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! Here is the first …

Policies and Procedures Are Written By Lawyers.

  • They are not written to protect you or your family or your heirs.
  • They are not written to ensure that you are paid fairly or to help you reach your goals.
  • They are not written to allow you to take a holiday or break or retire from your business.
  • They are not written in your best interests.

ThreeStoogesLawyersThey are written by lawyers hired by the company. The reasons may or may not be found in, and are not limited to the following list. We’re learning Legalese!

Policies and Procedures are written …

  • to protect the interests of the company and shareholders. There are few or no clauses written with your welfare in mind.
  • to tell you what you have to do for the company. There are no clauses stating what the company must do for you.
  • to let you know that the company does not trust you.
  • to allow the company to take money out of your pocket and share it among your sponsor and upline and the company without drawing attention from the authorities.
  • to give the company clauses to use against you.
  • to give the company a way to legally steal your check.
  • to keep you recruiting or selling or consuming on penalty of termination
  • to allow the company to terminate you at any time at their sole discretion.
  • to treat you like an employee without having to provide the usual benefits.
  • to allow the company to control your life to a far greater degree than any employer has ever controlled you – while you are with the company and often for a period of six months to a year after you have left the company.
  • to allow the company to control and monitor the behavior and actions of all your family members and hold you responsible.
  • to allow the company to hold you responsible for the actions of your downline no matter how deep, and for the actions of your downline’s families no matter how dysfunctional.
  • to allow the company to hold you responsible for the actions and/or the non-payments of your customers.
  • to remove your right to a trial by jury and your right to sue the company.
  • to make you responsible for the legal fees of the company should you decide to try take them to court.

We’re not making this stuff up.

Read your Policies and Procedures before you sign them. Let us repeat that. Read your Policies and Procedures before you sign them. It is YOUR contract. If there is just one phrase or one word that you do not understand, DO NOT SIGN!

This is not a hobby you are starting. This is a serious business and should be treated seriously.

LawyersInWigs50pcImagine yourself in court three years from now trying to protect your business and your future and your family’s future. Imagine that every phrase in the contract you signed can and will be used against you.

Because that is what will happen.

Do not lapse into the fuzzy furry thinking that your company would never do that to you.

As Michael Dlouhy says,

If they don’t intend to use them, why are they there?

As Richard Dennis says (from bitter experience),

The company will not use those clauses against you unless they have to. If you’re making money and they want it, they will use them!

And as we say,

Don’t be silly. You read every other contract you sign. Why would you not read this one? You can have the greatest product and the best sponsor in the world. You can be as helpful as you want to your downline, but none of that matters. It’s the company and the Policies and Procedures that are in charge. Read them!

Most companies do not trust you and you should return the favor.

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?

1. Length and Readability

a. Michael Dlouhy in his skills call “Business Models Drive The Behavior”, says that PNP’s should be no more than six pages. Rod Cook of MLM Watchdog says a dozen or fifteen is the max. The longer the document, the more places there are for the lawyers to hide the ‘gotchas’. We have seen them as long as 65 pages!

b. Read from the back to the front. Lawyers will hide the really bad gotchas near the end.

c. Beware of the Policies and Procedures, Terms and Conditions, and the Compensation Plan being in three different locations. All three of these together make up your agreement with the company.

d. Beware if the PNP’s are not easily visible on the website. Beware if you have to join the company to view the PNP’s! In some cases, you have to pretend to start joining the company to see them on the second or third page. Copy and paste and print them.

e. Take the PNP’s to your lawyer. Make sure s/he is familiar with MLM.

f. Beware of contracts with no paragraphs or spacing. Too tough to read.

g. Beware of Legalese. If you don’t understand it, don’t sign it!

h. To help find more red flags, Google your company and owners and add the word ‘scam’ or ‘legal’ or ‘court’ in the search term. You may find your company is registered offshore, for example.

2. Termination or Non Renewal Clauses

AxedSorrya. Use the Ctrl-F feature on your screen to look for ugly words like ‘termination’, ‘terminate’, or ‘renewal’, etc. Beware of phrases like the following actual sentences found in the PNP’s of some very well known companies:

b. [The Company] reserves the right to terminate or suspend any distributor at any time. Such termination or suspension shall be made by [The Company] at its sole discretion.

c. [The Company] reserves the right to reject any applications for a new Distributor or applications for renewal.

d. [The Company] may terminate your access to any part or all of the Service and any related service(s) at any time, with or without cause, with or without notice, effective immediately, for any reason whatsoever.

e. Check to make sure that you actually own your own business and that it is bequeathable. This is a topic for another entire call and article!

We’ll finish Part 1 with another quote from Richard Dennis:

Losing that check hurt a lot, but watching our team lose their checks hurt a lot more. And it was all because I didn’t read my contract.

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, click on Part 2: You’re Kidding Me! Do I Really Have To Do That?

Bob and Anna Bassett
Skype bobbassett