Cutting through the PR and BS (updated)

As in any dispute, there’s always at least two sides to every story, and usually neither side is blameless or has a mortgage on the truth. I believe that to be the case in the recent dispute arising between Orrin Woodward and Chris Brady’s TEAM and Quixtar and Alticor.

There has been a lot of passionate posting by supporters of TEAM and those who disagree with them, both here and on the Alticor websites. First, let’s clear out some myths. I’ll give my take on why I think this has all happened in a later post.

1. MYTH: Stacking is illegal
The "stacking" technique is when new IBOs are primarily placed down one leg. The idea is to focus on building depth in an organization first, which should give more long-term stability. It also should aid in IBO retention and belief, as new IBOs see that the business actually does work. In the traditional "width first" approach, new IBOs would always be sponsored by the person who introduced them to the business concept. Typically IBOs would try to sponsor as many in width as possible and then work with those who wanted to build the business. Given limited time, this often meant some IBOs would get "left behind" as the active IBO focussed on those willing to do the work.

There is nothing inherently wrong in either approach, and certainly not illegal. The "binary system" of network marketing has promoted the depth concept for many years. The Amway plan is flexible enough to allow people to pursue this method if they wish.

2. MYTH: Stacking is against Quixtar Rules
To the best of my knowledge, "stacking" is not against Quixtar’s rules. Indeed, Quixtar has approved custom SA-44 documents for organizations that were using the stacking technique. Quixtar requires IBOs to supply the SA-44 to prospects. You can see one used by Billy Florence’s DCI Team here. This document clearly explains a stacking technique and includes Quixtar’s BSM approval number. Indeed, this document was at the core of a dispute between Billy Florence and Amway/Quixtar critic Scott Larsen, who disputed it’s authenticity. Quixtar confirmed it’s legitimacy in a letter posted on the IBOAI website.

Where problems can arise with stacking is that Quixtar’s rules contractually require a sponsor to provide training and motivation for IBOs they sponsor. In somewhat of a major oversight however, until a recent change, being implemented from September 5 27, an IBOs sponsor was never required to sign any contract agreeing to be someone’s sponsor. In the new changes both the new IBO and their Sponsor will need to sign the agreement.

UPDATE: As rykel98 points out in the forums, some Amway markets do have a no stacking rule, and Quixtar is implementing a no stacking policy from September 1, 27. Nevertheless, until that point "stacking" is not against Quixtar rules and Quixtar has previously approved materials describing this technique.

UPDATE 2: Part of the confusion in this issue comes about because of definitions. Some consider "stacking" to be any placing of prospects downline of someone other than that who introduced them to the concept. A new post on Adatudes, Stacking vs Depth-building gives Quixtar’s definition –

stacking is deemed to take place when a new IBO doesn’t know their sponsor or doesn’t agree with whom their registered sponsor is

Thus, placement of IBOs in depth positions, where they (and their sponsor) agree is considered legitimate depth-building rather than stacking. This is an important distinction.

3. MYTH: Orrin Woodward and Chris Brady resigned before they had their contracts terminated
TEAM CEO Robert Dickie explains on his website that the terminations occurred unexpectedly in response to a request to allow TEAM and TEAM IBOs to pursue other opportunities. It is quite possible, indeed likely, that other IBOs proffered their resignations in response. The truth would appear to be that some IBOs resigned first, others had their businesses terminated first. CLARIFICATION: this is with regards to resigning from Quixtar, no the IBOAI board. Some have confused the issue and claimed they resigned from Quixtar, thus forgoing their Quixtar income, and this was evidence of their good intentions.

4. MYTH: Primarily internal consumption makes Quixtar an illegal pyramid
Even as early as the 1979 FTC vs Amway case, the government was clearly aware that a large percentage of Amway’s volume came from "internal consumption" – ie. IBO’s purchasing products for personal use. As I addressed in a post last week How to improve Amway & Quixtar – Part I and in an early post AMWAY/QUIXTAR MYTH: It’s a pyramid if most products are bought by IBOs this idea is simply not true. It’s a concept promoted by anti-mlm Zealots such as Robert FitzPatrick. Indeed, as recently as 24 the FTC clearly stated –

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.

You can read more about that, and the FTC’s letter on this topic, in the AMWAY/QUIXTAR MYTH: It’s a pyramid if most products are bought by IBOs article.

5. MYTH: The products can’t be retailed
Leaving aside the fact that a product purchased by an IBO for personal use *is* a retail sale (see the Amway/Quixtar Myth post above), the TEAM class action lawsuit against Quixtar claims –

a 26 report prepared by Quixtar states that only 3.4% of its total volume cones from those who do not participate in Quixtar’s compensation plan

Now, as I mention in How to improve Amway & Quixtar – Part I if you really like Away/Quixtar products, you have to be an idiot not to be an IBO. Why not get the prices cheaper? Nevertheless, having "outside consumers" does offer evidence that your products do have real demand in the marketplace and are not just purchased in order to try to get a bonus – which could make you open to illegal pyramiding claims.

Well, 3.4% doesn’t sound like much, but let’s put this in perspective – Quixtar’s annual 26 sales were $1.118 billion. What’s 3.4% of that? $38,12,. Throw on say 3% markup and your talking full retail sales (not to IBOs) approaching $5,,!!!

That’s an awful lot of evidence the products can be retailed! I recall Quixtar PR blogger Beth Dornan mentioning on her site an IBO who had ordered 25 Quixtar catalogues – for his clients. If I recall correctly an MP3 by Diamond Brad Doyle on the Quixtar Tools website talks about a qualified Ruby – all with customer volume.

Now, I too have some concerns about some of the pricing, but anyone who says they can’t be retailed simply doesn’t have the facts.

So what’s the real story behind the TEAM vs Quixtar dispute? My take on that in a later post.

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