Tuesday, August 14, 2007

QUIXTAR: Stacking vs. Depth-Building

Original Source

Stacking vs. Depth-Building
Tuesday, August 14, 2007 by Todd Krause
Category: Transparency, Rules, Quixtar Philosophy
Lots of people have been posting comments seeking our explanations regarding “Stacking” vs. “Depth-Building.” Also, there have been questions about Quixtar’s authorization of a customized SA4400 for Team. Let me try to shed some light on this.

The Quixtar IBO Compensation Plan is a multilevel plan – people make money from selling product personally and from the sales of product by those they sponsor. We don’t dictate how any IBO builds their business in terms of width or depth. IBOs are free to choose their own organizational structure – provided it is within acceptable business practices.

Depth-building has long been part of the business for those who wish to build a large organization, and the IBO Compensation Plan is structured to reward sales volume from such a structure. On the other hand, “stacking” is unacceptable. Stacking is when an IBO doesn’t know their sponsor or did not agree to be sponsored by the IBO who is registered as their sponsor. Stacking often is accompanied by misrepresentations that distort the Quixtar IBO Compensation Plan. Stacking violates the IBO Rules of Conduct.

In the beginning, when Team represented to Quixtar that they were teaching acceptable depth-building, we authorized a customized SA4400 so that those participating in that methodology understood that they would be less profitable in the short to medium term. We thought it important to manage the expectations of prospective IBOs. It appears now, however, that the actual method taught by Team was beyond acceptable depth-building and amounted to stacking.

It is interesting to note Team’s decision to leave the Quixtar business came two weeks after Jim Payne, Quixtar Managing Director, sent a message to all Quixtar Platinums that the company would be investigating “stacking” allegations and penalizing those businesses found to be engaging in this practice. Check out Jim’s email below:

July 25, 2007

To Qualified Platinums and above:

One of the fundamental principles for achieving success with Quixtar is to build a knowledgeable and successful sales force that features, as its foundation, a personal relationship between each Independent Business Owner (IBO) and his or her sponsor. That relationship is the building block for every line of sponsorship and affects the potential awards and rewards obtained through the Quixtar IBO Compensation Plan.

It would be a serious violation of an IBO's contract and Quixtar Rules to circumvent this principle by manipulating the Plan through the practice of "stacking.” Stacking occurs when an upline IBO places a new IBO under another IBO in their Quixtar line of sponsorship without regard for whether the IBO knows and has a relationship with their frontline sponsor. Accordingly, stacking is deemed to take place when a new IBO doesn’t know their sponsor or doesn't agree with whom their registered sponsor is. In all such cases, stacking is a serious violation of Rule 4.25, the Plan Manipulation Rule (see below*). Moreover, our complaint history confirms that the absence of a relationship often is accompanied by high-risk representations that trigger pyramid and securities law issues.

Quixtar wishes to make sure that all leaders know and understand that “stacking” is not acceptable and to further communicate this to their downlines.

Please understand that not all depth-building is stacking. If prospective IBOs wish to align vertically and they know their sponsor and approve of the arrangement, it is acceptable. In such instances, however, Quixtar wants to make sure IBOs understand that this choice is optional, and that an IBO with only one leg will not be as profitable as an IBO with multiple legs. In fact, the concern over potential profitability is why Quixtar encourages the building of balanced businesses that include the retail sale of product to customers and sponsoring that results in both depth and width in the line of sponsorship.

To further deter and stop the practice of stacking, effective September 1, 2007, Quixtar will initiate the following policy:

POLICY - Effective September 1, 2007 whenever Quixtar becomes aware of (i) a new IBO that either does not know their sponsor or who sponsored someone they do not know or (ii) a new IBO that does not agree with whom their sponsor is, Quixtar will immediately flag that Platinum group and will begin an internal review of the situation which may include but not be limited to calling all new IBOs of the group after they register to ask them to verify their sponsor. As the Rules of Conduct hold qualified Platinums responsible for compliance within their personal groups, if the internal review reveals cases of stacking, Quixtar will take the following steps:

First Occurrence: Quixtar will place a freeze on all sponsoring within that Platinum’s group until all IBOs in that group receive training communication from Quixtar on acceptable sponsoring practices.

Second Occurrence: Quixtar will suspend the Platinum business for a minimum of 30 days, including forfeiture of bonuses.

Third Occurrence: Further action up to, and including, termination of the Platinum’s contract with Quixtar.

** As with all Quixtar enforcement actions, an IBO can appeal company action through the dispute resolution procedures described by the Rules of Conduct.**

Quixtar is extremely serious about prohibiting the practice of stacking.

Your assistance in ensuring that your group fully understands and abides by the rules against stacking is appreciated.

Thanks for your help with this.


Tom Morris said...

This is funny because:

Yes, Amway approved stacking and even wrote a custom SA 4400 for those promoting the stacking method.

Amway's approval letter

Copy of the custom SA 4400

AndrewNZachsDad said...

Thanks, Tom, for including those links. That customized document does not make any mention of those in each of the vertical legs needing to know their sponsors. I would have thought the Quixtar lawyers to have known their stuff better than that if it was such a big deal...