If UnFranchise® Owners violate their Independent UnFranchise Owner Application and Agreement, including the policies and procedures set forth in this UnFranchise Manual, or if UnFranchise Owners violate other agreements with Market America, Market America may take corrective action.
(A) Grounds for Corrective Action: Grounds for invoking the Corrective Action Procedure (CAP) include, but are not limited to the following:
• Breach of the Independent UnFranchise Owner Application and Agreement
• Violation of the law relating to the UnFranchise Owner’s business
• Failure to maintain company standards
• Falsification of reports
• Forged documents or any false or misleading communication made to the company
• Failure to meet retail sales requirements or improper verification of these requirements
• Unauthorized income claims or publishing of commission checks
• Failure to make timely payments to the company
• Credit card violations:
• Unauthorized use
• Chargebacks without following Return Merchandise Policy
• Breach of non-solicitation or trade secret covenants
• Violation of same household rules
• Establishment of fraudulent Business Development Centers
• Inventory loading
• Unauthorized or illegal re-entry
• Misrepresentation of the marketing plan
• Communicating defamatory and/or disparaging statements
• Cross-group sponsoring
• Conduct which materially impairs the company’s goodwill
• Failure to fulfill management and fiduciary responsibility as a manager under the MPCP
• Violation of the advertising policy, including company trademark violations
• Violation of the 270-day policy
• Unethical practices
The Corrective Action Procedure may result in a range of sanctions against the UnFranchise Owner, including but not limited to additional training requirements, written warnings, forfeiture of commissions, suspension and termination. The severity, frequency, number of infractions, and impact on the company and other UnFranchise Owners’ rights and businesses determine the type of corrective action taken, at the company’s sole discretion. If the violation, in the company’s opinion, cannot be remedied, is broad and damaging, brings irreparable harm, or threatens the reputation and goodwill of the company or its UnFranchise Owners, it is grounds for immediate termination. If an UnFranchise Owner is issued a written warning from the company and repeats the infraction, it is grounds for immediate termination.
(B) Corrective Action Procedure: The following procedure will be applicable to an UnFranchise Owner subject to corrective action:
(1) When evidence of a violation comes to the attention of Market America’s Legal Counsel, Legal Counsel will notify the UnFranchise Owner by certified mail return receipt requested or overnight service with signature required for delivery, sent to the UnFranchise Owner’s last known address on record with the company, that the UnFranchise Owner appears to have engaged in improper conduct and must submit a response explaining the situation to the Corrective Action Board (CAB). If the letter cannot be delivered, Market America may at its discretion also attempt to send notification by fax or email.
(2) The UnFranchise Owner must submit a written response to Market America within 20 days from the postmark date of the Legal Counsel’s letter (including weekends and holidays; if the twentieth day falls on a weekend or holiday, the response shall be due the next business day). If a written response is not received within said 20-day period, the UnFranchise Owner’s contract may be automatically terminated.
(3) Upon receipt of the response within the 20-day period, the Corrective Action Board will review the response within 15 business days from receipt of same and determine what action is to be implemented. In unusual circumstances, the CAB may extend the decision period with appropriate notice to the UnFranchise Owner. The Corrective Action Board will consist of at least two senior executives of Market America, one representative from the company’s Legal Department, and one representative from the company’s Compliance Department.
(4) The Corrective Action Board will notify the UnFranchise Owner of its decision by Certified Mail, Return Receipt Requested, or by overnight mail service with signature required for delivery. The decision of the CAB shall take effect immediately.
(5) If the UnFranchise Owner disagrees with the decision rendered by the Corrective Action Board, he or she may appeal the decision to the Advisory Board, which includes representatives from Market America’s UnFranchise Owner Advisory Council. The UnFranchise Owner may request an appeal in one of two ways: (a) by requesting an appeal hearing (at Market America’s corporate office in Greensboro, NC, or by telephone), or (b) by submitting documentation for a written appeal. If the UnFranchise Owner requests a written appeal, all supporting documentation must be included with the appeal request letter. Note: All documents submitted in the written appeal must be notarized, certified, or otherwise appropriately verified.
(6) All appeal requests must be received by Market America within 15 days of the date of the CAB decision letter (including weekends and holidays; if the fifteenth day falls on a weekend or holiday, the appeal must be received the next business day). If the UnFranchise Owner fails to request an appeal within 15 days, the decision of the Corrective Action Board will be final.
(7) The Advisory Board will review the appeal within 30 days of receipt of the appeal request letter. If the UnFranchise Owner requests an appeal hearing, the Advisory Board will attempt to schedule the hearing at a time convenient to the UnFranchise Owner. However, the Advisory Board has discretion to schedule the hearing at any time during the 30-day period. In unusual circumstances, the Board may extend its decision time with appropriate notice to the UnFranchise Owner. Please note that if UnFranchise Owners exercise their appeal right, any sanction issued by the Corrective Action Board will remain in effect until the appeal process is completed. Therefore, UnFranchise Owners must satisfy any sanction set forth by the Corrective Action Board even if the deadline for this sanction falls before the Advisory Board gives notice of its decision on the appeal.
(8) The Advisory Board will conduct the hearing on the scheduled date and will render a final decision and send notification to the UnFranchise Owner within five days from the hearing date.
(C) Termination: If an UnFranchise Owner commits a serious violation of the provisions of the Independent UnFranchise Owner Application and Agreement or of the policies, procedures, rules and regulations contained in the UnFranchise Manual, the company may, at its discretion, terminate the UnFranchise Owner’s contract.
(1) An UnFranchise Owner whose contract is terminated loses all the rights, privileges and benefits of a Market America UnFranchise Owner.
(2) Market America will notify the UnFranchise Owner of termination via Certified Mail, Return Receipt Requested, at the latest address for that UnFranchise Owner shown in company records.
(3) Upon receipt of notice of termination, the UnFranchise Owner may seek an appeal before the Advisory Board, following the same procedural steps outlined under Corrective Action Procedure.
(D) Arbitration: If the UnFranchise Owner disagrees with the decision of the Advisory Board, the UnFranchise Owner’s only recourse is to request arbitration administered by the American Arbitration Association, as provided for in the Independent UnFranchise Owner Application and Agreement. UnFranchise Owners have one (1) year from the date of the Advisory Board's decision to file for arbitration. If UnFranchise Owners fail to request an appeal within one (1) year of the postmarked date of the Advisory Board's decision, they waive their right to request arbitration and the decision of the Advisory Board will be final.
The company never relinquishes its right to insist on compliance with stated policies, procedures, rules and regulations or with applicable law governing conduct of the business.
(A) Authorities: This policy is true in all cases, both specifically expressed and implied, unless an officer of the company who is authorized to bind the company in contractual agreements specifies in writing that the company waives a provision or provisions. Verbal communication is not sufficient to authorize non-compliance.
(B) Permission: In addition, if the company on any occasion authorizes a policy exception, that authorization does not extend to future non-compliance.
(C) Scope: This provision deals with the concept of “waiver,” and the parties agree that the company does not waive any of its rights under any circumstances other than in the case of the written authorization referred to above.
The company expressly reserves the right to alter or amend UnFranchise Owners’ cost of products, policies, procedures, rules, regulations, product availability and/or formulation, and the Management Performance Compensation Plan. Upon notification by mailing to the most recent address listed for the UnFranchise Owner in the records on file with the company or notification via an UnFranchise® Business Account, UnFranchise Owner Magazine, email, voice mail, or other sufficient method, such amendments are automatically incorporated as part of the Independent UnFranchise Owner Application and Agreement between the company and the UnFranchise Owner.
The company reserves the right to approve or disapprove UnFranchise Owners’ change of registered business names, formation of partnerships, corporations, other business organizations, and trusts for tax, estate planning, and other liability purposes. If the company approves such a change by an UnFranchise Owner, the UnFranchise Owner must provide a list of the names of the principals of the organization and Social Security numbers and signatures for each.
Termination will result in the loss of commission rights from the UnFranchise Owner’s Business Development Center(s).
(A) Effective Period: Effect of termination shall be retroactive to the beginning of the week in which the termination was received in writing by the company.
(B) Payment of Commissions: Payment of commissions to the terminated UnFranchise Owner will be made only for business completed during the last full week prior to the effective date of termination.
(C) Representation: A terminated UnFranchise Owner shall no longer represent himself/herself as an Independent UnFranchise Owner of Market America.
Market America and its UnFranchise Owners (collectively “Sales Force”) have invested substantial time, energy, effort, and money in training and building this Sales Force; therefore, protecting Market America and the Sales Force from unfair competition is critically important. UnFranchise Owners must not in any way, directly or indirectly, or by social media or by any other means, during the term of this Agreement or thereafter, make any statements (orally or in writing, whether fiction or nonfiction) or take any action(s), which in any way disparage or defame Market America, its parent, subsidiaries or affiliates (Related Companies) and/or their respective officers, directors, partners, principals, employees, third party vendors, consultants, agents, attorneys or advisors, or in any way, directly or indirectly, cause or encourage any other person to make such statements or take such actions . The provisions contained in this section are reasonable and necessary to protect the legitimate interests of Market America, its Sales Force and Related Companies, Violation of the terms of this section, will result in the initiation of the corrective action procedure, possible termination of the UnFranchise Owner’s contract, and/or other legal ramifications.
Cross-group sponsoring and selling undermines the lines of distribution and threatens the integrity of the marketing plan and is therefore unethical and strictly prohibited. Without these prohibitions, there would be no incentive for UnFranchise Owners to recruit, train and manage their organizations. Violation of the Cross-group Sponsoring and Selling policy shall result in the initiation of corrective action procedures, which may result in, without limitation, reorganizing the sales organizations and genealogies, moving or adjusting sales volumes involved, financial, restitution and/or termination of the UnFranchise Owner’s IUA&A.
(A) Cross-Group Sponsoring Defined: Prospecting, recruiting, and/or sponsoring, directly or indirectly (including but not limited to the use of a website or social media), whether through a spouse, immediate family members, or affiliated third parties, any UnFranchise Owner into another line of sponsorship within Market America’s MPCP or in any direct sales, network marketing, affiliate marketing or similar business venture or marketing opportunity (collectively, “Competing Company”) is strictly prohibited.
Use of Market America’s Proprietary or Confidential Information or relationships developed through Market America to divert or diminish an UnFranchise Owner’s or customer’s time, effort, volume, production or activity under the UnFranchise Owner’s line of sponsorship or under the MPCP to benefit another person or entity by use of any device, mechanism, agreement or arrangement, including but not limited to the use of trade names, DBAs, assumed names, federal identification numbers, fraudulent Social Security or Social Insurance numbers, fabricated Business Development Centers (collectively “Alter Egos”), is unethical and strictly prohibited.
Primary Types of Cross-Group Sponsoring:
(1) Selling Market America products to any Market America UnFranchise Owners, other than one’s personally sponsored UnFranchise Owners, without proper credit of sales volume or BV.3) act.inguch device tocenario where a UFO buys product and then ships to a region where MA does not ship to except through Gl
(2) Sponsoring or moving existing UnFranchise Owners, including their efforts, recruiting activity, sales activity, or volume production, to another line of sponsorship or position in the organizational genealogy, without complying with policies and procedures for transfer of sponsorship as provided in the UnFranchise Manual. This includes attempts to divert an UnFranchise Owner’s volume, effort, production or activity under the MPCP to another person or location in the organizational genealogy, thereby depriving anyone upline, in the original line of sponsorship, of the volume credit he/she would have been due, by use of any device, mechanism, agreement or arrangement.
(3) Selling products or sales aids of a competing company to Market America UnFranchise Owners, other than one’s personally sponsored UnFranchise Owners.
(B) Cross-Group Selling Defined: Cross-group selling shall be defined as an UnFranchise Owner soliciting sales from another line of sponsorship.
(C) Attempts to Circumvent: The use of any device, mechanism or arrangement such as trade names, DBAs, assumed names, federal identification numbers, fraudulent Social Security or Social Insurance numbers, fabricated Business Development Centers (collectively “Alter Egos”), is unethical and strictly prohibited. Use of an Alter Ego undermines the UnFranchise Business Plan and deprives other UnFranchise Owners of business volume that he or she would be due. Without these prohibitions, there would be no incentive for UnFranchise Owners to recruit, train, and manage their organizations. Violation of this section, shall result in initiation of corrective action procedures, which may result in, without limitation, reorganizing the sales organizations and genealogies, moving or adjusting sales volumes involved in order to protect the integrity of the marketing plan, financial restitution and/or termination of the UnFranchise Owner’s IUA&A.
(D) Enforcement Responsibility: All Coordinators and higher UnFranchise Levels in the line of sponsorship are responsible for enforcing this rule by reporting any evidence of such activity to Market America’s Compliance Department or by filing a grievance. Failure to report such activity is grounds for corrective action by Market America.
UnFranchise Owners are prohibited from, directly or indirectly, promoting or marketing any Competing Company or selling their respective products and programs to any UnFranchise Owners or customers. This provision does not limit an UnFranchise Owner’s ability to solicit individuals that are not associated in any way, with Market America. UnFranchise Owners are prohibited from using Proprietary and Confidential Information to directly or indirectly offer or promote any non-Market America products or business opportunities to UnFranchise Owners or customers, regardless of whether such business opportunities or products relate to a Competing Company. In addition, because Competing Companies conduct business worldwide, often through networks of independent contractors, dispersed across the entire United States and internationally, via the internet and telephone, this provision shall apply in all countries in which Market America conducts business at the time the restriction is applicable. Violation of this policy is very serious and will result in corrective action by Market America, including possible termination of the UnFranchise Owner’s contract and/or the initiation of legal proceedings.
UnFranchise Owners having grievances or complaints regarding business practices or conduct relative to their Market America business should first report it to their upline leadership, who should review the matter and try to resolve it in the field. If the matter cannot be resolved in the field, it can be reported in writing to email@example.com. The company will review the facts and attempt to resolve the matter. If it is not satisfactorily resolved, it may be referred to the Dispute Resolution Board (DRB) for final review and determination. The UnFranchise Owner agrees to submit any complaint, grievance or claim against an UnFranchise Owner or the company to the company and/or Dispute Resolution Board for settlement prior to contacting any regulatory agency or taking any legal action.
(A) DRB Process: The Dispute Resolution Board (DRB) is the final appeal process regarding company rulings or decisions concerning policies, procedures, rules, and regulations. The DRB only reviews facts and enforces company policies and procedures. The DRB does not set policy, change policy, or make exceptions to rules and regulations. It functions to interpret policies, procedures, rules and regulations where no precedent exists or where unique mitigating circumstances are encountered.
(1) Formal appeal to the DRB requires completing and submitting the DRB Submission Form (which is located online on your UnFranchise® Business Account), a notarized statement (affidavit), all documentation, evidence, and a $50 filing fee for the review process (this fee is non-refundable, regardless of the final decision of the DRB).
(2) The DRB reviews all appeals on a timely basis.
(3) Cut-off on commission claims and adjustments will not be in effect provided the DRB process was started within 45 days of the respective commission week.
(4) If the UnFranchise Owner disagrees with the decision of the DRB, the UnFranchise Owner’s only recourse is to request arbitration within 90 days of the date of the DRB decision letter. This arbitration shall be administered by the American Arbitration Association, as provided in the Independent UnFranchise Owner Application and Agreement.
A “starter kit” provides a cross-section of consumable products and necessary literature to begin the business. The company reserves the right to substitute items of equal or greater Business Volume, value or cost at any time without notice. An UnFranchise Owner should not expect the exact same products to be in every kit.
The company cannot guarantee the absolute accuracy of the information on the UnFranchise Management System (UFMS) until the close of a commission week, which occurs two weeks after the actual week ends, due to continuous updates, adjustments, and reconciliations.
(A) Adjustment Factors: There are a multitude of factors that can affect the volume numbers shown on the UFMS, such as incorrect placements, data processing errors caught in reconciliation, bounced checks, refund requests, volume erasure, volume purges, etc.
(1) The figures are not final until posting and reconciliation on Friday, two weeks after the week-ending commission cycle.
(2) Commissions will be paid only on the actual reconciled volume.
(B) Limitations: The information provided by the UFMS is to be used as a management tool, supplying the UnFranchise Owner with an approximation of Business Development Centers’ Group Business Volume.
In the event a group of UnFranchise Owners in the same line of sponsorship are leaving (terminating) as Market America Independent UnFranchise Owners within a 90-day period of each other, it becomes impossible for the company to reverse unearned commissions by the removal of Business Volume. Usually there are competitive motives involved when an event like this occurs. Often the UnFranchise Owners who earned commissions on downline group Business Volume are leaving the business within the same period of time as their downline UnFranchise Owners who are requesting refunds are leaving the business. It is not unusual for the terminating upline UnFranchise Owners to encourage or instruct the downline UnFranchise Owners to leave the business or request refunds in concert. Regardless of the reasons, the company must reverse unearned commissions in order to make an equitable distribution of refunds to groups of UnFranchise Owners leaving the business. With the rights under the Independent UnFranchise Owner Application and Agreement to earn commissions, accrue group Business Volume, and sponsor other individuals as UnFranchise Owners come certain contractual obligations, responsibilities, and liabilities.
(A) Seventy Percent Rule: Each Executive Coordinator is contractually obligated to ensure that 70 percent of all products purchased are sold to the end consumer.
(B) Breaches Of Contract: In the case where groups of UnFranchise Owners in the same line of sponsorship are leaving the business and dollar amounts of refund request exceed 30 percent of product orders, sales, volume or deposits, there are obvious breaches of contract by UnFranchise Owners receiving commissions. Or, there was obvious manipulation of the Management Performance Compensation Plan and/or misrepresentation on the part of participants requesting refunds as a group.
(C) Executive Coordinator Responsibilities: Regardless of delivery issues, back orders, or disputes, the Executive Coordinator (remaining in the business) accepted the commissions which now must be reversed.
(D) Buy-Back Guarantee: Under the 1979 FTC vs. Amway decision, it was stated that Multi-Level Marketing companies are permitted to advance commissions to participants on wholesale purchases intended to be resold or consumed only if there are protectionary provisions in the form of buy-back guarantees, refund policies, retailing requirements, and performance requirements, to which the participants are obligated to adhere.
(E) Basis For Commissions: The company pays commissions on the basis of UnFranchise Owners’ and Executive Coordinators’ contractual obligations to comply with Market America’s policies, procedures, rules and regulations. These provisions are clearly stated repeatedly in all Market America literature and communications.
(1) The same consumer protection and anti-pyramid statutes apply to the UnFranchise Owners as well as Market America.
(2) The company has gone to great lengths to ensure compliance with the 1979 FTC vs. Amway decision by implementing contractual requirements. Therefore, when group refunds are requested, the company must execute the contractual provisions which were entered into by all parties to protect against receiving commissions on undelivered product to the end consumer.
(F) Refund/Return Process: The company reserves the right to handle refunds or product returns for a group of UnFranchise Owners leaving the business within the same 90-day period or in concert with each other in the following manner:
(1) The company will hold all returns and refunds for a period of 60 days until all adjustments are made.
(2) The company may identify who is involved and reverse all unearned commissions by the removal of Business Volume and the Commission Reversal Process.
(3) The company may demand enforcement of the 70 percent Rule on the Executive Coordinator who violated the policies, procedures, rules, regulations and anti-pyramid laws.
(4) The company may enforce a payment schedule releasing funds to the appropriate parties in payments until all unearned commissions are reversed. If the Executive Coordinator accepted the commissions and is contractually responsible for compliance in his/her organization, then he/she is obligated to refund the unearned commissions to his/her downline group.
(5) The company may take enforcement action against any individual who refuses to return or refund unearned commissions, or who refuses to buy back products.
(6) If the company is unable to collect unearned commissions from the involved Executive Coordinator, and if both the terminating UnFranchise Owners and the Executive Coordinator fail to comply with the requirements under the marketing plan and policies and procedures, the company will then refund the portion it owes and assign the collection rights of unearned commission by the Executive Coordinator to the participant requesting a refund. The company may, at its discretion, provide legal assistance to the parties receiving the assignment to collect from the Executive Coordinator.
At the end of each calendar year, Market America is obliged by law to provide each United States Independent UnFranchise Owner and the Internal Revenue Service with a 1099 form reporting his/her commission payments and other remuneration from the company for that year. This is required for those United States UnFranchise Owners earning in excess of $600 for that calendar year and for those who have purchased over $5,000 worth of product. Market America is not obligated to provide income information to UnFranchise Owners who reside in Canada.
No claims submitted more than 45 days from the end of a commission week will be accepted. The absolute deadline for commission claims for adjustments is 45 days following the Friday of the close of the commission week. The company will not adjust commissions going back more than 45 days. The 45-day period allows three to four weeks from the time a commission check is disbursed to contact or notify the company and make a claim. If an UnFranchise Owner believes he/she should have received a check and did not, he/she must notify the company prior to the expiration of the 45-day period. No exceptions will be made.