Joe Guadagno and Susan Beth Rishel Guadagno - Page 5

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               Amway has about 360,000 independent distributors.  During              
          the years in issue, an Amway distributor’s average monthly gross            
          income from Amway-related activities was less than $90.  Amway              
          does not assign its distributors exclusive territories.  As best            
          we can determine from the record, there is no contractual                   
          relationship between an upline distributor and his or her                   
          downline distributors.  A downline distributor is not obligated             
          to remain in the distribution network of an upline distributor              
          and is not obligated to achieve any minimum sales levels.                   
               A distributor’s performance bonus is determined by his or              
          her “point value” and “business volume”.  Point value is a number           
          that corresponds to a particular tier in the Amway “performance             
          bonus schedule”.  Business volume is a dollar amount generally              
          equal to 87 percent of the suggested retail price of a particular           
          product.  Amway assigns a given point value and business volume             
          to each product it sells but may change these figures at any time           
          for any reason it chooses.3  Consequently, it is difficult to               
          predict a performance bonus on the basis of the present point               
          value and business volume of Amway products.  The performance               
          bonus is calculated by multiplying a distributor’s monthly                  
          business volume by a percentage that is listed in the performance           

               3 According to petitioners’ exhibits, the ratio of business            
          volume to point value ranges from 2.00 to 2.62.                             

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Last modified: May 25, 2011