Amway made an official comment on the UK Sanctions at the Amway Media Blog today.

Here is a clip from the post:

So: Is it so?

Yes.

By this post, we are confirming the veracity of the e-mail from Amway UK branch manager Ben Woodward, which was sent to IBOs in the UK last Friday and has since been widely circulated online. The text is below.

So: What else do we have to say for ourselves?

For now, we will let Ben’s message stand for itself. We are aware that there is intense speculation out there, and we do intend to address it in the near future.

But we will say this right now: All of us at Amway are 100 percent committed to the UK market, and to the IBOs there who are working hard to build their businesses the right way. Our only goal, ever, is to build a stronger business for IBOs and the customers who buy our products. What we are doing in the UK is an important step along that path.

Here is a link to the Amway UK Sanctions letter mentioned above.

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The following is from the owner/author of Get The Facts, he is also known as Insider or IBO Fightback around the Quixtar online community.  I reported the Amway UK sanctions letter as authentic from the beginning because I had two seperate sources telling me it was the real deal. On with the comments…

I have refrained from commenting on the email until I had confirmation it was authentic, I now have that confirmation and a little more information. The situation with the Department of Trade and Industry is a real issue, and leaders have been aware of it for some months. As has been the case in other markets, some IBOs, and indeed some “systems” have not operated in what I would consider a professional manner. I’ve had reports in the past, for example, of Amway UK and Ireland IBOs being taught by their group to invite friends around for dinner, then at the end of the dinner, bring out the whiteboard! Such deceptive techniques are explicitly against Amway rules and highly unprofessional.

Additionally, Amway Europe has had in place for some time rules limiting the amount of BSM IBOs may purchase in the first 3 months in the business. It’s my understanding these rules have been ignored by some groups.

An IBO with business in the UK I have been in contact with has clarified the following  -

• Sponsoring is postponed
• BSM sale is stopped until it is (re)-approved.
• Meetings with an entry-fee need written approval.
• The business has not stopped, the sale of products have not been banned!
• The income opportunity is not closed
• Meetings are not banned

He goes on to point out -

This is not unique to the UK. It works fine in many countries (including China and Russia) where similar regulations have been in place from the opening of the business due to local government regulations. Those markets are not sleeping… The IBO organisations I know of are not planning to sue Amway, they are cooperating with Amway to get the DTI issues cleared properly.

I’ll have more information as it comes to hand, but as it is a public holiday in the UK today, this may take a little while. It appears that what has happened is that the Quixtar Accreditation approach has been made compulsory and implemented immediately by Amway UK and Ireland in response to concerns expressed by the UK Deparment of Trade and Industry. Such “shock therapy” is what many critics have been calling for, whereas Amway and Quixtar has tended to take a more “softly, softly” approach to implementing change. The UK market is a potential sleeping giant for Amway, with very little market penetration, which hasn’t been helped by the deceptive practices and over-selling of some IBOs. It will be interesting to see the effect of these changes.

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According to one report, The Amway UK sanctions are only the start…

“Amways zero tolerance on system money started with the UK and Ireland on May 4th 2007 and will then roll out to the rest of the world, that’s when surely war will break out.”

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It appears as though an Amway UK Diamond is using his web site to keep people up to date on the Amway UK Sanctions:

Sunday 6th may A fellow diamond has just informed me that the function he was about to have at the beginning og june 07 has been banned. he had an email, not a phone call from Amways european designate saying if he held it he would be suspended. Amway have offered to compensate for loss of revenue, which contradicts their stand on making money from functions…but there you go! Apparently some very big shot American EDCS are flying to the UK to discusss implications…

Here is a link to the site.

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As promised, here are some comments about the Amway UK IBO sanctions:

I am assuming at this point that you have read about the Amway UK IBO sanctions. If you haven’t read about them, click the link above and then come back and post your opinions.

Amway UK is a small market for Alticor, (Amway/Quixtar’s parent company) so the monetary affect of these sanctions is not huge on the overall volume of the company.

My personal opinion is that this is a shot over the bow of Quixtar in the U.S. This is about Alticor showing the IBO Leaders (Britt, Winters, Puryear, Woodward, Yager, etc) that the company is serious about cleaning up the training and tools mess.

If the old school tools boys don’t clean up their act, it is now apparent that the company will step in and clean house.

But…(you knew that was coming, didn’t you?)

But, Quixtar is not nearly as lucrative as an opportunity if you remove the tools income that begins in many cases at the Platinum level. I would even go as far as saying that the tools income is what keeps Amway/Quixtar leaders from leaving for a different company with a better compensation plan.

Quixtar pays out roughly 30% back to it’s IBO base, yet the average of the top 30 companies in the industry is roughly 37% payout. Why would IBO Leaders stick around Amway/Quixtar for years when there is more money to be made elsewhere?  It’s all about the secondary business of books, CDs, seminars, voice mail, and web sites, collectively know as the tools business. Take away the tools business and Quixtar Leaders are paid 20%  (a conservative number) less than leaders in other companies for the same volume.

The IBO leaders are in a bit of a bind. They clean up their act or the leaders keep on trucking and Quixtar comes in and cleans up. Either way the leaders stand to lose a lot of money.

Will all of this be better for the individual Amway/Quixtar IBO? Probably. Would the individual Quixtar IBO be better off by finding a new opportunity at this point? Probably. I would be willing to bet that BIG TIME IBO leaders are already looking around at other opportunities.

I said this about USANA and it applies to Quixtar at this point as well. The company will survive all of this, but it will get worse for the typical IBO before it gets better.

Update: I re-read the letter and noticed that this UK action is in response to “serious concerns raised” by the Department of Trade and Industry (DTI). That has me wondering whether Amway would have done anything if not for a pending crackdown by the DTI.

Your comments and theories are welcome…

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This letter was posted at the Quixtar Blog by Dave Robison of On The Road with Dave fame (my comments coming shortly in a seperate post - stay tuned you might be surprised at my take on this):

Letter: from Ben Woodward Branch Manager Amway UK UK/ROI IBO
Communication

May 4, 2007

To: UK/ROI IBO Leader
From: Ben Woodward, Branch Manager, Amway UK

RE: Significant change to Amway’s mode of operations in UK/Republic of Ireland.

This letter is to inform you of significant changes to the way Amway will conduct its business in the UK and Republic of Ireland. These changes are effective immediately. While these changes may cause short-term challenges for some of our IBOs, we strongly believe the changes will make our long-term business in the UK/RoI stronger.

Effective Immediately: 4 May 07.
Amway will prohibit the production, sale or promotion of BSM that are not authorized and distributed by Amway; this includes websites. This includes any BSM (books, tapes, meetings, CD’s, websites) that have been already been approved by Amway UK/RoI. They are now considered unauthorized for use.

All meetings for which an entry fee is charged are suspended until Amway has approved, in writing, the meeting and its content;

Amway has imposed a moratorium on sponsoring new IBOs for at least 60 days and until current IBOs are re-trained and re-qualified; We are evaluating all costs associated with joining Amway;

We are also sanctioning a number of IBOs based on contract violations that have come to our attention.

Failure to comply with the above mentioned points 1 to 3 will lead to a suspension and/or termination of the respective IBO contract. Please also note that Amway is in no way limited to these sanctions, but can impose further corrective or punitive measures.

In addition, the company is announcing a thorough review of its business practices globally with the goal of ensuring a consistent, rigorously enforced set of rules and regulations governs its relationships with IBOs and consumers.

That global audit has begun, and we expect it to be completed in June, and will share the results with you later this summer.

These are important steps, but in some ways, they are not surprising ones. Many of you know that for the past 10 years, Amway has been moving to exert more control over the way we do business globally.

In newer markets that has meant, for example, outright bans or tight
restrictions on the sale of non-company BSMs and the requirement of a more consistent, approved messaging and branding by IBOs about the Amway business opportunity.

While most changes in other markets have been carried out gradually around the world according to our timetable, we need to move more quickly here. This is in response to serious concerns raised about Amway by the Department of Trade and Industry (DTI) following the receipt of complaints about BSMs and misrepresentation of the business to prospective IBOs.

At this time, we can not specify when sponsoring will be allowed to resume. We will continue to communicate with key international and local IBO leadership to update them on developments of a new operational mode in UK and Republic of Ireland.

Enquiries
For example, if any IBO has a planned meeting for which tickets have been sold (that is required to be cancelled and ticket purchases refunded), or they have unsold inventory of BSM, or have unsold Starter kits, or have completed applications not yet submitted to Amway, they may contact the dedicated enquiry telephone number – 01908-629400 (press option 4).

In the following weeks, we will seek to meet with you personally to discuss the implications of this policy change and respond to any questions you may have. Meanwhile, please feel free to call me at 01908-629404.

Amway has been in the UK/RoI for more than 30 years, and today is a strong, growing £13 million business with more than 100 staff and 30,000 IBOs. We are entering into a challenging period of time.

But we believe in this business, we believe in our values and we believe in our IBOs. We are committed to making the changes we need to make in order to ensure the continued growth and success of Amway in the UK/RoI.

BEN WOODWARD
Branch Manager UK / RoI

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The Star:

KUALA LUMPUR: Amway (M) Holdings Bhd expects new products launched this year to boost revenue by RM57mil for its financial year ending Dec 31.

Amway posted RM723.7mil revenue and a net profit of RM80.6mil for its 16-month financial year from Sept 1, 2005 to Dec 31, 2006. It changed its financial year to align it with US-based holding company, Alticor Global Holdings Inc.

Executive director Paul Yee said four new products had been launched earlier this year and 10 more would be introduced before year-end.

“We are confident the 14 new products will increase sales by RM57mil based on the track record of previously launched products,” he said after the company AGM yesterday.

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Bangkok Post:

Amway (Thailand) Co, the country’s largest direct sales firm, is aiming to double its sales in 2012 to 20 billion baht.

Preecha Prakobkit, the company’s managing director, said the target would be in line with its US parent firm’s goal to double its business at the same time.

To achieve its target, Amway plans to adopt three main strategies to generate growth. They include focusing on customers, boosting performance, and innovation.

Mr Preecha said the company would study consumer needs to develop new products that fit their demands.

It also encourages interested individuals to contact Amway for business opportunities and products.

Celebrating Amway Thailand’s 20th anniversary yesterday, from left: managing director Preecha Prakobkit; Somrit Chunharat, distribution division director; Kittawat Ritteerawee, business relations director; and Chumpol Chayopratham, information systems division director. — WISIT THAMNGERN

Sales in the first quarter remained unchanged from last year due to the poor economy, Mr Preecha said. Therefore, the company expects sales this year to reach 9.71 billion baht, on par with the previous year’s figure.

To cope with the gloomy economic situation, the company will increase its advertising and promotional spending by 20% to as much as 100 million baht. It will push fast-moving items and introduce new products every month to spur consumer demand.

It plans to stage the Amway Expo and Convention 2007 for national direct sales businesses from May 12-13 at Challenger Hall, Muang Thong Thani. It expects to attract more than 60,000 visitors during the two-day event.

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The Enquirer:

Consumer-products giant Procter & Gamble Co. is asking a federal judge to ignore allegations that a jury improperly awarded money to the company, which was the target of devil-worshipping rumors.

Cincinnati-based Procter & Gamble filed the petition after three trial jurors alleged that their panel concluded the company suffered no damages, but compensated P&G anyway for legal fees by counting the number of company lawyers in the courtroom.

The jury returned a $19.25 million verdict for Procter & Gamble on March 16 against four Amway distributors accused of helping spread the falsehood that P&G’s logo - a bearded, crescent man-in-moon looking over a field of 13 stars - was a symbol of Satanism.

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Orlando Sentinel:

The top 10 reasons why Amway billionaire Rich DeVos says we need to build him a new Magic arena.

10) You wouldn’t believe what Wal-Mart is doing to the price of soap.

9) Have you seen my son-in-law? Does he look cheap to you?

Seems we’ll have another lottery draft pick and there are only so many head cases from Spain.

7) I loaned the other $50 million I was going to contribute to Lou Pearlman.

6) Grant Hill’s contract is expiring and you know how these guys always want more.

5) What, you want to be like Raleigh or Boulder?

4) Looks like I’m going to have to buy out Brian Hill again.

3) Still making payments on contracts to John Weisbrod, Johnny Davis, Doc Rivers and Doug Guetzloe.

2) Only the little people pay for arenas.

And the No. 1 reason…

You want to lose Wrestlemania to Tampa?

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