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D. Nature of Petitioners’ Amway Activity
At the time that they were recruited as Amway distributors
in August 1994, petitioners had no prior experience with Amway or
an Amway type activity.
Other than accepting the Amway “9-4-2 plan”, petitioners
never developed a business plan for their Amway activity, nor did
they ever prepare profit projections or undertake any type of
market analysis. Although petitioners maintained a monthly
report of expenses incurred in pursing their activity, they never
prepared a break-even analysis nor a formal budget.
Despite their lack of experience with either Amway or an
Amway type activity, petitioners never sought meaningful counsel
from disinterested third parties. Rather, petitioners relied
principally on advice from “upline” distributors and other
interested Amway individuals.
Petitioners spent little time personally trying to sell
Amway products. Indeed, from February through September 1997, no
retail sales were made. Rather, petitioners concentrated on
trying to recruit, and retain, “downline” distributors. Gross
income received by petitioners consisted principally of bonuses
earned from the sale, or personal consumption, of Amway products
by “downline” distributors.
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