3.1 Direct Sellers' Compliance
Companies shall require their Direct Sellers, as a condition of membership in the Companies' distribution systems, to comply with the Code or with rules of conduct which meet its standards.
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3.2 Recruiting
Companies and Direct Sellers shall not use misleading, deceptive or unfair recruiting practices.
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3.3 Business Information
Information provided by the company to its Direct Sellers and to prospective Direct Sellers concerning the opportunity and related rights and obligations shall be accurate and complete. Companies shall not make any factual representation to a prospective recruit which cannot be verified or make any promise which cannot be fulfilled. Companies shall not present the advantages of the selling opportunity to any prospective recruit in a false or deceptive manner.
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3.4 Earnings Claims
Companies and Direct Sellers shall not misrepresent the actual or potential sales or earnings of their Direct Sellers. Any earnings or sales representations made shall be based upon documented facts.
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3.5 Relationship
Companies shall give their Direct Sellers either a written agreement to be signed by both the company and the Direct Seller or a written statement, containing all essential details of the relationship between the Direct Seller and the company. Companies shall inform their Direct Sellers of their legal obligations, including any applicable licenses, registrations and taxes.
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3.6 Fees
Companies and Direct Sellers shall not ask other Direct Sellers to assume unreasonably high entrance fees, training fees, franchise fees, fees for promotional materials or other fees related solely to the right to participate in the business.
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3.7 Termination
On the termination of a Direct Seller's relationship with a company, companies shall buy back any unsold but saleable product inventory, including promotional material, sales aids and kits, and credit the Direct Seller's original net cost thereof less a handling charge to the Direct Seller up to 10% of the net purchase price and less any benefit received by the Direct Seller based on the original purchase of the returned goods.
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3.8 Inventory
Companies shall not require or encourage Direct Sellers to purchase product inventory in unreasonably large amounts. The following should be taken into account when determining the appropriate amount of product inventory: the relationship of inventory to realistic sales possibilities, the nature of competitiveness of the products and the market environment, and the company's product return and refund policies.
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3.9 Remuneration and Accounts
Companies shall provide Direct Sellers with periodic accounts concerning, as applicable, sales, purchases, details of earnings, commissions, bonuses, discounts, deliveries, cancellations and other relevant data, in accordance with the company's arrangement with the Direct Sellers. All monies due shall be paid and any withholdings made in a commercially reasonable manner.
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3.10 Education and Training
Companies shall provide adequate education and training to enable Direct Sellers to operate ethically. This may be accomplished by training sessions or through written manuals or guides, or audio-visual materials.
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