Business Development Agreements are BAD for MLM

Business Development Agreements (BDAs) are in the spotlight again thanks to litigation between Mark & Tammy Smith and Nerium International.  If you’ve been on the receiving end of a special deal – what I’m about to say is going to piss you off. My hope is that you’ll take my points into consideration if you’re offered another deal in the future.
 
For those of you who have never heard of a BDA, this is the politically correct term for back door deal and they’re typically offered to big leaders to lure them away from other companies Instead of paying a person what they’d normally make under the compensation plan, they get a far better deal.

 

Let’s start with the argument for these deals.

If you talk to the CEO of a network marketing company offering these “performance agreements”, they’ll tell you that these kinds of deals are necessary because it takes a lot of time & money to get a business off the ground.  And they’re right.  A person that is brand new to MLM isn’t going to have the skills or experience to create a massive amount of momentum and someone with tons of experience isn’t going to be excited about starting at the bottom and working their way up.

Think about this for a moment: Suppose you were making $100,000 every month and someone from another company approached you about joining their brand new startup.  What would it take for you to walk away and start over? Over the years, I’ve seen people offered special deals that include guaranteed monthly income, placement above existing teams, travel budgets, cars, jewelry, percentages of the company – you name it.

The leaders on the receiving ends of these deals don’t want anyone else to know they’ve gotten one because they want to create the illusion that they built their business just like everyone else.  Nothing could be further from the truth.  I’ve seen them flaunting their houses, cars and jewels in social media posts without ever disclosing the fact that they got preferential treatment.

This is where the real problem comes in.

The people who aren’t privy to the back room deals (most don’t even know they exist) are given the false impression that if they work really hard, they can live like the people at the top in a year or two.  Yes, that can be true.  But the reality is – leaders who get these deals have been in the industry for years and they’ve built substantial networks in the past.  When people aren’t able to make the huge money they see the “big guys” making – they give up and bad mouth the industry or they go to another company looking for a “ground floor opportunity” believing the real problem was that they got in too late.

The verdict:

There’s a case to be made for special deals with top leaders.  People bringing exceptional skills and talent need to be compensated fairly. I’ll get back to that in a moment.

Whether we like it or not – our industry is constantly under the microscope.  In recent years, the FTC has gone after companies for over-promising and under delivering.  The perception many have is that only the people at the very top of a network marketing company make money.  If we’re all being honest with one another – that perception isn’t far off.  When a back room deal becomes public, it starts looking like MLM business opportunities are rigged against the “average” person.  Perception is reality – right?

I remember hearing the phrase “We sell hope, not soap”.  Yes, people need to feel the hope they can achieve more.  But if that hope doesn’t become reality for more people, it creates piranhas in the industry.  A single industry critic is no big deal.  But when those critics number in the millions – it’s a problem that we need to look at.

Ideally – companies would stop offering special deals to a select few and instead offer limited-time incentives to the entire field.  When more “regular” people succeed, it elevates and legitimizes the entire industry.  When Eric Worre says “Network marketing isn’t perfect, but it’s better” – I want that to be the prevailing perception.

If a company decides they need to make special deals – they need to be FULLY disclosed.  If a leader comes out and says “The company is paying me a salary for 6 months to help it get off the ground” – people will respect that.  The importance of transparency can’t be over-emphasized.  When people are given all of the facts about a business opportunity up-front, it builds trust and credibility.  When they find out everything they believed was a lie – it destroys it.

1 month ago

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