When Leaders Leave and Join Competitor MLM Companies

by louabbott on February 16, 2011

Should getting paid to leave and join another company be “illegal?”
Are some “whores?”

Fa0uzi Dagnistani, from Melbourne, Australia sent in this commentary that I thought might be worth posting.  He thinks this is a “huge concern” of our profession today.  Thanks, Faouzi…

Hi Lou,

I am writing to you because you are a trusted and well-known observer in the MLM profession.

I believe we have a huge concern in the profession today that till now nobody has really faced head-on. And I’m not sure why.

While many have alluded to this issue and hinted that it must be controlled in some manner, nobody has really come out and said it needs to be investigated. Of course, I am talking about the ‘buying’ of top income earners in other companies in order to grow another. Personally I believe it has become a farce and huge blight on the MLM industry as a whole.

Consider this: Should the ‘purchasing’ of top income earners by another company be made ‘illegal’ in MLM? Should financial inducement to join another organization be disallowed when leaders begin doing their shopping around?

Because if something is not done about it soon, this profession, with all the ground it has made in the last few years is about to take one huge backward step…and possibly never recover.

This is the very scenario that is being played more and more often today; a company that is struggling decides to ‘purchase’ a proven networker to help them grow. They then go on to offer other deals to other networker’s in different companies, with the belief that buying leadership rather than growing it within is a faster road to success. Some leaders are not ‘paid’ but offered ‘bridging income’ and help with travel expenses to help while building their business. This company goes on to grow so fast that other company owners begin to wonder whether this is a better approach to building a business than the other method…having a great product, great culture, and growing leaders from within the organization who enter on an equal playing field.

Eventually, some distributors leave our wonder company when they realize that there are a lot of ‘leaders’ coming in to the company who aren’t exactly there because they found it was the best one to go; it was just offering the best deal. The company eventually takes a slight hit in volume, begins to wonder what they need to do to get back and firing, so decide to get back in the ‘purchasing’ game. It worked once it will work again, right?

So let’s see what has happened here to Joe & Jane Average, the very people we are trying to entice to MLM. They see a wonderful opportunity to join, but soon find out that the ‘leaders’ on stage are there on special deals. They soon find out that their ‘upline’ who promised to be there supporting them all the way, are sniffing around other companies, wondering where to shift their team. They then find out that their legendary upline have moved somewhere else, because they apparently discovered “issues” with the old company that they had previously never been aware of.

Now let me ask you all this…in an industry that holds itself together through integrity, trust, and building relationships, for how much longer do you think these ‘leaders’ can continue this behavior?

Which so-called leader will you be able to trust, knowing that at the drop of a hat, the person on stage who has assured everyone they’re not going anywhere is later signing a new contract with the latest supposed hot deal?

In a profession where everyone spouts “it’s all about the relationships,” we have more and more leaders willing to walk away from their MLM “family” in the hope they can rise up the ladder faster somewhere else and drive a newer and better car.

Can you see what this is doing to those ‘outside the industry looking in’? What happens when they Google the MLM company they are looking to join and discover a whole host of infighting, deal-making and bad-mouthing going on? Is that really what they want to be a part of?

I know most of the so-called “MLM Leaders” who are doing the jumping won’t read or take notice of this because they’re not worried about the criticism or comments made about them. Unfortunately, they’re more often sitting with their lawyers, nutting out the next deal that allows them to look like big stars in one company after another. Where they’ll stand from the stage and announce “this is the LAST company we’ll ever be part of!”

Here’s what I know. At the end of the night, you and I have a bed to lay in and a pillow to put our heads on. And when you hear the words “I don’t know how they can sleep at night” I know that you don’t want that said about you, and I never, ever want that to be said about me.

With Passion,

Faouzi Daghistani
Melbourne, Australia

Faouzi makes some very good points. In an industry where the most important issue we face is our credibility, having leaders join companies for any other reason than it being the best place for their downline reps to find the best chance of long-term success is clearly bad for our reputation.

That said, I can’t say that I think making it “illegal” would be either practical, wise, or effective. I actually don’t mind if the whole truth were disclosed.  If the deals were made transparent rather than done behind closed doors and adamantly denied.

Fortunately, in this information age with the proliferation of social networking, very little stays a secret very long – particularly in network marketing!

By way of transparency, Fauzi is with Agel, a company that has seen more than one high-level leader leave with rumors that they were “bought.” So he is sensitive to the issue for sure. But of course, it happens all the time that leaders leave.

Here’s a snippet of what Randy Gage posted on this subject a couple of days ago:

Especially in Network Marketing, people switch companies all the time.  Frankly there are a lot of whores who shop for deals and there will always be desperate companies willing to make them.  Others aren’t willing to do the work and think the grass is greener on the other side of the fence.  And sometimes people just need a change of scenery, don’t like their sponsor, or just feel the company they’re with isn’t a good fit for them.

Yes, people do switch companies all the time. I am surprised, however, that Randy would put “whores who shop for deals” first on his list.

He also leaves off some very good reasons that an associate with integrity might feel compelled to leave:

  • The company changes the comp plan so significantly that it becomes much more difficult for the leader or anyone in his/her downline to make money
  • The company breaks its integrity in how it does business or in maintaining the same quality of product
  • It becomes clear that the company will not survive
  • Change of corporate ownership or top management that looks unpromising
  • The company is sold
  • The company ruins its reputation by some act or history of acts or policies

I have felt compelled to leave behind two companies where I built significant businesses.  In each case, it was for a combination of some of the above reasons.  In each case, it was a very difficult and painful thing to do. To maintain a good conscience, I felt I had to do it.

Interestingly, Melaleuca just settled a lawsuit against Max International for $1.2 Million  over this kind of issue.  So companies may wish to think about the practice of paying people to join – especially if they are expecting that leader to solicit their active downline or sideline leaders to come with them!

What is your experience?  Your thinking on this? Comment below.

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{ 7 comments… read them below or add one }

Viola Tam July 4, 2015 at 8:59 am Thumb up 0 Thumb down 0

Hi FaOuzi,

Thank you for sharing this interesting point about leaders moving to another company. I agree with you that there may be valid reasons why leaders may go. However, integrity is very important in this much blemished business model. There are lots of people looking for good leaders and a strong team to join. Why compromise the integrity by herding the old team?

Thanks for sharing your insights!

Viola Tam

Reply

James Kinney January 4, 2012 at 4:13 pm Thumb up 1 Thumb down 0

Network Marketing can and should be an honorable profession, but it will only happen when the leaders have integrity and conduct themselves with honesty.
It is unfortunate that there is always the greed factor that will continually be present.
I watched the binary movie and it presented some truth on how the binary program works, however there was something that was not included.
The flushing of money that happens when a distributor does not qualify (balance) both legs. The money that is in the power leg flushes up to the first qualifying distributor. If there is not a qualifying distributor it will flush up to the highest heavy hitter, or to the company. All a heavy hitter has to do to disqualify every one in the power leg is to enroll a new distributor into the bottom of the power leg a day or two before the qualifying date. This will cause disqualification up the entire leg.
Most of the distributors will sit and wonder how this happened while the company and the heavy hitters are robbing them of their money, and laughing all the way to the bank.
It may also be noted that some binary plans say the money will be sitting in the bank waiting for them to qualify. Stop and think of the interest they are drawing on the money, and the fact that very few will ever qualify!!!!

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Rasim Hadzic December 2, 2011 at 5:59 am Thumb up 0 Thumb down 0

Hi,

I am Mandura leader, and I personally think that it is wrong that leaders change companies like their underwear.

Only in my country, Vemma, MonaVie,Noni leaders, they all left their teams and join us. And all those people?

Reply

Debra August 26, 2011 at 9:49 pm Thumb up 0 Thumb down 0

Wow – I am so glad to see this topic being discussed! It needs to be discussed more often. I get so disgusted at seeing leaders s-w-i-n-g their downline from one company after another. Doing so without one of the valid reasons in the above listed bullet points is nothing more than operating from a cult mentality, and ultimately insulting to unsuspecting innocent distributors in their downline who follow them, having placed full, yet blind trust in them, as a leader. There is a huge responsibility that comes with bringing people on board with you. You know what? If you want to be a good and ethical leader, support your people in the company you brought them into – even if you leave. If you decide you want to move on – then do it for crying out loud, but don’t take advantage of the relationships you built for your own financial gain. Have some ethics and go build a new downline in your new company. Thanks for putting it out there.

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Bob June 24, 2011 at 10:13 am Thumb up 0 Thumb down 0

Wow, this is completely wrong. I wasn’t even aware of this going on in the industry. Thanks for sharing!

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Victor Cardi April 11, 2011 at 1:32 pm Thumb up 0 Thumb down 0

Faouzi;
Way to hit the nail on the head!! I am in Mona Vie and believe in it with all my heart!! But I have noticed that a lot of my upliners have stopped or moved on to other companies!! That is so wrong!! if they believed it would work they have to take the good times with the bad……If everybody believed in their product and not just going from “DEAL TO DEAL” maybe MLM would be a better place…………

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Ken February 27, 2011 at 9:00 am Thumb up 1 Thumb down 0

A close cousin to this is the practice of giving “spots” in an organization to a perceived leader who comes along after the business has been built. The people who take a chance on a company when nobody else will are later “rewarded” by the insertion into their upline of big hitters. Often a fable is then crafted about how this big hitter has been involved behind the scenes the entire time, just waiting for a chance to pounce.

Besides the issues of ego and pride being affected (which can be incredibly damaging within the fragile ecosystem of a Network Marketing organization), you are faced with the very real problem of a power recruiter simultaneously making money from your efforts while competing aggressively against you. Because he/she had nothing to do with building the business, there is often no loyalty to the downline.

My feeling is that you have to come to some inner peace about situations like the one above or you will be consumed from within. Take care of the issues in front of you, within your sphere of influence, and you will grow yourself bigger than any perceived issues. It is only then that you gain a big enough voice to address such concerns.

There will always be people who cut corners. There will always be backroom deal-makers. Just ask yourself this if you ever grow big enough to be in a position to make these kind of deals: Will taking this action be fair (or perceived as fair) to the other leaders in my organization who have built my business? Will taking this action ultimately produce the greatest benefit for the greatest number of people in my group, or is this a self-centered, greed motivated action with only a few winners and a whole bunch of losers?

Ultimately, in my opinion, these types of deals are not duplicatable, and therefore cannot be the norm if you expect to have a stable, solid, long-lasting MLM business. When someone wants a spot, the best answer is, “Yes, I have a spot. It’s right beneath the last guy I put in. It’s the same way I started, and it has worked out well for me. If you are willing to listen, learn, and go to work, I will help you succeed.”

Reply

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