Management Agreement

Sponsorship provides you with the opportunity to expand your AMWAY business and maximise income. With this opportunity comes responsibility to your downline IBOs, including the obligation to provide regular training and motivation, and to ensure that IBOs in your personal group comply with the Rules of Conduct.

When a sponsor intends to be absent from the business for a period of more than three months, Rule 5.5 of the Rules of Conduct provides that he or she must enter into an agreement for their Independent Business to be properly managed.

WHAT IS A MANAGEMENT AGREEMENT?
Rule Section 2 defines a management agreement as "an agreement in writing, the terms and conditions of which are approved by AMWAY, for the responsible conduct of an AMWAY business, where the manager manages the business in the absence of the owner".

This means that the AMWAY Independent Business Owner (IBO) intending to take leave from their business nominates another IBO to manage their business until they return.

WHY DOES THE AGREEMENT NEED TO BE IN WRITING?
The majority of contracts do not have to be in writing. Despite this, it is always sensible practice for agreements to be written and signed by the parties. A written contract sets out the terms and conditions agreed by the parties and avoids a number of potential problems. For example, where one party disputes a particular term of an unwritten contract, it is usually difficult to prove that the term was, in fact, part of the contract.

WHY IS AMWAY'S APPROVAL REQUIRED?
The company's approval is required to ensure that relevant personnel are kept informed of the arrangements, the needs of downline IBOs are satisfied and that the terms and conditions are fair and reasonable and comply with the Rules.

WHO SHOULD MANAGE THE BUSINESS?
It is important that the person you appoint to manage your business is qualified to be an Amway IBO, has the capacity and experience to maintain and improve the business, has earned, or is capable of earning, the respect of IBOs in your personal group, and has the motivation to sponsor and assist IBOs. Commonly, the manager is an appropriate upline member of the relevant line of sponsorship, perhaps the sponsor or the Platinum IBO.

HOW SHOULD THE MANAGER BE COMPENSATED?
The manager should be reimbursed for all reasonable costs and expenses incurred in the management of the business. They should also be provided with appropriate incentives to sponsor, train and motivate IBOs and to manage the business expertly. In the typical scenario, the manager should be entitled to all monthly performance bonuses and in some cases a percentage of any new leadership or other bonuses generated during the term of their management. Alternatively, a fixed amount may be preferred. Each management agreement is different and will depend on the situation.

WHAT IS THE PERIOD OF THE AGREEMENT?
The period of the agreement may be as long as three months and can continue for further months or even years.

WHAT SHOULD THE MANAGEMENT AGREEMENT INCLUDE?
At minimum, the management agreement should include details of:

  • the parties and the business to be managed;
  • the period of the arrangement;
  • the consequences of termination of the agreement;
  • the rights and duties of the parties;
  • the records that the manager is obliged to keep;
  • the compensation to be paid;
  • an assurance that the manager will operate the business in compliance with Amway's Rules of Conduct;
  • And any other relevant information.

 

Where the period of management is to be lengthy, it may be practical to allow for a staged return to the business by the original IBO. In certain circumstances, it may even be advisable to enter into a partial management arrangement, whereby the manager is responsible for only part of an Independent Business.

SHOULD I CONSULT A SOLICITOR?
While there is no legal requirement that a lawyer should be consulted in relation to the preparation of a contract, it is always advisable to seek legal advice. In addition or in the alternative, a standard Management Agreement form is available from Amway upon request. This form may be used as a guide. For details, contact the Legal Department on (02) 9854 8100 or send an email to rules@amway.com.