Can Your MLM Company Terminate Your Distributorship Without Reason?
You know, many network marketing companies try to hook you with “the freedom of owning your own business.” Is this true? Do you really own your own business?
When you really delve into the opportunity and understand it, you’ll realise that you don’t own your own business at all. It again, comes down to the company’s policies and procedures – the legally binding contract between you, the distributor, and the company. These policies and procedures are living proof that you DO NOT own your own business.
If a network marketing company can terminate your distributorship for any reason, is that owning your own business? Of course not. If a network marketing company can choose not to renew your annual contract, is that owning your own company? Again, absolutely not.
So without further ado, let’s dig right into the termination and renewal clauses. Some of these are quite unbelievable… and entertaining… but it’s serious stuff!
– Termination Clauses –
“[The Company] reserves the right to terminate or MRF Tyres Distributorship daliye suspend any distributor at any time. Such termination or suspension shall be made by [The Company] at its sole discretion.”
“[The Company] may terminate your access to any part or all of the Service and any related service(s) at any time, with or without cause, with or without notice, effective immediately, for any reason whatsoever.”
On a conference call, one of my mentors told a story about a lady who had become quite successful in a company that had one of these termination clauses. She was earning $30,000 per month and the company was flying her all over the country to train their other distributors.
When my mentor raised this objection, she replied… “The company is asking me to do all of their corporate training, they’re NEVER going to do that to me!”
Well, about a year later, lo and behold, she phoned my mentor to tell him that she had be terminated. Poof! $30,000 a month gone! And guess why this company terminated her? She was going through a divorce at the time, so the reason that the company gave for the termination was that her divorce was not a good image for the company.
Now what does her divorce, a private situation, have anything to with her network marketing business? Absolutely nothing, but it gave this company a convenient excuse to “steal” her healthy paycheck. And the saddest part of this story was she could do NOTHING about the termination. She could not sue the company because she agreed to the policy that she could be terminated at any time for any reason.
The question for you is, is this a risk that you want to take, to work hard and build your company a business that they can take away from you at any point in time? And then to have to rebuild it?
– Renewal Clauses –
“This is a one year contract and must be renewed every year on the date of the anniversary”
This is a clause that appears in almost every company where you have to pay an annual renewal fee. It’s a clause that many people glaze over and don’t give too much thought about.
But get this, as a contractor, with a one year contract, you can’t be a business owner! What this clause is telling you is that you’re just an independently contracted distributor of the company’s products and services. It effectively reduces you from a business builder to a contracted promoter.
At the end of contract, a company can do whatever they please with you. They can decide to renew your contract for another year or they can choose not to. And sometimes they clearly spell that out with clauses like these…
“[The Company] reserves the right to reject any applications for a new Distributor or applications for renewal.”
“[The Company] may elect to not renew any distributorship for any reason it deems to be in the best interest of the Company, its customers and other distributors. These reasons may include, but are not limited to the following: Failure to use best efforts to promote [The Company’s] products and services, and actions that bring dishonor to or impute the reputation of [The Company].”
I don’t know about you, but the clause above sounds pretty vague to me. And this vagueness allows the company, at its discretion, define what are “in the best interests of the company”, what are “best efforts to promote products and services” and “actions that bring dishonor.”
You want to build your home business once, and build it right, so you can enjoy your financial independence.
If your MLM company’s policies and procedures [http://www.profitablenetworker.com/2010/01/02/deadly-mlm-policies-and-procedures-part-iii-termination-and-renewal/] have any of the above clauses, there is risk that you may have to build it again.
Wayne teaches network marketers how to brand themselves on the internet and generate an endless flow of qualified prospects with simple, powerful, low cost marketing. To learn how you can make money in less than one year in MLM, visit The Profitable Networker