Will Your Network Marketing Company Allow You to Retire?

The entire philosophy of the network marketing industry is financial freedom – the ability for you to do whatever you want, wherever you want, whenever you want with whoever you want.

A network marketing business is supposed to be something that you work hard for a few years to build once, then you should be able to retire to enjoy the fruits of your labour and your business should still grow autonomously.

So with that in mind, I want to share with you a little experience I had. A while ago, I thought about joining a relatively new MLM company. I was attracted to the company’s business philosophy and its products. But thanks to training I had received from my mentor, I made a wise decision not to join this company – as good as its products were and all.

As I read the policies and procedures of this company – that is, the contract between you, the distributor, and the company – I realised that I could build this company, but I wouldn’t be able to retire, ever. That’s because the company had “ongoing” activity clauses in its contract.

In fact, many MLM companies have the exact same clauses in their policies and procedures as the ones I am about to show you.

As I read through the P & P’s, I came across this section regarding ongoing sales…

Regardless of their level of achievement, Distributors have an ongoing obligation to continue to personally promote sales through the generation of new Customers and through servicing their existing Customers.

As I read on, I reached a clause on actively maintaining customers…

Distributors must fulfill personal and Downline Organization retail sales requirements (as well as meet other responsibilities set forth in the Agreement) to be eligible for bonuses, commissions and advancement to higher levels of leadership. The following sales requirements must be satisfied for Distributors to be eligible for commissions:
…
Distributors must develop or service at least five Customers every month. These customers can be either Retail Customers, Retail Accounts, Preferred Customers, or a combination thereof.

And finally, here’s the section of the policies and procedures that makes you prove to the company that you are doing the above…

Distributors must maintain all retail sales receipts for a period of two years and furnish them to [Company Name Removed] at the Company’s request.

What this company is saying to its distributors is “you can’t retire!” With the clause “Regardless of level of achievement”, even if you’re the top earning distributor in the company and you’ve built a downline that produces 70% of the company’s volume, you still have to be actively generating new customers and maintaining existing ones to qualify for the bonus check.

Now picture this scenario. You’ve worked hard to acquire 5 happy customers who just love the products and buy a good batch from you every month. Now what if one of those customers loves the products so much that she decides to sign up as a distributor to do the business as well?

Well, you’re going to have to work hard to find a new customer, otherwise you’re going to miss out on that handsome bonus check that you’ve worked hard to build up.

Now I can hear you saying “They’re never going to enforce that policy…”

They may not, but trust me, if it’s in the policies and procedures, it means they’re thinking about it. They have every legal right to enforce that policy and there’s nothing you can do about it if they do, because you agreed to it by signing on the dotted line. It’s contract law.

My question is why would companies put these clauses in their policies and procedures? Do they intentionally want to upset their distributors? No, I don’t really think they want to do that. But companies sometimes make dumb decisions and do dumb things which get them into hot water. And they sometimes need to “steal” your bonus check in order to pay for their overhead.

It really comes down to Pillar One of the “The 5 Pillars” of Network Marketing – company management experience with integrity.

Many new MLM companies today are started by “Fortune 500″ hotshots. These people are brilliant in the corporate world as CEO’s and Managing Directors, but they do not have one iota of experience as a network marketing distributor. They just don’t get what this industry is about. They just don’t get the fact that it is the distributors who build the MLM companies.

So whenever the company hits troubled times, these corporate types are always going to make decisions that are in favour of the company, NOT the distributors.

And they hate paying people who do nothing. Let’s say you’ve built a big organisation and you’ve retired to enjoy the fruits of your labour. Well, they hate that – but that’s the whole idea of MLM!

That’s why they put these policies and procedures in place to keep you working for them. So please remember that you’re here to build yourself a royalty check, not a loyalty check. Vote with your feet and go to a company that will allow you to retire.

To your MLM success,

Wayne Wu
Founder, The Profitable Networker

P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.

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Related posts:

1. Deadly MLM Policies and Procedures (Part I)
2. Why You Should Run From MLM Companies with High Overhead
3. Deadly MLM Policies and Procedures (Part II) – How Long Is Yours?
4. Deadly MLM Policies and Procedures (Part V) – Are You Being Blackmailed?
5. Deadly MLM Policies and Procedures (Part VI) – Can You Fight Back?
6. Deadly MLM Policies and Procedures (Part IV) – Making You Responsible!
7. Deadly MLM Policies and Procedures (Part III) – Termination and Renewal

Tagged as: Clauses, Commissions, Financial Freedom, Network Marketing Business, Obligation, Policies And Procedures