STATEMENT OF POLICIES AND PROCEDURES
1. ACTIVEITEM, INC., hereinafter "Company," is direct selling Company marketing dietary
supplements and personal health care product and other consumer products to the consumer
through Independent Affiliates. The policies and procedures herein are applicable to all
Independent Affiliates (hereinafter "IAs") of the Company.
2. An IA is one who has completed a Company application and agreement and has been accepted
by the Company as an IA. The Company reserves the right to accept or reject anyone as an
3. All IAs must be the age of majority in the state in which they distribute Company products and
4. Unless waived in writing by the Company upon application, the Company will consider each
married couple a single IA. Husbands and wives may not sponsor each other directly or
indirectly, nor have different sponsors. If one spouse is already an IA, the nonparticipating
spouse may elect to become an IA, but must join the same IA position as his or her spouse.
The Company reserves the right to reject any applications for new IAs or applications for
renewal. Should a husband/wife IA divorce, they should notify the Company as to how the
IA position is to be managed thereafter. Otherwise, the Company will recognize the final
judicial or adjudicatory disposition of the IA position.
5. IAs are independent marketing representatives of the Company and are not to be considered
purchasers of a franchise or a distributorship. The agreement between the Company and its
IAs does not create an employer\employee relationship, agency, partnership, or joint venture
between the Company and the IAs. Each IA shall hold harmless the Company from any
claims, damages or liabilities arising out of IA's business practices. Company IAs have no
authority to bind the Company to any obligation. Each IA is encouraged to set up his\her
own hours and to determine his\her own methods of sale, so long as he\she complies with the
policies and procedures of the Company.
6. Transaction Submission Integrity. It is essential to the success of the Company, its IAs and
customers that submissions of transactions to the Company maintain integrity of
communication. It is to be expected that all transactions submissions to the Company,
including, but not limited to, IA applications, IA communication, IA financial transactions and
consumer transactions, be submitted by the individual or entity involved in the transaction.
Third party submission of any and all transactions submissions is prohibited. An IA may not
communicate any transactions submissions on behalf of another IA, IA applicant or customer.
An IA may not use his or her credit card or bank account on behalf of another individual or
IA. This rule is applicable to any and all forms of transactions submissions, including, but not
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limited to, online, telephone, fax, email, etc.
7. Ethical Conduct. IAs will, at all times, conduct their business in a professional and ethical
manner that is supportive to both the Company and other IAs. An IA shall engage in no
conduct which negatively impacts, disrupts or impairs the reputation or business of the
Company, its products/services or other IAs, including, but not limited to: disparagement of
the Company, its officers or employees, its products/services or other IAs; manipulation of the
compensation plan or unauthorized manipulation of the placement program or genealogy
structures; undermines or is at odds with the training systems utilized by and authorized by the
Company; conduct which is abusive, disrespectful, bullying or intimidating of other IAs,
customers, employees, or affiliates of the Company; conduct that undermines the relationship
between the Company and IAs or relationships between IAs; conduct which disrespects the
privacy of other IAs; conduct which is false, fraudulent, dishonest or deceptive in any way; or
any other conduct which the Company deems disreputable or, in any way, negatively impacts
the Company or other IAs.
TWO ALTERNATIVE PARAGRAPHS FOR PARAGRAPH 8:
OPTION 1: (CONSERVATIVE APPROACH, HIGHLY RECOMMENDED FROM
CONSERVATIVE LEGAL STANDPOINT – HOWEVER, THIS APPROACH IS
FOLLOWED BY VERY FEW COMPANIES):
The company's program is built upon retail sales to the ultimate consumer. The company also
recognizes that IAs may wish to purchase product or service in reasonable amounts for their
own personal or family use. For this reason, a retail sale for bonus purposes shall include sales
to nonparticipants, as well as sales to IAs for personal or family use which are not made for
purposes of qualification or advancement. It is company policy, however, to strictly prohibit
the purchase of product or large quantities of inventory in unreasonable amounts solely for the
purpose of qualifying for bonuses or advancement in the marketing program. IAs may not
inventory load nor encourage others in the program to load up on inventory. IAs must fulfill
published personal and downline retail sales requirements, including requisite retail sales to
nonparticipants, as well as supervisory responsibilities, to qualify for bonuses, overrides or
8. Any IA, who sponsors other IAs, must fulfill the obligation of performing a bona fide
supervisory, distributing and selling function in the sale or delivery of product to the ultimate
consumer and in the training of those sponsored. IAs must have ongoing contact,
communication and management supervision with his or her sales organization. Examples of
such supervision may include, but are not limited to: newsletters, written correspondence,
personal meetings, telephone contact, voice mail, electronic mail, training sessions, and
accompanying individuals to Company training, sharing genealogy information with those
sponsored. IAs should be able to provide evidence to the Company semiannually of ongoing
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fulfillment of sponsor responsibilities. If an IA is an Enroller in the marketing program
entitled to Enroller bonuses, then the Enroller is obligated to the same responsibilities of
supervisory, communication and training activities with respect to IAs he or she has
enrolled, irrespective of whether the Enroller is also the Sponsor of those IAs.
9. Company Retail/70 Percent Policy. The Company sales and marketing program is based upon
retail sales to the ultimate consumer. Every aspect of the program is designed to assist our IAs
in the marketing of fine products and services to the general consuming public. As a dual
consumer safeguard, of the utmost importance to the Company is the policy that IAs should
purchase products and services in commercially reasonable quantities, and under no
circumstances may IAs cause others to purchase products or services in amounts that are not
reasonably expected to be sold to the consuming public or in unreasonable amounts for
personal or family use. In furtherance of these policies, the Company has adopted specific
rules on retail sales and retailing referenced as the Company retail/70 percent rules. In the
interest of protecting the consumer and the opportunity of its IAs, the Company enforces this
rule through a verification program.
Company Retail/70 Percent Rule.
a) Retail Rule.
Although the primary function of the Company is to sell products and services
to the general consuming public, the Company realizes that its IAs may wish to
purchase product for personal or family use in reasonable amounts. For this
reason, the Company defines a retail sale to include sales to nonparticipants, as
well as purchases for personal or family use in reasonable amounts, which are
not made solely for purposes of qualification or advancement. This is a
standard followed by leading direct selling companies. Notwithstanding this
policy, the Company, in order to specifically further retail selling, has adopted a
requirement that an IA will not be eligible for bonuses or overrides unless he
or she has made ___7_____ requisite sales per month to non-participant retail
b) 70 Percent Rule.
As with other leading direct selling companies, the Company has adopted a 70
percent rule. Under this rule, Company IAs may not order additional product
unless they have sold or used for personal or family use at least 70 percent of
previously purchased inventory-type product. This verification form is also
intended to support the 70 percent rule policy.
Retail Sales/70 Percent Rule Audit Verification Program.
In its effort to support and enforce the retail sales/70 percent rule, the Company on a
quarterly basis will conduct random audit verification follow-ups. The Company’s
Compliance Department will contact IAs to further verify compliance with the retail
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sale/70 percent rule. IAs should maintain records and be prepared to assist the
Company Compliance Department in its task.
10. Sales Volume Qualification by Order Taking. As with other leading direct selling companies,
the Company has adopted minimum personal and group sales volume requirements. With
respect to tangible products, which may be offered for purchase for resale, minimum sales
volume requirements may also be fulfilled by taking orders from retail customers which will be
fulfilled or drop-shipped by the Company directly to the retail customer.
11. All IAs are responsible for paying local, state and federal taxes due on earnings from
commissions or any other earnings generated as a seller of Company products and services.
The Company will collect sales tax on behalf of the IA, then report and distribute applicable
sales taxes to the taxing entity for the state in which the sale is made. IAs may apply for a
waiver of this practice by submitting a copy of their sales and use tax number (and a
statement that they are wholesale purchasers purchasing for resale) acquired through their
local taxing authorities.
12. Company IAs shall not advertise Company products and services and/or marketing plans
except as specifically approved by the Company. Company IAs agree to make no false or
fraudulent representations about the Company, the products, the Company compensation
plan, or income potentials.
13. No purchase or investment is necessary to become a Company IA other than the purchase of,
or payment fee for, a sales kit which is sold "at Company cost." (Purchase is optional in North
Dakota). This "at cost" sales kit fee covers basic and ongoing sales and marketing materials and
support in both written and electronic and online media formats, including product and service
As an extension to the initial "at cost" sales kit, a modest monthly fee may be charged for
expanded "at cost" ongoing sales and marketing materials support, including back office
accounting review, training updates, replicated website and communication tools to support
the sales and marketing process.
14. Trademark, Copyright, Trade Names, Advertising.
a) The name of the Company and other names as may be adopted by the Company are
proprietary trade names and trademarks of the Company. As such, these marks are of
great value to the Company and are supplied to IA for IA's use only in an expressly
authorized manner. IA agrees not to advertise the Company products or services in
any way other than the advertising or promotional materials made available to IA by
the Company. IA agrees not to use any written, printed, recorded or any other material
in advertising, promoting or describing the products or services or the Company
marketing program, or in any other manner, any material which has not been
copyrighted and supplied by the Company, unless such material has been submitted to
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the Company and approved in writing by the Company before being disseminated,
published or displayed.
b) The IA, as an independent contractor, is fully responsible for all of his\her verbal and
written statements made regarding the product or service and marketing program
which are not expressly contained in writing in the current IA agreement, and
advertising or promotional materials supplied directly by the Company. IA agrees to
indemnify the Company and hold it harmless from any and all liability including
judgments, civil penalties, refund, attorney fees, court costs or lost business incurred by
the Company as a result of IA's unauthorized representations.
c) The Company will not permit the use of its copyrights, designs, logos, trade names,
trademarks, etc. without its prior written permission.
d) All Company marketing materials or published intellectual property, whether printed,
on film, produced by sound recording, or on the internet, are copyrighted and may not
be reproduced in whole or in part by IAs or any other person except as authorized by
the Company. Permission to reproduce any materials will be considered only in
extreme circumstances. Therefore, an IA should not anticipate that approval will be
e) A Company IA may not produce, use or distribute any information relative to the
contents, characteristics or properties of Company product or service which has not
been provided directly by the Company. This prohibition includes but is not limited to
print, audio or video media.
f) A Company IA may not produce, sell or distribute literature, films or sound recordings
which are deceptively similar in nature to those produced, published and provided by
the Company for its IAs. Nor may an IA purchase, sell or distribute non-company
materials which imply or suggest that said materials originate from the Company.
g) Any display ads or institutional or trademark advertising copy, other than covered in
the foregoing rules, must be submitted to the Company and approved in writing by the
Company prior to publication.
h) All advertising copy, direct mailing, radio, TV, newspaper and display copy must be
approved in writing before being disseminated, published or displayed with the
exception of blind ads where no reference is made to the Company name or product
i) No claims as to therapeutic or curative properties about the products may be made
except those officially approved in writing by the Company or as contained in the
official Company literature. In particular, no IA may make any claim that the
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Company products are useful in the treatment or cure of any disease. Such statements
can be perceived as medical claims. Not only is this totally against Company policy,
but it is also against the laws governed by the United States Food and Drug
15. Recording Policy.
a) Attendance at Company Events; use authorized in Company media. Company
events may be recorded by Company. Images, video and audio of people attending
or participating in a Company related event may be used in Company published
media in business support materials, and for promotions. By registering and
attending a Company related event, you agree to allow Company to use your image,
video, audio and personal information in these recordings.
b) Private Video and Recording of Events Prohibited. Audio, video and cellular
recording of Company related events is strictly prohibited as they are governed by an
all-rights-reserved copyright policy. In accordance with this policy, Company
prohibits any and all personal recordings of any Company related event. This
includes all Company related conferences, leadership or team meetings, training
Audio, video, and cellular recordings of Company related events are not permitted; all audio
and video recording devices are prohibited on the premises except by the expressed written
permission of Company. Any attempt by unauthorized personnel to record these events may
result in the confiscation of and forfeiture of the recording device. No recording devices will
be allowed into Company related events, and all bags, briefcases, and backpacks are subject
to be searched.
Internet and Website Policy.
The Company maintains an official corporate website. IAs are allowed to advertise on the
internet through an approved Company program which allows IAs to choose from among
Company home page designs that can be personalized with the IA's message and the IA's
contact information. These websites link directly to the Company website giving the IA a
professional and Company-approved presence on the internet. Only these approved
websites may be used by IAs. No IA may independently design a website that uses the
names, logos, product or service descriptions of the Company, nor may an IA use "blind"
ads on the internet making product or income claims which are ultimately associated with
Company products, services or the Company's compensation plan. Any person using
Company names, logos, trademarks, etc. on the internet or any other advertising medium,
except as permitted by Company Rules and Regulations, shall be subject to immediate
discipline, including termination of IA status.
16. Prohibition of Sales on Unauthorized Internet Sites. Except with written authorization from
the Company, an IA may not sell nor promote Company products on unauthorized internet
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sites, including, but not limited to auction sites such as eBay, nor internet shopping sites such
as Amazon or Craig’s List, nor internet malls.
17. Unsolicited Email. The Company does not permit IAs to send unsolicited commercial email
to others unless such emails strictly comply with applicable laws and regulations including,
without limitation, the federal CAN SPAM Act.
Any email sent by an IA that promotes the Company, the Company opportunity or Company
products and services must comply with the following:
a) There must be a functioning return email address to the sender.
b) There must be a notice in the email that advises the recipient that he or she may reply
to the email, via the functioning return email address, to request that future email
solicitations or correspondence not be sent to him or her (a functioning "opt-out"
c) The email must clearly and conspicuously disclose that the message is an advertisement
d) The use of deceptive subject lines and/or false header information is prohibited.
e) All opt-out requests, whether received by email or regular mail, must be honored. If an
IA receives an opt-out request from a recipient of an email, the IA must forward the
opt-out request to the Company.
18. Unsolicited Faxes and Spam. Except as provided in this section, IAs may not use or
transmit unsolicited faxes, mass email distribution, unsolicited email, or "spamming" or use
an automatic telephone dialing system relative to the operation of their Company businesses.
Unsolicited broadcast distribution of email or other distribution that may be defined as "bulk
mail" or "SPAM" is strictly prohibited. IAs may send "general mailings" only to other IAs in
their downline organizations and their direct up-line sponsors. Any other bulk use of email is
The term "automatic telephone dialing system" means equipment, which has the capacity to:
a) Store or produce telephone numbers to be called, using a random or sequential
number generator; and
b) To dial such numbers.
The terms "unsolicited faxes" and "unsolicited email" mean the transmission via telephone
facsimile or electronic mail, respectively, of any material or information advertising or
promoting the Company, its products, its compensation plan or any other aspect of the
Company which is transmitted to any person, except that these terms do not include a fax or
a) To any person with that person’s prior express invitation or permission; or
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b) To any person with whom the IA has an established business or personal
relationship. The term "established business or personal relationship" means a prior
or existing relationship formed by a voluntary two-way communication between an
IA and a person, on the basis of:
(1) An inquiry, application, purchase or transaction by the person regarding
products offered by such IA; or
(2) A personal or familial relationship, which relationship has not been
previously terminated by either party.
19. Retail Establishments. Company products or services may only be displayed and sold in retail
establishments where the nature of the business is to make appointments with customers (such
as salons, doctors' offices, and health clubs where appointments are made for personal training
or classes are scheduled) the sale of such products or services within such retail facilities must
be conducted by an IA and must be preceded by a discussion where the IA introduces the
prospect to the products or services and opportunity just as they would if they had met outside
of the retail facility. Company produced literature, banners, or signage only may be displayed
on a shelf, counter, or wall and must be displayed by itself. Products or services may not be
sold from a shelf or taken from a display for purchase by a customer. Company products or
services may not be sold in any retail establishment, even by appointment, if competitive
products or services are sold in the establishment. From time to time, the Company may
announce policies and rules that expand or contract restrictions on sales in retail
20. Trade Shows. With written authorization from the Company, Company products or services
and opportunity may be displayed at trade shows by IAs. Request for participation in trade
shows must be received in writing by the Company at least two weeks prior to the show.
Written authorization from the Company must be received before participating in the trade
show. Unless written authorization is secured from the Company, Company products or
services and opportunity are the only products or services and/or opportunity that may be
offered in the trade show booth. Only Company produced marketing materials may be
displayed or distributed. No IA may sell or promote the Company's products or services or
business opportunity at flea markets, swap meets, or garage sales.
21. International Sales. No IA may export or sell directly or indirectly to others who export the
Company's products, literature, sales aids or promotional material relating to the Company, its
products or services or the Company's program from the United States or its possessions or
territories to any other country. IAs who choose to sponsor internationally may do so only in
countries in which the Company has registered to operate its business and must comply fully
with the Rules of Operation of a Company IA position in that country. Any violation of this
rule constitutes a material breach of this contract and is grounds for immediate termination of
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22. The Company reserves the right to approve or disapprove IA's change of business names,
formation of partnerships, corporations, and trusts for tax, estate planning, and limited liability
purposes. If the Company approves such a change by IA, the organization's name and the
names of the principals of the organization must appear on the IA application/agreement
along with a social security number or federal identification number. It is prohibited to make
changes to attempt to circumvent or violate Company rules on raiding, solicitation, targeting,
cross-sponsoring or interference.
23. The IA agreement may be canceled at any time and for any reason by an IA notifying the
Company in writing of the election to cancel.
24. If an IA elects not to renew his\her IA agreement, all rights to bonuses, marketing position
and wholesale purchases cease. The terminated IA's sales organization shall be subject to
placement in accordance with the then current published compensation plan presentation.
25. If the IA has purchased products for inventory purposes or mandatory sales aids while the IA
agreement was in effect, all products in a resalable condition then in possession of the IA,
which have been purchased within ___90__ (days) (months) of cancellation, shall be
repurchased The repurchase shall be at a price of not less than ninety percent (90%) of the
original net cost to the participant returning such goods, taking into account any sales made by
or through such participant prior to notification to the Company of the election to cancel.
Buyback is 12 months in Massachusetts, Maryland, Montana, Georgia, Louisiana,
Wyoming, Texas, Oklahoma, Idaho, Utah, Washington and Puerto Rico. In addition,
the Company will honor statutory mandated buyback requirements of every jurisdiction. A
Montana resident may cancel his or her Agreement within 15 days from the date of enrollment,
and may return his or her starter kit for a full refund within such time period.
26. The Company shall be entitled to repayment of any commission previously paid on a sale of
product/service if the product/service purchase is cancelled or reversed or a refund paid for
a terminated purchase. The Company shall recover the commission by adjustment on the
next month's IA check payment. In the event that no commission is available for adjustment
in the following month, the IA who has received the commission shall repay the commission
paid on the "reversed sale" within 30 days of the Company’s notice to repay.
27. The Company shall be entitled to change product or service prices at any time and without
notice, and to make changes in the statement of policy and procedures.
28. Each IA shall comply with all state and local taxes and regulations governing the sale of
Company products or services.
29. Notwithstanding the Company's longer retail customer guarantee policy, all retail sales must
comply with the FTC Three-Day Cooling Off Rule which requires statutory language and
notice of cancellation on the retail sales receipt. The three-day right of cancellation must be
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orally explained to the customer and the customer must receive two copies of the notice of
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Prohibition on Raiding and Cross-Solicitation of Products or Other MLM and/or Business
Opportunities. The Company takes seriously its responsibility to protect the livelihood of its
sales force and to the hard work invested to build a sales organization. Raiding and
solicitation actions in which IAs seek to raid and solicit other IAs in the sales organization to
non-company products and services and to other MLM/business opportunities, severely
undermines the marketing program of the Company, interferes with the relationship
between the Company and its sales force and destroys the livelihood of other IAs who have
worked hard to build their own business, the business of their sales force and benefits they
have earned by helping to build a sales organization. Therefore, IAs shall not directly or
indirectly sell to, nor solicit from, other Company IAs non-company products or services, or
in any way promote to other Company IAs business opportunities in marketing programs of
other MLM or business opportunity companies at any time. A Company IA shall not
engage in any recruiting or promotion activity that targets Company IAs for opportunities or
products of other direct selling companies or business opportunities, either directly or
indirectly, by themselves or in conjunction with others, nor shall an IA participate, directly
or indirectly, in interference, raiding or solicitation activity of Company IA for other direct
selling companies or business opportunities. Unless approved in writing by the Company,
this prohibition includes sales or solicitation of non-company products or services at
meetings organized for Company sales, promotion, training recruitment, demonstration, etc.
This prohibition on targeting, interference, soliciting and raiding shall be in effect during the
term of the IA agreement and for a period of ___1_________years after the termination of
the IA agreement. [NOTE: Choose from six months, one year or two years.] For the term
of this agreement and for ____1_____ years after termination hereof, an IA shall not,
directly or indirectly, recruit any of Company's IAs to join other direct sales or network
marketing companies nor solicit, directly or indirectly, Company's IAs to purchase services
or products, or in any other way interfere with the contractual relationships between
Company and its IAs.
30. On a periodic basis, the Company will supply data processing information and reports to the
IA, which will provide information concerning the IA’s downline sales organization, product
purchases and product mix. The IA agrees that such information is proprietary and
confidential to the Company and is transmitted to the IA in confidence. The IA agrees that
he or she will not disclose such information to any third party directly or indirectly, nor use
the information to compete with the Company directly or indirectly during or after the term
of the agreement. The IA and the Company agree that, but for this agreement of
confidentiality and nondisclosure, the Company would not provide the above confidential
information to the IA. An IA seeking to sell his/her IA position must acknowledge and
agree to this provision prior to the finalization of the sale of their IA position.
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31. Vendor Confidentiality. The Company's business relationship with its vendors, manufacturers
and suppliers is confidential. An IA shall not contact, directly or indirectly, or speak to or
communicate with any representative of any supplier or manufacturer of the Company except
at a Company sponsored event at which the representative is present at the request of the
Company. Violation of this regulation may result in termination and possible claims for
damages if the vendor/manufacturer's association is compromised by the IA contact.
32. An IA shall take appropriate steps to safeguard the protection of all private information
provided by a consumer, a prospective consumer and/or other IAs.
33. Change in Status.
Marriage/Statutory Domestic Partnership: Two Company IAs who marry or enter into a
statutory domestic partnership, after having established their own individual IA positions,
may continue to operate their existing IA positions, as long as they do not originate from the
same line. If they originate from the same line, then the couple has the choice of either
selling or resigning from one of their IA positions, at their discretion.
Divorce/Dissolution: Should a couple become divorced or enter into a dissolution, they
agree to notify the Company as to who will assume responsibility for the IA position in one
of the following manners:
a) Written notarized agreement signed by both parties indicating who will retain the IA
b) A court order delineating who receives custody over the IA position.
c) Both parties may choose to retain their joint IA position and operate it as a
The divorced/dissolved IA may apply for a new IA position without having to wait 12
Death: Upon the death of an IA, the rights and responsibilities of the IA position may be
passed on to the rightfully legally documented heir as long as that person has filled out a new
IA application/agreement and completed the required training.
Disability: Should an IA become disabled to the extent that he/she can no longer fulfill the
required duties of the Company IA, such disabled IA’s legal representative or conservator
a) Contact the Company within thirty (30) days of the disability and advise the
Company of the IA’s status and the plans for future management or cancellation of
the IA position.
b) Provide notarized or court confirmed copy of appointment as legal representative or
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c) Provide notarized or court confirmed copy of document establishing right to
administer the Company business.
d) Should the legal representative or conservator plan to continue the business of the
IA position, then he/she shall fill out a new IA application/agreement and receive
the required training consistent with the disabled IA’s level at the time of disability.
e) These requirements shall be satisfied within a deadline of six months.
34. Sale or Transfer. An IA may not sell, assign or otherwise transfer his or her IA position,
marketing position or other IA rights without written application and approval by the
Company. This paragraph is also applicable to transfer of any interest in an entity that owns
an IA position, including but not limited to corporation, partnership, trust or other non-
individual entity. The potential buyer must be at the equivalent or higher rank as the selling IA
or have been a Company IA for at least a one-year period prior to the sale. The IA position
must be offered in writing first to the IA's sponsor. If the sponsor declines the offer, the IA
may offer the IA position for sale to other qualified Company IAs, but only on the same terms
and conditions as offered to the sponsor. An IA who sells his or her IA position shall not be
eligible to requalify as an IA for a period of at least six months after the sale. The Company
reserves the right to review the sale agreement and to verify waiver from the upline sponsor in
the event the upline sponsor declines to purchase the IA position.
An IA may not add a co-applicant to their IA position and thereafter, remove their name
from the IA position, in an effort to circumvent the Company’s sale, assign, delegate or
merger procedure. The primary IA must wait twelve (12) months after adding a co-applicant
to the IA position before they are allowed to remove their name from the IA position. It is
prohibited to use a sale or transfer to attempt to circumvent Company policy on raiding,
soliciting, cross-sponsoring or interference.
For the term of three (3) years after sale or transfer, an IA agrees that he/she shall not,
directly or indirectly, disrupt, damage, impair or interfere with the business of Company,
whether by way of interfering with, or raiding its employees or IAs, disrupting its
relationship with customers, agents, representatives, suppliers, vendors or manufacturers or
otherwise. "Disrupting" or "interfering" shall include, but not be limited to, direct or
indirect solicitation or recruitment for other direct selling business opportunities or products
or services of other direct selling companies. An IA seeking to sell or transfer his/her IA
position must acknowledge and agree to this provision prior to the finalization of the sale or
transfer of their IA position.
35. This statement of policies and procedures is incorporated into the IA agreement and
constitutes the entire agreement of the parties regarding their business relationship.
36. The Company expressly reserves the right to alter or amend prices, Rules and Regulations,
Policies and Procedures, product availability and compensation plan. Upon notification, in
writing, such amendments are automatically incorporated as part of the agreement between
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the Company and the IA. Company communication of changes may include, but shall not
be limited to mail, email, fax, posting on the Company website, publication in company
newsletters or magazines, etc.
37. Non-Individual Ownership. A partnership or corporation may be an IA. However, no
individual may participate in more than one (1) IA position in any form without express
written permission from the Company. Only in the most extreme and extraordinary
circumstances will this be considered.
a) An IA position may change status under the same sponsor from individual to
partnership or corporation or from partnership to corporation with proper and
b) To form a new IA position as a partnership or corporation or to change status to one
of these forms of business, you must request a partnership/corporation form from the
corporate home office. This form must be submitted detailing all partners,
stockholders, officers or directors in the partnership or corporation. The partner or
officer who submits the form must be authorized to enter into binding contracts on
behalf of the partnership or corporation. In addition, by submitting the
partnership/corporation form, you certify that no person with an interest in the
business has had an interest in an IA position within three (3) months of the
submission of the form (unless it is the continuation of an existing IA position that is
changing its form of doing business).
38. Individual and Entity Ownership Information.
a) An individual can have only one IA position in the Company. He/she may not own
any other IA position, either individually or jointly, nor may he/she participate as a
partner, owner, stockholder, trustee, director, or association member in more than
one IA position in any form.
b) An individual shall provide the Company with a Social Security Number or a
Taxpayer Identification Number (TIN) on an IRS W-9 form. No individual
operating under a fictitious name and no partnership, corporation or other business
entity may become a Company IA without submitting an “Entity Information” form
following enrollment of proprietorship, corporation, Limited Liability Corporation
(LLC), trust or partnership.
(1) Proprietorship: A copy of fictitious name filing must be submitted, plus a
(2) Corporation: Copies of articles of incorporation are required, including the
page with state seals and notarization. These articles will show who the
principals are and prove validation of Federal ID Number/Business
Number/E.I.N, plus a W-9 form.
(3) LLC: IRS acceptance only. The name on the IRS acceptance is required to
state the LLC in order to use it as an LLC, plus a W-9 form.
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(4) Trust: An affidavit of trust with the notarized copy of the power of attorney
is necessary. If Federal ID Number is to be used and is not noted in the
affidavit, an IRS acceptance will be required, plus a W-9 form.
(5) Partnership: To register as a partner, complete the partnership portion of
the Entity Information form, along with all signatures that apply, plus a W-9
39. Entity Guarantee for Owners: Although Company has offered IAs the opportunity to
conduct their IA position as corporate, LLC, trust or partnership entities, it is agreed that
since the IA position entity is under the control of its owners or principals, the actions of
individual owners or beneficiaries as they may affect Company and the IA position are also
critical to Company’s business. Therefore, it is agreed that actions of the ownership entity
shareholders, officers, directors, trustees, beneficiaries, agents, employees or other related or
interested parties and the actions of such parties, which are in contravention to Company’s
policies shall be attributable to the corporate, LLC, trust or partnership entity.
In the event that any of the ownership entity shareholders, officers, directors, trustees,
beneficiaries, agents, employees or other related parties shall terminate ownership interests in
the IA position, any breaching actions by such parties that continue to have a beneficial
financial interest, directly or indirectly, in the IA position shall be attributable to the IA
40. Members of Same Household; Responsibility. Members of IA’s household may operate
together as one Company IA position, but may not become separate Company IAs.
Household is defined as husband, wife, and dependents. Note: Children of legal age to
contract and at least 18 years of age are not considered a part of their parents’ household.
Company recognizes that members of the same household may belong to competing direct
selling opportunities. Although the actions of the parties are normally in good faith, in some
circumstances, there is an abuse of relationships in which the non-company household
member is engaged in recruitment, solicitation or raiding of the Company sales organization.
Since the household member that has an ownership interest in the Company IA position is
in the best position to be responsible to prevent raiding or cross-sponsoring activity by their
co-household member, the cross-recruiting activity of the non-company household member
shall be attributed to the Company IA position, subjecting the IA position to discipline or
41. It is agreed that Company is authorized to use IA’s name, photograph, personal story and/or
likeness in advertising or promotional materials and IA waives all claims for remuneration for
42. Disciplinary Actions. An IA's violation of any policies and procedures, the agreement, terms
and conditions or any illegal, fraudulent, deceptive, or unethical business conduct may result, at
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the Company's discretion, in one or more of the following disciplinary actions:
a) Issuance of a written warning or admonition.
b) Imposition of a fine, which may be imposed immediately or withheld from future
c) Reassignment of all or part of an IA's organization.
d) Suspension, which may result in termination or reinstatement with conditions or
e) Termination of the IA.
43. The Company reserves the right to terminate any IA at any time for cause when it is
determined that the IA has violated the provisions of the IA agreement, including the
provisions of these policies and procedures as they may be amended or the provisions of
applicable laws and standards of fair dealing. Such involuntary termination shall be made by
the Company at its discretion. Upon an involuntary termination, the Company shall notify the
IA by mail at the latest address listed with the Company for the IA. In the event of a
termination, the terminated IA agrees to immediately cease representing him/herself as an IA.
a) When a decision is made to terminate an IA, the Company will inform the IA in
writing that the IA is terminated immediately, effective as of the date of the written
notification. The termination notice will be sent by certified mail to the IA's address
on file with the Company.
b) The IA will have 15 days from the date of mailing of the certified letter in which to
appeal the termination in writing, and provide written response to the finding of
violations of Company agreement, policies and/or rules. The IA's appeal and/or
response correspondence must be received by the Company within 20 days of the
Company's termination letter. If the appeal is not received within the 20-day period,
the termination will be automatically deemed final.
c) If an IA files a timely appeal of termination, the Company will review and reconsider
the termination, consider any other appropriate action, and notify the IA of its
decision. The decision of the Company will be final and subject to no further review.
In the event the termination is not rescinded, the termination will be effective as of the
date of the Company's original termination notice.
45. All IAs have the right to sponsor others. In addition, every person has the ultimate right to
choose his/her own sponsor. If two IAs should claim to be the sponsors of the same new IA,
the Company shall regard the first application received by the corporate home office as
a) As a general rule, it is good practice to regard the first IA to meaningfully work with a
prospective IA as having first claim to sponsorship, but this is not necessarily
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controlling. Basic tenets of common sense and consideration should govern.
b) As a convenience to its IAs, the Company may provide various methods of registering
or informing the Company of newly sponsored IAs, including online internet
registration, telephone registration and facsimile registration. Until such time as the
Company receives an application, either as hard copy or by facsimile, containing all
appropriate information, as well as the signature of the proposed new IA, the
Company will only consider the internet, telephone or facsimile registration in the
category of "intended" recognition of sponsor. Thus, although the Company is
attempting to create some convenience for its sponsoring IAs, it is the responsibility of
the sponsoring IA to cause delivery to the Company of a completed and signed IA
agreement if the sponsor is to expect formal recognition as the official sponsoring IA.
c) There is no "magic" involved in the Company or in any business. Those who sponsor
widely but who do not help new IAs develop their business meet with limited success.
Therefore, a responsibility of sponsorship is to work with new IAs, helping them learn
the business and encouraging them during the critical early months.
d) Sponsors are not required to carry inventory of products or sales aids for new IAs.
When tangible product is involved, IAs who do so, however, find building a major
sales organization much easier because of the decreased response time in meeting a
new IA's needs.
e) When soliciting a prospective IA to join the Company’s network program, the IA
must clearly explain the following:
(1) Products: type, performance and quality of each product.
(2) Compensation plan.
(3) Policies and Procedures.
(4) IAs rights and duties.
(5) Other important items that will affect the judgment of the prospective IA.
46. Transfer of Sponsorship. Transfer is rarely permitted and is actively discouraged. Maintaining
the integrity of sponsorship is absolutely mandatory for the success of the overall organization.
a) Transfers will generally be approved in three (3) circumstances only:
(1) In the case of unethical sponsoring by the original sponsor. In such cases, the
Company will be the final authority.
(2) With the written approval of the immediate five (5) upline sponsors.
(3) Resigning from the Company entirely and waiting six (6) months to reapply
under the new sponsor.
b) In cases of unethical sponsoring, the individual may be transferred with any downlines
intact; in all other events, the individual alone is transferred without any downline IAs
being removed from the original line of sponsorship.
47. To be eligible for monthly override commissions and bonuses, the IA must comply with:
a) Supervisory responsibility requirements as outlined herein.
b) 70% rule on resale of wholesale product ordered, and
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c) Retail sales rule requiring sales to at least ___10__ non-participant retail customers per
month. The requirement that his/her downline has retailed product which has been
purchased at wholesale.
48. The Company encourages each IA to keep accurate sales records. The program is based upon
retail sales to the ultimate consumers; therefore, all forms of stockpiling or pyramiding are
prohibited. Products and services are offered to IAs only for personal consumption and for
resale to consumers.
49. See specific addenda to IA agreement for specific states as to statutory purchasing
limitations, buyback rules and other restrictions, disclosures and additional IA rights and
responsibilities. In any state with a business opportunity statute, required expenditures
during the first six months shall not exceed the statutory amount that initiates applicability of
the state business opportunity statute.
50. Income Claims. No income claims, income projections nor income representations may be
made to prospective IAs. Obviously, any false, deceptive or misleading claims regarding the
opportunity or product\service are prohibited. In their enthusiasm, IAs are occasionally
tempted to represent hypothetical income figures based upon the inherent power of network
marketing as actual income projections. This is counter-productive, since new IAs may be
quickly disappointed if their results are not as extensive or as rapid as a hypothetical model
would suggest. The Company believes firmly that the income potential is great enough to be
highly attractive in reality without resorting to artificial and unrealistic projections.
51. Representation of Status. In all cases, any reference the IA makes to him/herself must
clearly set forth the IA's independent status. For example, if the IA has a business
telephone, the telephone may not be listed under the Company's name or in any other
manner which does not disclose the independent contractor status of the IA.
52. Tax Reporting Applicable to Non-U.S. Citizen/Residents. If the IA is a non-U.S.
citizen/resident, then he/she hereby confirms that he/she is not a citizen or resident of
the United States, and is obliged to inform the Company of this status. The IA agrees that, if
the IA engages in any activities related to the Company while physically present in the United
States, the IA will (1) inform the Company about such activities, (2) submit a completed
IRS Form 8233* to the Company if requested by the Company, completed as directed by
the Company, for the year in which such activities occur and for each year thereafter, and
(3) inform the Company of the aggregate dollar amount of the sales of the IA or the IA’s
down line that, as reasonably determined by the IA, are attributable to activities that the IA
performed while physically present in the United States (including an explanation of how
the IA calculated the amount). The IA understands that, if the IA engages in any such
activities in any year, the Company may be required to (1) withhold a portion of each
payment to the IA in that year and each subsequent year and (2) report a portion of each
payment to the IA to the IRS on IRS Form 1042 and report the same to the IA on IRS Form
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*IRS Form 8233 is applicable for distributors in certain countries that are parties to a
U.S. tax treaty.
53. Judgment and Tax Liens. The Company will comply fully with any court order or
instruction/demand by any government taxing authorities within the United States and
Canada that orders, instructs or demands the withholding of an IA’s earnings from his/her
IA position with the Company.
54. Subpoenas Duces Tecum (Demands for Records). Assuming proper jurisdiction, the
Company will comply with all subpoenas duces tecum demanding financial compensation
records of an IA in his/her capacity as an independent contractor with the Company.
55. Requests for Records. The Company will comply fully with all requests for records
accompanied by a properly prepared and signed authorization by the person whose records
are being sought. The Company will comply fully with all requests for records by
government agencies with the authority to request such records and accompanied by the
requisite legal documentation.
56. Newspaper and Online Advertisements. Some IAs use classified advertising in the newspapers
or online, such as Craig’s List, to find prospects. The following rules apply:
• No advertisement may imply that a "job" or "position" is available.
• No specific income can be promised.
• Advertisements must contain no misleading facts or distortions of the Company
opportunity or product line.
57. Business Cards and Stationery. Any printed materials, including business cards and stationery,
must be approved by the Company in advance. Criteria for approving these materials will
include a judgment regarding the quality of the materials as well as properly setting forth the
independent status of the IA.
58. Telemarketing Techniques. The Federal Trade Commission and the Federal
Communications Commission each have laws that restrict telemarketing practices. Both
federal agencies (as well as a number of states) have "do not call" regulations as part of their
telemarketing laws. Although the Company does not consider IAs to be "telemarketers" in
the traditional sense of the word, these government regulations broadly define the term
"telemarketer" and "telemarketing" so that your inadvertent action of calling someone whose
telephone number is listed on the federal "do not call" registry could cause you to violate the
law. Moreover, these regulations must not be taken lightly, as they carry significant
Therefore, IAs must not engage in telemarketing in the operation of their Company
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businesses. The term "telemarketing" means the placing of one or more telephone calls to
an individual or entity to induce the purchase of a Company product or service, or to recruit
them for the Company opportunity. "Cold calls" made to prospective customers or IAs that
promote either Company products or services or the Company opportunity constitute
telemarketing and are prohibited. However, a telephone call(s) placed to a prospective
customer or IA (a "prospect") is permissible under the following situations:
a) You may call family members, personal friends, and acquaintances. An
"acquaintance" is someone with whom you have at least a recent first-hand
relationship within the preceding three (3) months. Bear in mind, however, that if
you make a habit of "card collecting" with everyone you meet and subsequently
calling them, the FTC may consider this a form of telemarketing that is not subject
to this exemption. Thus, if you engage in calling "acquaintances," you must make
such calls on an occasional basis only and not make this a routine practice.
b) The prospect’s personal inquiry or application regarding a product or service offered
by the IA, within the three (3) months immediately preceding the date of such a
c) If the IA has an established business relationship with the prospect. An "established
business relationship" is a relationship between an IA and a prospect based on the
prospect’s purchase, rental or lease of goods or services from the IA, or a financial
transaction between the prospect and the IA within the eighteen (18) months
immediately preceding the date of a telephone call to induce the prospect’s purchase
of a product or service.
d) If the IA receives written and signed permission from the prospect authorizing the
IA to call. The authorization must specify the telephone number(s) which the IA is
authorized to call.
e) In addition, IAs shall not use automatic telephone dialing systems relative to the
operation of their Company businesses. The term "automatic telephone dialing
system" means equipment which has the capacity to (a) store or produce telephone
numbers to be called, using a random or sequential number generator, and (b) to
dial such numbers.
59. Press Inquiries. Any inquiries by the media are to be referred immediately to the Company.
This policy is to assure accuracy and consistent public image.
60. Social Networking. If done correctly and in compliance with Company policies, social
networking may be useful in driving traffic to the official Company website and to Company
authorized personal replicated websites of IAs. The following rules and guidelines, regarding
social networking, are applicable:
a) The Company encourages IAs to join online forums, discussion groups, blogs, and
other forms of Internet communication for the purpose of communicating the
benefits of Company products and opportunity. Internet social networking is similar
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to telephoning, emailing, and other technology-assisted communication: it is not a
violation so long as it complies with the general policies and procedures governing
claims and contacting. Social networks include such sites as Facebook, LinkedIn,
Twitter and so on. Additionally, there are social networks of like-minded persons.
You may find social networks by doing a Google search using varying topics.
b) You must comply with the rules associated with websites and networks. For
instance, some sites prohibit the marketing of financial opportunity or the selling of
products. On such sites, you may instead choose to share your testimonial of
benefits from the technology of the Company; or you may want to talk about how
your life is improving. When others in the network hear your testimonial, they will
naturally inquire ... and that is the opportunity to send them to your authorized
c) Upon notifying the Company Compliance Department via email for review, you may
publish YouTube, Twitter and other communications. You must supply for content
review a link to the material you have posted. In the event your material is found to
be non-complying, you will be required to remove it within 24 hours.
d) If you are on Facebook or other social networking sites, join our "Fans" or
comparable pages. Here are some guidelines for you to follow as you use Facebook,
or other social networking sites, to grow your business online.
1. Positive Steps to Help Your Business:
• Post as much as you like to your wall.
• Comment as much as you like on your photos and links.
• Post as many links on your page.
2. Activities to Avoid:
• Do not send more than the allowed friend invites per day or
your account may be deactivated.
• Do not post anything to someone’s wall about the Company if
they have asked you to stop.
• Do not send emails with links to anyone you do not know
unless they have asked for the link.
• Do not post more than the allowed times per day to anyone
else’s walls, as deactivation may occur.
An IA must treat Facebook or any other online forum just like real life but in the virtual
space. Your property is your page while other people’s pages are their property; and this
"ownership" must be respected as if it were the real property of your neighbor. This simple
approach will keep you out of trouble with social networking sites and help us maintain the
integrity of the Company.
61. Internet Search Engine Optimization.
a) IAs may use, reference, or incorporate the Company names and trademarks in
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approved Internet advertising.
b) When participating in chat rooms and other social media, Company IAs may use
approved Company language (as represented in the brochures, promotional and
training materials of the Company and on the Company website) for the purpose of
discussing the Company products and opportunity.
c) IAs may use the language of approved Company literature for Internet advertising.
Company trademarks, trade names, or product names, or any variations thereof, may
not be used in search engines.
d) IAs may communicate the benefits of Company products on the Internet and on
search engines in appropriate categories.
e) IAs may not use language that is sexually explicit, threatening, pornographic, violent
or otherwise prohibited.
f) In no way should any independent website or link give the impression of being the
official website of the Company, rather than that of a Company IA. All Internet
advertising must clearly report that the ad is placed by an "IA" of the Company.
g) IAs may use words from approved Company advertising as "key words" for the
purpose of having communications found by search engines.
h) With the exception of the IA’s authorized hosted Company website, the use of the
Company name within a URL address/domain name, directory, file name, e-mail
address, official title for a social media account, or any derivative thereof, is not
permitted (by way of example, but not limited to the varying derivatives of the name
of the Company that use the Company name in the URL or domain name.
Company IAs may not use any domain name or email address that includes any
reference, whether abbreviated or not, to the Company name, products or services,
except in connection with the Company IA’s authorized replicated Company
i) Company IAs may not publish, post, or distribute any material on their websites or
in conversation or postings on the Internet, including blogs and social networking in
connection with the Company that is defamatory, libelous, disparaging, threatening,
offensive, harassing, abusive, obscene, pornographic, in violation of applicable law or
that inhibits others from enjoying the Company’s main website or the Company IAs’
j) Determination of whether a link is objectionable is solely at the discretion of the
k) IAs may not use tactics such as "cloaking" or other deceptive means on the IAs’ web
pages (For example: Cloaking in Google terms means designing a website so that search engines
see one thing and visitors see another.)
l) As a practical matter, Company IAs should make sure that any advertising through
digital media, such as the Internet and email, is fully compliant with Company
policies and procedures, Internet Compliance Department and existing laws and
m) Company IAs may not sell or advertise products over the Internet through
independently designed shopping carts or websites that use the names, logos,
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product or income testimonials, compensation plan or product description(s) of the
Company. IAs may send "general mailings" only to IAs in their downline
organizations and their direct upline enrolls. Any other bulk use of email is
prohibited by the Company and will result in immediate discipline which may result
in termination of IA rights and benefits and the loss of IA rights, including sales
organizations and compensation. Various kinds of prohibited emails – either bulk or
individual – include, but are not limited to the following:
(1) Totally Unsolicited or Blind Mass Email. Many "lists" that can be
purchased for distribution over the Internet have been illicitly compiled and
result in completely unsolicited information being sent to uninterested
parties. Since the expense is so low to distribute to these lists, they are even
more prevalent than bulk-mailings through traditional channels. Any use of
a list not specifically approved by the Company or compiled from a
legitimate genealogical listing of the emailer’s downline organization is
subject to immediate discipline.
(2) Hidden Approval Mass Email. Sites that garner approval by having hidden,
discreet or non-prominent "buttons" that are selected by default rather than
choice are illegal. For instance, if it is necessary to de-select approval to keep
from being added to a list (rather than requesting to be added), the resulting
list is illegal. Many supposedly "approved lists" have in fact been gathered
illicitly through this means.
(3) Third Party Approval for Mass Email. Companies that gather approval from
inquiries, then sell the lists to third parties where the person giving approval
is not informed that a third party will contact them, compile illegal lists.
These companies frequently distribute to many third parties who "bury" the
user with many emails.
(4) Legal and Ethical Email Communication. Email is by its nature personal
and mutual: An appropriate Company email is a communication in which
both parties are interested. Rather than requiring denial to terminate ("If you
want your name removed from this list ..."), it requires consent to initiate.
Any email communication which violates this premise is potentially illegal
and subjects the author to disciplinary review.
(5) Specifically Illegal Practices: False Reply-To Address. Any attempt to
disguise the identity of the emailer will be taken as evidence for the intent of
fraud and subject the sender to immediate discipline.
(6) Linking. No links may be made from an IA website, except as provided or
authorized by the Company. Authorized links include:
• Links made to a Company IA website for the purpose of Company
communication, so long as such communication does not violate the
terms and conditions of this agreement and such agreements as a
Company IA has with the Company.
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• Links from blogs and social networking sites joined for the purpose
of networking, marketing, sponsoring, and selling the Company
products. The trademarks, names, and identities of the Company are
for the exclusive use and licensing of the Company. The purpose of
the Company licensing of IA sites is to supervise and control the
content by which Company products and opportunity are marketed.
Any effort to circumvent this authorization and supervision will be
regarded as a violation of the rules and regulations and subject to
immediate discipline, and social network and/or participating in the
conversations of blogs must conform with these standards.
n) Lawful use of the Internet. The Company supports all laws and regulations
regarding use of the Internet, the Worldwide Web, and all other communication
technologies. Any person associated with the Company program found in violation
of said rules and regulations, including, but not limited to spamming (unsolicited
bulk contact using the Internet), etc., is subject to immediate discipline.
o) Internet Banner Advertising, etc. Banner advertising is bound by the same policies
and procedures affecting other forms of advertising and must conform to general
policies and procedures.
62. Federal and state regulatory agencies rarely approve or endorse direct selling programs.
Therefore, IAs may not represent that the Company's pro