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.)
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.
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.
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.
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 , 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?