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Amway the $5 Billion MLM Giant Sanctions its Entire 30,000 UK Sales Force
May 07, 2007
"My faith in Amway and what it stands for is not dead but very badly shaken, I cannot believe that the co-founder Rich De Vos has sanctioned such a blatantly provocative email."
USA AND UK -- What is all the fuss about? Well, starting with the United Kingdom and Ireland. A very surprised and shocked sale force and just before a holiday break, received an email, which can be read below or on network marketing leads the way.
In a nutshell, Amways seemingly soft touch with its ibo (independent business owner) sales force, over their lucrative, conference, speaker, books and cd systems, which many organisations run side by side with their Amway business, is about to come to an end.
This income that Amway has now blocked, is known as system money by the ibo sales force and millions can be made from it by its successful ibos, they are known as "system lords". They have taken full advantage of one of the best internet home based business opportunities.
Amways zero tolerance on system money started with the UK and Ireland on May 4th 2007 and will then roll out to the rest of the world, that’s when surely war will break out.
Starting with the UK and Ireland, it has banned all sponsoring for at least 8 weeks and banned all system conferences, books and cds. Which essentially are not run, or distributed by Amway. Many ibos make good money from speaker fees.
It would seem that Amway has finally got fed up with the negative media and Internet sites which have berated ibos who make more system money than they do out of their Amway networking business and are now making a stand, whatever the cost. They are taking a home business lead in zero tolerance towards abuses of their business model.
Most people would agree, Amway itself is rarely attacked; it is the ibos themselves who tend to shoot themselves in the foot with their greed to make as much system money as they can, at the expense of the naive ibo, and this is where most of the complaints come from.
Luckily I belong to an organisation that has always been anti system money, because of the greed factor, so we are not to worried; we make our money on product sales and referral income, which was the original pure dream of Alticors co founders Rich De Vos and Jay Van Andel.
However the big boys, who earn mighty bucks from the multi million dollar system, are going to be rather angry; lawsuits are sure to fly and could lead to the break-up of the multi billion privately owned business.
The implications on the numerous non-Amway professional speakers and writers and even hotels, will be interesting to see. If a good positive reading book comes out ibos can order one hundred thousand plus in one go. The system lords, are also one of the largest conference and hotel room bookers in the world.
It would appear that Alticor, the parent company has initially picked on one of the weaker countries as far as the business goes to implement its zero tolerance stance.
The UK has always been a difficult country to crack and it would appear they are working on the principle of limited damage, i.e. lets see how the UK ibo sales force reacts and go on from there. I notice they haven't picked on their own US business network yet. The UK would appear to be the first lamb to the system money slaughter.
After one day the UK sales force doesn't appear to be reacting very well, they are in shock. They are already threatening to "go on strike". Many of the large US business ibos, who have very deep pockets, have business interests in the UK and have already instructed lawyers regarding such matters as: breach of contract, breach of human rights to hold meetings, and the implications of the free trade enterprise system and freedom of speech and the rights of a corporation to dictate to its independent sales force in such a way.
Why are ibos shocked. Well the very essence of a network marketing business or MLM business, is that you are your own boss, to a keen ibo JOB means Jackass Of the Boss, no security and guaranteed redundancy at some time in your career and probably no pension. In other words if you rely on the system, more fool you. Up to now the Amway has lived up to its word of providing a regular income for those ibos who have dedicated themselves to building the business.
To receive an email like this, with no warning to the leaders, just before a holiday break, is just what ibos hate, corporate mind games and total lack of feeling for people financial futures. There had been no discussion or communication, before this email.
One well-known ibo has commented "My faith in Amway and what it stands for is not dead but very badly shaken, I cannot believe that the co-founder Rich De Vos has sanctioned such a blatantly provocative email. He would never change the goal posts this way. His book compassionate capitalism talks about this very thing".
"We don’t make any system money, so why are we been treated in the same way as those who are greedy and violating the system, it really is not fair".
"Many families rely on the income derived from this business and to not be able to build it, for at least two month is tantamount to a breach of contract and Amways good word. I have had ibos at my house and on the phone crying their eyes out, it is an absolute disgrace, I feel let down and cheated by the Amway corporation. I really feel I am in mourning I am fighting to not loose faith in people and become just another cynical human being".
In my opinion, based on 19 years in the business, both sides are absolutely right on this issue but so absolutely wrong. The email below explains Amways position. The losers in the end will be the honest ibo sales force who have worked very hard to create a future for themselves and their families. The only winners in the long run, will be the lawyers. There will be future updates on the network marketing lead story, starting the 6th May.
The email that has caused all the fuss:
Letter: from Ben Woodward Branch Manager Amway UK UK/ROI IBO Communication
May 4, 2007
To: UK/ROI IBO Leader
From: Ben Woodward, Branch Manager, Amway UK
RE: Significant change to Amway’s mode of operations in UK/Republic of Ireland.
This letter is to inform you of significant changes to the way Amway will conduct its business in the UK and Republic of Ireland. These changes are effective immediately. While these changes may cause short-term challenges for some of our IBOs, we strongly believe the changes will make our long-term business in the UK/RoI stronger.
Effective Immediately: 4 May 07.
Amway will prohibit the production, sale or promotion of BSM that are not authorized and distributed by Amway; this includes websites. This includes any BSM (books, tapes, meetings, CD’s, websites) that have been already been approved by Amway UK/RoI. They are now considered unauthorized for use.
All meetings for which an entry fee is charged are suspended until Amway has approved, in writing, the meeting and its content;
Amway has imposed a moratorium on sponsoring new IBOs for at least 60 days and until current IBOs are re-trained and re-qualified;
We are evaluating all costs associated with joining Amway;
We are also sanctioning a number of IBOs based on contract violations that have come to our attention.
Failure to comply with the above mentioned points 1 to 3 will lead to a suspension and/or termination of the respective IBO contract. Please also note that Amway is in no way limited to these sanctions, but can impose further corrective or punitive measures.
In addition, the company is announcing a thorough review of its business practices globally with the goal of ensuring a consistent, rigorously enforced set of rules and regulations governs its relationships with IBOs and consumers.
That global audit has begun, and we expect it to be completed in June, and will share the results with you later this summer.
These are important steps, but in some ways, they are not surprising ones. Many of you know that for the past 10 years, Amway has been moving to exert more control over the way we do business globally.
In newer markets that has meant, for example, outright bans or tight restrictions on the sale of non-company BSMs and the requirement of a more consistent, approved messaging and branding by IBOs about the Amway business opportunity.
While most changes in other markets have been carried out gradually around the world according to our timetable, we need to move more quickly here. This is in response to serious concerns raised about Amway by the Department of Trade and Industry (DTI) following the receipt of complaints about BSMs and misrepresentation of the business to prospective IBOs.
At this time, we can not specify when sponsoring will be allowed to resume. We will continue to communicate with key international and local IBO leadership to update them on developments of a new operational mode in UK and Republic of Ireland.
For example, if any IBO has a planned meeting for which tickets have been sold (that is required to be cancelled and ticket purchases refunded), or
they have unsold inventory of BSM, or
have unsold Starter kits, or have completed applications not yet submitted to Amway, they may contact the dedicated enquiry telephone number – 01908-629400 (press option 4).
In the following weeks, we will seek to meet with you personally to discuss the implications of this policy change and respond to any questions you may have. Meanwhile, please feel free to call me at 01908-629404.
Amway has been in the UK/RoI for more than 30 years, and today is a strong, growing £13 million business with more than 100 staff and 30,000 IBOs. We are entering into a challenging period of time.
But we believe in this business, we believe in our values and we believe in our IBOs. We are committed to making the changes we need to make in order to ensure the continued growth and success of Amway in the UK/RoI.
Branch Manager – UK / RoI
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