|IS MARY KAY A "PYRAMID BUSINESS?|
|I got a question recently regarding whether Mary Kay is a "pyramid business" or not and to explain that in a little more detail. So, I'm providing the information below for your own information based on what I found on www.marykayintouch.comand the Direct Selling Association's website of which Mary Kay is a member (http://www.dsa.org/). |
First and foremost, according to the government, pyramid businesses are illegal.
A pyramid business is one in which compensation is based primarily on recruiting individuals, not on the legitimate sale of product. Pyramid style businesses are not allowed to be part of the Direct Selling Association which is a national trade association of companies that manufacture and distribute goods and services that are sold directly to consumers through an independent field sales force.
Mary Kay is actually a leader in this association and helped create its Code of Ethics. Part of the Code of Ethics is that member companies pledge to buy back inventory within twelve (12) months from the salesperson's date of purchase at not less than 90 percent of the original net cost.
Since pyramid style business are not bound by this, most likely they will not repurchase inventory from their sales force.
Other reasons why Mary Kay is not a pyramid style business include:
We have only one wholesale sale (from Mary Kay to the consultant). There are no levels of wholesalers where the products pass along at varying levels of discounts before the final sale is made. Everyone buys at the same discount level, regardless of their status along the career path.
-We don't recruit people to buy products from us. We always sell products directly to customers. Ultimately, as consultants or directors, we all purchase product directly from Mary Kay at the wholesale price.
-No status along the career path can be purchased in any way. You must earn the position not buy it.
-Any commissions are paid directly to consultants and directors.
I hope this helps clarify. FYI-I found this information in the Legal Ease Guidelines on www.marykayintouch.com, under Education-->Product Education-->Ingredients and Safety->>Just the FAQs on www.marykayintouch.com, and at www.dsa.org/.
Hope you had a great day!