THE WATCHDOG VIEW – TERMINATIONS

Rod Cook

This is an outline of distributor terminations for DRA policy establishment that I started on years ago and keep growing until it fits almost every kind of Distributor termination.  The MLM WatchDog gets 2 to 10 calls a month from good folks that have been terminated by their parent companies.  I have been an expert witness in more cases than I want to think about. Over the years I have developed a kind of classification for "types of terminations." Let me share it with you so you can have an inside look at some of the pain, grief and the causes.  Suggestions are welcomed for additions and deletions. Our first principle, is - is there a good reason for terminating a distributor? That gets tempered with experience and time. Here are some of the reasons that distributors get terminated and some seminal insights to different situations. None of them are "perfect" descriptions of what happens, nor is any case black or white. Most termination cases end up a mix of any number of these scenarios. A real case may end up a little bit of #1, a lot of #3, and a touch of #4. Mix and match your choices to what is really going on and you will get a 100% fit!

1.  One of the worst I see time and time again are ">Vulterous" distributor acts. Over 100's of cases that I have dealt with I have found there is a major area of concern.  The "Vulterous" Upline (or even downline and crossline) who stands to financially gain from the termination of one of their downline.  A quick example is if the downline has a large 6th level producing massive income.  This is out of the pay reach of the "Vulture" Upline who proceeds to create fraudulent charges against their downline.   The downline gets terminated and the Vulture benefits.  I have also seen this done because of personality clashes and ego power plays. Downlines are suckered in or even in one case "outraged" because the distributor in question was doing another company (with permission of the parent company).  His downline demanded that he be terminated because it was destroying the morale of the downline’s downline.  The problem is the company does not INVESTIGATE PROPERLY. Verbal assaults are allowed by the company and nothing is documented.   Any so called "Due Process" the company puts the threatened distributor through is faulty. There is no disclosure of accusations, only vague references.

2. The Desperate Company Owner is in a hard cash crunch. Sales may be dropping and his overhead is too high.  This is because when company sales level off it seems the last thing cut is home office staff!  Or the company may actually be in dire financial condition and needs the money to continue operating. A sad train of thought settles in, the Company Owner thinks, "The distributor has already been well paid for his efforts, so why should the company continue to reward him?" This is also a subset of the thinking of "save my house staff". It is as old as direct sales itself (not just MLM). A subset of this is being seen in "Wild West" Binary Compensation plans today where the plan is paying out too much. If "pay stops" are put into their Binary Pay plan it is going to lose its glamour. The Desperate Company Owner starts termination, (or makes qualification extremely difficult) for top earners who often have multiple earning positions.  There are MLM Consultants that specialize in the cutting of commissions.  One speaks often at the Direct Sales Association’s meetings and is very popular.

3.  The Greedy Company Owner that has figured out he has more to gain from terminating a top earner than to lose. The loss ratio in their head is that more of top distributor Go-getter’s downline will stay if he or she leaves. They save $50,000 a month (in commissions to Go-getter) and sales only drop $20,000. The company comes out $30,000 ahead. If this happens once or twice to distributors you know, its' time to get nervous! Mr. Greedy Owner may be testing and is about to figure out the execution formula in a cost benefit analysis. If Mr. Greedy gets away with it 2 times out of 3, he is $60,000 a month ahead with more money in his pocket!

4. The Alarmed Company Owner begins his termination process because it is reported that distributor Go-getter is working another MLM company sequentially. Some major players in the industry do this on a regular basis. They build a company to $20-30,000 a month then, leaving all their leaders and distributor intact, they quietly move on and start building a second company for "insurance." This is AND should be an accepted way of doing business for independent contractors. The problem is that the Alarmed Company usually panics and pulls the pin, terminating Go-getter. Distributor Go-getter has no choice but to sue, or go back and raid his downline. Distributors have the right to work any company they want, as long as they leave their downline (exception for personally sponsored individuals) alone!

5. The Egotistical Company Owner has a personality conflict with top distributor Go-getter. This distributor becomes a burr under the owner's saddle and he can't wait to find an excuse to terminate him/her. The top distributor suddenly finds that secret top leader meetings are being held and he/she is being excluded. The Egotistical Owner has other distributors spy on the target distributor and to find "violations" of policies and procedures. A word on Mr. Egotistical's company owners behalf: Sometimes, but not always, distributors in such scenarios are "pains in the know what", thinking they know more about running the company than the owners themselves. They haven't walked in the owner's shoes and had the responsibility of running a company. We have two big egos colliding here!

6. Mr. Ego Distributor doesn’t like the way that the company is being run so then decides to do his own thing. Another company has offered to make them "King Kazuba" of that company with percentages of the gross earnings as an inside secret bonus. They go in to rape, pillage, and plunder their downline and anyone else's they can pirate. In their mind, the Company is evil and this is really justified. Sometimes I swear that this is a psychotic crusade on part of the distributor and is conducted in a high state of hysteria. Your editor has been in the downline of a Mr. Ego doing this and had to physically deter him (can you believe that) from raping my downline!  In this case innocent distributors can get hurt and the Company should terminate the offending Distributor and perhaps do more than that!  I usually blame this on the corporate compliance lawyer because they are too lazy to do a good job of investigation.

7.The top distributor:  "Mrs. Moneyplus" that figures starting his/her own company will make them a lot more money than being a distributor. They team up with others or try to start their own company. This results in an open war of survival between the two. It is natural that the parent company terminates the distributor! Why fund the competition? The damage to downlines can be horrific. Years ago your pacifist editor threatened to sue my upline in a case like this, to protect my downline. To be realistic though this is how most new companies spring up. It goes all the way back to when two guys split from Nutrilite and started first, American Way, then Amway. That was a bitter battle as recounted by some of the old timers. Your editor considers it part of the normal progression of the NetWork Marketing business. Not pretty, but Terminations are going to be automatic!