Section 6 – Preservation of the Line of Sponsorship
Maintaining the integrity of the Line of Sponsorship is important in promoting the longevity and profitability of an Amway Business. Amway places strict rules limiting those circumstance under which changes to a line of sponsorship will be condoned.
6.1 Protection of the Line of Sponsorship: An IBO shall in no circumstances directly or indirectly and whether on his/her own behalf or in conjunction with or by way of assisting any other person, solicit, interfere with or endeavour to entice another IBO or Customer away from his/her Line of Sponsorship or to change Line of Sponsorship.
6.2 Integrity of the Line of Sponsorship: The sale of an ownership interest in an IB, or transferring an IB, requires prior approval by Amway. This approval shall be at Amway’s sole discretion.
6.2.1 The transfer of an IBO, with or without his/her personally sponsored and downline of those sponsored, moves the sponsorship of that IB from one IBO to another.
6.2.2 When an IB is sold, such IB shall remain in the same position in the Line of Sponsorship.
6.2.3 Transfers may not be used to strategically or artificially restructure any part of the Line of Sponsorship.
6.2.4 Transfers will only be granted by Amway if, in Amway’s opinion, the request for transfer represents an extraordinary circumstance or has been caused by or contributed to by any failure of a Sponsor or of any IBO upline from such Sponsor to meet all or any of the responsibilities of a Sponsor set out in these Rules, or to comply with any other of these Rules, or any injustice would otherwise be imposed upon the IBO requesting the transfer by refusal of the transfer request.
6.3 Six Month Inactivity: An IBO who wishes to terminate (by resignation or failure to renew) their IB under their current Sponsor and who thereafter becomes Inactive shall cease to be an authorised IBO and may, following the lapse of a 6 month Inactivity period, apply as a new IBO under a new Sponsor. The date on which Amway receives the letter of resignation begins the Inactivity period. A person who has not renewed their IB will be considered expired and must remain Inactive for six months from the beginning of the following month.
6.3.1 To apply as a new IBO under this Rule, the applicant must complete a new IBO Contract. If evidence of activity during the six-month period is substantiated, Amway will refuse to honour the sponsorship under the new Sponsor. The right of an IBO to contest the sponsorship of a former IBO who is now sponsored under a different Sponsor ceases when two years have elapsed since the date Amway accepted the application under the new Sponsor.
6.3.2 During the Inactivity period, the former IBO must not participate in any activity under another IB in the name of their parents, siblings, or others, or they shall be determined as “active” for the purposes of this Rule.
6.3.3 When either a husband or wife is an IBO, both must fulfil the six-month Inactivity requirements before one can be sponsored again as an IBO.
6.3.4 If the IBO who is changing Sponsors under this Rule also has any internationally sponsored IBOs, the IBO’s internationally sponsored IBOs are forfeited once the six-month Inactivity period has begun.
6.3.5 If the IBO who is changing Sponsors under this Rule also owns Amway Businesses in other markets, they must elect one of them to be the International Sponsor of their new IB when completing the new IBO Contract.
6.4 Two Year Inactivity: An IBO who transfers to or who following six or more months of Inactivity applies for sponsorship under a Sponsor in a different Line of Sponsorship pursuant to the provisions of this Rule 6, may not be sponsored by any IBO who was previously above them in the original Line of Sponsorship up to and including the first IBO qualified at the Platinum or above level, or below them in their former personally sponsored and downline of those sponsored, down to and including the first IBO qualified at the Platinum or above level, unless at least two years of Inactivity have elapsed since the termination of his or her IB.
6.4.1 IBOs who transfers to, or who, following six or more months of Inactivity, are sponsored under a Sponsor in a different Line of Sponsorship pursuant to the provisions of this Rule, shall have no right to sponsor in the new Line of Sponsorship any IBOs who was previously above him or her in the original Line of Sponsorship up to and including the first IBO qualified at the Platinum or above level, or below them in their former personally sponsored and downline of those sponsored, down to and including the first IBO qualified at the Platinum or above level. However, an IBO who has been Inactive for a period of two years following their resignation may be sponsored by any sponsor, including their former Sponsor who may have since been transferred to or sponsored by a different Sponsor.
6.5 An IBO who has declared Inactivity in one market may continue to operate as an Amway IBO in any other market in which he/she has an IB, during the terms of his/her Inactivity in the other markets.
6.6 A formerly fostered sponsored IBO may sponsor again subject to Rules 6.3 and 6.4 and the following conditions:
6.6.1 At the time of application, the former IBO must specify whether or not he wishes to be internationally and foster sponsored again, and
6.6.2 A former IBO may not be personally sponsored by a Sponsor who was previously above him or her in the original line of foster sponsorship up to and including the first IBO qualified at the Platinum or above level, or below him or her in his or her original Line of Sponsorship down to and including the first IBO qualified at the Platinum or above level unless two or more years have elapsed since the termination of his or her IB.
6.7 Corrective Action: If any provisions to this Rule are violated, Amway may take corrective action, which may include, but is not limited to, the termination of the violating IBO’s IB, and transfer of his or her former personally sponsored and downline of those sponsored and/or the Business Volume generated during the period of violation to the appropriate Line of Sponsorship.
6.8 Waiver of Inactivity: Amway, at its direction, may waive the required Inactivity period requirement in Rule 6.3 and 6.4 if in its opinion the former IBO’s Sponsor or any IBO upline from such Sponsor has caused or contributed to the resignation or failure to renew by failing to meet all or any of the responsibilities of a Sponsor set out in these Rules, or by breaching any other of these Rules, or any injustice would otherwise be imposed upon the IBO by enforcement of the Inactivity requirement.
6.9 Individual Transfers: An individual transfer involves the transfer of an IBO without any of his or her sponsored IBOs. Without limiting or restricting in anyway Amway’s powers and discretion under Section 6:
6.9.1 Any IBO who wants to change Sponsors must submit a written request to Amway accompanied by:
a) a written release signed by all IBOs upline up to and including the first qualified Platinum or above; and
b) a written acceptance from the new Sponsor and new Platinum or above. The written acceptance from the new Sponsor and Platinum or above confirms that they will incur all responsibilities of the transferring IBO.
6.9.2 Amway may contact any International Sponsor and International Leadership Bonus/Rebate recipients and will allow 30 days for comment.
6.10 Group Transfers: A group transfer involves the transfer of an IBO with all or some of his/her personally sponsored and downline of those sponsored. Without limiting or restricting in any way Amway’s powers and discretion under Section 6.
6.10.1. An IBO who wishes to transfer to a different Sponsor with all or part of his/her personally sponsored and downline of those sponsored, must submit a written request to Amway accompanied by the written consent from all downline IBOs, who wish to transfer, down to the first IBO who is qualified at the Platinum or above level and all IBOs who are qualified at the Platinum or above level up to and including the first IBO who is qualified at the Emerald or above level.
184.108.40.206 If the first upline IBO who is qualified at a formal award level is a qualified Emerald or above, written consent must be received from the next IBO who is qualified at the Platinum or above level who is upline from that Emerald.
220.127.116.11 Amway will then notify the first qualified upline Diamond and allow 14 days for comment.
6.10.2 The transfer request must be accompanied by written consent of all those IBOs, including those internationally sponsored, who the transferring IBO wishes to take with him or her and the written acceptance of the IBO in the Line of Sponsorship to which the requester wants to be transferred.
18.104.22.168 Amway may contact any International Sponsor and International Leadership Bonus/Rebate recipient and will allow 30 days for comment.
6.10.3 No IBO currently qualified as a Silver Producer or above can be transferred with downline IBOs under this rule.
22.214.171.124 An IBO formerly qualified as a Silver Producer or above may be transferred with downline IBOs if more than 12 months have elapsed since the IBO was qualified.
6.11 Sale of an IB: An IBO who owns an IB (whether or not qualified as Platinum or above) may sell his or her IB only to another authorised IBO as proscribed by this rule. Amway requires that specific terms of sale be included in any sales agreement. In order to preserve the Line of Sponsorship, the selling IBO must offer his or her IB in the order of priority stated below and the IBO interested in purchasing the IB must meet all of the terms and conditions as set forth in these Rules. The purchased business shall remain separate from the buyer’s other Amway Business and the Line of Sponsorship shall not be altered in any way as a result of the sale. In all circumstances, Amway must provide written approval to the terms and conditions of sale (except price).
6.11.1 The first option to purchase belongs to his or her International Sponsor, who retains throughout the sales negotiations to sell the IB the right to acquire the same by meeting the price and conditions of any bona fide offer received by and deemed acceptable to the Seller.
6.11.2 The second option to purchase belongs to his or her Sponsor so long as the first option has not been exercised. In the event the selling IBO has no International Sponsor, the local Sponsor retains throughout the sale negotiations to sell the IB the right to acquire same by meeting the price and conditions of any bona fide offer received by and deemed acceptable by the Seller.
6.11.3 The third option, exercisable so long as the Sponsor declines the offer to purchase, belongs to any one of the Seller’s personally sponsored Australian/New Zealand IBOs.
6.11.4 The fourth option, exercisable so long as all personally sponsored IBOs in Australia/New Zealand decline the offer to purchase, belongs to any Platinum or above in Australia/New Zealand in the Line of Sponsorship up to and including the first qualified Diamond.
6.11.5 The fifth option, exercisable so long as all Platinum IBOs in the seller’s Line of Sponsorship in Australia/ New Zealand up to and including the first qualifying Diamond decline the offer of purchase, belongs to all other Platinum IBOs in Australia/New Zealand in the first qualifying Diamond’s Line of Sponsorship.
6.11.6 The sixth option, exercisable so long as all Platinum IBOs in Australia/New Zealand in the first qualifying Diamond’s Line of Sponsorship decline the offer to purchase, belongs to all currently qualified Emerald IBOs in Australia/New Zealand.
6.11.7 The final option, exercisable so long as all currently qualified Emerald IBOs in Australia/New Zealand decline to purchase, belongs to any person who is or becomes an IBO in Australia/New Zealand. Amway shall determine the list of offerees by reference to its current, confidential files and will forward, on the seller’s behalf, the offers for sale. Amway may offer the IB for sale to all IBOs simultaneously, but will grant priority in accordance with Rule 6.11.
6.11.8 Purchasing IBOs: All purchasing IBOs must be in Good Standing with Amway as determined by Amway. All sales (except the price) must be reviewed and approved by Amway before they become final. Amway reserves the right to approve all sales at its own discretion. No changes in ownership will be implemented and no change of title of the business shall be made final until the sales agreement has been received and approved by Amway and a finally executed copy of the sales agreement is provided to Amway for its records.
126.96.36.199 If the IBO wishes to sell his or her IB under terms and conditions different from those of his or her first offer, the IB must be once again offered for sale under the revised terms and conditions in accordance with the order of priority indicated above.
188.8.131.52 All purchasing IBOs must meet the following criteria as reasonably determined by Amway. Failure to meet the following criteria will act as if the offer to purchase was revoked or the option to purchase was never exercised:
a) Possess sufficient expertise in the business so as to demonstrate a complete and accurate understanding of the Amway Sales and Marketing Plan and the Amway Business Opportunity;
b) Possess a complete and accurate understanding of the Rules of Conduct and demonstrate a willingness to abide by them;
c) Possess adequate resources to operate the seller’s IB and to provide necessary training and support;
d) Possess an understanding of any relevant market factors that may impact the operation of the seller’s IB; and
e) Is not currently engaged in any dispute or possess any conflict which may impact their ability to operate the seller’s IB.
6.11.9 Monthly Performance Bonuses/Rebates accruing to the business after the date of sale will be paid to the new owners. Annual Bonuses/Rebates (such as Emerald and Diamond Bonuses/Rebates) shall be paid as specified in the Sales Agreement as authorised by Amway. All awards previously awarded to the business will not be transferred to the new owners. Qualification for awards for the business will be determined only by activities occurring after the date of sale.
6.11.10 When sale rules do not apply: Rule 6.11 shall not apply to:
a) an assignment or sale of an IB by an IBO to a company of which the IBO is (or in the case of a partnership, both IBOs are) the principal shareholder(s) and director(s), and which otherwise complies with these Rules;
b) an assignment or sale of an IB to a person or company to be held on trust for beneficiaries, which are in Amway’s opinion, primarily the assigning IBO and/or relatives (within the meaning of that term in the Income Tax Assessment Act) of the assigning IBO and which otherwise complies with these Rules;
c) an assignment or sale of the interest of one party in an IB, either to the other partner, or to a person who is or becomes an IBO before commencing to operate or participate in the IB.
6.11.11 An IBO may sell or assign his/her IB in the circumstances set out in Rule 6.11.10 with the prior written approval of Amway, which approval may be given or withheld by Amway in its absolute discretion and if granted, may be subject to such conditions and provisions as Amway may determine.
6.12 Assignment: Subject to clause 6.12.1 an IB may be assigned (whether by sale or gift) or transmitted by will, provided that the assignee or beneficiary is or becomes an IBO in accordance with these Rules.
6.12.1 In no event may an IB be divided up or partially assigned and nor may an IBO assign a part interest in or an interest in any part of an IB other than pursuant to Rules 6.11.10 and 6.11.11 nor may an IBO do any act, matter or thing, the effect of which is that he/she holds the whole or any part of his IB on trust for any other person.
6.13 One Amway Business Rule: An IBO may own, have an interest in, be a signatory on or be listed as a designee on only one IB, except as provided in Rules 6.13.1 – 6.13.4 below. Only under the following circumstances may an IBO have ownership interest in more than one IB:
6.13.1 Where two IBOs marry or enter into a long-term relationship and one or both have attained the Platinum or above level prior to the relationship commencing pursuant to Rule 3.2;
6.13.2 Where an existing IB purchases another IB pursuant to Rule 6.11;
6.13.3 Where an IBO (transferor), in order to facilitate the transfer of his or her IB in the event of his or her death, requests to assign the IB to another existing IBO pursuant to Section 10; or
6.13.4 Where an existing IBO inherits an IB pursuant to Section 10.
In the event that an IBO owns or has an ownership interest in two or more IBs pursuant to this Rule, Amway shall continue to recognise such IBs as separate IBs and will only recognise them as separate, individual IBs for all purposes including, for award and Bonus/Rebate purposes.
6.14 Mergers and Combinations of IBs: IBs shall not be merged or combined without the prior written approval of Amway which may be given or withheld in Amway’s absolute discretion. Any approval by Amway may be subject to such conditions and provisions as Amway may determine. Under no circumstances will Amway approve a merger which results in an IB attaining a higher award level.
6.14.1 In the event that an IBO acquires another IB, the IBO shall not transfer Business Volume between the businesses operated by them otherwise than strictly in accordance with the Amway Sales and Marketing Plan and other published Amway material.
6.15 Dissolution of a Legal Entity Operating an IB: Absent the express written agreement of Amway to the contrary, prior to dissolution of a legal entity that is a signatory to an IBO Contract, the IBO Contract may be assigned to the authorised representative of the legal entity who signed the IBO Contract originally on behalf of the company, or the IB may be sold in accordance with Rule 6.11 of the Rules of Conduct. The failure to either assign the IBO Contract to the authorised representative or to sell the IB in accordance with Rule 6.11 of the Rules of Conduct shall result in abandonment of the IB in accordance with Section 13 of the Rules of Conduct.
6.16 Disposition of an IB: If an IBO terminates his/her IB with Amway, or fails to apply for extension of the IB within the required time period, or dies without leaving heirs who are willing and able to assume responsibility for the IB, Amway, at its sole discretion, shall decide the future of the IB in accordance with Section 13.
6.17 Partner dispute or disagreement: In the event that an IBO is a partnership and the partners have a dispute or disagreement (matrimonial or otherwise) such that in Amway’s opinion the IB is not being properly conducted, then:
6.17.1 The IB may, with the prior approval of Amway (which approval may be granted or withheld in Amway’s absolute discretion and which, if given, may be subject to such conditions and provisions as Amway may determine including, without limiting the generality of the foregoing, a condition that, within a period specified by Amway, the IB be sold or assigned or one of the partner’s shares in the IB be sold or assigned) be operated during the period of the dispute or such other period as Amway may approve or specify, by one of the partners or by a manager appointed by the partners for the purpose;
6.17.2 If within 14 days after the dispute comes to Amway’s notice the partners cannot agree on a partner or on a manager to operate the IB during such period then Amway may either terminate the IB or appoint a manager on such terms and conditions as Amway considers appropriate to operate the IB. Without limiting the breadth of Amway’s discretion in respect of the terms and conditions upon which a manager may be so appointed, the manager shall, if Amway considers it appropriate, be entitled to all, or such part as Amway specifies, of the Bonuses/Rebates and privileges accruing in respect of the IB during the period of management.
6.17.3 During such period:
a) neither of the partners may operate or participate in the operation of any other IBs contracted to Amway; and
b) to the extent directed by Amway, the partners or the partner specified by Amway, shall not attend any Amway function.
6.18 Integration Rule: An IBO who is a parent may integrate his/her IB with his/her child’s or children’s IB provided the following conditions are met:
6.18.1 The child(ren) must be personally sponsored by the parent; or the parent must be personally sponsored by the child(ren)
6.18.2 The parent’s IB and the child’s (children’s) IB must have operated as separate IBs for not less than two (2) years by the date of integration;
6.18.3 The parent and the child(ren) shall have achieved the level of at least Platinum IBO as of the Implementation Date;
6.18.4 Upon integration, the parents and child(ren) agree to relinquish all rights to awards and reward level personally achieved in their own IBs; and
6.18.5 In the event that the parent s) or the child(ren) are deceased or are not mentally or physically capable of running the IB before conditions 6.18.2 and
6.18.6 Above have occurred, the child(ren) or parent(s) inheriting the IB shall have the right to integrate the separate IBs in accordance with this Rule;
6.18.7 Upon Amway’s granting the request for integration, implementation shall be as follows:
a) The Implementation Date shall be September 1 following the passing of at least one full fiscal year after receipt of the written request.
b) At the Implementation Date, the child(ren) and parents are eligible for all awards and recognition to their separate businesses earned during the previous fiscal year.
c) All awards and recognitions, based on the combined business, shall begin accruing at the Implementation Date. Thus, any higher awards based on the combined businesses will be awarded upon completion of qualification after the Implementation Date.