Well, I am sure the title of this editorial “Is The Empower Network The Next Zeek Rewards?” caused you to pause and ask your own question… What is Troy Dooly talking about? Well first let me state right off the bat, I am not talking about the Empower Network being called a ponzi. No my thoughts go way deeper than legal issues, it’s about something far deeper… Behavior Issues… Behaviors of companies and distibutors!
Over the last few weeks I have heard from hundreds of folks via phne calls, emails, text messages and through my social profiles, asking me the same basic question… “Can my company terminate me for being in the Empower Network?” And folks this is the same question I heard from thousands of folks who in 2012 joined Zeek Rewards. It has caused me to pause and give this some thought.
I also reached out to some of the founders and executives of companies who have terminated independent business owners in their field force for ellegingly also promoting the Empower Network. After talking with both sides of this very hot issue, I have come to realize that here are some very strong simalarities to this current situation and those that Zeek Rewards affiliates faced not so many moneys ago.
First let’s look at the one common reason given by the company executives for terminating, subspending or sending threatening warning letters to their field force – Cross Recruiting!
Now the majority of the time somewhere in the Policies & Procedures which more than likely you have not yet read is a policy governing being in another direct selling type of company. It might be in the same industry or niche, it might have a simaler compensation plan, it might not even look anything like your primary company. But based on the policy if you are in this type of company and you talk to ANYONE (well maybe not anyone, just anyone in your upline, crossline, or downline – except for your personals, or maybe even your personals) you can be TERMINATED!
Here are a few examples of some of these policies:
MLM Company #1
” MLM Company” conducts business in an ethical and credible manner, and expects all ID’s (Independent Contractors) to work ethically with their customers, with each other, and with the company. “MLM Company” permits no unethical activity and “MLM Company” will intervene when unethical behavior is evident. “MLM Company” reserves the right to use its best judgment in deciding whether certain ID activities are unethical and if determined so, are grounds for terminating or deactivating the ID position.
If for any reason an ID violates any of the terms of the Agreement and/or these Policies and Procedures, MLM Company reserves the right to immediately deactivate or terminate the ID’s position. Such action by MLM Company will terminate any and all rights of the ID and any further payments of any kind and is effective at the time of said violation. Examples of unethical activity include, but are not limited to:
Cross-line recruiting (see below)
Cross-Line Recruiting:MLM Company strictly prohibits “crossline recruiting” which is the solicitation of any ID who was already referred by another ID. Directly or indirectly soliciting involvement of a referring ID, or assisting in the solicitation of a referring ID of any existing or pending ID into another sales organization of which they are not currently an ID is also prohibited. Another policy IDs agreed to uphold when they joined this MLM Company…
“Non Interference and Exclusivity Policy:
During the term of this Agreement (and any renewals), I will not sell any other products for any entity competing with MLM Company. During the term of this Agreement (and any renewals) and for one (1) year thereafter, I will not solicit or recruit, MLM Company employees or Distributors, whether active or inactive, to participate in a network marketing program whether or not such marketing company offers products. I acknowledge that my violation of this provision will result in immediate termination of my Distributorship and payments of any kind.”
Troy’s Thoughts: Notice in the above policy, that the company “reserves he right to use its best judgement in deciding what is ethical or unethical behavior.” Not what I would call ID friendly, but hundreds of thousands of IDs agreed to the policy going in, and are not frustrated when it is used against them. Notice in the second policy the phrase “I will not sell any other products for any entity competing with MLM Company.” Although ambiguos in nature, the IDs signed that they agreed to this policy. So the question that is not on the table is… What does “COMPETING” mean?
In the mind of independent distributors for this comapny, it means “selling competing products”, and I hear “But Troy, the Empower Network, doesn’t sell health and nutrition products, so I am not in violation!”
But, read the above statement again… “I will not sell any other products for any entity competing with MLM Company.” The phrase doesn’t same anything about “competing products” it clearly states “any entity competing with MLM Company.“ So when you join a different, direct selling company, MLM company, Network Markting Company, Affiliate Marketing Company… Be it the Empower Network, Ocean Avenue, ViSalus, Melaleuca, Zeek Rewards, or any one of two thousand companies who offer some form of multi-level compensation plan, the above MLM Company “reserves the right to terminate you!” Not because you are selling a “competing product” but because you are marketing an “income opportunity” for “competing inintity.”
Here is a more friendly Distributor Friendly Policy & Procedure covering the same issue of Cross-Sponsoring. But I want to add, that I doubt if many of distributors for this company have read it either, and although it is more distributor friendly, it does once again protect the company’s reputation first and formost.
MLM Company #2
“MLM Company AMBASSADORS are free to participate in other multilevel or network marketing business opportunities (collectively “Network Marketing”). However, during the term of this Agreement, AMBASSADORS may not directly or indirectly recruit other MLM Company AMBASSADORS or customers other than those they have personally sponsored for any other Network Marketing business.
Following the cancellation of an AMBASSADOR, and for a period of six (6) calendar months thereafter, with the exception of an AMBASSADOR who was personally sponsored by the former AMBASSADOR, the former AMBASSADOR may not recruit any MLM Company AMBASSADOR or customer for another Network Marketing business.
AMBASSADORS and the Company acknowledge and recognize that because Network Marketing is conducted through networks of independent contractors dispersed across the entire United States and the business is commonly conducted via the Internet and telephone, an effort to narrowly limit the geographic scope of this non-solicitation provision would render it wholly ineffective.
Therefore, AMBASSADORS and the Company agree that this non-solicitation provision shall apply to all markets in which MLM Company conducts business.” AMBASSADORS must not sell, or attempt to sell, any competing non-Ocean Avenue programs, products, or services to MLM COmpany AMBASSADORS or customers.For purposes of this provision, any program, product, service, or direct selling opportunity in the same generic categories as MLM Company is deemed to be competing, regardless of differences in cost, quality or other distinguishing factors.
If an AMBASSADOR is engaged in other non-MLM Company direct selling programs, it is the responsibility of the AMBASSADOR to ensure that their MLM Company business is operated entirely separate and apart from any other program. The following separation requirements must be strictly adhered to and include: (a) The AMBASSADOR shall not display MLM Company promotional material, sales aids, or products with, or in the same location as, any non-MLM Company promotional material or sales aids, or products; (b) The AMBASSADOR shall not offer the MLM Company opportunity or products to prospective or existing AMBASSADORS and customers in conjunction with any non-MLM Company program, opportunity, product or service; and (c) The AMBASSADORS may not offer any non-MLM Company opportunity, products, services, or opportunity at any MLM Company related meeting, seminar or convention, or within two hours and a five mile radius of the MLM Company event. If the MLM Company meeting is held telephonically or on the Internet, any non-MLM Company meeting must be at least two hours before or after the MLM Coompany meeting, and on a different conference telephone number or internet web address from the MLM Comany meeting.
“ Disciplinary Actions:
If you violate any of the Policies and Procedures, the Terms and Conditions of the AMBASSADOR Agreement, or engage in any illegal, fraudulent, deceptive, or unethical business conduct, we may, at our sole discretion, invoke any disciplinary action that we deem appropriate. Among the potential disciplinary actions are: Issuance of a written warning or admonition;
Issuance of a written warning or admonition;
Imposition of a fine, which may be imposed immediately or withheld from future Bonus or Commission Checks;
Reassignment of all or part of your Downline organization;
Adjustment of your AMBASSADOR status;
Suspension, which may result in termination or reinstatement with conditions or restrictions; and
Termination of your AMBASSADOR position. With respect to termination, the Founders Advisory Counsel, will have the final say with respect to any and all terminations.”
Troy’s Thoughts: Now although the second MLM Company has written out in deeper detail the policies, the end result is the same. If the Ambasador is found violating any of them, then the company “we may, at our sole discretion, invoke any disciplinary action that we deem appropriate.”
So, in both of these MLM Companies, if either one were to feel that the IDs or Ambassadors were violating any of the policies, they can take whatever actions they deem neccassarry to protect the MLM Companies Reputation and integrity of their field force.
NWM Company #3
Conduct of Household Members If any member of the Marketing Executive’s Immediate Household engages in any activity which, if performed by the Marketing Executive, would violate any NWM Company’s policy or any provision of the Independent Marketing Executive Agreement, such activity will be deemed a violation by the Marketing Executive. Non-Solicitation and Conflicts of Interest Marketing Executives are independent contractors and may be active in other business ventures while they are Marketing Executives for NWM Company. However, to qualify for compensation under NWM Company’s Compensation Plan, Marketing Executives have the ongoing responsibility to service, supervise motivate, train and assist the Marketing Executives in their Marketing Organizations. They also have the responsibility to promote NWM Company products and the NWM Compnay’s income opportunity.
NWM Company and its Marketing Executives have made a great investment in the establishment of organizations consisting of Customers and Marketing Executives. This constitutes one of NWM Company’s most valuable assets. NWM Company reserves the right to cease paying compensation to any Marketing Executive who recruits any NWM Company Customer or Marketing Executive to participate in another business venture. In order to protect the efforts of all Marketing Executives in building and maintaining their individual Marketing Organizations and Customer bases, and in order to protect NWM Company’s interest in the overall Customer base, Marketing Executives and all members of their Immediate Household are required to abide by the following policies: Non-Solicitation of NWM Company’s Customers and Marketing Executives:
(i) During the period that their Independent Marketing Executive Agreements are in force Marketing Executives and all members of their Immediate Household are prohibited from directly, indirectly or through a third party recruiting any NWM Company Customers or Marketing Executives to participate in any other business venture. (ii) For a period of twelve months after cancellation or termination for any reason of a Marketing Executive’s Independent Marketing Executive Agreement, the Marketing Executive and all members of his or her Immediate Household are prohibited from directly, indirectly or through a third party recruiting to participate in any other business venture any NWM Company Customers or Marketing Executives:
(1) who were in the Marketing Executive’s Marketing Organization or Support Team at any time during the term of his or her association with NWM Company;
(2) with whom the Marketing Executive had contact during the term of his or her association with NWM Company;
(3) whose contact information (name, address, phone number or email address, etc.) the Marketing Executive or members of his or her Immediate Household has obtained at any time during the term of his or her association with NWM Company; or
(4) whose contact information (name, address, phone number or email address, etc.) the Marketing Executive or members of his or her Immediate Household obtained at any time from another person who obtained the information because of any other person’s association with NWM Company.
The prohibitions under clauses (a)(i) and (ii) above include but are not limited to, presenting or assisting in the presentation of other business ventures to any NWM Company Customer or Marketing Executive or implicitly or explicitly encouraging any NWM Company Customer or Marketing Executive to join any other business ventures. It is a violation of this policy to recruit a NWM Company Customer or Marketing Executive to participate in another business venture even if the Marketing Executive does not know that the prospect is also a NWM Company Customer or Marketing Executive. It is the Marketing Executive’s responsibility to first determine whether the prospect is a MLM Company Customer or Marketing Executive before recruiting the prospect to participate in another business venture. (Please refer specifically to the definition of “recruit” in the Definitions of Terms at the end of these Policies.)
(b) During the period that their Independent Marketing Executive Agreements are in force, and for a period of twelve months after the cancellation or termination thereof for any reason, Marketing Executives and all members of their Immediate Household are further prohibited from the following:
(i) Producing any literature, tapes or promotional material of any nature (including but not limited to websites and emails) which is used by the Marketing Executive or any third person to recruit NWM Company Customers or Marketing Executives to participate in another business venture;
(ii) Selling, offering to sell, or promoting any competing products or services to NWM Company Customers;
(iii) Offering any non-NWM Company products, services or business ventures in conjunction with the offering of Melaleuca products, services or income opportunity or at any NWM Company meeting, seminar, launch, convention, or other NWM Company function.
(i) Violation of any provision of this Policy 20 constitutes a Marketing Executive’s voluntary resignation and cancellation of his/her Independent Marketing Executive Agreement, effective as of the date of the violation, and the forfeiture by the Marketing Executive of all commissions or bonuses payable for and after the calendar month in which the violation occurred.
(ii) If NWM Company pays any bonuses or commissions to the Marketing Executive after the date of the violation, all bonuses and commissions for and after the calendar month in which the violation occurred shall be refunded to NWM Company.
(iii) NWM Company may seek and obtain from the violating Marketing Executive both injunctive relief and damages for violations of this Policy 20. NWM Company, may, at its option, elect to enforce this Policy by lawsuit in a court of competent jurisdiction in Idaho rather than by arbitration.
(iv) In addition to being entitled to a refund of bonuses and commissions and to damages as described above, in the event a person or entity violates this Policy 20, NWM Company and any Marketing Executive that experiences an adverse financial impact as a result of such person’s or entity’s violation of this Policy 20 shall be entitled to an accounting and repayment of all profits, compensation, commissions, remunerations or other benefits which the person or entity directly or indirectly receives and/or may receive as a result of, growing out of, or in connection with any violation of this Policy. Such remedy shall be in addition to and not in limitation of any damages, or injunctive relief or other rights or remedies to which NWM Company is or may be entitled at law or in equity.
(d) Violations of this Policy 20 are especially detrimental to the growth and sales of other Marketing Executives’ Independent NWM Businesses and to NWM’s business. Consequently, Marketing Executives who have knowledge that any Marketing Executive has violated this Policy must immediately report that information to NWM Company’s Policy Administration Department. The failure of a Marketing Executive to report such information to Melaleuca will also constitute a violation of this Policy. The names of those reporting violations of this Policy 20 will be held in confidence.
21. Proprietary Information and Trade Secrets By executing the Independent Marketing Executive Agreement, the Marketing Executive acknowledges that all information which is contained in the Marketing Executive’s Monthly Business Report, including names, addresses and telephone numbers of Marketing Executives and Customers, is NWM Company’s proprietary trade secret information. The Marketing Executive agrees not to disclose such information to any third party (except to existing or prospective NWM Company Marketing Executives or Customers for the purpose of promoting Melaleuca products and business opportunity) or to utilize such information for the purpose of promoting any other business opportunity at any time, whether during the term of his/her association with NWM Company or thereafter. The Marketing Executive acknowledges that such proprietary information is of such character as to render it unique and that disclosure or use thereof in violation of this provision will result in irreparable damage to Melaleuca and to Independent NWM Businesses. NWM Company and its Marketing Executives will be entitled to injunctive relief to prevent violation of this policy. If litigation or arbitration is required to obtain injunctive relief or to recover damages, the prevailing party shall be entitled to an award of attorney’s fees and expenses.
Troy’s Thoughts: Although the 3rd company which holds itself out to be a Network Marketing Company, and not a MLM or Multi-Level Marketing company, it has far stricter guidelines than the first two companies, and I want to state again that it is my professional opinion, than in all three cases that the minority or former and active Independent Disributors (IDs), Ambassadors and Marketing Exectutives read the Policies & Procedures before joining the company.
I will also contend that most of the former IDs, Ambassadors and Marketing Executives still have not read them. In the majority of cases, the only time the P&Ps get read is when an active field representive is terminated!
Now let’s take a look at how the terminated field representivie feels.
Since I used the Empower Network & Zeek Rewards as my example because these two companies have caused the most contriverial terminations in 2012, I want to stick with them.
In reviewing thousands of communications, the common confusing issue, is that Independent Business Owners who join a primary company, and go find an online system with a compensation plan, do not beleive they are Cross-Sponsoring when in their business plan, the system is there to help them build the primary business. They do not see it as cross-recruiting when they find some other direct selling company that may offer fishing or hunting products and some independent distributor in their primary company contacts them about this hunting anf fishing comapny, or just joins.
I can totally see their point of view, as I can see the company’s point of view. The legal question is which view is legally binding? Let’s see what the best legal minds in Direct Selling have to say about these issues.
Kevin Thompson – How Should An MLM Leader Leave A Company?
Kevin Thompson – Master Distributors – Good or Bad?
Spenser Reese – Keep Your Hands Off My Downline
Jeffrey Babner – Noncompetition Agreements 0 Enforceable?
Jeffrey Babner – Cross-Sponsoring Rules
Gerry Nehra & Richard Waak – Independent Contractors, Things To Think About
Gerry Nehra & Richard Waak – The Integrity Of The Lines Of Sponsorship
David Eisenstein – The Perfect Storm of Company – Distributor Conflict
David Eisenstein – The Perfect Storm Revisited
David Eisenstein – Arbitrary Downline Moves By Companies a Signal of Lack of Integrity
David Eisenstein – MLM Couple Receives $650,000 In Wrongful Termination Case
IRS Publication 911 – Independent Contractor .vs Employee (Currently not being printed)