|
|
THE FACTS ABOUT About the Quixtar Plan With Quixtar's Independent Business Ownership Plan, each IBO sets his own goals and decides how much time and effort to invest. The beauty of Quixtar's plan is that every IBO has the opportunity to reach levels equal to or greater than his sponsoring IBO. Success is as individual as each Independent Business Owner. Quixtar's business plan follows the same established plan cited by the Michigan Attorney General as an example of a legal, legitimate tiered marketing business. Rebuttal : Quixtar follows the Amway plan, which is mentioned on the Michigan Attorney General's web page as a legitimate Multi-level-Marketing plan. However most Attorney Generals have never performed an in-depth study or analysis of the way Quixtar is actually run, and choose to rely on the 1979 FTC ruling stating that at the time Amway had rules which prevented it from being an illegal pyramid. Whether those rules are adequately enforced is the real question to be asked.There are four key elements that make the Quixtar Plan legal and a model of integrity:
Rebuttal: The Michigan Attorney General's website states that "A representative earns commissions from retail sales he or she makes, and also from retail sales made by other people he or she recruits." If the Michigan Attorney General were to seriously investigate the Quixtar business, they would find the vast majority of sales are to the participants in the compensation scheme. The Omnitrition and Equinox MLM's were shut down because they did not enforce the retailing rules, requiring at least 70% sales to come from those who did not participate in the compensation scheme. The current retailing requirements in Quixtar's MC volume rule are not enough to satisfy the 70% precedent. The rule is also easily bypassed with the "self reporting" option.In addition, the United State Federal Trade Commission does not consider purchases by IBOs and downline IBOs in a multilevel marketing business to even constitute "retail sales" as show in this definition of a "prohibited marketing scheme" taken from FTC v. Five Star Auto Club: 'Prohibited marketing scheme' means a pyramid sales scheme, Ponzi scheme, chain marketing scheme, or other marketing plan or program in which a person participates under a condition that he or she make a payment, directly or indirectly, to receive the right, license or opportunity to derive income as a participant primarily from: (1) the recruitment of additional recruits by the participant, program promoter or others; or (2) non-retail sales made to or by such recruits. Products that are not sold to actual retail customers who are not participants in the Quixtar or TOD compensation plan are not "retail sales to consumers" as suggested by Quixtar. According to internal Amway documents acquired by Forbes Magazine in 1991, only 19% of the products were resold to actual retail customers. The rest were consumed by the distributors themselves. This is far short of the 70% rule and far short of the legal requirement that income be "primarily" from retail sales. Rebuttal: This is misleading. If there are no retail sales to customers outside the pyramid, then the only way an IBO can make a profit is by recruiting more downline IBOs. While there is no up front headhunter fee, the absence of a meaningfully enforced retail sales rule results in payments based primarily on recruiting new members to buy goods for their own consumption. In practice, this is nothing more than a carefully disguised headhunting fee unless the focus is on selling the products.Rebuttal: This is true. However, as numerous Team of Destinyâ leaders demonstrate, IBOs are regularly taught to change their buying habits to remain "brand loyal", and to generate volume. LinIn addition, IBOs are typically heavily pressured by their upline system to purchase "business support materials" ("BSMs"), a system consisting of audiocassettes, videos, books, tickets to functions and rallies, very little of which can be resold to retail customers. "Tools (BSM's) are optional, but so is success" Rebuttal: Typically Quixtar inventory in large quantities is bought back at 90% of cost. Additionally, the Line of Sponsorship Business Support Materials carry no 90% or better money back assurance. The large volumes of tapes and promotional materials available on E-bay show just how good their buyback policy really works. Many lines of sponsorship also print on their major function ticket application forms that the tickets are no refundable.The Michigan Attorney General, in fact, clearly delineates that the plan upon which Quixtar's is based is legal. Additionally, this plan has been cited in many Federal and State courts and agencies as the legal and viable way to operate a business with a tiered compensation plan. Rebuttal: The Amway plan, upon which Quixtar is based, clearly relies on the 1979 FTC case. In this case because Amway had certain rules, such as the Retail Sales rule, the 90% buy back rule, and the 70% rule, it was not ruled an illegal pyramid. However, that ruling was based on the FTC's finding that at that time these rules, and particularly the retail sales rules, were actually enforced:72. Amway, the Direct Distributor or the sponsoring distributor will buy back any unused marketable products from a distributor whose inventory is not moving or who wishes to leave the business. The buyback rule has been in existence since Amway started. Amway enforces the buyback rule. From In re Amway, 93 FTC 618 (1979) (record citations omitted, emphases added). Since 1979 there have been numerous legal cases which now dictate that a MLM must enforce its rules and that retail sales to non-participants must make up the majority of sales. It is not enough to have rules to encourage retail sales if they are not meaningfully enforced. In Amway's suit against P&G claiming they were being defamed by P&G and being unjustly called an illegal pyramid scheme, the United States Federal District Court for the Western District of Michigan went on to summarize the evidence presented in the case that Amway actually was a pyramid scheme. The issue in that case was an individual's right to say that Amway was an illegal pyramid scheme. Thus, the court did not find the actual operations of Amway an illegal pyramid, because the issue was not before the court. In summary Amway was in theory not a pyramid from the 1979 ruling, but only because the FTC found at that time that Amway had and enforced rules that encouraged retail sales, including the 70% rule. If Quixtar were tried today, based upon the actual percentage of sales to those participating in the compensation scheme, the model would probably be ruled an illegal pyramid. The Lines of Sponsorship would clearly be ruled illegal pyramids since their BSM products are only sold to IBOs, who also one day hope to participate in the BSM compensation program. Even the co-founder of Amway, Rich DeVos, has admitted that the BSM business operates as an illegal pyramid scheme: "Let me talk to you about the legal side, beyond price fixing, that deals with pyramids, that deals with the illegal operation of a business that does not have an end consumer, where the product is not retailed. That would include all books and tapes. The sad news, folks, is that when those things go out that way and they become excessive, beyond my ten or twenty percent theoretical guideline, hopefully acceptable, to where it's a reasonable support system, but not beyond the reasonable element, then it becomes an out and out illegal pyramid." From Rich DeVos's "Directly Speaking" tape, recorded in 1983.With Quixtar, you can feel confident that you're partnering with a credible, successful business organization.
Ken McDonald November, 2003 |
Copyright © 2003 Quixtar Inc. All rights reserved. Unauthorized use and/or reproduction is strictly prohibited.
