- 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