- 6 -
a total of 117 “downline” distributors in the initial
distributor’s organization). The “9-4-2 plan” is promoted as the
theoretical break-even point for a distributorship, assuming that
(1) the distributor and each “downline” distributor within the
distributor’s organization purchases $200 of Amway products per
month and that (2) 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 117 “downline” distributors
in the distributor’s network successfully implements the “9-4-2
plan”.
The Amway “9-4-2 plan” does not provide meaningful guidance
to distributors regarding how expenses incurred in pursuing an
Amway activity may 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.
Amway distributors are entitled to purchase Amway products
for their personal use at distributor’s cost without the
customary percentage markup.9
9 Although the record is not crystal clear, it would appear
that 30 percent was the customary markup.
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Last modified: May 25, 2011