TEAM – FreeTheIBO? No – UseTheIBO

Last week I commented on the fact that I and many other people had been banned from commenting on the TEAM forums at forums.freetheibo.info. Initially I was just banned from my particular internet address, so I simply used another one to log in and ask why I’d been banned. I’d posted nothing inflammatory. The reply? My account and all the posts I’d made were deleted! Other folk have reported the exact same thing.

So much for "freedom".

I still read the website occasionally, and find gems like this where a poster quotes a website claiming to show how much better a deal the Aquasana water filter is than eSpring. It’s not really a surprise the site would say that – since it’s hosted by Aquasana! More recently there’s a nice post by "Orrin Woodward’s Pastor, Robert Dickie". Which loses only a little credibility when you discover that Orrin Woodward’s Pastor, Robert Dickie II is also known as the father of TEAM CEO, Robert Dickie III.

But can we mere IBOs go on the site and point out these issues to TEAM IBOs? Nope – they don’t want us there.

And now it’s obvious why – the whole setup is simply a PR stunt. I quote from today’s article in PR Week om the TEAM vs Quixtar PR war -

Ashton Partners has been hired to represent a group of 15 distributors in a lawsuit against Quixtar, the American Amway operations. Ashton Partners, which has a practice dedicated to litigation support, has been brought on board to provide strategic communications counsel, drive media relations and outreach, and manage the plaintiff’s Web site, www.freetheibo.com.

Unlike this site, which is run by a real live Independent Business Owner (me) – the freetheibo websites are managed by a PR firm. Those sites are not there to help TEAM IBOs understand the issues and get the facts – they are simply there to make TEAM look as good as possible.

That’s not freeing IBOs – that’s using IBOs.

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Updated to correct the Pastor Robert Dickie relationship
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Amway Europe – Stacking vs Depth-Building

Last week Amway Europe notified all European Diamonds and above about a new policy regarding “inappropriate depth building” or “stacking”. If you are wondering what is “appropriate” and what is “inappropriate”, Quixtar’s Director of Sales, Todd Krause, recently did a great post on this topic on the Opportunity Zone – Stacking vs Depth Building – a couple of weeks ago. The guidelines from Amway Europe state -

“Stacking” is an unacceptable business building practice. It is defined as the strategic and artificial structuring of an organization by an upline IBO placing new IBOs in depth, regardless of whether there are relationships between those who are sponsored and those who sponsor. It is a method of doing business which creates an imbalance in Depth, and inhibits Profitability.

This business building method is one of the areas of dispute between Quixtar and Team in North America, however there are other organizations that continue to use a “team” approach to depth building. Amway says the following is acceptable depth building -

  1. Any business building strategy, such as a team approach, is optional and should be so stated.
  2. Building a balance of both width and depth is vital must be taught in a group as the basis of profitability.
  3. The line of sponsorship may not be restructured by use of the transfer rules for strategic realignment of Depth.
  4. Product education is vital and a requirement for a successful business, which is based on building a balance of product sales and recruiting.
  5. It is important that each IBO has a prior relationship with his sponsor who in turn participates in a meaningful way in the sponsoring activity and agrees to fulfill the obligations of being a sponsor.
  6. It is every IBO’s responsibility to communicate and clearly educate all who enter the business that profitability comes from the sale of products and the development of width for the long term.
  7. It must be taught that building one leg in Depth will not create profitability.
  8. A team approach does not take away the fact that it takes hard work and it is the responsibility of each individual IBO to build his business.
  9. IBOs must be educated on the fact that the act of referring prospects to other IBOs may have a significant impact on the potential for qualification as well as a potentially negative impact on the profitability of that business.

There seem to be two concerns here – one is the issue of profitability, and the other is the issue of a sponsor knowing who they’ve sponsored and vice versa. Focusing on depth helps build a stable business and allows all IBOs to take advantage of increasing bonuses on their own purchases. The width first methodology on the other hand leads to greater initial profitability, but there can be a tendency for those IBOs that aren’t ready to be active immediately to be “forgotten”, and without constant efforts by their upline are likely to do little and eventually not renew – another Amway “failure”.

A focus on building Depth first helps prevent this, but at a loss of early profitability. In the Amway compensation plan we earn income based on volume differential. An IBO at 15% might have legs at say 9%, 6% and some at 3% or lower. He or she will earn 6%, 9%, and 12% respectively on those legs, and 15% on new sponsored legs. If these folk are all in one leg, then it’s likely the sponsor and his immediate downline are both at 15% – no differential, no profit. When the organization I work with began looking at this system, one message that came through was that this made retailing to customers even more important – folk need to be making a profit, and it will take longer to earn bonuses with depth, though perhaps quicker and easier to some of the larger bonuses available at Emerald and beyond.

There are various anecdotal reports on the ‘net of some “stacking” practices that I could image would cause problems. For example focusing on building just one leg at a time. Our organization teaches people to start building a second leg quite early (typically when the first leg is no more than about 10 “deep”). Along with retailing to clients, this means they start to get a bonus reasonably early. Interestingly, in the document sent to Diamonds (linked below), Amway lists the following as an “unacceptable practice” -

1. Legs are 25, 50 or even 100 deep with little or no volume or width.

The fact they list this as a concern indicates to me this has actually been happening. 25,50, or even 100 folk, with no volume or second or third legs means an awful lot of people joining and then getting no benefit at all. A recipe for problems. Another concern listed -

9. Upline holds the applications until the end of the month to artificially control volume for qualification or income purposes.

I’d heard reports of this happening, but frankly I didn’t believe them. It appears though the stories might be true! Some have claimed that folk were even getting sponsored into legs completely separate to the person who introduced them! That’s wrong no matter how you look at it.

Obviously if these types of things occurring, Amway has to take some kind of action. They are doing so and this new policy comes into effect on September 1, 2007. From a practical point of view the biggest issue for IBOs using a “team” approach is the following -

If a leg goes more than 10 in depth, Amway employees will call individuals to insure that the normal sponsor/sponsee relationship exists.

In theory a sponsor is supposed to know the people they sponsor and they are responsible for “training and motivating” that person. In practice I’m certain that this hasn’t always happened with the Team approach. Personally I don’t believe this in itself should really be a problem, assuming there is someone upline who has agreed to take this responsibility. Indeed, some network marketing companies record both a “sponsor” and an “enroller”, so a person can be placed in an organization where it helps them the best, but the person who actually introduced them to the business is noted and still responsible for them.

Interestingly enough, in the countries I’ve worked with Amway, a sponsor is not required to sign the contract agreeing to sponsor a new person – so someone could theoretically fill out an IBO application form and choose *any* IBO as their sponsor, and that sponsor would then be obliged to help them! I can’t find anything in the IBO contract and rules actually requiring a prior personal relationship, however it’s apparent Amway has decided to “enforce” this anyway.

It’s my belief the “real” problem isn’t the lack of this personal relationship, it’s the fact that perhaps prospects and new IBOs are not properly having the strategy explained to them and don’t understand the pluses and minuses. On The Real Quixtar Blog, Quixtar PR Robin Luymes said in response to a query -

All I know is that too many complaints were coming from Team IBOs about who was listed as their upline.

So, IBOs that continue to use a “depth strategy”, Amway wants to ensure new IBOs know the situation, know the pitfalls, and know their upline. Personally I think this can make the method even more powerful. If a potential new IBO wants to take advantage of this strategy, even if they want to only be a wholesale shopper and get the additional rebates, then they must get along to some kind of meeting and meet other members of the team they are joining. This can only make it more likely they’ll actually take advantage of the opportunity, as meeting others is what tends to give people belief about the business and the products.
Read the new guidelines here
Read the sanctions Amway may take if you ignore them

TEAM vs Quixtar: A win for TEAM?

On Friday, Quixtar had some wins in a Michigan Court in their legal dispute with TEAM, with their Restraining Order against TEAM upheld, and the two ROs TEAM requested against Quixtar dismissed. Since then however, TEAM supporters have been crowing about their "wins" in other courts around the United States. Now, I’m not a laywer, let alone a US lawyer, but the TEAM "wins" aren’t yet wins per se – they are grantings of Temporary Restraining Orders (TRO). In disputes like this, these are typically quite easy to get and are issued to prevent parties doing too much "damage" to each other before a case gets a chance to get to court for a full hearing. Both TEAM and Quixtar had these issued in Michigan last week, and when they went to a full hearing Quixtar was the winner in all three cases. So, nothing for TEAM to get too excited about.

One case though looks a little more interesting – Simmons et.al vs Quixtar in Texas. Frankly I don’t quite understand the whole process that has happened, but it appears TEAM got a TRO against Quixtar, similiar as to what happened in Michigan last week. As I said with the Michigan order, given the circumstances that’s perfectly normal and correct.

However, in the Simmons et.al vs Quixtar case I was forwarded it appears that Quixtar asked for the case to be moved to a Federal Court and some changes made to the order, arguing it was "overly broad". They were apparently granted this request, but the TRO remains in force, though modified. I’ve no idea what the changes are. Until the hearing on August 31, Quixtar is enjoined from -

  1. Interfering with Plaintiffs’ Team business support system;
  2. Sending verbal, written, or electronic communications to business associates and upline or downline business partners of Plaintiffs related to violations of the Rules of Conduct, use of Team materials and attendance at Team meetings and conferences, and threats to suspend or terminate any Quixtar distributor’s business based on Team materials;
  3. Terminating or threatening to terminate the distributorships or businesses of Plaintiffs and other IBOs who use Team materials forwarded by Plaintiffs;
  4. Disparaging the Team approach;
  5. Taking any adverse action against Plaintiffs pending disposition of this Order;
  6. Refusing to pay any bonus to Plaintiffs that may be due in the ordinary course of business;
  7. Interfering with or prohibiting, in any way, the operation of the Team as a business support system for Plaintiffs or taking any action to shut down or interfere with the Team’s business.

This isn’t significantly different from the TRO against Quixtar in Michigan which TEAM ultimately lost when it went to a full hearing. The difference, according to TEAM IBOs, is that this time, rather than the TRO being issued "ex parte", ie without one party being there to defend themselves, Quixtar did give their side of the story, and Judge Bush decided TEAM still had a case. Whether it stands up under a full hearing, we’ll have to wait until Friday at the earliest. Quixtar has definitely had the best of things early in the battle, but TEAM’s not out of this yet.

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Quixtar vs TEAM – A Granholm Connection?

First of all I’ll say up front that if I was an American (I’m not) I’d probably be a registered Democrat, and I’m grateful that, despite the founding families well-know support for the Republican Party, the corporation’s official position is that politics shouldn’t be promoted in conjunction with the business. I’m even more grateful that my LOA actually abides by that rule! It’s a policy that’s being given some much needed teeth in the Quixtar Accreditation process.

However – something interesting struck my eye after doing some further research on today’s Quixtar vs TEAM rulings. Many of the new reports include something like the following -

A statement released by Chris DeWitt on behalf of the distributors indicated they plan to continue their fight. "Some very brave IBOs have blown the whistle on Quixtar’s illegal business practices. This is just one small skirmish in a very long and involved battle. In the end the IBOs will prevail." (woodtv.com)

After reading that I thought I’d go hunting for Chris DeWitt’s statement. So what did I do? Naturally enough, I googled "Chris DeWitt Quixtar"

And didn’t that find something interesting … Lots and lots of links to news stories about the DeVos vs Granholm Michigan Governor’s race, quoting

"Granholm campaign spokesman Chris DeWitt"

DeWitt is quoted numerous times disparging Amway and Quixtar in support of Governor Granholm. Funnily enough, last week a thread on the TEAM Forums likened Quixtar to Democrats. This would come as an enormous surprise to the DeVos family I’m sure!

Probably all just coincidence … but interesting nevertheless ….

Oh … and I never did find the statement, can any TEAM members help out with the statement? Or info on the DeWitt connection?

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Judge rules against TEAM, in favour of Quixtar

In a big win for Quixtar, a Michigan Court today ruled for Quixtar and against TEAM in all 3 cases before it. From the Quixtar press release -

In ruling on three motions related to the terminations, Judge Paul Sullivan of Kent County Circuit Court took the following actions:

  • Issued a preliminary injunction preventing Woodward and his company, Team, from using Quixtar business data to recruit Quixtar IBOs as Team builds a competing business;
  • Issued a second injunction ordering Woodward and other terminated distributors to return confidential documents and data they had taken from their former trade association, which has suspended them; and
  • Denied an injunction request from others who sought to prevent Quixtar from enforcing its rules of conduct.

You can read the decision here. I think the lesson for IBOs out of this so far is – you’re in a business, expect to be treated as business owners are treated. Which means know what the contracts you sign say, and if you agree to abide by them, and then later decide not to, don’t be surprised to find yourself on the wrong side of the law.
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The Missing Partnership?

Promises to Keep: The Amway Phenomenon and How It WorksThe following text is from a chapter headed The Other Partnership in Charles Paul Conn’s 1985 book Promises to Keep: The Amway Phenomenon and How It Works. It will probably get me shot by the copyright police, but I think it’s worthwhile reading to provide some context for some of the challenges facing Amway and Quixtar around the world. I think the words speak for themselves.

When the word "partnership" is used to describe Amway, one thinks of the personal partnership of Van Andel and DeVos.

There is another partnership at work in the Amway phenomenon which is just as much a part of the story as the teamwork of the two co-founders. That second partnership is the one between the corporation in Ada and the distributor force which spreads around the world.

These two parts of the "world of Amway" are inseparable and interdependent. Each is impressive on it’s own, but neither amounts to very much without the other. The corporation makes the products and provides the support base; the distributor force sells the products, recruits new people, and provides the cash flow.

It is conceivable that Amway Corporation could find other ways to market its products without its distributor force, just as it is conceivable that the distributors could find another product line to take the place of Amway. But in either case, to imagine one seeking to operate without the other is a wildly hypothetical conjecture. They are two separare structures, but too inextricably linked to one another to think of surviving apart.

The connective tissue joining Amway Corporation and the Amway distributor force is, of course, DeVos and Van Andel themselves. They fit into both sides of the equation. They own and lead the corporation, and at the same time are distributors – the original distributors, in fact. In the one role, they are chief executive officers of a manufacturing company. In the other role, they are the distributorship from which every other distributorship in Amway can be directly traced.

It is the structure which is unusual – perhaps even unique – in the direct-sales industry, and more than any other single element it may account for the soundness and resilience of Amway in good times and bad.

It is conventional wisdom in economic theory to speak of the inherent contract between the corporate mentality and the entrepreneurial mentality. Good entrepreneurs do not necessarily make good corporate officials, and vice versa. For a company like Amway to operate well, both types of talent are needed. The problem is often that the two do not always understand each other’s mind-set; the juncture between the two is often ragged and disjointed.

At Amway, Van Andel and DeVos provide the link between the corporate and entrepreneurial sides of the business. In them there is a fusion of the two "mentalities" which gives great strength to the whole operation. Of all the things they do, none is more important than this: to nurture the partnership between Amway Corporation and its distributors.

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kathummmpppp …….

That was the sound of my jaw hitting the ground, my response to one part of today’s proceedings in the ongoing TEAM/Quixtar legal dispute.

I refer you to this article from MLIVE where it reiterates, as is well known -

Woodward and Brady are among those who have sued Quixtar in California, alleging it is an illegal pyramid scheme

The very next paragraph -

Even though they have filed that suit, members of TEAM have continued to recruit another 1, new Quixtar IBOs, attorneys for Woodward and Brady said.

Is it just me, or is this one of the most bizarre legal strategies in history?

"We believe this to be an illegal business, and while we try to convince you of it, we will continue to promote it to other people!"

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