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, our second was “Do I Really Have To Do That?” ,and our third was “Over The Top Clauses?”

Here is our fourth installment, a sequel to Over Top and What the Hell Clauses, entitled MORE Over the Top and What the Hell Clauses …

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? *

Promotions are approved at the discretion of the upline leader, but company distributors may choose the automatic promotion option.

This one made no sense until we realized that the company has a stairstep breakaway comp plan.  When people promote below you, they take part of your check.  This company allows your upline to stop your promotion, even though you have earned it!

In keeping with the Company rule that a husband and wife cannot hold separate sponsorship positions, they must choose which one of them will transfer to the distributorship of the other, while leaving the transferring spouse’s sponsorship group behind. If for some reason a dispute should arise over the choice of sponsorship lines, the company reserves the right to decide each case independently.

Spouse ChimpsThis means that if Alice is a successful distributor and she wants to marry Bill, also successful, one of them must give up his/her business!  We wonder where that other business goes.  To the company?  Hmm.  This company is looking for ANY reason to steal your check.  This is breakage at its finest.

In order to maintain status as a distributor, the distributor, spouse, family, household member, or distributor’s business partner are required to not actively participate in any other network marketing or direct sales company.

Can you say ‘indentured labor’?  ‘Dictatorship’?

The distributor must fully, at all times, disclose the fact of ongoing income being received from any other network marketing or direct sales company.

Picture your boss requiring you to disclose your earnings from your second job.  This is what we meant in our first article about MLM companies controlling you more than any employer ever would in the ‘real world’.

The Company expects associates to make good judgments when referring customers and avoid situations that may lead to fraud or high customer turnover. Associates will be subject to a charge back for any incentive, bonus or commission earned if a customer fails to become active or is deactivated or canceled for any reason or suspended for non-payment within 180 days after becoming active.

Does this mean that if a customer of mine fails to make one payment in the sixth month, I must pay back EVERYTHING the company has paid me?

Any associate determined to have an unusually high turnover ratio will be subject to termination at the sole discretion of the Company.

Who defines ‘unusually high’?  Will I have access to the company records to see if my turnover is out of the ordinary?

Cat With MoneyThe Company may develop from time to time procedures for Associates to partially or fully guarantee deposits for new customers. Should an Associate provide such a guarantee, the Associate’s commissions may be applied to cover the guarantee amount in the event of a customer payment default.

The thinking rep may from time to time develop a huge distrust of the company.  This clause means that if your customer does not pay, you are responsible!  Imagine what would happen if your neighbor on your service heard about this!  Why would he bother paying his bill when he knows you will do it for him?  You signed it!  How generous of you!

Distributors are free to participate in other multilevel or network marketing business ventures. However, during the term of this agreement, distributors may not recruit other Company distributors or customers for any other network marketing business. Following the cancellation of this agreement for any reason, and for a period of six months thereafter, a former Distributor may not recruit any Company distributor or customer for another network marketing business if that distributor or customer was in the former distributor’s downline, or the former distributor met, developed a relationship with, or gained knowledge of the distributor or customer by virtue of their mutual participation in the Company. The term “recruit” means actual or attempted solicitation, enrollment, encouragement, or effort to influence in any other way, either directly or through a third party, another Company Distributor or customer to enroll or participate in another multilevel marketing, network marketing or direct sales opportunity. This conduct constitutes recruiting even if the distributor’s actions are in response to an inquiry made by another distributor or customer.

Is anyone else getting amazed and bewildered by all this?  This one means that if you leave the company because you are making no money, and a former fellow rep in the company, also making no money, asks you what you are doing now, you can’t tell him/her for fear of persecution or prosecution by the company.

They control you while you are with them and they control you after you have left.  Amazing.

Incidentally, the only way people can be ‘cross-recruited’ is if they are not happy where they are.  When a company includes many clauses forbidding cross-recruiting, it is an admission that they intend to treat you poorly and/or underpay you.  If you are being treated with dignity and respect and being paid fairly, you will not leave your company for another.

Tarzan Jane Boy CheetahIf a family member acts in a way that would violate policies if they were a representative, the company will regard such action as an action of the representative, and the representative will be subject to termination.

This means that if your crazy stepson or disgruntled separated whacko spouse makes a negative remark about the company, you are toast.

The distributor also agrees to waive any and all rights to “stop payment” or to “charge back”.

This is stunning.  This means that if you pay for a product or service from the company and you are not happy with it, you cannot get your money back.  The company requires you to forfeit the rights you have with every other business in the real world.

Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  Distributors waive all rights to trial by jury or to any court. All arbitration proceedings shall be held in the city of the head office of the Company.

Whoa again! This means that if you have a problem, you have to get on a bus or a plane and travel a few states or provinces away to sit in front of an arbitration panel with no recourse to a judge or jury or any court at all.  You might as well save the bus fare and give up right now.  BOHICA!  Bend over – here it comes again!

We hope by now you are as shocked and as fed up and as angry as we are about how most companies live out of the pockets of their distributors, and how they protect themselves against the most basic of rights of the reps to fight back.

To read more, click on Policies and Procedures – You Really Otta Readures!

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 and perhaps an unpleasant termination!

Bob and Anna Bassett
Skype bobbassett

PS  September 20 2008 – We thought we had seen it all until we read this clause in the ‘LLWW’ Policies and Procedures.  Once you read this, there’s no need to go any farther.  As Michael says, “Run far.  Run fast.”

LLWW reserves the right to change any of the Policies and Procedures at its discretion. LLWW also reserves the right to over rule any policy or procedure at its discretion. Changes will become effective after appearance in any LLWW publication notice or posting on our Website.