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Greg Duncan and Private Franchising |
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A Site visitor sent me .mp3 excerpts of Greg Duncan's "Private Franchising in a .COM World II" prospecting CD-ROM. Here is my rebuttal to a few of his claims. Mr. Duncan is a Triple Diamond in Quixtar within the WorldWide Dream Builders organization. No doubt Mr. Duncan has a large income. The point he doesn't highlight is what portion of his income comes from his non-Quixtar business of selling motivational tapes, seminars and prospecting materials such as the Private Franchising CD ROM. The term "Private Franchising" is nothing more than a new catchy phrase used by the World Wide Dream Builders organization, to dissociate themselves from other more common terms such a Network Marketing, Multi-level-Marketing, Interactive distribution and Amway. It is the same as Amway changing its name to Quixtar to stay ahead of the bad reputation the "Amway" name had received.
Greg Duncan from his CD
No doubt this a true statement and it should be a goal for everyone. What Mr. Duncan does not point out is that the Amway/Quixtar method of distribution is usually not capable of producing an average hourly income greater than minimum wage. The leveraged income Mr. Duncan enjoys comes at the expense of his vast army of downline IBOs working for sub-minimum wages and their willingness to purchase his motivational tapes and seminar tickets. Just ask any WWDB IBO how much profit they reported on their taxes and the time their family expended to earn that amount. If you can even find one willing to show you their tax return and can account for the hours the wife and husband worked, then you can do the calculation yourself.
Mr. Duncan makes the illogical comparison that a family's expenses for rent, food and necessities are somehow similar to a corporation's expenses. Mr. Duncan asserts a family should be measured like a corporation on what is finally left over after the expenses are paid. He asks if you would buy stock in "You Inc." The goal of a family is much different from that of a corporation. If a family were run like a corporation, then most would not have children. Unless of course we could enslave our children and force then to work for us to create more income. Mr. Duncan also neglects to point out that even if one were to be a Private Franchiser that those expenses on necessities are still ever present. The point then becomes can one make more in less time as a Private Franchiser then does one in their current occupation? Mr. Duncan's argument and question is of course pure demagoguery. However illogical the argument is, it still leads many prospects to reflect on what they make and possibly look to his private franchising proposal as a better way to make money. Mr. Duncan makes no economic arguments as to why Private Franchising is a superior method of distribution that would then allow the participants to have a higher economic productivity distributing goods for Quixtar than in their chosen profession, and thus be able to attain higher average wages. It would be best to ask the people asking you to get in the business, how much money they are reporting on their taxes due to their Private Franchising business. After all they are trying to convince you to be a Franchiser under them. Ask them to show you the "fruit of their tree", to which they elude. Mr. Duncan will never show a prospect how much his "fruit of his tree" is nourished by the profits from the motivational tape and seminar sales.
One can of course do some of the business's administrative tasks in a bathrobe on a computer. But, most the time consuming aspect of building the business cannot be done from sitting at home in a bathrobe. The characteristics of successful Quixtar IBOs are the same ones needed by Amway distributors. The business requires personal contact and it will die without it. Quixtar does not allow IBOs to send out bulk e-mailings or even have a prospecting Website that is not password protected. IBO websites are not allowed to be listed in search engines. This means that in order to build a business, and replace the 50% annual fallout, one must prospect away from home, in public places. Mr. Duncan also never points out the fact that most groups within the World Wide Dream Builders organization still have the age old Amway product pickup method otherwise know as "standard fulfillment". Doing product pickup in bathrobes might, however provide a few laughs for the participants! The majority of WWDB IBOs pay their downlines with checks, and products must be paid for up-front with a check or cash. Most e-commerce firms provide convenient home delivery, and take credit card payment. It is funny how WWDB claims their business to be "e-commerce", when it is really no different from the Amway business, which Quixtar took over.
Mr. Duncan did not mention that you will have to don a dark suit with a red tie and be on the road numerous evenings each week showing the plan in other people's homes and prospecting for new people in your local bookstores and malls. If one doesn't create the aura of success and legitimacy by being clean cut, well groomed and well dressed; it will be impossible to convince a total stranger that you aren't trying to peddle a scam. The supposed time freedom Mr. Duncan to is an elusive dream for most of his downline IBOs. The vast majority of people involved with the Private Franchising a.k.a. Amway/Quixtar are still working a job as well as doing the business several hours a week. Mr. Duncan's personal freedom is supplemented by his downline buying the WWDB motivational tapes and seminars. Mr. Duncan's support organization World Wide Dream Builders has the Eagle and Double Eagle Qualification levels. Not only is a certain level of product sales necessary to be admitted to the club, but more importantly is your ability to market Mr. Duncan's business support materials business to your downline recruits, without commission. Eagle Club qualifications: Double Eagle Club qualifications: The monthly product sales of a minimum Eagle group generates about $315 in monthly gross product profits, which will be split among numerous people. The WWDB SOT tape program consists of three tapes every two weeks. The cost of tape duplication is about $0.65. This means the Standing Order Tape sales of an Eagle will generate $245 in gross profit/month to be split-up inside Mr. Duncan's WWDB organization. A double Eagle group generates a minimum of $600 in gross product profits, versus tape profits of $450 for WWDB. In the minimum sales case, about 85% of the gross product profits are consumed just on standing order tape costs from Mr. Duncan's support system. This does not include promotional supplies, consumables, voice messaging, and seminar tickets that private franchisers are encouraged to purchase. It is said that product volume lags the sales of tapes by 90 days. It takes tapes and seminars to get the longer-term goal of moving-products in swing. I must however question the efficiency of the distribution method and the value of the products if such a high percentage of the gross profit, up to 77%, has to be spent on just one part of their system, to generate this movement in product volume. Supposedly, WWDDB has studied and refined the system of tapes and seminars to maximize growth. In my opinion the system is however not geared to maximize profitability per IBO since it does not stress maximizing sales per IBO, nor minimizing IBOs expenses. If however the positive business effects of the system are so well known, how come the costs of their system are not outlined in their plan? Their published instruction, for the private franchising plan, only shows gross income and ignores those levels below direct distributor.
What Mr. Duncan does not tell you is that if Costco were to pay people for referrals, then they would have to charge higher prices. Costco was able to distribute their goods for just 18% of sales. Quixtar on the other hand paid IBOs 28% just for referral commissions alone, and it doesn't include Quixtar Corporation's overhead expenses, or the IBOs costs of the WWDB support system. Click here for a detailed analysis. Either you can pay higher prices, get a referral fee and then pay for the WWDB system, or pay lower prices and get no referral fee. The difference in prices for Quixtar products, and payments for their support system could be seen as a payment to a hidden pyramid scheme inside the Quixtar compensation schedule, the WWDB support system profits. As long as people keep buying the products, you get paid for the referral. Mr. Duncan does not tell you that the Quixtar reported the business has a 66% turnover rate of first year IBOs. This tells me there is some inherent value/convenience issue with the products or distribution method. Try the products and compare prices for yourself. Amway reported on their website that just over 50% of all IBOs renew. Due to the constant turnover of IBOs Quixtar reported that by the end of 2002, 85% of IBOs will never have been in Amway, even though Quixtar took over all Amway North American IBOs in 2002. It will be tough to earn the referral money for any length of time, let alone "for life", without constantly renewing the customer and IBO base. Just ask anyone of these thirteen WWDB Former Diamond distributors who did not requalify for Diamond what "getting paid for life" really means: Al Gallo, Randy Sears, Duane Kaneshiro, Mike Carrol, Frank Radford, Rod Jao, Darrel Ansley, Gary Lowary, Brantly Compton, Ross Hall, Larry Koening, Jim Brooks
Mr. Duncan's argument and question is pure demagoguery and is a tool to stir up emotions in the prospect. Mr. Duncan is utilizing people's ignorance of general business to create an illusion that they are currently unfairly compensated in their job. Mr. Duncan's argument is entirely on the profits of a business and why it is unfair for employees not to get a significant share of them. After all, the employees did all the work right? Mr. Duncan does not highlight the fact that those employees also earned their normal wage, which is much larger than the average net profits the employee created. Here is an example using numbers from General Electric. I challenge any prospect to speak with their employer and find out the total compensation paid to employees and compare that to the net profits their employer earned. Mr. Duncan somehow forgot his economics 101. Mr. Duncan's argument is the same one used by Lenin and Karl Marx to promote communism.
Apparently Mr. Duncan has not carefully analyzed the Quixtar bonus schedule. The typical 100PV plan of recruiting nine people who then each recruit four who in tern each recruit two is very lopsided when it comes to compensation. This 9-4-2 plan has 72 people in the first layer of the pyramid compensated at the 3% bonus level. There are 36 people in the second layer of the pyramid at 6% bonus, and nine in the third layer at 12% bonus. The platinum distributor, the head of this group, is in the 25% bonus bracket. The Platinum nets 13% bonus (25%-12%) on all sales. The 13% exceeds the bonus percentage of all his 117-person downline. It seems in this case the new business owner earns very little of the profit his sales generated, 3% compared to approximately 31% for all those above him. Those that recruited him earn the majority of the gross profits. This is just the opposite of what Mr. Duncan claims. 64% of the people earn less than 1/4th of what the platinum earns off their work. Another 31% earn less than 1/2 of what the platinum makes off their work. Still for the last nine, they only take home less than half the profit their sales generated at the platinum level. It seems Mr. Duncan's Private Franchising plan has even more problems with unfairness than the typical employee/employer situation.
When all bonuses percentages are combined, it comes out to about 34% of BV (not sales $'s). A diamond for instance could capture an additional 9% (34%-25%) on his downline's sales. This 9% bonus alone exceeds the bonus percentage of 92% of the people in a 9-4-2 100PV platinum group. One will only make more on the business than his sponsor will, when he finally reaches platinum. Until one reaches platinum, the majority of the people will not keep the majority of the profits that their sales generated, contrary to what Mr. Duncan claims. You should ask the Platinum distributor to show you the "fruit on his tree" and show you his net income reported on taxes due to his and his wife's efforts. Ask for the number of hours they spent on the business last year. Most likely any professional will earn more per hour than the Quixtar Platinum couple earns.
So do you want to know what Forbes says about Quixtar like Greg Duncan recommends? Read away: Fortune Magazine June 25, 2000 Too bad Mr. Duncan did not read these magazines before recommending them! Other Forbes articles on Quixtar's predecessor - Amway. |
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 Quixtar's Ken McDonald reported that by the end of 2002 85% of IBOs will never have been in "Amway". Quixtar reported 400,000 IBOs in 2001, which did not include "Amway" IBOs. In 2002 Amway and Quixtar IBOs and sales were combined. Quixtar did not report an IBO count for 2002. Assuming the average IBO did not increase their sales, the reported 67% sales growth implies a distributor count in 2002 0f about 668,000. In 1999, USAtoday reported 750,000 North American Amway IBOs. Assuming flat growth for 2002, this means that since September of 1999 only 15% of the 668,000 current NA IBOs (100,000) have been in longer than 3 years. Not counting the additional Amway IBOs recruited in 2000, and 2001, this means that only 13.3% or fewer (100,000/750,000) remain today. This calculates to be a renewal rate of only 50.7%% or a drop out rate of 49.3% per year. Since Amway IBOs were recruited in 2000, and 2001, the drop out rate from Quixtar's predecessor, Amway, is much higher than 49.3%. |
Private Franchising Plan Instructions