KidReadingWallcropOn July 19 2008, we were honored to be guests of Richard Dennis on the Saturday evening Mentoring For Free Skills Calls. To listen to that call, click here:

Policies and Procedures with Bob and Anna Bassett.

Early in 2007, Michael Dlouhy encouraged us to look more carefully at MLM companies based on his training “Five Pillars – What To Look For In A Company”. We have now analyzed close to two hundred companies, and our findings have shocked and amazed us.

When we finished what we thought was going to be a couple of pages of info for the call, it had turned out to be enough for four articles! Our first was called “Written By Lawyers” which addressed the first two categories of red flags, and here is our second, called “You’re Kidding Me! Do I Really Have To Do That?” in which we address the third and fourth categories.

We have found that the Red Flag Clauses in the PNP’s fall into five major areas:

RedFlag1. Length and Readability
2. Termination

3. Ongoing and Increasing Responsibility *

4. Unusual, Vague or Bizarre Responsibilities *

5. Over the Top and What The Hell?

Richard Dennis says,

You think you are going to own your own business, but as soon as you sign the policies and procedures, it’s THEIR business.

Bob and Anna say,

And some companies think they own you and your family too! Just check the clauses that tell you all how to behave and what to say!

Here are more scary clauses. (Our comments are in brackets.)

3. Ongoing and Increasing Responsibilities (Sales, Recruiting, Training)

a. Beware of clauses that prohibit you from retiring, taking a vacation, or even taking time off for illness in your family. Look for words like ‘ongoing’, ‘regular’, ‘continued’, etc. Companies often require you to have ongoing sales, ongoing recruiting, and ongoing training. Here are some actual phrases. In each case, ask yourself who will be giving the definition of terms like ‘regular’ or ‘bona fide’ or ‘professional’, etc.

b. A director must demonstrate regular leadership and guidance.

c. A leader must maintain ongoing contact with his/her team.

d. You must fulfill the obligation of performing a bona fide supervisory sales or distributive function in the sale or delivery of products and services.

e. A sponsor must maintain an ongoing professional leadership association with his group.

f. You are responsible for supervising and supporting Independent Sales Associates you sponsor into the program and in your commissionable downline by way of any of the following, or combination thereof: personal contact, telephone and internet communication, written communication, and attendance at Independent Sales Associate meetings. (Does this mean that if you do not attend meetings or write a letter, you can be terminated?)

g. You will fulfill your leadership responsibilities as a Sponsor including training, communicating and supporting your team. (Vague indeed)

FrogSchoolh. As Distributors progress through the various levels of leadership, they will become more experienced in sales techniques, product knowledge, and understanding of the [Company] program. They will be called upon to share this knowledge with less experienced Distributors within their organization.

i. Regardless of their level of achievement, Distributors have an ongoing obligation to continue to personally promote sales through the generation of new customers and through servicing their existing customers. (This is the one! You can never take a holiday or retire from this company!)

4. Unusual, Vague or Bizarre Responsibilities and Red Flags

a. Beware of open ended or vague phrases that the company can interpret any way they want. Watch out for clauses such as these actual examples:

b. [The Company] may elect to not renew any distributorship for any reason it deems to be in the best interest of the Company, its customers and other distributors. These reasons may include, but are not limited to the following: Failure to use best efforts to promote [The Company’s] products and services, and actions that bring dishonor to or impute the reputation of [The Company]. (Who decides if you are using your best efforts? Who defines ‘dishonor’? Who determines the reputation of the company? Does “in the best interest of the company’ include their needing to steal your check because they are in the hole and the shareholders are complaining?)

c. You are responsible for motivation of your team. (Who defines ‘motivation’? If a team member reports you as being uninspiring, can you be terminated for being dull?)

d. Adequate training shall include but not be limited to … education regarding the company Policies and Procedures Manual, Compensation Plan, product information, sound business practices, sales strategies, and ethical behavior. (Is this not the job of the company to train its distributors? What does ‘not limited to’ mean? Where’s the rest of the list of things you have to do?)

e. [The Company] reserves the right to retitle a Business Leader regardless of the PV requirements if, in [The Company]’s assessment, a Business Leader fails to fulfill other qualifications and responsibilities of leadership, as explained in this PandR.” (We have no clue what this means. Can the company demote you without giving an explanation?)

Richard Dennis again …

The company puts you in a position where you can’t possibly fulfill all the responsibilities.

To learn more about how to protect yourself, start with Success In Ten Steps by Michael Dlouhy. It will save you years of failure and frustration.

To read more, please click on Part 3: Over The Top Clauses.

Bob and Anna Bassett
Skype bobbassett