Melaleuca CEO Frank VanderSloot Denies to Lead a MLM Company

by Ted Nuyten on February 27, 2012

Frank Vandersloot CEO Melaleuca

Melaleuca CEO and founder Frank VanderSloot (Photo) is in the USA in the national spotlight (See under). Interesting in the discussion is that he denies to lead a MLM or Network Marketing company, and that is what many Melaleuca distributors also claim.

So, what is the definition of a MLM business model? 

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation. 

That is what Melaleuca is paying for to distributors….. (Second Photo). Welcome to the MLM family… there is nothing wrong about this great business model. "Ted Nuyten – proud MLM ambassador"

Frank VanderSloot about Melaleuca's Business Model: 

Melaleuca Compensation Plan"It’s unfortunate that someone would suggest that Melaleuca is something like Amway. It's not. We started Melaleuca 26 years ago to market environmentally responsible products and to provide a business opportunity for folks who weren't successful in climbing the corporate ladder and didn't inherit wealth from their parents. We try to be champions of the little guy. My father was a little guy. And I still see myself as a little guy.

Contrary to those who do not know us, our business model is nothing like Amway or Herbalife. I challenge anyone to find any similarity whatsoever. There is no investment of any kind unless you want to call a $29 membership fee an "investment." And anyone can get a refund on that by just asking.

We do offer a home-based business opportunity. But it is no "pyramid scheme." We have long been critical of the many MLM/pyramid schemes operating in this country. I agree with those who say that typical MLM companies destroy people’s finances. Most are designed to attract people to "invest" in large purchases with the promise of "getting rich" quickly by getting others to invest. The guy at the top always wins and the guy on the bottom always loses.

In Melaleuca's case there is no investment and no getting others to invest. We do pay commissions to those who have referred customers based on what those customers purchase. There is really no way to lose money on referring customers. And there's no way for customers to lose either when they're buying high-quality products at grocery store prices. Customers just order the products they use every month directly from the factory. We have hundreds of thousands of customers who buy from us each month. They don't ever resell anything. They don't invest in any inventory. There can be no pyramiding without some kind of investment. In 26 years, no one has ever complained that they lost money. It’s simply not possible.

Our business model works pretty well for most folks. We have already paid over $2.9 billion in commissions to households across the country. Our mission is to enhance lives by helping people reach their goals regardless of their beliefs, backgrounds, or affiliations. Last month we sent out almost 200,000 checks to American households alone. Members of those households tell us we are doing a pretty good job achieving that mission."

 

 

The Full Story

Melaleuca CEO Frank VanderSloot is in the national spotlight amidst accusations that he threatens journalists to make negative reports about him go away. The scrutiny comes alongside VanderSloot's role with the Mitt Romney campaign. He's co-chair of the GOP candidate's national finance committee and donated $1 million to the Romney Super-PAC. In an extensive article published last Friday, Salon.com charged the apparent billionaire with using legal tactics for years, to silence those who have criticized his business practices or characterized him as "anti-gay." VanderSloot denied a number of allegations and called it an attack by the liberal media in a nearly four-page statement on Tuesday.

MSNBC host Rachel Maddow spent five minutes of airtime on Monday night talking about VanderSloot, and re-capping Friday's controversial article.

"Mr. VanderSloot has involved himself in a number of political causes over the years, in what would seem to be a very high profile kind of way, but has taken a very aggressive stance toward anyone reporting on his public involvements," said Maddow. Salon.com's Glenn Greenwald said VanderSloot threatens "patently frivolous lawsuits," and in the last month alone, has forced journalists to take down critical articles. VanderSloot said Greenwald "quotes what others have wrongfully said about us and then taunts us to do something about the fact that he repeats it."

"Mr. VanderSloot is a public political figure," said independent journalist and blogger Jody May-Chang. "They're fair game … especially when you're talking about behaviors and actions and things done in public light that are well known." Some of VanderSloot's public actions under scrutiny, include: Running an alleged "pyramid" company, his wife's reported $100,000 donation to the Prop 8 campaign to ban gay marriage in California, and his alleged "outing" of a gay Idaho Falls reporter, which he denied.

"I have never spoken out against gays or against gay rights," said VanderSloot.

But some said money speaks louder than words. VanderSloot admitted he may have offended some by contributing to a group that objected to spending tax dollars on a pro-gay marriage documentary on public television in 1999. "I'm not sure how anyone else could not characterize those as anti-gay," said May-Chang.

The Boise-based May-Chang got a letter from VanderSloot's lawyers for some 2007-2008 posts, but she's not backing down. "I'm prepared to defend my right to free speech without being intimidated by a bully with deep pockets," said May-Chang. VanderSloot said Melaleuca "will continue to use whatever legal means are available to us to defend the truth and to request corrections where false allegations have been made."

Below is the full statement Frank VanderSloot issued on Tuesday:

ON BEING A "BILLIONAIRE"—I fear my financial status has been greatly exaggerated. I do own a majority interest in Melaleuca, a company we started 26 years ago. The company has done well. Some analysts have suggested that I could sell my share of the company for a lot of money. It’s hard to know how much. The problem is I would have to sell the company before I would ever see the cash. I'm not selling, so I will never be cash-rich. But that was never the intent.

That said, I'm paid a good salary and receive bonuses and residuals that are beyond what I deserve. In my youth, my family was poor, but we learned we didn't need money to be happy. My father taught us to love manual labor. I grew up milking cows by hand and chopping wood for my mother’s cook stove. I never anticipated being wealthy. I never imagined it. I never desired it and I never even considered it as a possibility. But our little business has prospered and I have really enjoyed my business experience. The hardworking folks who have joined us have prospered with us. I am a strong advocate of the free enterprise system. Only in America could someone start out where I started and receive the kinds of opportunities I've had.

ON THE BOY SCOUTS ISSUE—In 2005, the Idaho Falls Post Register ran a story about several pedophiles who had operated in local Boy Scout troops over the years. These were serious offenses and the topic deserved to be covered. I had no empathy for the pedophiles. They deserved to be exposed and punished. However, I felt that the coverage of the story was unfair in several respects. I felt the paper also wrongfully tried to vilify one of the pedophile’s parents, volunteers at his church, and Scout leaders. The pedophile’s family and friends were clearly also victims. But somehow they were being blamed for his actions. These people had no way to defend themselves from the innuendos being lodged against them. I tried to put myself in their shoes. I had never met these people, but I felt someone should stand up for them.

I spent considerable time and effort trying to find out what the truth was before I took sides. I learned that there were several facts and a great deal of court testimony the paper was ignoring and Melaleuca purchased space in the paper to point out those things. Clearly, mistakes in judgment had been made. The pedophile had bamboozled everyone and he had been given far too much unsupervised access to young people in the community. But implying that all of the people around him intentionally assisted the pedophile went too far. In trying to inform the community of the additional facts that we had uncovered, I erred in not being sensitive to the extreme hurt the victims had suffered in coming forward with what had happened to them. I had no clue as to what they were suffering. I got to know some of the victims personally. They had been very courageous in coming forward. I learned that my approach had caused them more pain. I'm deeply sorry for that and would use a much different approach were this to happen again.

In the end, though, much more good than harm came from the Post Register article. Many members of the community contributed to that positive outcome. The community learned how easy it is for a pedophile to remain undetected for years as he grooms his victims. The Boy Scouts have a stronger training program and the laws in Idaho involving pedophiles have been strengthened. Parents and Scout leaders are on the alert to always protect their kids. And the Post Register has upgraded its requirements for accurate, non-biased reporting.

WE NEVER OUTED A GAY PERSON— Among other false rumors, the idea that we outed Peter Zuckerman is absolutely false. I believe if someone were gay and did not want to disclose that, they should absolutely have the right to their own privacy. If anyone were to "out" a gay person against his will, I think that would be an extremely hurtful and wrong action. But, in the case of Peter Zuckerman, that is hardly what happened. For whatever reason, Peter had erred in his articles about the Boy Scouts by unfairly inferring that several innocent people were responsible for unknowingly aiding and abetting a pedophile. The people who knew the facts knew that the articles were inaccurate and sensationalized.

It was public knowledge that Peter Zuckerman was gay. He had never kept that a secret. He had published the fact that he was gay on a website for the entire world to see. The Trish and Holly Show on local radio had been abuzz for several weeks talking about Peter’s sexual orientation and accusing Peter of bias against the Boy Scouts because the Scouts did not allow gay people to be Scout leaders. But I felt Trish and Holly had been unfair in suggesting that was his motivation to write about the Scouts in a negative light. Contrary to what Glenn Greenwald suggests, we defended Peter Zuckerman and his motives. Anyone would have to intentionally twist the truth into a pretzel in order to suggest we either outed Peter or bashed him for being gay. We did the opposite. (See www.communitypagenews.com)

MELALEUCA'S BUSINESS MODEL—It’s unfortunate that someone would suggest that Melaleuca is something like Amway. It's not. We started Melaleuca 26 years ago to market environmentally responsible products and to provide a business opportunity for folks who weren't successful in climbing the corporate ladder and didn't inherit wealth from their parents. We try to be champions of the little guy. My father was a little guy. And I still see myself as a little guy.

Contrary to those who do not know us, our business model is nothing like Amway or Herbalife. I challenge anyone to find any similarity whatsoever. There is no investment of any kind unless you want to call a $29 membership fee an "investment." And anyone can get a refund on that by just asking.

We do offer a home-based business opportunity. But it is no "pyramid scheme." We have long been critical of the many MLM/pyramid schemes operating in this country. I agree with those who say that typical MLM companies destroy people’s finances. Most are designed to attract people to "invest" in large purchases with the promise of "getting rich" quickly by getting others to invest. The guy at the top always wins and the guy on the bottom always loses.

In Melaleuca's case there is no investment and no getting others to invest. We do pay commissions to those who have referred customers based on what those customers purchase. There is really no way to lose money on referring customers. And there's no way for customers to lose either when they're buying high-quality products at grocery store prices. Customers just order the products they use every month directly from the factory. We have hundreds of thousands of customers who buy from us each month. They don't ever resell anything. They don't invest in any inventory. There can be no pyramiding without some kind of investment. In 26 years, no one has ever complained that they lost money. It’s simply not possible.

Our business model works pretty well for most folks. We have already paid over $2.9 billion in commissions to households across the country. Our mission is to enhance lives by helping people reach their goals regardless of their beliefs, backgrounds, or affiliations. Last month we sent out almost 200,000 checks to American households alone. Members of those households tell us we are doing a pretty good job achieving that mission.

ON GAY RIGHTS—I have many gay friends whom I love and respect. And I believe they love and respect me. I am very close to some of these very good people. Our company has thousands of gay customers, independent marketing executives, and employees. I believe they feel welcome and valued. I believe that people deserve freedom, respect, and privacy in their own lives. I believe that gay people should have the same freedoms and rights as any other individual.

At the same time, I believe there are both appropriate and inappropriate ways to address the concerns of the gay community. I offended some members of the gay community in 1999 when I contributed to a group that was objecting to Idaho tax dollars being used to air a program called "It’s Elementary." The program was designed to promote the concept of gay marriage to first-, second-, and third-graders. Many local and national organizations felt children of that age were far too young to be indoctrinated in that debate and they felt using tax dollars to accomplish it was also inappropriate. I agreed. Interestingly, many of my gay friends also agreed. Originally the program was scheduled to air during prime time when it would attract the most children. After valuable public debate it was moved to 10 p.m. when few children would be watching. The debate was healthy and fostered a better understanding of differing views. We demonstrated that when people listen to each other and work together for a common solution, it brings people of opposing views together. Only when people take extreme views and beat up on those who disagree with them, do we end up with division and unsolved problems.

Although many members of the gay community agreed with me on the “It’s Elementary” issue, a few didn’t. I don't think that makes me a bigot. I've never bashed or criticized a gay person for being gay. Nor would I stand by if anyone else did so.

DEFENDING THE TRUTH—I am a strong advocate of freedom of speech, but I do not believe people have the right to accuse someone of having done something they never did, especially if it will harm them or others. Greenwald's article accuses Melaleuca of using unwarranted, strong-arm bully tactics to thwart criticism of itself. He quotes what others have wrongfully said about us and then taunts us to do something about the fact that he repeats it. He admits they changed what they originally said about us after they learned the facts, but he repeats what they originally said as opposed to their corrected statement.

Greenwald is clearly a very bright man. I suspect he knows exactly what he is doing in repeating the original false allegations – and I suspect he believes that his motives are pure or at least vindicated by his intended end result. But we make no apology for rising to defend our reputation when we are wrongly accused!

At first, when our detractors began circulating untrue rumors about us, we chose to look the other way. Even when those accusations were made in the press, we chose to not take issue with them because it was simply not worth the fight. We felt that acting in a way to be worthy of a good reputation would prove our detractors wrong. At first we were right. And then we were wrong!

We learned when inaccurate information finds a home on the Internet, if it is not refuted it can be used 10 years later as a reference point by some well-meaning reporter. And then you will have two references to the same inaccurate information. Later, a third reporter can pick up the first two references and use them as sources. And soon, if not addressed, inaccurate information can easily become irrefutable "fact" by the public or the press. As a result, we have learned we need to ask that incorrect information about us be corrected by its source before it gets quoted by others. Prior to sending a letter, we always try to reach the author by phone. Credible authors are almost always willing to have a meaningful discussion about the accuracy of their articles and are anxious to correct inaccuracies. Those with an agenda are not always as anxious. Sometimes they avoid contact, and sometimes they hide behind false identities. Nevertheless, even when it appears the author has an agenda, we first try a friendly approach. Only when it is evident that the author could care less about the truth and is intent on doing damage for the sake of doing damage, do we raise the possibility of legal action. Sometimes, when there is no urgency, we are extremely patient. At other times when delays can cause us irreparable damage, we are less patient.

In the case of any company, many livelihoods are at stake. Melaleuca employs over 3,000 people worldwide. And thousands more rely on us to send them a check in support of their independent businesses each month. Damage to Melaleuca results in damage to their lives also. When we defend our company, we are also defending them and their income. We agree that we need to do that fairly and responsibly. But it is simply unfair to accuse us of bullying people into submission. We feel we should be held accountable when we make mistakes. We are not perfect, but we feel we are pretty good at admitting mistakes and correcting them when they are brought to our attention. But we make no apology for asking people to tell the truth about us and our business. A good reputation is anyone's most precious asset. We promise to listen to folks when they have a legitimate issue with our actions. We promise to try to find an amicable remedy.

We can disagree on issues and argue those issues in honest and open debate. You can count on us to not smear or attack the messenger. We will defend their right to disagree. But we do ask even those who disagree with us to tell the truth about who we are and what we do. We will continue to ask that of people. That is not going to change.

Frank L. VanderSloot

Source: http://www.localnews8.com/news/30512994/detail.html

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11 comments… read them below or add one

Neil Ashworth - How To Find The Best MLM In 2012 February 27, 2012 at 2:32 pm
Ted - I know the Melaleuca model well, having been a happy and loyal customer for almost 5 years. As far as the business model is concerned, Frank is correct and also incorrect (no big surprise here then)... Yes, the model IS unlike any MLM out there - there is NO big sign up fee and therefore no commissions paid for recruiting (not directly at least), although most MLM companies who are legitimate would also argue this point and suggest the commissions paid out in the typical MLM model are on the back of "product purchased". Why this works in Melaleuca's mind is that nobody is ever left with a garage full of stock after investing (if thats the correct word) $1,000 or more into product they cannot shift. The down side (which Frank does not mention) is that this makes the Melaleuca compensation model very light on the front end and leads to slow growth for most as they cannot create cashflow. Melaleuca do have great products though and from my experience (trying) to build this one - customers who sign up to build a business also but cannot/will not recruit tend to hang around for a long time - 91% re-order rate in my own customer base in fact. I'm not pitching Melaleuca at all - I believe in some ways it is very tough to build (8 or more personally enrolled customers needed to open up the pay plan) but the proof is there that despite its faults, the company and its customers have a lot going that other (not other in Franks eyes) MLM companies could learn from. Neil

Cobalt February 28, 2012 at 2:35 am
I am familiar with Melaleuca and their business model. The article defines an MLM as this : Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit... You could say Melaleuca has "multi-level marketing" because the marketing executives move up levels based on their success, but they do no actual selling whatsoever. They are not compensated as salesmen. The ONLY way to purchase Melaleuca products is by ordering directly through Melaleuca--the call center, the website, and their stores. They do get a commission from anyone they recommend (my hair salon gives me a $5 credit for ever referral I give). By the definition provided in the article, I can see exactly how Frank makes his claim that Melaleuca is not an MLM.

Dino February 28, 2012 at 10:17 pm
Just had to add some support to the two previous comments. While it's apparent that Melaleuca and its model have many ties to the network marketing industry, it's also true that they have a number of important differences that make them fundamentally different than other MLM and traditional pyramid-style businesses, especially in regards to investment and risks for either seller or customer. Vandersloot isn't really trying to make enemies in the MLM industry in his comments, he's trying distinguish his company and its business model from some negative news reports.

Dave March 1, 2012 at 5:57 am
It is clear Mela is a quality company with a quality product line. And one thing that sets them apart from the current mlm model is the simplicity of their comp plan. It's pretty simple to understand with not very many hoops to jump through, which is typical of many mlm companies. Some may find it difficult or "slow" to generate the desired income in Mela, but I think effective marketing is the key to success as it is in any business endeavor, as there are many who are and have been successful promoting this company and it's products. Great coverage on this company, Ted. Thank you for all you do.

Michael Hamburger March 4, 2012 at 6:18 pm
With the new Business Opportunity law passed March 1, 2012 in the United States by the FTC, I wonder if Frank will re-evaluate whether or not Melaleuca is an MLM or not. If I were in Frank's shoes, I'd want to be an MLM and classified as an MLM, just saying!!!

Keith Mason March 6, 2012 at 12:10 am
As you get paid for sales on multiple levels, it can only be a MLM Business as the saying goes" if looks like a Duck & Quacks like a Duck it's a DUCK!!!! !"

Michelle Porter March 6, 2012 at 12:33 am
I think Mr. Vandersloot does a disservice to the networking industry by so adamantly stating they are not an MLM. It doesn't matter whether there is an upfront investment or not. When one enrolls someone else to sell products and gets paid from those sales, that's MLM. My sponsor certainly thought it was! He seems to equate MLM with losing money. Melaleuca was the very first network marketing company I ever joined back in the early 90s. I started but never built a large team but bought products for almost 15 years, so I clearly liked them. However, I did not use up the minimum requirement each month and although I stopped buying products in 2005, I STILL have some stuff stockpiled in my bathroom.

Jack March 6, 2012 at 5:26 pm
Man, What a fruitcake. this is an mlm that i was recruited 5 times as a student. i stopped because they would not stop charging me on my credit card. Wake up , autoship = mlm. Quit stop denying the truth, people see through your bull---- !

Melissa April 21, 2012 at 10:34 am
Hi, I have been educated in the Melaleuca business model and I am very happy with it's openess and clarity. As a bank manager I got paid for my staffs' performance for on selling the banks products. I invested my time on a daily basis (no up front costs). I got paid more than my staff to mentor and develop them, then paid bonuses on pressuring them to work harder and sell more. My staff could not develop to Bank Manager status unless a position became available. I got paid on my downlines (bank tellers, consultants, lenders) performance for delivering a product or service. Does this make all businesses a MLM or pyramid company? It sure starts to look like one when you draw out the picture with all the levels and downlines. This is where Frank is making a differentiation from the others, no pressuring to buy more (garage full of stock to on sell) so your upline can advance etc.... I have since left my Bank Manager role and found an improved lifestyle - a reduction in my stress levels, blood pressure and cholesterol levels and an increase in my family relationships, health and overall wellbeing. I know in Melaleuca that if you open an account for an absolute 'GUN Salesperson' that you cannot be paid more than they ever are and just WIN off their abilities. In Australia - we have a Marketing Executive whose 'upline' is only earning $65/mth off her (over $10,000/mth) business because they choose to be a customer only. This business is designed to reward those who work as most business models do. We are very open with the income we earn, because we are honest, no purchasing of tools required to advance - we train, coach and mentor for free (or you might say - that's what we get paid to do with our bonuses). We duplicate the business - with advice from those before us. Please contact me if you are interested in a fair business model that is not a 'get rich quick' scheme, this is a business built to last a lifetime, built on sound principles. All roads lead to Melaleuca - many others who have been in MLM's have choosen to reach their final destination with Melaleuca. Melissa - mel-jackson@live.com.au

sue January 2, 2013 at 6:09 am
I w.. as a director once for Melaleuca. However, although you don't have to buy inventory, what they do have you do is buy leads. Really the only way to find the amount of people to sign up. You don't tell them who you are until the last minute, and they literally try to talk people into it. In my experience, they flip people because once they find out the only people making money is the people who are on top, they drop out. You have to order a certain amount each month to get preferred prices, regular prices are very high. It's like one person signs you up, and then you try to sign others up. Very much like MLM. The little guys are holding the big guys who make the money up. That is why they have to keep replacing them. I have found products to replace them. After I bought the leads to call I lost money in the long run. They tell you how you can build this wonderful business, and I believe there is a lot of deciet in how they recruit people. Unless you just know endless amount of people who just happen to want to join. I would never do it again.. It wasn't worth it.

Tony Wittock February 15, 2013 at 11:35 pm
Melaleuca products are some of the best in the world. Everyone share different values, but it does not mean we cannot do business together.