug DeVos, "We are going through a global transformation of our business; this includes rethinking our global approach to products, training, brands, and how we operate in all the countries in which Alticor operates. As part of that, in 18 to 24 months, we're planning to begin using the Amway name in North America to unite our business opportunity under a single global brand."[2]

ProductsQuixtar is the exclusive distributor of Alticor products in the United States and Canada, including Nutrilite dietary supplements, XS Energy Drinks, personal care, home care, air and water purifiers [5] and Artistry cosmetics.

Quixtar also markets through their website products from partner stores whose list can be found at Quixtar website. Quixtar utilizes the Employee & Affiliates Purchase Program discount pricing structure for purchases from most of these third-party partner stores. Purchases from some of them (generally called discount-only partner stores) may not gain the P/V & B/V (measures of sales volumes, used for calculating bonuses to be paid) normally associated with an IBO's purchases.[6]

Business modelQuixtar relies primarily on person-to-person referral rather than advertisements for sale of products;[7] however, Quixtar has recently announced the launch of a multi-million dollar ad campaign.[8] A large part of the marketing budget is spent on paying bonuses to distributors. IBOs were paid more than $370.1 million in bonuses and incentives in fiscal year 2006.[2][dead

link]. Bonuses are paid for individual sales and sales generated by people one sponsors but not for sponsoring itself.[9][10]

In 2001, after the majority of Amway Independent Business Owners (IBOs) had transferred to the new company, Quixtar completely replaced Amway as the marketing venture for Amway/Alticor products in North American regions. The Quixtar business model differs from the earlier Amway business model in many aspects, such as the way distribution is performed as well as the products and services offered through partner stores. Rather than ordering product

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from a distributor who delivers them in person, Quixtar customers can place orders online and have the products shipped to them directly. In mid-2007 however, Quixtar announced they were phasing back in the Amway name over two years and discarding the Quixtar name. Along with the re-branding campaign, Amway Global is investing over 580 million dollars into both increased compensation for IBOs and for extensive advertising of the new brand name.[11]

Individuals may buy products through Quixtar's web site with a referral number from an IBO. Quixtar also gives IBOs the option to create free personal websites that can be personalized to focus on health, beauty, health and beauty, and/or gift and incentive products. The referring IBO then receives the retail/wholesale profit (usually 30%), and a percentage ("bonus") of the cost of the sold goods (from 3% up to 31% depending on total PV generated), with Quixtar-exclusive products yielding a higher bonus per dollar in Point Value and Business Value (PV/BV). Quixtar offers a wide range of products for its IBOs to purchase for personal use and/or to sell to customers through Quixtar.com and IBO personal e-commerce sites.

IBOs pay a registration fee and build their businesses through retail sales to customers, referring business to Quixtar.com, and by helping other IBOs build similar businesses. Their earnings are based on their business' sales and the volume of sales and purchases of IBOs registered by them.

The structure of a Quixtar's IBO organization is hierarchical, but an individual can earn more than those who bring them into the organization.[citation needed] Pin levels are similar as in Amway. There are several major pin levels in the model [9][12] denoting particular level of success in building their IBO business.

Income of Quixtar IBOs

Quixtar IBOs earn income in different forms in various categories including IGP (Immediate Gross Profit), Performance Bonus, Leadership Bonus, and other Growth incentives. IGP is the profit made when customers of an IBO buy products and services from Quixtar at retail price. A majority of IBOs who make income in the beginning are in this category only[citation needed]. Performance bonus on a scale of 3% to 25% of the group volume (total BV of the sale made by the group) is paid if the PV level of the IBO is more than 100 PV in a month. Leadership bonus is paid at 4% of BV of each qualified leg who is at 25% or 7500 PV. Growth incentives are announced by Quixtar every year in the form of bonuses and paid trips at various levels. These bonuses are awarded to IBOs who are at Platinum or higher achievement levels.

Quixtar reports that the average income for an "active" Quixtar IBO in 2005 was $115 a month ($1,380 annually), as documented in The Quixtar IBO Compensation Plan[12] and on a Quixtar website.[13] The average annual Quixtar income for an IBO that qualified at the Platinum level in 2005 (0.1683% of IBOs) was $47,472 and for a Diamond (.0120% of IBOs) it was $146,995. The largest single annual bonus (in addition to monthly incomes) for a Diamond was $1,083,421.[13][14]

An "active" IBO is qualified on the IBO Registration form:[15] Based on an independent survey during 2001, “Active” means an IBO attempted to make a retail sale, or presented the

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Independent Business Ownership Plan, or received bonus money, or attended a company or IBO meeting in the year 2000. Approximately 66% of all IBOs of record were found to be "Active."

IBO Association International

The IBO Association International (IBOAI) was founded in 1959 as the American Way Association with the goal of "serving the common interests of Independent Business Owners throughout North America." Members are served by an 18-member Board of Directors who are supported by seven full-time staff.[16] The Association's board members are "elected by its voting members",[17] who must be "Qualified Platinums and above."[18]

Accreditation

In 2006, Quixtar, in partnership with the IBOAI (IBO Association International) launched the "Quixtar Accreditation" program in order to address concerns about the companies that provide Business Support Materials to Quixtar IBOs. North American Diamonds (high-level IBOs) and their associated training companies may apply to Quixtar to be accredited by the corporation. Among other things, accreditation specifically states that promotion of particular religious or political viewpoints is unacceptable. Additionally, accredited programs must agree to a range of other guidelines, including "full" transparency in any compensation paid for Business Support Materials. The "full" transparency only applies to the IBO's who are participants in the BSM income, for most groups this means Platinums and above, representing a very small percentage of IBO's. Accreditation lasts two years and is enforced through reviews of materials and surveys of IBOs. The full guidelines are listed in the IBO Communications Platform.[19] In April 2006 "eFinity" became the first Quixtar affiliated support organization to receive accredited status.

Sales and rankingForbes ranked Alticor, as America's 27th largest privately owned company with estimated revenue of $7.29 billion.[20] In 2006, Internet Retailer ranked Quixtar.com as the number one site in the "health and beauty" category [21] and 18th largest e-commerce site (for revenue) overall.

Quixtar-powered IBOs generated revenues of $1.118 billion for Quixtar for the fiscal year ended December 31, 2006, the fourth consecutive year in which the company surpassed the billion-dollar mark. IBOs also generated record $84.6 million in revenues for Quixtar’s Partner Stores in 2006.[22]

Promotion

Athletes who have promoted Quixtar or its products include Jamaican Olympic sprinter Asafa Powell, American pole vaulter Jennifer Stuczynski, American Olympic sprinter Sanya Richards, U.S. Olympian Shawn White, Cinematographer Wes Anderson,Chinese Olympic hurdler Liu Xiang;[23] Brazilian soccer player Ronaldinho, heavyweight boxer Evander Holyfield, NFL player Emmitt Smith[citation needed] and Heisman Trophy winner Ron Dayne. Tim Foley, a member of the undefeated 1972 Miami Dolphins, is a Quixtar Founders Crown Ambassador.[24]

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Author John C. Maxwell, who writes leadership books including The 21 Irrefutable Laws of Leadership, is known to support Quixtar affiliated organizations such as Worldwide DreamBuilders[citation needed] and co-authored a book, Becoming a Person of Influence, with Jim Dornan, Quixtar Founders Crown Ambassador and founder of Quixtar support organization Network TwentyOne. Orrin Woodward and Chris Brady, both former IBOAI board members for Quixtar, co-authored the #1 bestseller, Launching a Leadership Revolution. Both Woodward and Brady were terminated by Quixtar and participated in a class action lawsuit against Quixtar alleging that Quixtar operated as an illegal recruitment scheme.[citation needed] Paul Harvey, a radio broadcaster, known for his 'The rest of the story' tagline, has long been associated with the Quixtar program that is advertised on his show.[citation needed]

As a guest speaker at the Quixtar LIVE! conference in 2003, Phil McGraw ("Dr. Phil") reportedly described Quixtar as "one of the greatest success stories in American business history."[citation needed] In a 2006 settlement involving a class-action lawsuit brought against McGraw and his Shape-Up diet products, plaintiffs could receive a share of $6.0 million in Quixtar-brand Nutrilite vitamins and $4.5 million in cash.[25][26]

Sports Interests

Orlando Arena naming rights

In December 2006, Amway secured the naming rights for the Orlando Arena, home to the NBA's Orlando Magic, which was formerly known as the TD Waterhouse Centre. In the deal, the arena became known as Amway Arena. As part of the contract, Amway also had the exclusive right to first negotiations for the naming rights of the arena's successor, and secured in early August 2009 a 10-year deal to name the new facility Amway Center.[27][28]

San Jose Earthquakes

Prior to the 2009 Major League Soccer season, Amway Global signed a three-year deal with the San Jose Earthquakes to become the team's official jersey sponsor.

A major part of the partnership is focused on community initiatives in the Bay Area. As a result, Amway Global is now also the official sponsor of the team's Kicks for Kids program that focuses on fitness and healthy lifestyles, as well as bringing underprivileged children to Earthquakes games.

The partnership also saw the creation of the Amway Global Street Team, which appears at all Earthquakes home games and at a number of soccer and non-soccer events throughout the Bay Area. The members of the Amway Global Street Team give away Earthquakes-branded merchandise and provide soccer skills demonstrations at each event.

As of 2012, Amway officially ended their 3 year contract with the Earthquakes to be their official sponsor.[29]

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Los Angeles Sol

In March 2009, Amway Global signed a multi-year deal to become the official presenting partner of the Los Angeles Sol of Women's Professional Soccer.[30] That deal would last only one year, as the Sol folded after the 2009 season.

Controversies

Litigation

For several years Quixtar was involved in litigation with the tools businesses of former Crown Distributor Kenny Stewart and Double Diamond Brig Hart.[31] In February 2008 a federal judge dismissed the case.[32]

A class action lawsuit was filed in 2007 against Quixtar and some of its top-level distributors in California, alleging fraud, racketeering, and that the products business and the tools business are pyramid schemes.[33] A similar case filed in California in August 2007 by TEAM affiliated IBOs whose contracts had been terminated was dismissed.[34] On November 3, 2010, Amway announced that it had agreed to pay $56 million to settle the class action, $34 million in cash and $22 million in products, and while denying any wrongdoing or liability, acknowledged that it had made changes to its business operations as a result of the lawsuit. The settlement is subject to approval by the court, which is expected in early 2011.[35] The total economic value of the settlement, including the changes to the business model, is $100 million.[36]

In his online book "Merchants of Deception", former Quixtar IBO Eric Scheibeler stated that he and his family received death threats from his uplines during a business meeting and from an anonymous phone call. In 2006, a Swedish newspaper published statements attributed to Scheibler which implied that Amway/Quixtar employees were responsible for these threats. Amway and Quixtar sued Scheibler on February 27, 2007 for defamation.[37] In July 2007, Scheibeler wrote a letter to an attorney for Amway and Quixtar clarifying among other things that, to his knowledge, Doug DeVos or Amway/Quixtar employees never made any death threats to him.[38]

In July 2007, a lawsuit was filed by IBS (Internet Business Solutions), owned by Quixtar Emeralds Henry and Sue Skaggs, naming Bill and Peggy Britt, Paul and Leslie Miller, Rocky Covington, Kevin and Beth Bell, and Britt World Wide, all of whom are Emeralds and above in Quixtar, as defendants. The suit alleges that the Skaggs, having developed a software system to allow for direct order fulfillment of tools to their downline, received approval from Britt to continue the development of the software program for eventual rollout to all of BWW (a tool system within Quixtar). During this time, the Skaggs state that they carried the burden of the development costs. According to the lawsuit, Bill Britt stated in 2005 that the program would not be rolled out across BWW. The Skaggs then claim they were de-edified by their upline. The suit alleges breach of contract, racketeering, and intentional interference with economic relations.[citation needed] In response, the defendants claimed that no contract was entered into and challenge the lawsuit on various other legal grounds.[citation needed]

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FTC investigations

The Federal Trade Commission offers advice for potential MLM members to help them identify those which are likely to be pyramid schemes.[39][40]

In the 1979 ruling In re. Amway Corp., the Federal Trade Commission determined that Quixtar predecessor Amway was not an illegal pyramid scheme because no payments were made for recruitment. In addition, Amway (and later Quixtar) rules required distributors to sell to at least 10 retail customers per month, or have $100 in product sales, or a total of 50PV from customer purchases in order to qualify for bonuses on downline volume. Quixtar IBOs are required to report this customer volume on Quixtar.com or they do not receive bonuses on downline volume. Furthermore, an IBO must also personally sell or use at least 70% of the products personally purchased each month.[9] The FTC established that these rules help prevent inventory loading and other potential abuses of the marketing model.

In 1986 Amway Corp. agreed, under a consent decree filed in federal court, to pay a $100,000 civil penalty to settle Commission charges it violated a 1979 Commission order that prohibits Amway from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve. According to a complaint filed with the consent decree, Amway violated the 1979 order by advertising earnings claims without including in it clear and conspicuous disclosures of the average earnings or sales of all distributors in any recent year or the percent of distributors who actually achieved the results claimed.[41]

The FTC has required the information on average income to be provided to all prospective Quixtar business owners since the above 1979 FTC ruling clearing the Amway business model as legal.

Income from tools and business support materials

In 1983, Rich DeVos, one of Amway's founders, made recordings which, among other things, communicated his displeasure with several issues regarding some of the high ranking distributors/IBO's. These recordings are entitled "Directly Speaking"[42][43] and were addressed to Direct Distributors (now called Platinums), who are considered leaders with various responsibilities for their downline group. In January 1983 Rich DeVos announced that Amway would pay Business Volume (BV) on Amway produced tapes. He expressed concern about the level of income from the sale of Business Support Materials (BSM; tapes, CDs, books, and business conferences/functions) compared to the income the high level distributors were making from Amway products. He stated his legal team was concerned if the tool income exceeded 10% of their Amway income, and stated that BV payouts on tapes can never exceed 20%[44] of the distributor's total Business Volume.

A 1985 Forbes magazine article quoted Dexter Yager, an IBO, as stating that about 2/3 of his income is from BSM's.[45]

In 2004, Dateline NBC aired a report, alleging that some high-level Quixtar IBOs make most of their money from selling motivational materials rather than Quixtar products.[46] Quixtar

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published an official Quixtar Response website[47] where it showed '"Interviews Dateline Didn't Do"'. Quixtar also states on its response site that Dateline declined their request to link to the site.

During the registration process for a new IBO, Quixtar contracts clearly inform prospective IBOs that BSM are optional and that the producers and sellers of the BSM may make profit or loss from their sale (like any other business).[15] This is also publicized on Quixtar websites.[48] Quixtar's Business Support Materials Arbitration Agreement (SMAA) requires the immediate seller of BSM's to buy-back materials, which were purchased only for personal consumption within a 180 day time frame, on commercially reasonable terms, upon request of the purchaser. BSM's purchased for inventory or to be sold to others downline are not covered by the buy back policy.[9]

Disputes with TEAM

On August 9, 2007, a group of Quixtar distributors, including founders of the TEAM training organization filed a lawsuit seeking to enjoin Quixtar from enforcing its distributor contracts, including the non-competition and non-solicitation provisions. The plaintiffs alleged that the company knowingly operates as a pyramid scheme, and prevents its distributors from leaving the organization through the aforementioned provisions.

On August 10, 2007, Quixtar announced that it had [49] terminated the businesses of] fifteen of the plaintiffs involved in the lawsuit, and sought and received a temporary restraining order and preliminary order of injunction[50][51] hosted by QuixtarNewsroom.com in a Michigan court preventing them from interfering with the LOS, soliciting IBOs for their new company, or disparaging Quixtar or the business in any way. In mid October 2007, Quixtar argued that the former distributors were in violation of the court order since Team continued to have meetings and sell motivational materials. In Grand Rapids, Michigan, Quixtar argued that Team was using Quixtar's proprietary information to promote its meetings and sell materials. The court held [52] in favor of Woodward and Brady and allowed Team to continue to operate. Specifically, the court held, "The Court finds particularly noteworthy the steps that both Mr. Orrin Woodward and TEAM took to make a good faith effort to comply with the preliminary injunction."

In an effort to ensure its injunction wasn't being violated, Quixtar filed an action against 30 anonymous bloggers.[53] Specifically, Quixtar is seeking to discover if Woodward and Brady are involved in a blogging campaign to disparage the company. The California lawsuit was dismissed on October 5, 2007.[54]

In the summer of 2004, some Quixtar leaders and IBOs allegedly launched a Web initiative designed to make their web pages more prominent in search results, aka Google Bombing.[55]

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Avon Products From Wikipedia, the free encyclopediaJump to: navigation, search

Avon Products, Inc.

Type Public

Traded as NYSE: AVPS&P 500 Component

Industry Personal careFounded 1886Founder(s) David H. McConnellHeadquarters New York City, New York, U.S.

Key people

Andrea Jung(Executive Chairman)Sherilyn S. McCoy(CEO)

Products

CosmeticsPerfumeClothingToys

Revenue US$ 11.292 billion (2011)[1]

Operating income US$ 855 million (2011)[1]

Net income US$ 518 million (2011)[1]

Total assets US$ 7.735 billion (2011)[1]

Total equity US$ 1.585 billion (2011)[1]

Employees 42,000 (2010)[1]

Website AvonCompany.comFor other uses, see Avon.

Avon Products, Inc. (NYSE: AVP) is a American personal care manufacturer and seller company in over 140 countries across the world and sales of $10.8 billion worldwide as of 2010.[2] It is the fifth-largest beauty company and largest direct selling enterprise in the world, with 6.4 million representatives.[3]

Contents 1 Business model and governance 2 History

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o 2.1 Early Avon trademark

o 2.2 Global expansion

o 2.3 Mergers and acquisitions

3 Avon Foundation

4 Controversy

5 See also

6 References

7 External links

Business model and governanceAvon Product is an multi-level marketing company.[4] The company's CEO is Sherilyn S. McCoy, who was appointed to that position in April 2012.[5] The former CEO, Andrea Jung, became the executive chairman of the board. Jung was the longest tenured female CEO among Fortune 500 companies.[6]

Avon uses both door-to-door sales people ("Avon ladies," primarily and a growing number of men) and brochures to advertise its products.

History

Early Avon trademark

The drawing stylized word AVON mark is an expired trademark at the USPTO, and owned by Avon Products, Inc.

The California Perfume Company, Inc. of New York, NY filed their first trademark application for Avon on June 3, 1932 with the USPTO. Part of the description for goods and services provided to the USPTO included "perfumes, toilet waters, powder and rouge compacts, lipsticks," and other toiletry products. First use and commercial use for Avon by the California Perfume Company was on September 1, 1929. Registration was granted on August 30, 1932. The trademark is owned by Avon Products, Inc. of New York, NY. The status of the original stylized word mark for Avon is expired.[citation needed]

Global expansion

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Avon sells products in over 140 countries. Brazil is the company's largest market, passing the United States in 2010. Avon entered the Chinese market in 1990, but legal changes in 1998 forced Avon to sell only through physical stores called Beauty Boutiques. The company received China's first license for direct selling in 2006.[3]

Mergers and acquisitions

Avon purchased Silpada, a direct seller of silver jewelry, in 2010 for $650 million.[3]

Avon FoundationIn addition to its corporate pursuits, the Avon corporation is involved in philanthropic causes. The Avon Foundation for Women, a 501(c)(3) public charity, is the largest corporate-affiliated philanthropy for women in the world. Avon founded the Avon Foundation for Women with its first grant, a $400 scholarship, in 1955. Avon was committed to helping women achieve their highest potential of economic opportunity and self-fulfillment by empowering them through scholarships and support for other forms of educational and occupational training and advancement. Women's empowerment continued to be the focus through the early 1990s when Avon began to increase its philanthropy with a new emphasis on breast cancer; the Avon Foundation still awards scholarships for Avon Sales Representatives and their families, as well as for the children of Avon associates. The Avon Foundation is currently focused on two key causes: breast cancer and domestic violence.[7] The Foundation approved $38 million in grants in 2011.[3]

ControversySince at least 2008, the conduct of various employees and executives of Avon has been investigated for possible violations of the law, including possible bribery and violations of the Foreign Corrupt Practices Act [8]

Avon began a probe of its China division after allegations of bribery in June 2008.[9] At least four executives, both in Asia and in the United States, were suspended in 2010,[9] and later fired for their roles in the activities being investigated.[10] According to the New York Times, Avon has spent over $170 million on legal fees and costs related to the investigation: $59 million in 2009 and $95 million in 2010, and $22.5 million for the first quarter of 2011.[11] The Times reported that the final tally may be close to $250 million, after which Avon would report the findings to the United States Department of Justice and the Securities and Exchange Commission and try to negotiate the penalties that those entities may impose.[11] On February 24, 2011, Avon filed a report with the Securities and Exchange commission highlighting the investigation as a corporate risk factor that could cause investor loss.[12]

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Beachbody From Wikipedia, the free encyclopediaJump to: navigation, search

Beachbody LLC

The official Beachbody fitness logo.Type Private

Industry

FitnessWeight lossMuscle BuildingSupplements

Founder(s) Carl DaikelerJon Congdon

Headquarters Santa Monica, California, U.S.Area served Worldwide

Key people

Carl DaikelerTony HortonShaun T.Chalene JohnsonDebbie Siebers

Products P90XInsanityHip-hop AbsChaLEAN ExtremeRockin BodyBody GospelPower 9010 Minute TrainerRev AbsBrazil Butt LiftTurbo JamSlim in 6TurboFire

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Kathy Smith's Project:YOU!Yoga Booty BalletShakeology [1]

Website beachbody.com

Beachbody LLC is an American multinational corporation that uses multi-level marketing [2] to sell fitness, weight loss, and muscle building home-exercise DVD's. The company's best-known product is Tony Horton's P90X, whose TV ads have become some of the most frequently run infomercials in the United States.[3]

Contents 1 Selected products

o 1.1 P90X

o 1.2 Insanity

o 1.3 Hip Hop Abs

o 1.4 Dietary Supplements

2 See also

3 References

4 External links

Selected products

P90X

Main article: P90X

P90X is a 90 day workout regimen developed by Tony Horton that claims it can significantly improve fitness in three months through intense physical training. P90X's advertising emphasizes "muscle confusion", a method of cross-training and periodization achieved through switching the order of exercises and incorporating new and varied movements.[4] Muscle confusion supposedly prevents the body from adapting to exercises over time, resulting in continual improvement without plateaus.

Insanity

Insanity is a workout regimen similar to P90X in that it claims to improve fitness in 60 days through strenuous stamina training. Developed by Shaun T., Insanity's advertising emphasizes "max interval training", a method of exercising during which one works out strenuously for 3-4 minutes and then rests or "cools down" for approximately 30 seconds before starting the whole

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process over again. This is essentially a reversal of traditional interval training, during which participants exercise mildly for 3-4 minutes and then exercise strenuously for 30 seconds.[5][6][7]

Hip Hop Abs

Hip Hop Abs is a workout/dance routine that claims to significantly improve one's abdominal area through lightweight hip-hop dance moves. Hip Hop Abs claims to be a relatively painless way to lose weight and sculpt abs; it advertises "you never do a single crunch." In 2007 it was the highest-selling workout video in the United States.[8]

Dietary Supplements

Beachbody LLC markets a line of dietary supplements for use with its workouts. The company markets these products through television infomercials, websites, workout DVDs, and through a network of coaches who receive commissions on their sales.

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BioPerformance From Wikipedia, the free encyclopediaJump to: navigation, search

BioPerformance is a multi-level marketing company that sells fuel additives, often in the form of "gas pills", which are claimed to increase fuel efficiency in automobiles. It is headed by evangelist Lowell Mims.

Research has concluded that the "gas pills" are not effective with regard to fuel efficiency. It has also been claimed that BioPerformance made other false claims, such as that its pills are non-toxic (they are made primarily of naphthalene, a toxic chemical also found in mothballs). The company was temporarily shut down on May 17, 2006 by the Texas Attorney General for being an alleged pyramid scheme and also because of the company's alleged false advertising claims.[1]

It has been asserted by former Bioformance representatives now speaking out against BioPerformance that the company appears to have taken early precautionary measures to avoid refunds on the gas pill. The company accepted money order payments or check payments through postal mail. Multilevel marketing companies selling faulty products have been known to not accept credit card payments due to charge backs from unsatisfied customers, which in turn create accrued charge back fees for the company.[citation needed]

As of May 2007, the company still does not take credit cards and is still selling a naphthalene-based product. The headquarters is no longer in Texas, and the company no longer ships to Texas, where the owners were sued and ultimately gave over $7,000,000 to the Office of the Attorney General. Nor did they issue refunds or ship over 10,000 cases of product, although complaints arrived from all over the nation. To date, over $6.5 million in refund requests have been processed by the Texas Attorney Generals Office.[citation needed]

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Discovery Toys From Wikipedia, the free encyclopediaJump to: navigation, search

Discovery Toys is a 34-year-old direct sales company specializing in educational toys. It functions with the typical direct sales model using party plan marketing, offering incentive trips and the earning of free merchandise. Its products are sold in the U.S. and Canada, and its headquarters are in Livermore, California.

Discovery Toys is a member of the Direct Selling Association.[1]

HistoryDiscovery Toys was founded by early childhood educator, Lane Nemeth, in 1978 with a $5,000 family loan.[2] By 1982, the company had $4.6 million in revenue and 2,500 sales "consultants."[3]

Ms. Nemeth grew the company to a $100 million in annual revenue by 1997 then sold the company to Avon [4] who sold it in 2002 to a private equity group. DT was again purchased in 2008 by Draupnir, LLC and is led by its Chairman and CEO, Jeremy W. Hobbs.

One of the company's top selling toys is Marbleworks. Released in 1982 it consists of colorful, sloped, plastic half-pipes of different designs. The individual pieces interlock, creating a track on which marbles are run. Marbleworks was included in Discovery's product line when Discovery Toys expanded into China in 2003.[5]

Most of its product line is exclusive to Discovery Toys, and many of the products have garnered awards from Dr. Toy, the Oppenheim Toy Portfolio and other independent reviewers.

The company's website makes it easy for consumers to find an Educational Consultant in their locale simply by entering their zip code (U.S.) or postal code (Canada).

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Royal Tongan Limu From Wikipedia, the free encyclopedia  (Redirected from Dynamic Essentials)Jump to: navigation, search

Royal Tongan Limu was a seaweed extract product manufactured and distributed by Dynamic Essentials, a now defunct multilevel marketing company based in Lake Mary, Florida, until legal issues with the U.S. Food and Drug Administration forced the company’s closure in 2003. Subsequently, NBTY, Inc., the parent company of Dynamic Essentials, was ordered to pay a $2 million USD settlement in a class action suit launched by the U.S. Federal Trade Commission and Department of Justice in response to misleading and illegal claims made about the purported health benefits of Royal Tongan Limu.

Key Personnel Gary Raser, Chief Executive Officer Dallin Larsen, Vice President of Sales

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Forever Living Products From Wikipedia, the free encyclopediaJump to: navigation, search

This article has multiple issues. Please help improve it or discuss these issues on the talk page.

It needs additional citations for verification. Tagged since May 2011. It is written like an advertisement and needs to be rewritten from a neutral point

of view. Tagged since May 2011.

It may have been edited by a contributor who has a close connection with its subject. Tagged since May 2011.

It has been nominated to be checked for its neutrality. Tagged since May 2011.Forever Living Products International, Inc.

Type PrivateIndustry direct sellingFounded 1978Headquarters Scottsdale, Arizona, USA

Key people Rex G. Maughan, Founder, Chairman of the Board and CEO

Revenue $2.5 billion in 2010Employees 4,100 in 2006.[1]

Website www.foreverliving.com

Forever Living Products International, Inc. is a Scottsdale, Arizona-based direct selling company that sells aloe vera and bee derived drinks, cosmetics, nutritional supplements, and personal care products in over 150 countries.[2] Forever is the world's largest grower, manufacturer and distributor of aloe vera and beehive-based products.[2][3] FLP was founded by Rex Maughan in 1978 who is also the CEO.[1] The company was ranked number 340 in the Forbes list of the 400 largest private companies in 2006 and is Arizona's largest privately held company.[1]

There is a range of products numbering more than 200 contributing to a global turnover of $2.6 billion and a distributor base of more than 9 million people.[citation needed]

Contents 1 History

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o 1.1 Founding

o 1.2 Growth in the first two years

o 1.3 1980s

2 Business model

o 2.1 Direct selling

3 Product diversification

o 3.1 Bee products

o 3.2 Nutritional supplements

4 International expansion

o 4.1 FLP Bangladesh

5 Achievements

o 5.1 DSN ranking

o 5.2 Forbes ranking

o 5.3 World's largest aloe producer

6 Problems

7 References

8 External links

History

Founding

The company was founded by Rex Maughan, having earned a degree in business administration from Arizona State University with a concentration in accounting in 1962, served as a Mormon missionary in Western Samoa. In 1967, three years after entering the real estate industry, he took a top management position with real estate developer Del E. Webb Corporation only to find that it is highly unlikely for him to rise to that company's presidency. This heavily inspired him to start his own enterprise.[4]

Maughan, who continued to hold his day job with Del Webb, rented an office in Phoenix and warehoused product in his garage, and unveiled his company on 13 May 1978[citation needed].

Growth in the first two years

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The 40 people that Rex and his partners recruited sold $700,000 worth of aloe-based products under the Forever Living name that first year. Initially, the company started only with Aloe Vera juice, gelly and lotions in several Western states of America. Within just two years, annual sales had increased to more than $30 million. Feeling confident that he had achieved "financial freedom", a 43 years old Maughan quit Del Webb to concentrate on Forever Living Products (FLP) full time in 1980.[4]

1980s

In 1981, Forever Living Products purchased Aloe Vera of America's patents, its cosmetic production plant, and its field processing operations. From 1980 to 1981, the company's sales more than doubled to more than $71 million, ranking FLP among America's fastest growing firms. This rapid expansion drew the attention of "dozens" of brokers seeking to take the company public or merge it with another firm. But Maughan was not ready to cash out. In the mid-1980s, he reflected, "I was not interested then, nor now. I'm still in it to help other people."

In 1983, Maughan solidified his position at the top by buying out his partner's half interest.

Forever Living Products exceeded $100 million in revenues and 500 employees by 1985, when the company had more than 1,000 acres of aloe growing in Texas's Lower Rio Grande Valley. By this time, the company also owned processing plants and research labs in Dallas, a fleet of trucks, and an official headquarters in Tempe.[4]

Maughan refined Forever Living's marketing plan over the years. By the mid-1990s, sales people were ranked from beginner-level "Distributor" to high-flying "Double Diamond Manager". The company supported these representatives with training materials ranging from booklets and videotapes to "ForeverVision," a bimonthly satellite broadcast featuring product information and motivational programs. In addition to downline bonuses, distributors had the potential to earn vacations to Forever Resorts, autos, electronics, and other incentives.

Business modelMaughan first got involved with direct selling as a distributor selling gasoline additives in his free time. From there, he developed a keen interest in direct selling system. He realized that the key advantage of this strategy was that it relied on word-of-mouth marketing for growth, thereby eliminating the need for an advertising budget.

Maughan began researching well-known direct sales firms like Avon, Amway, Tupperware and Shaklee. However, he soon observed that most direct selling companies were designed to benefit the guys who founded them. So he and an associate who had some experience in the field drew up a business plan. He proposed that very simple business idea to his closest family and friends.

After settling on a marketing strategy, the two partners sought a product. Maughan understood that they needed to offer something expendable to encourage repeat sales. In a 1995 interview with Success magazine's Duncan Maxwell Anderson, the Forever Living founder reflected, "Water purifiers and burglar alarms were very popular at that time but I didn't want anything that

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wasn't consumable. I was interested in health products and thought other people might be, too. However, I didn't want a me-too item like diet products, soaps, or vitamins."[4]

Maughan found what he thought was an ideal candidate-aloe vera. He soon came across a group of doctors in Dallas who had developed a method of stabilizing and storing the highly perishable aloe gel, which they used in a sunburn lotion. The Dallas group, Aloe Vera of America, had been trying to sell its product in health food stores with little success. Maughan and his partner believed that the products would benefit from the direct selling method, which relies heavily on demonstrations, testimonials, and word-of-mouth sales.

That's how they came up with another way to sell products. Instead of dumping big bucks into traditional advertising, they decided to compensate anyone willing to share their aloe based products with their family and friends, thereby bypassing the retail stores and selling directly to customers. They were also interested in offering consumable products to the public that were proven to promote lasting wellness and health. They comprehended that this personal way of selling products to end consumers would prove to be more successful than following the conventional selling strategy.[5]

They took massive action and started recruiting their own downlines in 1978. Thus from an initial investment of $10,000, they recruited about 40 people.[4]

Direct selling

Forever Living Productsuses a system of direct selling where distributors are mainly part-time agents selling products online and locally using in-person presentations.[6]

The system has been criticized[who?] for being an illegal pyramid scheme on the basis that participants are said to be rewarded primarily for recruiting new members to the organization, rather than for selling products to genuine end-users.[7] In reality, the company has never had a lawsuit in its 33 years of existence. It has A+ rating from Better Business Bureau.[8]

Product diversificationAlthough aloe is most commonly used topically, Forever Living's key product has been its aloe vera beverage. The substance has long been used as a purgative agent, to which Maughan may have been referring when he asserted, "Aloe vera helps our bodies perform like they are supposed to." By the mid-1990s, the company had developed three flavors of aloe "juice": cranberry, apple, and natural. Although Forever Living promotes the natural flavor as "exotic," Christopher Palmeri characterized the taste as more near that of "turpentine" in his 1995 piece.

Aloe drinks generated about 50 percent of Forever Living's annual sales into the mid-1990s. Although Rex Maughan calls his company "the best-kept secret in Arizona" Forever Living's fame grew in line with its sales in the late 1980s and early 1990s. Revenues mounted from $100 million in 1985 to more than $200 million in 1990 and surpassed $1 billion in 1995.[4]

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The company also made dozens of skin care products from aloe, including lotions, creams, soaps, hair care products, deodorant, aftershave, lip balm, and a burn treatment. Other aloe-based goods included toothpaste, colognes and perfumes, and laundry detergent.

Bee products

FLP launched its line of Forever Bee Products in 1983. At the core of this group of nutritional supplements is "Royal Jelly" a food created by honey bee especially for the queen bee. Some scientists attribute the queen bee's growth, reproductive ability, and comparative longevity to her consumption of royal jelly. The company offered royal jelly in 250 mg tablets, bee pollen (the worker bees' food source) in 500 mg tablets, bee propolis (from the walls of the hive) in 500 mg tablets, and pure honey. Forever Living made absolutely no claims that humans who consumed these products would obtain the same health benefits apparently enjoyed by the bees, making assurances only about the source, potency, quality, and purity.[4]

Nutritional supplements

Although the founder has asserted that, initially, he was not interested in selling vitamins and diet products, nutritional supplements would become an important segment of the Forever Living line. The company combined aloe with vitamins, ginseng, minerals, fish oils, garlic, and other substances to make an array of nutritional supplements. Forever Living's promotions were peppered with pseudo-scientific terms like "flavonoid extract" and "bioflavonoids," but the most the company would guarantee was that its products would "make people feel better and more beautiful."

International expansionHaving fleshed out its product lines, Forever Living began to diversify geographically in 1983. The company focused first on the Far East, where natural remedies enjoy a strong heritage and high esteem. By 1995, FLP had distributors in 40 countries.

FLP Bangladesh

Forever Living Products launched in Bangladesh on May 12, 2010 through a Grand Opening at Raddisson Hotel in Dhaka. The Products arrived at 12 August 2010. Bangladesh Government approved 32 products in the first phase.[9]

Achievements

DSN ranking

In June 2010 Direct Selling News published a list of 100 top direct selling companies in the world based on 2009 year-end wholesale revenue (in U.S. dollars) which they claimed was one of the industry’s most comprehensive reports assembled. Forever Living Products holds the 10th position on the list, while Avon and Amway hold the 1st and 2nd position respectively.[10]

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Forbes ranking

Forever Living was ranked number 340 on the Forbes list of the 400 largest private companies in 2006.

World's largest aloe producer

Forever Living Products, together with its affiliates, is the world's largest grower, manufacturer and distributor of aloe vera and aloe based products.[citation needed] Forever Living owns 5,000 acres of land in the United States, Mexico and the Dominican Republic where they grow and harvest aloe vera. The company has a patented stabilization process ensuring that their aloe is essentially identical to the inner leaf gel.[11]

Forever Living also owns Forever Resorts, which manages resort and recreational properties in the United States, Europe and Africa.

ProblemsForever Living Products is selling nutritional supplements and cosmetics but advertise these products as medicaments, and often state that they can cure various illnesses which effect is not scientifically proven but supported by "stories of cures". Since drug control is very strict the company had to adjust several times its communication to prevent being attacked by legislation and governmental control. In most countries these "stories" now restricted to company resellers and forbidden to be told customers to prevent it being advertising, and it is forbidden for the resellers to state that the products cure anything or could be used to relieve symptoms (unless they get written permission from the company). If, however some products were accepted officially as drugs it would be impossible to sell them in the same business model, and this may be one important reason the company keeps their nutritional supplement status.

In Hungary they were found to violate several laws related about advertising, registration or nutritional products and using cosmetics as medicaments; the company was fined approximately $280000.[12]

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Herbalife From Wikipedia, the free encyclopediaJump to: navigation, search

Herbalife International

Type PublicTraded as NYSE: HLFIndustry Nutrition & Skin Care productsFounded Los Angeles, California (1980)Founder(s) Mark Hughes

Headquarters Los Angeles, California, United States

Key people

Michael O. Johnson (CEO)Des Walsh (President)Richard P. Goudis (COO)John DeSimone (CFO)

Products Weight management, nutritional supplements, personal care

Revenue US$ 2.734 billion (2010)[1]:48

Operating income US$ 387.512 million (2010)[1]:48

Net income US$ 290.533 million (2010)[1]:48

Total assets US$ 1.446 billion (2011)[2]

Total equity US$ 487.212 million (2010)[1]:49

Employees 4,500 (31 Dec 2010)[1]:25

Website www.herbalife.com

Coordinates: 33.857195°N 118.291855°W

Herbalife International (NYSE: HLF) is a global nutrition, weight management and skin-care company. The company was founded in 1980 and it employs around 4,000 people worldwide. Herbalife reported net sales of USD 3.5 billion in 2011 with a retail sales turn over of 5.1 Billion USD with an increase of 1.1 billion retail sales on 2010.[3] Though incorporated in the Cayman Islands [1] :1, its corporate headquarters are in Los Angeles, United States.[4]

The company distributes its products in 81 countries through a network of approximately 2.1 million independent distributors[1]:4, some of whom earn profit on product sales and additional commission from a multi-level marketing (MLM) compensation structure.

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Contents 1 History 2 Products

3 Efficacy of Herbalife products for weight loss

o 3.1 The study of Treyzon et al.

o 3.2 The Lee study

o 3.3 Flechtner-Mors et al.

4 Adverse effects

5 Herbalife and liver disease

6 Business model

7 Sponsorships

o 7.1 Sports

o 7.2 Media

8 Criticism

9 See also

10 References

11 External links

HistoryIn February 1980, Mark Hughes began selling the original Herbalife weight management product from the trunk of his car. Hughes often stated that the genesis of his product and program stemmed from the weight loss concerns of his mother Joanne, whose premature death he attributed to an eating disorder and an unhealthy approach to weight loss. His goal was to change the nutritional habits of the world.

It all started with a protein shake to help people manage their weight. Along with introducing people to a healthier way to live, Mark wanted to give people the opportunity to earn extra income. So he structured the company using a direct-selling model, enabling people to become Herbalife Independent Distributors and earn part-time or full-time income.

Adopting the multi-level marketing system for distribution and growth, the company attracted thousands of distributors who sold its products door-to-door or through word-of-mouth, not relying on commercial distribution in retail stores.

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The company's slogan, "Lose Weight Now, Ask Me How", became a marketing theme for distributors, featuring heavily on badges, flyers and posters. Early methods to recruit distributors included seminars, which would feature distributors giving health and weight loss testimonials on the Herbalife products and a keynote address by Hughes. By 1982 Herbalife had reached USD 2 million in sales and had expanded into Canada.

In 1985, the California Attorney General sued the company for making inflated claims about the efficacy of its products. The company settled the suit for USD 850,000 without admitting wrongdoing.[5] In 1986 Herbalife became a publicly traded company on the NASDAQ, and in 1996 Herbalife reached USD 1 billion in annual sales.

Mark Hughes died at age 44.[6] The Los Angeles County Coroner autopsy results ruled that the entrepreneur had died of an accidental overdose. The company continued to grow after his death and in 2002 was acquired by Whitney and Co LLC and Golden Gate Capital for USD 685 million, who took the company private again.[7]

In April 2003, Michael O. Johnson joined Herbalife as CEO following a 17-year career with The Walt Disney Company, most recently as president of Walt Disney International.[5] On 16 December 2004, the company had an initial public offering on the NYSE of 14,500,000 common shares at $14/share. 2004 net sales were reported as USD 1.3 billion. In April 2005, the company celebrated its 25th anniversary with a four-day event attended by 35,000 Herbalife Independent Distributors from around the world. In August 2005, Dr. Steve Henig joined the company as Chief Scientific Officer, responsible for product research and development. In 2008, President and COO Greg Probert resigned after it was reported that he had not completed the degree requirements for the MBA he claimed on his resume.[8]

ProductsHerbalife's product range includes protein shakes, protein snacks, nutrition, energy and fitness supplements and personal care products.[9] The Formula 1 protein shake, a soy-based meal-replacement shake, is the company's number one product and was one of the first products sold by the company. The range also includes products for heart health, digestive health, skin care, and the new 24 sports line released in 2011. Some products are vegetarian, kosher or halal, and Herbalife provides testimonials and advice from health professionals as part of their product marketing.

According to the 2009 Form 10-K, many of its weight management, nutritional and personal care products are manufactured for by third party manufacturing companies, with the exception of products distributed in and sourced from China, where they have their own manufacturing facility and several products are manufactured in its recently acquired manufacturing facility in Lake Forest, California. Herbalife is currently making modifications to its recently acquired manufacturing facility in order to increase capability and capacity, and upon completion of these modifications, expect to increase self manufacturing.[10]:16

In October 2010, Herbalife held a ground-breaking ceremony in Changsha, Khanh Hoa Province, Viet Nam for its extraction facility for botanical extracts, powders and pure compounds to be

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used in its inner and outer nutrition products. The new facility is expected to open in the second half of 2011. The new extraction facility will purchase botanicals directly from farms in Hunan province, China and other regions, perform extraction and other conversion processes and then send these processed raw materials directly to Herbalife’s manufacturing facilities in Suzhou, China and Lake Forest, Calif. or to its third party manufacturers throughout the world. The new extraction plant will produce botanical extracts including teas, guarana, chamomile, broccoli and bilberry, among others, for use in many of its products. [11]

Efficacy of Herbalife products for weight lossThree clinical studies have been completed of the effect of different Herbalife products on weight loss.

The study of Treyzon et al.

Treyzon et al compared a protein supplement (Performance Protein Powder, Herbalife Intl., Los Angeles) with a similar tasting carbohydrate placebo. The two treatments showed significant differences in their effects on the primary outcome of body weight. Effects on body mass index, waist circumference or fat free mass were also significantly different. Subjects on the high protein powder lost significantly more fat mass, 1.01 kg, P=0.05.[12] As this was a secondary analysis these findings should be interpreted with caution and regarded as exploratory until confirmed in independent studies.

The Lee study

Lee et al used a similar design but a differently named protein powder (ShapeWorks Formula 3, Herbalife). Lee et al. found no significant difference in the effect of this protein powder on fat mass compared with placebo. Effects on other body weight and composition outcomes also did not differ significantly between the Herbalife protein powder and placebo. In a subgroup analysis, among subjects with dietary compliance ≥ 70%, the high-protein treatment was more effective than the control treatment in reducing body fat.[13] As this was a secondary analysis these findings should be interpreted with caution and regarded as exploratory until confirmed in independent studies.

Flechtner-Mors et al.

Flechtner-Mors et al instructed 110 obese persons to cut their calories by about 50%. [14] Fifty-five persons made up the high protein group and received Herbalife meal replacement shakes, Performance Protein Powder and protein bars. The other 55 made up the conventional diet group, and received diet instructions only. After 12 months, 24 subjects in the protein group had dropped out, as opposed to 12 in the conventional group. For the dropouts, weight at 3 months instead of 12 months was used for calculating the effect of treatment. Mean weight loss at 12 months was 8.96 kg in the protein (Herbalife) group and 6.41 in the conventional group, a significant difference of 3.6 kg. The authors concluded that a protein-enriched diet may have advantages for the management of the adverse effects of obesity on health.[15] The study was

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criticised by Busetto et al. [16] because the interpretation of the results was complicated by the high dropout rate, and also by the provision of shakes and bars to the Protein (Herbalife) group only. When subjects receive special weight loss products, they may stick better to their diet, independent of what weight loss products are given.

By and large, these studies do not provide convincing evidence that Herbalife products produce more weight loss than other products or than a proper placebo.[citation needed]

Adverse effectsSome of the original Herbalife weight loss products contained the active ingredient Ma Huang or Sida cordifolia, two herbs containing ephedra, an appetite suppressant. Herbalife stopped using ephedrine in its products in 2002 after several U.S. states banned supplements containing botanical sources of ephedrine alkaloids.[17]:15[18] The U.S. Food and Drug Administration banned supplements containing ephedra in 2004.[19]

In May 2008, the Fraud Discovery Institute, which claims to be a consumer watchdog organization, reported that laboratory test results of Herbalife products showed lead levels in excess of limits established by law in California under Proposition 65.[20][21] The Fraud Discovery Institute was founded by Barry Minkow, who served seven years in jail for stock fraud,[22] and since disclosed that his company was profiting from the allegations by shorting Herbalife stock.[23] Herbalife responded stating its products met federal FDA requirements[24][25] and released independent lab tests it said proved the products did not exceed Proposition 65 limits.[23] On May 10, 2008 a suit was filed on behalf of a woman who developed lead-related liver complaints that she claimed were a reaction to a combination of Herbalife products.[22][26] The suit was filed by lawyer Christopher Grell, cofounder of the Dietary Supplement Safety Committee and an associate of Barry Minkow.[22] On June 17, 2008, the suit was expanded to add distributors who had supplied the woman with the Herbalife products, with Grell launching a website to offer persons who believe they were harmed by Herbalife products the chance of redress.[27] In August 2008, Minkow retracted all accusations against Herbalife and removed any mention of the company from his web site.[28]

Herbalife and liver diseaseIn 2005, Israel's Health Minister began an investigation against Herbalife's products after four persons using Herbalife's products were found to have liver problems.[29] Herbalife's products were accused of containing toxic ingredients such as Qua-qua, Kompri, and Kraska. The products were sent to the Bio-Medical Research Design LTD (B.R.D) laboratory, to a private laboratory in the United States of America, and to Israel's Forensic research laboratory. The company issued a press release stating that the Israeli government, and scientists working with Herbalife, were unable to establish a link between the product and the eight cases of liver damage. Herbalife withdrew the product, which was only marketed in Israel.[30] Herbalife's SEC 10-Q filings state that the Israeli Ministry of Health did not establish a causal relationship between the product and liver ailments. The Israeli Ministry of Health advises individuals with compromised liver function to avoid dietary supplements.[31] In 2009, an Israeli woman sued

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Herbalife International and Herbalife Israel, claiming that her liver damage resulted from the use of Herbalife products.[32]

Scientific studies in 2007 by doctors at the University Hospital of Bern in Switzerland and the Liver Unit of the Hadassah-Hebrew University Medical Center in Israel found an association between consumption of Herbalife products and hepatitis.[29][33] In response, the Spanish Ministry of Health issued an alert asking for caution in consuming Herbalife products.[34] Herbalife has stated they are cooperating fully with Spanish authorities.[35]

By 2011, hospitals in Israel, Spain, Switzerland, Iceland, Argentina and the United States had reported liver damage in a number of patients, part of whom had used Herbalife products.[36][29] [37][33] [38][39][40] [41][42][improper synthesis?] Some patients recovered after they had stopped taking the products, in others the disease continued, and two patients died. Several authors considered it plausible that Herbalife products were the cause of the observed liver disease. Herbalife employees claim there is no definitive proof that Herbalife products cause hepatoxicity or other liver problems.[43]

Business modelHerbalife is a multi-level marketing (sometimes called MLM or network marketing) company. In addition to profits from product sales, Herbalife distributors can earn additional commissions from sales by their 'downline' distributors. Supporters of MLM contend this is a fair compensation system, while critics contend that it is similar to a pyramid scheme.[44] Critics also argue that the company does not make enough effort to curb abuses by individual distributors, though Herbalife has consistently denied such allegations.[45] Herbalife is a member of the Direct Selling Association in most countries in which it operates.

In its filings with the United States Securities and Exchange Commission (SEC), company management note problems with inappropriate business practices in the past, their subsequent long-lasting effects and the need to avoid any repetition. Company management considers the number and retention of distributors a key parameter and tracks it closely in financial reports. By January of each year, sales leaders are required to requalify. In February of each year, they remove from the rank of sales leaders those individuals who did not satisfy the sales leader qualification requirements during the preceding 12 months. For the latest 12-month requalification period ending January 2011, approximately 48.9 percent of the eligible sales leaders requalified, reflecting an improvement from 43 percent in 2009.[46] The company was cited as one of the most profitable companies in Los Angeles County.[47]

A 2004 settlement resolved a class action suit on behalf of 8,700 former and current distributors that accused the company and distributors of "essentially running a pyramid scheme." A total of $6 million was to be paid out, with defendants not admitting guilt.

In a California class action suit, Minton v. Herbalife International, et al., the plaintiff is "challenging the marketing practices of certain Herbalife International independent distributors and Herbalife International under various state laws prohibiting "endless chain schemes",

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insufficient disclosure in assisted marketing plans, unfair and deceptive business practices, and fraud and deceit".[48]

In a West Virginia class action suit, Mey v. Herbalife International, Inc., et al., the plaintiffs allege that some "telemarketing practices of certain Herbalife International distributors violate the Telephone Consumer Protection Act, or TCPA, and seeks to hold Herbalife International vicariously liable for the practices of these distributors. More specifically, the plaintiffs' complaint alleges that several of Herbalife International's distributors used pre-recorded telephone messages and autodialers to contact prospective customers in violation of the TCPA's prohibition of such practices". Herbalife management insisted they have meritorious defences in both cases and that in the West Virginia case, any such distributor actions also went against Herbalife's own policies. Management also contends that any adverse legal outcomes Herbalife might suffer would not significantly affect their financial condition, particularly since they have already set aside an amount that they "believe represents the likely outcome of the resolution of these disputes".[48] The case was resolved with Herbalife and its distributors paying $7 million into a fund for class members part of the suit.[49]:42 Herbalife International did not acknowledge wrongdoing, or admit culpability for the actions of its distributors.

As of April 2008, a series of commercials featuring a large red animated fox advertising home-based business opportunities have been running on American television. The advertisements typically feature a series of testimonials from actors playing individuals who have made sums of money between $5,000 USD and $15,000 USD per month as a result of participating in an undescribed business program. The adverts direct viewers to a website that allows them to purchase a "success kit". The kit also provides no information about how the business opportunity works.

These adverts have been found to be run by independent Herbalife distributors, as a method of recruiting new 'downline' distributors.[50] While it is not illegal, critics of this type of advertising prefer advertisers to be up front about their company associations.

Sponsorships

Sports

Herbalife sponsors a number of athletes, sports teams and sporting events around the world, including:[51]

2011 World Football Challenge Sergey Konyushok (Broke 7 Guinness Records at Strongman competitions)

LA Triathlon [52]

AYSO (the American Youth Soccer Organisation)[53]

Los Angeles Galaxy soccer team[54]

IndyCar drivers Townsend Bell and E.J. Viso in the 2010 Indy 500

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Valencia CF football club[55]

Pumas from Mexico

Club San Luis from Mexico

Santos FC , Official Nutrition Advisor

FC Barcelona , international/regional Sponsor[56]

FC Spartak Moscow , Official Sponsor

CA Lanús , Official Sponsor

Lionel Messi

Virat Kohli

MC Mary Kom

Club Maccabi Haifa, Israeli Football club

Botafogo de Futebol e Regatas football club

Universidad San Martín from Perú

Velo Club LaGrange (Herbalife LaGrange Cycling Team)

Lyngby Boldklub from Denmark

Wisła Kraków from Poland [57]

Media

In La Fea Más Bella, a Spanish-language program, a remake of "Betty la fea", the original Ugly Betty, the lead character Lety used actual Herbalife products as she underwent an onscreen "physical transformation" in six episodes of the show.[58]

CriticismThe specialists of the German Society of Food (German Deutsche Gesellschaft für Ernährung) concluded that the use of Herbalife products do not solve the problem with weight. [37] In independent studies of the German magazine Konsument (Zeitschrift Ökotest 11/2003) states that the products of Herbalife at the time of research were among the most expensive products, "healthy eating". [38] In 2004, the United States, Herbalife company was accused of creating a financial pyramid selling. In order not to bring the matter to court, the company paid the sum of six million dollars for a waiver of proceedings, so the question was settled out of court. In the case appear the names of dealers 8700. [39]. Criticism of the company can be divided into three main categories: Criticism of network marketing as such because of its similarity to the financial pyramids. Criticism of obsessive direct sales [40], which holds the company. In addition, there is

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criticism of the opinion that some of Herbalife distributor using NLP techniques, similar to the method of hypnosis. A typical criticism of the cosmetic and nutritional companies, as well as companies that sell any food or consumer goods, exaggerate the dignity of their products. For example, the emphasis on their "natural" origin of the grasses and animals with exotic names, no preservatives and low in fat. Total culture and organization of some distributors Herbalife. Typical organization of sales of Herbalife is as follows: an initial increase in the discount on the company's products depends on the quantity of goods purchased during the month. Further, these discounts do not depend on the volume of procurement activity or distributor (though you can not buy anything at all) if it has not reached the level of supervisor. Procured goods are distributed for personal use and for sale. Education by the methods of sales going to the special training.

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Direct selling From Wikipedia, the free encyclopediaJump to: navigation, search

Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling.[1] Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales.[2] A textbook definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."[3][4]

Industry representative, the World Federation of Direct Selling Associations (WFDSA), reports that its 59 regional member associations accounted for more than US$114 Billion in retail sales in 2007, through the activities of more than 62 million independent sales representatives.[5] The United States Direct Selling Association (DSA) reported that in 2000, 55% of adult Americans had at some time purchased goods or services from a direct selling representative and 20% reported that they were currently(6%) or had been in the past(14%) a direct selling representative.[6]

According to the WFDSA, consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees.[5] In contrast to franchising, the cost for an individual to start an independent direct selling business is typically very low with little or no required inventory or other cash commitments to begin.[5]

Most direct selling associations, including the Bundesverband Direktvertrieb Deutschland, the direct selling association of Germany, and the WFDSA and DSA require their members to abide by a code of conduct towards a fair partnership both with customers and salesmen. Most national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA).

Direct selling is distinct from direct marketing because it is about individual sales agents reaching and dealing directly with clients. Direct marketing is about business organizations seeking a relationship with their customers without going through an agent/consultant or retail outlet. Direct selling often, but not always, uses multi-level marketing (salesperson is paid for selling and for sales made by people he recruits or sponsors) rather than single-level marketing (salesperson is paid only for the sales he makes himself).[7]

Largest direct selling companiesAccording to Direct Selling News, the largest direct selling companies, by revenue in 2011,[8] were -

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