Business Support Materials Arbitration Agreement

Below is the actual text of the BSMAA that every distributor must sign when he renews his distributorship. It addresses a number of important issues: 1) that the purchase of tools is optional, 2) that the tools are refundable, and 3) that all distributors are now bound by arbitration to settle their disputes. Since any new distributor must sign this agreement as well, I have posted it here so people can now read it BEFORE they consider joining the Amway business. Be sure to read the "agreement section" very carefully as it "affects [the] legal rights" of every distributor. Since distributors are not employees of the Amway Corporation, but "independent contractors," this agreement may or may not be legally binding. But, it has yet to be challenged in a court of law.

This agreement is produced by the upline and signed by each and every distributor. Unlike Amway's carbonized, multi-copy sign-up form found in the business kit, there is only one copy to the BSMAA. And once signed, only the upline has the copy.

(Some of the more important statements have been colored red.)

Business Support Materials Arbitration Agreement ("BSMAA")

Please read carefully the Disclosures and Arbitration Agreement that follows before signing. The Disclosures section contains important information about buying or selling independently produced Business Support Materials, and the Agreement section affects your legal rights.

YOU DO NOT HAVE TO BUY BUSINESS SUPPORT MATERIALS TO BE AN AMWAY DISTRIBUTOR

THIS AGREEMENT SHOULD BE SIGNED BY EACH AMWAY DISTRIBUTOR WHO CHOOSES TO PURCHASE INDEPENDENTLY PRODUCED BUSINESS SUPPORT MATERIALS FROM, OR SELL SUCH MATERIALS TO, ANOTHER AMWAY DISTRIBUTOR. THE AGREEMENT DOES NOT DETERMINE PRICE, QUANTITY, OR SELECTION- THOSE ARE INDIVIDUAL DECISIONS- BUT IT OBLIGATES BUYERS AND SELLERS TO OBEY AMWAY'S BUSINESS SUPPORT MATERIALS RULE, AND IT PROVIDES FOR MEDIATION AND COMPULSORY BINDING ARBITRATION OF ANY DISPUTES.

DISCLOSURES ABOUT INDEPENDENTLY PRODUCED BUSINESS SUPPORT MATERIALS

Under the Amway Sales and Marketing Plan, all Amway distributors are responsible for training and motivating those whom they sponsor. To assist you with your own training and motivation, as well as training and motivating others, some distributors produce and distribute Business Support Materials and support services independently of Amway Corporation ("independently produced Business Support Materials or Business Support Materials"). These may include books, magazines, and other printed materials, audio tapes, video tapes, rallies, meetings, and educational seminars. While these Business Support Materials are not required by or produced by Amway Corporation, you may decide that they can play a useful role in building a profitable Amway business. However, you should carefully consider each of the following factors before purchasing any Business Support Materials.

Limiting Expenditures. You should carefully monitor your purchases of Business Support Materials so that such expenditures do not become excessive. The cost of purchasing tapes and books and the expenses incurred in attending seminars, rallies, and other meetings must be justified by their benefit to your Amway business. You should only purchase items or attend functions that provide information helpful to you in merchandising AMWAY products and sponsoring others to do the same.
Limiting time commitments. You must decide how much time (if any) you want to spend attending motivational and training functions and listening to tapes. You should carefully consider the impact of this time on your occupation, your other Amway-related activities, and your family.
Compliance with Amway's Rules of Conduct The Rules of Conduct for Amway Distributors contain important provisions affecting the purchase, sale, and use of Business Support Materials. These Rules are contained in the Amway Business Compendium which is found in your AMWAY Business Kit. Before purchasing Business Support Materials or furnishing them to others, you should be thoroughly familiar with these rules and guidelines. Business Support Materials not published by Amway Corporation are not substitutes for official Amway literature or sales and training aids.
PURCHASE OF BUSINESS SUPPORT MATERIALS AND SERVICES IS STRICTLY VOLUNTARY. NO ONE MAY REQUIRE, OR IN ANY WAY PRESSURE YOU TO BUY OR USE SUCH ITEMS.
Amway does not require you to buy Business Support Materials, and neither can anyone else. You should purchase Business Support Materials only if you decide they assist you in building a more successful and profitable Amway business. If you sponsor others, you have an obligation to train and motivate them whether or not they choose to buy Business Support Materials. All Distributors are free to change their volume of purchases of such items, to cancel standing orders, or to cease such purchases at any time without threats, pressure, or retaliation.
Cross-line selling. You are free to buy or obtain Business Support Materials for your own use, or for resale, from any supplier you choose. Amway's rules prohibit distributors from soliciting sales of independently produced products and services, including Business Support Materials, to Amway distributors the seller does not personally sponsor.
Offered independently of Amway Corporation. Independently produced Business Support Materials are offered independently of Amway Corporation and have not been endorsed or approved by Amway Corporation. Business Support Materials should be clearly labeled to show they do not come from Amway. Distributors who choose to sell Business Support Materials must make it clear to their customers that such materials are produced and sold independently of Amway.
Profit to sellers. Some distributors who sell Business Support Materials may purchase these items at wholesale prices and resell them for a profit, and speakers at meetings and functions may be paid for their appearance.
Refund Policies. Independently produced Business Support Materials are not covered by the Amway Corporation Satisfaction Guarantee or Buy-Back Rule. However, Amway's Rules of Conduct and this Agreement require the seller of Business Support Materials, upon request, to buy back Business Support Material on commercially reasonable terms for a period of 180 days from the date of purchase. Items shall be returned to the Distributor from whom they were purchased, or other designated party, with proof of purchase. For seminars, rallies, and other meetings, the selling distributor is obligated to repurchase tickets on a satisfaction guaranteed basis purchased for the buyer's personal use for a period of 30 days after the event. Such buy-back applies only to that portion of the cost of the affair related to the meeting, i.e. not to the cost of travel, meals, or hotel accommodations. Find out about this policy before you decide to buy.
No guarantee of results. Your success as an independent Amway distributor depends on your own hard work. No one can promise or guarantee that the use of any specific method, approach, or sales aid will result in a more profitable Amway Distributorship or the achievement of any specified level of success in the Amway business. While I understand that some distributors may earn money from selling BSM, no one has made any promises as to my own profitability. No one can guarantee that the techniques, attitudes, or approaches suggested in the Business Support Materials will work for you, and you must never make any such claim in selling Business Support Materials to others.
Only items specifically authorized by Amway Corporation for use with prospects may be sold, loaned, shown, or given to a prospect. The Rules of Conduct for Amway Distributors, which are contractually binding on all Amway Distributors, prohibit the use of any recruiting literature (including audio and video tapes) not produced and authorized by Amway Corporation in any phase of the recruiting process.

AGREEMENT TO ARBITRATE DISPUTES

Disputes; Conciliation. The undersigned parties agree that if a dispute arises out of or relates to Business Support Materials, the claiming party shall give notice of the claim in writing to the other party or parties. The notice shall specify the basis for the claim and the amount claimed or relief sought. During a period of not less than 90 days after the written notice is received, the parties shall attempt to resolve the dispute amicably through direct discussions, and, if appropriate, using the Amway Conciliation and Enforcement Procedures, as set forth in the Rules of Conduct for Amway distributors.

Binding arbitration. At least 90 days after the notice referred to in the paragraph above is received, or after the conclusion of the Amway conciliation process, whichever is later, any remaining controversy or claim, including any claim a party to this Agreement may make against any publisher, author, speaker, distributor, manufacturer, seller, reseller or marketer of Business Support Materials, or against Amway Corporation or any of its officers, directors, agents or employees, shall be settled by binding arbitration in accordance with the Amway Arbitration Rules contained in the Rules of Conduct for Amway Distributors, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Demand for arbitration shall be made within two years after the issue has arisen, but in no event after the date when the initiation of legal proceedings would have been barred by the applicable statute of limitations. The parties acknowledge that this Agreement evidences a transaction involving interstate commerce. The United States Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant to the arbitration provisions.

Confidentiality. Once a notice of claim has been sent, the dispute resolution process, including conciliation and any binding arbitration, shall remain confidential. No party to the claim shall disclose to any person not directly involved in the conciliation or arbitration process (a) the substance of, or basis for, the claim; (b) the content of the testimony or other evidence presented at an arbitration hearing or obtained through discovery; or (c) the terms or amount of any arbitration award.

I HAVE CAREFULLY READ AND UNDERSTAND THE BUSINESS SUPPORT MATERIALS ARBITRATION AGREEMENT, AND IN EXCHANGE FOR THE RIGHT AS AN INDEPENDENT AMWAY DISTRIBUTOR TO BUY, SELL, DISTRIBUTE, RECEIVE, AND USE BUSINESS SUPPORT MATERIALS, AGREE TO ABIDE AND BE BOUND BY THE TERMS SET FORTH HEREIN AND TO ARBITRATE ANY DISPUTES UNDER THE AMWAY ARBITRATION RULES.

What does this mean for the average distributor?

From the Amway Business Network:

Through the partnering of Amway and the ADA Board, a rule was adopted that requires all disputes relating to an Amway business to be resolved through the conciliation and arbitration process. Amway believes that this process is fair and efficient, and provides a superior alternative to litigation.

In spite of clear obligations to follow the arbitration process of Amway and the ADA, several distributors in the Houston area filed a lawsuit against several other distributors upline, downline and crossline from them, as well as against Amway and the ADA. (This has sometimes been referred to as the Morrison case.)

On Oct. 15 [1998], the court agreed with Amway, closed the cases and sent the parties to arbitration to resolve their disputes as required by their distributorship agreements. Amway believes this is a victory for all Amway distributors. It confirms that the conciliation and arbitration procedures spelled out in the Amway Rules of Conduct are the best and the only way for distributors to work out any disagreements quickly, fairly and inexpensively.

This article leads a person to wonder: are distributors surrendering their legal rights, or is this Agreement really a "fair...efficient...superior alternative to litigation?" And is this court's ruling a "victory for all Amway distributors" or does it just serve to give more power to Amway and the AMO's?

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