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bonus schedule and corresponds to the distributor’s monthly point
value.4 This percentage ranges from 3 to 25 percent and
increases in steps as a function of point value.
Petitioners’ Amway activities may be summarized as follows.
Petitioners were recruited by an upline distributor of Amway
products in 1995. They had no prior experience with Amway and no
prior experience running a business. Before becoming Amway
distributors, petitioners received advice from other Amway
distributors but did not solicit business advice from those
outside the Amway community; nor did petitioners seek independent
business advice during the course of their affiliation with
Amway.
During the years in issue, petitioners spent little time or
effort attempting to sell Amway products; instead they intended
to develop a network of distributors. Consequently, their
potential for profit depended almost entirely on Amway’s
performance bonus program and the sales efforts of their downline
distributors. Recruiting productive downline distributors,
therefore, was the key to petitioners’ profit potential. In this
4 For example, assume that, in a given month, a distributor
accumulates a point value of 1,000 and a business volume of
$2,500. According to Amway’s performance bonus schedule, at a
point value of 1,000, the performance bonus equals 12 percent of
business volume. Thus, in this example, the gross performance
bonus is $300 (i.e., $2,500 x 0.12). To determine the
distributor’s net performance bonus, this amount must be reduced
by the dollar amount of bonuses owed to downline distributors.
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Last modified: May 25, 2011