Rumors are running around the Orrin Woodward and the TEAM have lined up a high level supplier for their new Network Marketing company, Quixtar now has a restraining order against the TEAM leaders. TEAM leaders are not even supposed to talk to their Quixtar IBOs.
Will the TEAM survive?
Archived under Quixtar Support Systems, XS Energy Drink, Amway, Quixtar News, Amway - Quixtar Lawsuits Comments (1)
LOS ANGELES–(BUSINESS WIRE)–A group including eight of the largest distributors of Quixtar Inc., a sister company of Amway Corporation, today filed a class-action lawsuit against Quixtar seeking a declaration that all distributor contracts with Quixtar, and the non-competition and non-solicitation provisions in particular, are unenforceable due to illegality and/or frustration of purpose. The plaintiffs allege that Quixtar knowingly operates as a pyramid scheme and that it prevents distributors from leaving the organization through the non-competition and non-solicitation provisions.
The plaintiffs assert in the complaint that they merely want to allow distributors to leave the Quixtar organization and, to further that effort, they also intend to seek a preliminary and permanent injunction restraining Quixtar from enforcing or attempting to enforce the non-competition and non-solicitation provisions.
“Many of the plaintiffs have had close relationships with Quixtar’s founders as well as executive management for nearly three decades and have regularly pleaded with management to address these provisions, as well as the overpriced nature of the products,” stated D.J. Poyfair, an attorney for Shughart, Thomson & Kilroy, the law firm representing the plaintiffs in the lawsuit. “The complaint clearly illustrates that Quixtar has acknowledged that distributors can not sell the company’s products retail on the open market while encouraging them to recruit new distributors.”
The lawsuit was filed in federal district court, central district of California, western division. The proposed class representatives are a group of 15 Quixtar distributors, one of whom has been an Amway and/or Quixtar distributor since 1973, and many of whom have been distributors since the 1990s.
Quixtar, an e-commerce company founded by Amway in 1999, is a unit of Alticor, Inc., which is owned by Amway’s founding DeVos and Van Andel families. It essentially is the U.S. operation of the old Amway operation, which no longer operates under that name in the U.S. Alticor also is the parent of Amway, which only operates under that name outside the U.S., as well as Access Business Group, LLC, which manufactures the products sold by both Quixtar and Amway.
“We are not seeking damages against Quixtar, or to shut Quixtar down,” stated Billy Florence of Athens, Georgia, a distributor since 1974, who noted recent regulatory inquiries into Amway in India and the U.K. “Rather, we merely seek a judicial declaration that the non-competition and non-solicitation provisions are unenforceable, so distributors who choose to do so can extricate themselves from continued forced participation in Quixtar’s illegal pyramid scheme and pursue legitimate business opportunities instead.”
In the lawsuit, the plaintiffs assert Amway viewed the Quixtar launch “as its chance to make a second, and this time good, first impression on the network marketing industry in the United States and created new products, with a fresh plan for success.” They claim, however, that Quixtar instead adopted Amway’s existing business model, which by this time had been sharply criticized in the media, in lawsuits and by distributors.
According to the lawsuit, The Federal Trade Commission (FTC) began examining Amway’s business model in the late 1970s to determine whether it was operating as an illegal pyramid scheme. The examiners concluded that because Amway’s products were capable of being sold in the retail market, it was not a pyramid scheme; however, the company had to adopt – and enforce – certain rules designed to avoid the Koscot characteristics of an illegal pyramid scheme. The company needed to comply with these rules or it would be deemed an illegal pyramid scheme. Today, plaintiffs assert that Quixtar does not enforce any of these rules.
Since its start-up, the lawsuit claims, Quixtar products have become significantly overpriced, “and are thus not sellable in the retail market.” In fact, the action asserts that it is “widely understood in Quixtar for years that (distributors) buy Quixtar products mostly to earn commissions or bonuses,” rather than to sell the products to retail purchasers. The plaintiffs allege that only 3.4% of Quixtar’s sales are sold to customers outside Quixtar’s distributor network.
“Instead of focusing on reducing prices across the board on products, Quixtar has resorted to marketing the products solely to its distributors,” the complaint asserts. In fact, “President Doug DeVos himself has stated … that ‘Quixtar is an internal consumption company,’ not a retail sales company,” the lawsuit asserts.
Further, the plaintiffs assert that since Quixtar’s products are “unmarketable to those not participating in Quixtar’s comp plan, the sole way to make money is for a (distributor) to continually recruit new distributors who are also willing to buy and self-consume, or give away, the Quixtar products. This fact alone renders Quixtar a classic recruitment pyramid scheme.”
Finally, the complaint sharply criticizes Quixtar’s non-competition and non-solicitation rules. “The Quixtar business model is brilliant if you are a member of the DeVos or Van Andel families,” it asserts. “Elevate the price of all products to gain an alarmingly high profit margin for the company. Market the company as a business opportunity, promising retail saleability, to get unsuspecting distributors to purchase products at exorbitant prices while investing their time and energies promoting the business opportunity. Offer monetary rewards to incentivize distributors to recruit new distributors who also buy the company’s products. Teach all distributors to consume the products that cannot be sold, which is all of the products. Trap the distributors, a.k.a. the consumers, from leaving the company with a non-competition clause. Penalize those who attempt exodus with heavy-handed sanctions imposed by the only judge in town, Judge Quixtar.”
“In this manner, Quixtar has created an army of (distributors) who are effectively trapped in Quixtar’s system, forced to buy and consume outrageously priced products, and recruit new victims as the only means of avoiding financial loss, because leaving Quixtar is rendered impossible by the non-competition and non-solicitation rules.”
An injunction will be filed later today to stop Quixtar from enforcing the non-competition and non-solicitation rules that entrap distributors and prevent them from exiting the pyramid scheme. The preliminary injunction hearing is expected to be held in the next two weeks in Los Angeles.
Archived under Quixtar Support Systems, Amway, Amway - Quixtar Lawsuits Comments
ADA, Mich., Aug. 10 /PRNewswire/ — Quixtar Inc. announced this morning the termination of 15 independent businesses as a result of actions detrimental to the company’s North American operations. The businesses affected were part of the Team training organization or other training organizations using Team’s training materials and named as co-plaintiffs in a lawsuit filed by Team’s founders against Quixtar yesterday.Quixtar was working with Orrin Woodward and Chris Brady, founders of the Team training organization, to correct issues related to Team’s teaching of inappropriate business-building tactics, improper positioning of the opportunity, and use of unauthorized support materials. These teachings placed themselves, affiliated Independent Business Owners (IBOs), and Quixtar at serious and immediate risk of legal and regulatory actions and had to be stopped.
Woodward and Brady refused to work with the company to return Team to compliance with Quixtar’s rules, stated their intentions of starting a new company in competition with Quixtar, and filed a lawsuit against the company seeking relief from their non-compete requirements. The lawsuit is filled with outrageous claims and statements and will be defended vigorously by the corporation.
Due to their refusal to correct their business practices, Quixtar terminated the independent businesses of Woodward and Brady as well as those who joined them as plaintiffs in a class action lawsuit, filed in a California district court yesterday. A Temporary Restraining Order and Preliminary Order of Injunction was sought by the company and granted today in a Michigan district court, preventing Woodward and Brady from interfering with the Quixtar Line of Sponsorship (LOS), soliciting IBOs for another business opportunity, disparaging Quixtar and damaging its reputation, and requiring them to return to Quixtar its proprietary and confidential LOS data.
Additional co-plaintiffs whose Quixtar independent businesses were terminated include Billy Florence, Don Wilson, Randy Haugen, Chuck Goetschel, Tim Marks, Kirk Birtles, James Martin, Aron Radosa, David Brandy, Benjamin Dickie, Bruce Gilbank, Michael Martenson, and Chuck Cullen.
Incidentally, the law firm representing the plaintiffs is the same firm involved in several other frivolous lawsuits against Quixtar and IBOs.
Quixtar remains committed to the support of all IBOs and will work with those who agree to abide by the company’s rules and maintain high ethical standards. In fact, the company has announced many improvements to further enhance its business, including more than $200 million in investments in product development, brand building, training, and compensation enhancements.
Commentary from the company is being provided at the Alticor Media Blog [http://media.alticorblogs.com/] and Quixtar is actively reaching out to IBOs who were in the Team training organization and other organizations affected by these terminations to restate our commitment to supporting their independent businesses.
About Quixtar
Quixtar Inc. offers a business opportunity that allows people to have a business of their own based on retailing products and sharing the opportunity with others who will do the same. Quixtar supports Independent Business Owners (IBOs) with a proven compensation plan, portfolios of quality products in health, beauty, and other consumer categories, plus the merchandising materials, training, and education they need to be successful. IBOs also are supported by communities of those who have succeeded in Quixtar businesses before them.
Since 1999, Quixtar IBOs have generated $6.8 billion in sales through Quixtar.com, plus more than $500 million for Quixtar Partner Stores. These sales have earned IBOs more than $2.2 billion in bonuses through the Quixtar(R) Independent Business Owner Compensation Plan plus other incentives. Their efforts have propelled Quixtar to be ranked the #1 online Health & Beauty retailer based on sales, and 22nd among all e-commerce sites, according to Internet Retailer magazine.
A subsidiary of Alticor Inc., Quixtar supports independent businesses in the U.S., Canada, Puerto Rico, and various trust territories and independent island nations in the Pacific and Atlantic Oceans and Caribbean Sea.
SOURCE Quixtar Inc.
Archived under Quixtar Support Systems, Amway, Quixtar News, Amway - Quixtar Lawsuits Comments
Quixtar is talking about flexing it’s muscle in the training of it’s IBOs. Of course they talked about this before. The difference today is that the U.S. Quixtar business is less important to Alticor than the U.S. Amway busines in 1983. Maybe they mean it this time. Even though Amway should have done the right thing in 1983, today they can afford to do the right thing.
Ada-tudes:
Thank you all for your comments on the Opportunity Zone regarding our request for ideas to help improve IBO profitability and continue to grow the Quixtar business. The response has been overwhelming. We are consolidating these ideas with the one’s we have generated internally and are prioritizing how they might fit into our overall strategic plan. One consistent request was for more training by the company. The good news is that we have already begun work on this and below is some information to share on what we are doing.
1. Training is the key to our vision of creating clear pathways to profitability for IBOs at all levels. We believe that Quixtar must offer the best possible training, at the least possible cost to the IBO or the consumer.
Archived under Quixtar Support Systems, Amway, Quixtar News Comments (1)
My brother sent me a chat conversation he had with support at IBONetwork.com. Apparently this new system for Quixtar Independent Business Owners is not owned by any LOS, IBO, Diamond or Alticor/Quixtar and employees are not allowed to be IBOs.
The official launch will come in the summer of 2007 with a focus on business development for Quixtar IBOs.
Quote from support:
The idea is to get IBOs up and running faster, and to make money sooner. Instead of just spending money on tools.
IBONetwork plans to offer a full support system, web sites and services. Some of the services have never been offered to Quixtar IBOs before.
The diamond system owners can not be liking this. The competition arrives this summer.
Archived under Quixtar Support Systems, Quixtar News Comments (5)
