- 6 -
theoretical break-even point for a distributorship, assuming that
the distributor and each “downline” distributor within the
distributor’s organization purchases $200 of Amway products per
month, and that the distributor does not have expenses exceeding
$2,000 per month. At least in theory, the potential for profit
is enhanced as each of the 78 “downline” distributors in the
distributor’s network successfully implements the “6-4-2 plan”.
The Amway “6-4-2 plan” does not provide meaningful guidance
to distributors regarding how expenses incurred in pursuing an
Amway activity might be reduced.
The structure of the Amway “pyramid” incentive system
effectively serves to discourage distributors from spending their
time personally trying to sell Amway products. In contrast, the
system effectively serves to encourage distributors to spend
their time trying to recruit an ever-increasing number of
“downline” distributors. Petitioners themselves spent little
time personally trying to sell Amway products and concentrated
instead on trying to recruit (and retain) “downline”
distributors.4 Gross income received by petitioners consisted
principally of bonuses earned from the sale (or personal
consumption) of Amway products by “downline” distributors.
4 At the end of 1994, 1995, and 1996, petitioners had a
total of 75, 77, and 79 “downline” distributors, respectively, in
their organization.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011