Jorge N. and Vivian Lopez - Page 4

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          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.4  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 bonus schedule and corresponds to the distributor’s             
          monthly point value.5  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 1996.  Petitioners had no prior experience with Amway           
          and no prior experience running a business.  Before becoming                
          Amway distributors, petitioners received advice from other Away             
          distributors but did not seek the advice of independent business            
          consultants.  During the course of their affiliation with Amway,            
          petitioners relied on the advice of certain celebrated upline               


               4 According to petitioners’ exhibits, the ratio of business            
          volume to point value ranges from 2.00 to 2.62.                             
               5 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