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distributors of Amway products. Petitioners also received
unsolicited, independent advice from their accountant, but
apparently the advice was negative.
Instead of attempting to sell Amway products at a profit to
customers/users, petitioners chose to concentrate on developing a
network of distributors. Consequently, their potential for
profit was almost entirely dependent upon Amway’s performance
bonus program and the sales efforts of their downline
distributors. Recruiting productive downline distributors,
therefore, was the key to petitioners’ profit potential.
Nevertheless, they made no effort to develop a profile of a
successful downline distributor on which basis they would
recruit; instead, petitioners recruited indiscriminately from
family, friends, and acquaintances. By the end of 1999, it
appears that petitioners had recruited between 10 and 25 downline
distributors but had only two regular customers--their neighbor
and Mr. Lopez’s mother.
The relationship between petitioners and their downline
distributors was an informal one. There were no contracts or
minimum sales agreements. Downline distributors were free to
leave petitioners’ distribution network at will and, if they
desired, could even join another Amway distributorship under a
different upline distributor. Petitioners were not assigned a
sales territory, and, like their downline distributors, they had
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Last modified: May 25, 2011