Move to close multi-level model supports FTC’s stance
After reading the news on Friday, May 17 that such a well-respected and popular company as AdvoCare is closing its leadership ranks and moving to a single-level plan, I was stunned like everyone else.
But after spending the last four days before press time trying to understand what was happening and reading some of the details about the company’s compensation plan, I couldn’t help but think of all of the FTC warnings we’ve written about since last June.
I think it’s safe to assume that whatever else is happening with AdvoCare, its comp plan is a major part of the problem.
Lois Greisman, the Associate Director of the Federal Trade Commission’s (FTC) Division of Marketing Practices FTC, has made it clear everywhere she has spoken, including at the DSA Fall Conference in 2018, that the Herbalife and Vemma consent decrees, along with the MLM Business Guidance issued by the FTC, outline the only acceptable practices for any company in our channel. “Real sales to real customers” has been her rally cry, and any company that is still holding onto a model by which distributors are compensated on their wholesale purchases of product with monthly and/or quarterly personal volume requirements, and in which retail sales to end customers cannot be viably tracked and visibly demonstrated is operating in a dangerous position.
On pages 10-11 in this month’s issue, we’ve listed the 16 fastest-growing and new companies in our channel, none of which are burdened by an outdated, and in the FTC’s mind, dangerous to consumers compensation plan. It is possible to build a booming business that is not in the FTC’s sights.
More details about AdvoCare will be forthcoming, and in the weeks and months ahead, and we’ll be able to dissect the situation more fully.
Meanwhile, this issue marks our one year anniversary. The goal we set in spring of 2018 was to produce a trade publication for the channel that brought you insightful, actionable and compelling information that you could use in your business. I feel that we have met that goal; I hope you agree!
I want to thank all of you who have taken the time to let me know how much you appreciate the publication and the topics we are tackling. Your feedback is important to us, as providing you with valuable news and information is the point of our existence!
We are celebrating our birthday with an upgraded cover, making it harder than ever to put down your issue! We believe that the new vibrant cover is a reflection of the vibrant content within.