Max International Lawsuits - What Do They Mean For MLM?
Max International jumped into the health products pool with a big splash.
The company is embroiled in litigation that may have far reaching effects on the multi-level marketing (MLM) industry.
Let's take a look at the business and Max International lawsuits to see what the future may hold.
Background: Founded in 2007, Max International began by producing and marketing MaxGL, a patented supplement premised on antioxidant health benefits.
Additional products have been added to the line, including MaxWLX for weight loss and Max N-Fuse to build immune defenses.
Opportunity /Compensation: The Max International business opportunity offers the typical appeals for the independent entrepreneur.
The program is designed to reward newcomers quickly but,like all MLMs, requires building a downline for higher commissions and residual income.
The plan has 7 levels with matching bonuses, team commissions, car and travel bonuses.
Max is unusual as it offers consultants business insurance and affordable health and dental insurance.
Success requires tapping your warm market of friends, family and co-workers.
If you have enthusiasm for the product lines, sharing could come naturally for you.
Max International Lawsuits: (1) On February 17, 2010, Tripharma LLC ("Tripharma") sued Max International, LLC alleging false marketing and labeling of MaxWLX.
It also claimed that Max violated a supply agreement with Tripharma.
Max responded that the suit lacks merit.
This type of lawsuit is unfortunate but not ground breaking for MLM.
It falls within the norm of costly business litigation.
More concerning is the 2nd lawsuit: (2) On January 7, 2010, a U.
S.
District Court Judge entered an order enjoining Max from recruiting any former Melaleuca executives who are in the downlines of any current Max associate.
Max believes that Melaleuca is using lawsuit to bar its former consultant from choosing for whom they wish to work.
There is no question that freedom of choice, especially for work, is the American way.
Non-competition agreements, limit a person's ability to work within the same field, in a particular geographic area, upon termination of a current employment or business relationship.
Similar lawsuits abound for other MLM companies.
Most have settled out of court which is why there are no clear "bright line" guidelines today in the industry.
As a result, numerous issues remain unanswered:
What this means in actual practice is unknown.
Max International lawsuits and their results should make it an interesting year for MLM.
The company is embroiled in litigation that may have far reaching effects on the multi-level marketing (MLM) industry.
Let's take a look at the business and Max International lawsuits to see what the future may hold.
Background: Founded in 2007, Max International began by producing and marketing MaxGL, a patented supplement premised on antioxidant health benefits.
Additional products have been added to the line, including MaxWLX for weight loss and Max N-Fuse to build immune defenses.
Opportunity /Compensation: The Max International business opportunity offers the typical appeals for the independent entrepreneur.
The program is designed to reward newcomers quickly but,like all MLMs, requires building a downline for higher commissions and residual income.
The plan has 7 levels with matching bonuses, team commissions, car and travel bonuses.
Max is unusual as it offers consultants business insurance and affordable health and dental insurance.
Success requires tapping your warm market of friends, family and co-workers.
If you have enthusiasm for the product lines, sharing could come naturally for you.
Max International Lawsuits: (1) On February 17, 2010, Tripharma LLC ("Tripharma") sued Max International, LLC alleging false marketing and labeling of MaxWLX.
It also claimed that Max violated a supply agreement with Tripharma.
Max responded that the suit lacks merit.
This type of lawsuit is unfortunate but not ground breaking for MLM.
It falls within the norm of costly business litigation.
More concerning is the 2nd lawsuit: (2) On January 7, 2010, a U.
S.
District Court Judge entered an order enjoining Max from recruiting any former Melaleuca executives who are in the downlines of any current Max associate.
Max believes that Melaleuca is using lawsuit to bar its former consultant from choosing for whom they wish to work.
There is no question that freedom of choice, especially for work, is the American way.
Non-competition agreements, limit a person's ability to work within the same field, in a particular geographic area, upon termination of a current employment or business relationship.
Similar lawsuits abound for other MLM companies.
Most have settled out of court which is why there are no clear "bright line" guidelines today in the industry.
As a result, numerous issues remain unanswered:
- Is it right that if an upper tier exec leaves that their whole downline should follow?
- Should a company be able to sign a legally enforceable non-competition agreement with an upper level consultant or any consultant for that matter?
- What specific parameters are needed for such an agreement to be enforceable--reasonable time limits, geographic area?
- Will the status of employee versus independent contractor be the determining factor of whether non-compete agreements are enforceable?
- Are all MLM marketers independent contractors?
What this means in actual practice is unknown.
Max International lawsuits and their results should make it an interesting year for MLM.
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