MARY KAY COSMETICS: A Scam Club for Girls? (Guest Post)
July 20, 2008 by Sean Kelly
Filed under Business
(FranchisePick.Com) This is the latest in a series of guest posts on the Mary Kay cosmetics business opportunity.
This post is from SCAM, who blogs at Scam Types.
Are you a Mary Kay consultant? Ex-consultant? Customer? Ex-customer?
Please share you experience and opinion with a comment at the bottom of this post.
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Is Mary Kay Cosmetics a Scam Club for Girls? by Scam
‘You may think I’m foolish
For the foolish things I do..’
“Pink Cadillac” – Bruce Springsteen
Was the Boss singing about Mary Kay, a multi level marketing cosmetics organisation?
Of course not, but his lyrics may have some meaning to their business… let’s find out..
Mary Kay Ash
Mary Kay Ash was a mother of three in the 1930s. Her and her then husband often found it hard to make ends meet and so Mary began selling books to supplement the household income. During her first 6 months, she sold a remarkable $25,000 worth of books!
In 1938 she divorced her cheating husband and joined Stanley Home Products, selling via home parties. She was successful for 25 years and enjoy selling. However, she felt that women were underpaid compared with their male counterparts. She also felt that her good ideas for the company were ignored and rebuked, purely because she was a woman.
After retiring, she began to write books for women, designed to aid them with the challenges they faced in the workplace. Compiling 2 lists, one detailing the positives about companies and the other detailing the negatives, Mary Kay Ash began to realise that she was listing the qualities that could be used to form what she thought would be the perfect company.
With her life savings of a few thousand dollars, she began Mary Kay Cosmetics 13th September, 1963. With the help of one of her children, Richard Rogers, she was able to build the company up to the point of having over half a million independent beauty consultants who host parties and give demonstrations as they sell the company’s perfumes and cosmetics. In 1996 retail sales hit the $2 billion mark.
MLM
Mary Kay Cosmetics sells it’s products through multi level marketing, much like Arbonne, for example. As I looked for figures to determine how much product is sold by each consultant on average I discovered that Mary Kay Cosmetics is extremely secretive about such information. I would have to wonder why.
Multi level marketing involves selling products primarily, often with bonuses or commissions for recruiting new distributors, or consultants. On the other hand, a pyramid scheme, which is illegal, puts most or all of it’s emphasis on earning through recruitment, with any product sales being very much secondary to that cause.
Which category does Mary Kay Cosmetics fall into?
If you check out their website then you will see that the company is most definitely selling products, but are they viable?
The detractors of Mary Kay will highlight that they are not very competitvely priced. Not being the type of man who wears cosmetics, I couldn’t possibly have an opinion on that – perhaps some of the ladies could comment on price competitiveness? If products really are overpriced then that may push people into having to recruit to make any money, whether by accident or by design.
The majority of comments I found across the internet suggest that most Mary Kay consultants are not making much money – in fact several have lost money and those in profit are making only a couple of hundred dollars per year. Of course, these figures are subjective and open to interpretation – low earnings could be deliberately misquoted by those who are anti-MLM or disgruntled ex-consultants. Likewise, business takes hard work and it could, perhaps, be argued that the low earners don’t have what it takes.
Other criticisms include the fact that Mary Kay pushes an almost cult like belief that negativity has no place in their organisation. This means that only positive comments are given any credence and any consultant who highlights their failings risks being ostracised.
Also, at the time of recruitment, there are many stories of new consultants being required to but inventory. Of course, this sounds perfectly legitimate – how else do you sell cosmetics if you don’t have any stock? However, there are a lot of reports of pushy directors who try and get their new recruits to but the largest package of stock ($4,800 worth) rather than the minimum $600 package. Presumably, this is because they then earn a much bigger commission cheque?
There are also comments about how moving up the ladder within Mary Kay is dependent upon sales volumes. Again, this isn’t strange – the more successful people always rise to the top in any business venture. However, there are reports about people buying huge amounts of inventory, solely to gain promotion. Doesn’t sound quite right does it??
Pink Cadillacs
Some time ago, Mary Kay hit upon the idea of leasing cars to it’s consultants and directors. A great piece of marketing for the company.. who does it really benefit?
From what I can make out the consultant, who is at the low end of the scale, receives a car as long as they continue to generate $4,500 per month in revenue. Should they ever fall below this level then they will suddenly start getting billed $375 per month until they get their revenue back up to the prescribed level again.
Considering all the conditions, qualifying amounts and provisos of first obtaining the car, it can be said that a mere consultant will need to have generated $130,000 in revenue before being able to drive their red Pontiac Vibe.
That figure increases to $576,000 for a director who wishes to have the pink Cadillac.
I guess that means you have to work pretty damn hard to get to lease a car for ‘nothing’.
Conclusion
As with most of these MLM companies that I look into, nothing is ever crystal clear (in most cases).
I expect any comments below to be split between those who have been burned by Mary Kay and those who are reputedly making a good income from it.
It would be fair to say that those pushing recruitment ahead of retail sales may be individuals looking to make money rather then people following any company guidelines.
I personally would stop short of calling Mary Kay Cosmetics an illegal pyramid scheme, however, I believe they are an MLM through which hard working women are likely to see very little return on their investment.
That’s my opinion… what do you think?
Verdict : Probably not a scam, but probably not a winner either.
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Scam is a retail manager from London. England. After a good friend of his fell prey to an email scam he decided to write about internet safety and security on his blog, Scam Types.
If anyone would like to print a rebuttal or offer an alternative article, please email Sean at info[at]ideafarm.net
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Unhappy Franchisee: Franchising rumors, rants, controversies, issues, complaints & insider information you’re not supposed to know.
Unbiased franchise information, franchise interviews and detailed, searchable information on 400 franchise and business opportunities..
Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.
Perhaps I need to wait for
“Our next post will explain the significance of the this legal protection.”
to understand “the importance of the argument to network marketers.” but I think I might be “getting it”.
Please continue to bear with me! (And Sean, you seem to know more about franchises than I do, so feel free to jump in here!) It seems that you are saying that if an individual (recruiter or director or both) suggests (whether implied or explicitly) that the “cost” of doing business with Mary Kay is more than $500 than the person that “bought” the opportunity to sell (through these individuals) is (or should be) offered the protection that is offered to franchisees. It would seem that this protection would only be offered in terms of the relationship with the recruiter that “sold” the rights (and possibly anyone that authorized her to make that offer).
Am I getting close now?
If that is the case, it seems that there would be far worse legal implications for the ones suggesting that such purchases are mandatory, in that they are misrepresenting company policies and are essentially “selling” something (the right to distribute Mary Kay) that they do not have the right to sell.
Similar to me offering to sell you the Brooklyn Bridge. It is not mine to offer you. But you can not make a claim against the state of New York or New Jersey just because you gave me money with the impression that I had a right to make such an offer. If I worked for any of the government agencies that have some oversight of that particular structure, and I was using that position to convince people that I did have the authority to offer such an exchange, I would expect to be relieved of my duties as soon as I was found out.
Similarly, if someone is suggesting (again implied or explicitly) that a level of inventory (other than what we previously discussed) is required (not simply highly recommended) as a prerequisite to representing Mary Kay, then they are more likely to face charges of misrepresenting the company and possible legal action in that direction than they are to face legal pressure from the poor sap they sold an illegitimate bill of goods to!
I again apologize that the point you are trying to make is not readily clear to me. Legal stuff is pretty much a foreign language to me.
Am I any closer than before to understanding the point you are trying to make?
David writes: “It seems that you are saying that if an individual (recruiter or director or both) suggests (whether implied or explicitly) that the “cost” of doing business with Mary Kay is more than $500 than the person that “bought” the opportunity to sell (through these individuals) is (or should be) offered the protection that is offered to franchisees”
David, if MK’s business model requires an upsell to consultants past the $500 exemption, then MK is a franchisor.
Tupperware used to sell territories and so was clearly a franchisor.
MK doesn’t sell territories, but it doesn’t mean that MK is not a franchisor.
Do a google search for “inadvertent franchisor”.
You will find that a lot of distributorships are legally franchises.
With MK, there is obviously a gradient.
You buy the starter kit – no franchise.
You buy an unreasonable amount of inventory from MK – likely MK sold you a product distribution franchise.
(So did the MK director, but MK may very well be held liable for the MK director’s actions.)
Michael,
Thanks.
I am still uncertain what this has to do with the discussion at hand (still waiting for the “next post” that will explain the significance I guess!) but nonetheless, let us continue.
You said,
“MK’s business model requires an upsell”
Assuming that “requires” is the keyword there, again there is no requirement of any upsell. The fact that individuals on blogs are suggesting that you “need” a certain level of inventory to become a certain level of successful does not mean that Mary Kay requires this level for someone to represent the company.
Also, it still seems to me that if someone was representing that this is a requirement, I suspect that legal action would flow from Mary Kay towards the person that was representing this misinformation and not the other way around.
Finally, at your suggestion, I googled “inadvertent franchisor” and found the following on Entrepreneur(dot)com:
“The Inadvertent Franchisor
One completely unnecessary risk we often see is companies that inadvertently violate franchise laws by offering franchises without proper disclosure. In virtually every case, these companies simply did not know that they were actually franchising–or their lawyers didn’t.
The federal definition of a franchise includes a business relationship that has three elements:
1. The use of a common trademark (such as “McDonald’s”);
2. The provision of operational support or assistance, training or the exercise of significant operating control;
3. The payment of a fee of over $500 in the first six months of operation. This definition includes initial fees, royalties, advertising fees, training fees or fees for equipment. In fact, the lone exception is for goods sold to the franchisee at a bona fide wholesale price for resale to their customers.”
It would be my guess that Mary Kay’s Lawyers are quite aware of the differences and have set up the rules in such a way that Mary Kay is legitimately and legally what they claim to be. To be honest, I am not sure what it is that they claim to be, nor do I care, but I don’t think they would hope to get away with misrepresenting themselves.
I think that the part:
“…exception is for goods sold to the franchisee at a bona fide wholesale price for resale to their customers.”
is what sets MK apart. The money that you are discussing is being used to purchase goods that are being sold with the purpose of being resold to a consumer.
Are we getting closer?
David writes: “The money that you are discussing is being used to purchase goods that are being sold with the purpose of being resold to a consumer.”
Yes, that is the nub of the problem.
Whether the exemption applies is a fact determined situation.
Do not be fooled by the idea that all MK “requires” is the purchase of a starter kit – that is not going to fly.
Michael,
I am, unfortunately, still confused.
It seems that item 3
“3. The payment of a fee of over $500 in the first six months of operation. This definition includes initial fees, royalties, advertising fees, training fees or fees for equipment. In fact, the lone exception is for goods sold to the franchisee at a bona fide wholesale price for resale to their customers.”
is not true of Mary Kay. The “definition” of what constitutes “fees” that cannot exceed $500 are:
1. initial fees (included in starter kit)
2. royalties (if any, included it starter kit)
3. advertising fees (none)
4. training fees (though some directors charge a nominal “door fee” at their weekly meeting – that are highly recommended but not mandatory – $5/week would still only be $130 in the first 6 months $10/wk – which I have never heard of – would be $260, but again, these are not mandatory “training fees”)
5. fees for equipment (none)
Those are the items that, if in excess of $500, would make up the third element in causing Mary Kay to be a franchise.
As this particular article emphasizes, however, “the lone exception is for goods sold to the franchisee at a bona fide wholesale price for resale to their customers.”
So, it would seem that, even if an individual was required to purchase thousands, tens of thousands, or hundreds of thousands of dollars worth of inventory, so long as it was purchased “at a wholesale price for resale” it would not “count” towards the $500 as it is not a “fee”.
You said:
“Whether the exemption applies is a fact determined situation.”
I don’t understand that statement. The facts are (fact is) that Mary Kay does not charge a fee in excess of $500. The exemption applies to wholesale purchases only. What would make a wholesale purchase not a wholesale purchase?
You also said:
“Do not be fooled by the idea that all MK “requires” is the purchase of a starter kit – that is not going to fly.
I also do not understand that statement.
Doesn’t the whole premise of inquiring or determining whether or not Mary Kay is a franchise hinge on what they require in terms of fees?
Clearly, the other two items fit:
Common Trademark? Yes. Mary Kay
The provision of operational support or assistance, training or the exercise of significant operating control? Yes. There is considerable operational support available (though some *ahem*pinktruth*ahem* would disagree!)
So the only remaining question is, “do they charge more than $500 in fees to have the right to sell Mary Kay?”
In light of that, “the idea that all MK requires is the purchase of a starter kit” is pivotal to the conversation.
Unless you are suggesting that there are hidden fees that you later find out you must pay in order to operate as a representative of the company.
Are you suggesting that there are such hidden fees? If so, what are they?
If not, I am really struggling to see the point that you are trying to make.
Sean,
Throw me a bone here. “Franchise Pick” is the name of your blog. This is your area of expertise, no?
What am I missing here? I think many in Mary Kay would love to be able to say that we are a full-fledged, legitimate “franchise” opportunity. It adds a certain “feel” of credibility, if not actual credibility. It has always been my impression though that this $500 “thing” is one of the things that keeps Mary Kay on the peripheral of the franchise world.
For better or worse.
Please help me understand Michael (or help me ask him the right questions so that you can understand him and then interpret for me). I am still not sure why he feels that Mary Kay is a franchise, let alone what the significance would be if it were.
Sean, you are the expert (as far as I am concerned) of all things franchise.
What say you?
David, thank you for making me feel “sane” you are asking better than I did the same thing I was asking and trying to understand. I really was wondering what I was missing. Because the more I read the more I feel that what MW is saying is backing up what we are saying,
oh I am confused.
David and Mk4me;
1. I am a franchise attorney and have significant legal experience in franchise and biz op law, in the US and Canada.
You do not. Your inexperience shows, especially when it comes to understanding the nuances of legal definitions.
2. You both need to read the FTC Staff Advisory Opinion I cited at bizop.ca and virtually any submission that the DSA has made to the FTC regarding either a) the Franchise Rule or b) the Business Opportunity Rule.
3. Pretty sure that Sean would defer to my understanding of the legal issues surrounding inadvertent franchisors.
Michael,
I won’t hold it against you that you are a lawyer if you don’t hold it against me that I am not!
Just kidding! Congratulations on your accomplishments. Sincerely.
Thank you for pointing out that my inexperience shows. I should hope that it would. It is not my job (by any stretch of the imagination) to understand, as you say, “…the nuances of legal definitions”! That is why I have been asking you to help me understand.
Specifically, I wish to understand:
1. Why you think Mary Kay should be considered a franchise. I.E. On what basis it would be considered a franchise. What policies (stated or implied) lead you to believe that it may be a franchise. (At this point, I would even settle for a definitive, “I think that Mary Kay is a franchise” or “I don’t think Mary Kay is a franchise”)
2. What significant bearing that would have on those that are in Mary Kay, those that were in Mary Kay, or this conversation in general.
***
If you are referring to the link you posted in a comment on this post, I did go there, I read for a few pages and then skimmed the rest. As I said, (and you so deftly pointed out) “legalese” is not my specialty. If you are going to expect me to sift through that and ascertain the answers to my above questions, you will have to wait a long time! It did seem like that was in regards to a specific situation (vending machines as I gathered) and while some aspects of the opinion would be transferable to a conversation about Mary Kay, it seems that for the most part it does not apply.
I did not call upon Sean to override or undermine your opinion or understanding. I am sure that he would defer to it as well. I am asking him to explain what the heck you are saying. Because I still don’t understand. Perhaps everyone else here does understand… and mk4me and I are the only ones that do not understand. If that is the case, just tell us to leave it alone…. it really doesn’t concern me that much. But if you really want to make your point, (or anyone else “gets it” and wants to help the poor, helpless rest of us) please explain further.
The questions again are:
1. On what basis do you believe that Mary Kay is a franchise?
2. What would be the significance of Mary Kay being a franchise? (How would it change the way that Mary Kay reps operate?)
Thanks.
David:
Here’s the explanation that I think you’re looking for. Michael can correct any inaccuracies in my “dumbing down” of some of the more complex topics and terminology.
All companies offering business opportunities must comply with Federal and state laws regarding basic business, fraud, etc. plus specific laws pertaining to business opportunities. However, if a business opportunity meets the 3 criteria that classifies it as a “franchise” opportunity, the company is subject to stricter compliance responsibilities and can face stricter penalties for non-compliance – regardless of whether they call it a franchise, a license, direct sales “consultant program” or an egg salad sandwich.
In the U.S., if a company is deemed to be offering a franchise opportunity it must comply with the Federal regulations included in the FTC Rule issued by the Federal Trade Commission, as well as the state-level regulations and reporting requirements of particular states (called Registration and Filing states).
If Mary Kay is deemed a franchise, it should be following the FTC regulations for pre-sale disclosure, such as providing an FDD document (formerly UFOC) that includes required disclosure info about the company, its officers and the deal. Mary Kay would also be prohibited from providing potential earnings information to prospective consultant-franchisees outside of its designated format.
Put simply, here are 3 criteria that define a franchise. It’s a franchise if the opportunity provider:
1) Requires the use of a common, designated trademark, AND,
2) Requires compliance with specific operational and quality control guidelines and procedures, AND
3) Receives payment in excess of $500.
The first 2 are more cut and dried, but there are many ways that the payment of a fee can be disguised.
So Michael’s point is that if they are receiving more than $500 – even if it’s in the form of mark-up of inventory, or consulting fees, or whatever – Mary Kay may be an inadvertent or illegal franchise, and should be complying with all applicable franchise laws and regulations.
Michael: Have I dumbed down your point accurately?
Sean,
Thank you. “Dumb down”. That was the phrase that I was looking for! I need someone to “dumb it down” for me! Thanks.
Now, this next question will probably really need to be answered by Michael, but if you think you have an idea and want to take a stab at it, I would love to hear your take on it.
Isn’t this discussion more appropriate to a courtroom or an FTC hearing? To my understanding, the reason that we have government agencies like the FTC and others is so that they can evaluate how companies are operating and “keep them in line”. If Michael feels that Mary Kay should be considered a franchise wouldn’t his time and energy be better spent trying to convince the FTC of this fact?
If this is something that the Mary Kay people on my site should care about, I want to know why. If it is not, I want to know why he brought it up here!
Sean, if you understand and can explain, I would greatly appreciate it. If not, Michael, please enlighten me!
Thanks guys
David: Years ago, I was at a crossroads. Should I go to law school, become an attorney and correctly answer people’s legal questions? I asked myself, Or should I spend that same amount of time learning to play 5-string banjo, and just answer their legal questions anyway.
Well, I made the right decision, because today I can play a mean Foggy Mountain Breakdown and answer legal questions with impunity. For while real lawyers are held accountable for their accuracy and professionalism, no one can later claim they relied on bad legal advice from a blogger and admitted banjoist.
So here’s the enlightenment from my perspective: The FTC does very little in the way of active enforcement, period, and if consumers ain’t screaming, they ain’t enforcing. Even then… cruise the stories and comments here and on UnhappyFranchisee.com. There are thousands of comments against iSold It, Snappy Auctions, Quiznos, UPS Store, Dream Dinners, Super Suppers, Cuppy’s Coffee, Contours Express, Butterfly Life… The list goes on and on. Go search the FTC website for their investigations… there are none.
This is America. If no one’s making money off it, it ain’t gettin’ done.
So… who cares if Mary Kay is selling illegal franchises?
Attorneys representing clients going after Mary Kay for one…
Attorneys interested in putting a class action lawsuit against Mary Kay for two…
Now, back to banjo practice…
Sean,
I went with option 3. No banjo, no legal, just a boring old “regular” blogger.
So is it possible that Mr. Webster is just cruzin’ the blogs looking for folks that may want to go after Mary Kay or help assemble a class action suit? Seems he should troll Pink Truth a little more… they would be more likely to be the ones that want to “bring the company down” in whatever way possible!
I haven’t really read many of the posts on here, but I really like Quiznos. Are they bad guys?
In your estimation, is Mary Kay bad? I usually ask it this way:
Is there more bad than good or more good than bad? Based on what you know of course!
Thanks for clearing things up for me about the illegal franchise thing. To wrap it up for me though, can you confirm for me that this is (as I have thus far determined) rather irrelevant to the readers of my blog?
Thanks again and have a great weekend!
…is it possible that Mr. Webster is just cruzin’ the blogs looking for folks that may want to go after Mary Kay or help assemble a class action suit?
In a word: No.
Michael Webster is a bona fide good guy who donates countless hours teaching prospective franchisees what they need to know from making the mistakes that will later cost them their life savings, their credit ratings, their homes, their marriages, and a few, like at least one franchisee of Quiznos, their lives.
Webster is an unpaid board member of the American Association of Franchisees & Dealers (AAFD) and largely responsible for keeping it a viable organization. He also has a franchise and biz opp anti-fraud blog at Biz Opp News.
You’re missing an important point here. Franchise attorneys don’t have to cruise for business, and they certainly don’t benefit by educating people. Plus, the money isn’t in representing franchisees, as Michael Webster does. Attorneys have no shortage of business because people are ill-informed. Webster is the odd duck because he goes out of his way to help keep people from getting in trouble; he doesn’t sit around and simply cash in when they do.
To wrap it up for me though, can you confirm for me that this is (as I have thus far determined) rather irrelevant to the readers of my blog?
I’m playing catch up on my comment reading, so correct me if I’m missing something.
David, you claim that your blog is dedicated to providing an incisive and balanced examination of both sides of the Mary Kay controversy, correct?
Mary Kay has been around for 40 years and management has surely examined the franchise question with input from top attorneys, it would be fair to assume. If they are knowingly skirting franchise laws in order to avoid disclosure and other requirements put in place to protect potential investors, wouldn’t that be relevant to your investigation into Mary Kay?
How would you conclude that violating Federal law for decades would be “rather irrelevant” to your readers?
Or are you using the FOX News definition of “fair & balanced”?
Related reading:
When is a Mary Kay IB Consultant a Franchisee?
Does Pink Stink or is Mary Kay O.K.?
Is Mary Kay Cosmetics a “Cult of Greed”?
Are “Pink Truthers” Just Lazy Whiners?
MARY KAY: Hot or NOT? (Part 4 of 4)
Sean,
Sorry if that came across combative, just trying to figure it out. I can tell that, at the very least, he is not here to be belligerent the way some people are! I just couldn’t figure out what his motives were. Consumer education (as is the motivating factor with you and I – I believe) is certainly an admirable motivation! At least I think so, anyway.
In regards to the relevance of this topic, I do indeed feel that “violating Federal law for decades” would be relevant to my readers. But, unless I have not been paying enough attention to your remarks, that is the first time you put it like that.
That, of course, would be a pretty serious accusation!
Call me naive, but aren’t there laws in place that govern whatever it is that they are currently classified as? It seems that a company with a sales structure that is geared toward people looking to make anywhere from a few bucks on the side to a living wage to an executive income (and everywhere in between) should not necessarily be held to the same laws as a company that collects thousands (or hundreds of thousands) of dollars as an initial investment towards ownership of a moneymaking opportunity.
I am not saying that they should or should not be held to the same requirements. I am not saying that it should not be explored, discussed, and considered from every angle. But, I am saying that it seems rather pointless for a bunch of legally illiterate bloggers to “hold court” about a subject that (in my opinion) should be debated in a setting where the participants have a grasp on the laws and the language of the laws as they pertain to that subject.
I guess that if it came to light (through legal channels or otherwise) that Mary Kay is skirting the law, than it would be appropriate for me to discuss it, but it seems rather inappropriate for the folks on my blog to be the ones to pronounce a decision about this, particularly when:
1. My “…inexperience shows, especially when it comes to understanding the nuances of legal definitions.”
2. The FTC has not made that pronouncement in the 40 plus years that Mary Kay has been in existence.
To put it another way, I also do not discuss the benefits vs. consequences of the ingredients that Mary Kay uses in their formulas. I leave that to their scientists or researchers (or whoever figures out what ingredients to put in Mary Kay products) Seems to me that they have been doing it for 40 years without any problems. If someone that is familiar with these things discovers something bad about those ingredients, brings it to the attention of the FDA (or whatever organization would be appropriate) then it would get discussion on my blog.
I guess I am saying that it seems rather hypothetical and way too complex for a “casual” blog experience!
Call me naive, but aren’t there laws in place that govern whatever it is that they are currently classified as?
You’re naive.
It seems that a company with a sales structure that is geared toward people looking to make anywhere from a few bucks on the side to a living wage to an executive income (and everywhere in between) should not necessarily be held to the same laws as a company that collects thousands (or hundreds of thousands) of dollars as an initial investment towards ownership of a moneymaking opportunity.
These sound like words from a Mary Kay apologist, not one truly exploring both sides of the issue.
…But, I am saying that it seems rather pointless for a bunch of legally illiterate bloggers to “hold court” about a subject that (in my opinion) should be debated in a setting where the participants have a grasp on the laws…
If there’s a message that comes through loud and clear in the thousands of comments that have been posted here and Unhappy Franchisee it is that people NEED to get educated and get involved in investigating business opportunities, the laws that pertain to them, and the ramifications in the real world.
I mean you no disrespect, but you have dedicated quite a bit of time to writing about Mary Kay. Your reaction is that you and Mary Kayers are not educated about this subject, so you are not qualified to explore it and it is “irrelevant” to your discussion. Forgive me for being blunt, but that’s a pretty lame reaction. Shouldn’t it be: I’m not educated on this subject, so I should get educated and be able to enlighten my readers?
Are you on a true investigation of both sides of the issue, or do you only consider that which supports your set conclusion as “relevant” to your readers?
DS: Call me naive
SK: You’re naive
DS: Thanks.
****
All joking aside, there are things that I know (very little when it comes to Mary Kay) and things that I don’t know.
As a husband of a woman that sells for Mary Kay, I will do what I feel is necessary to ensure that she is making the best decision she can for herself and for our financial future.
As a blogger, I am opening the door for people to discuss their observations and their expertise as it applies to Mary Kay.
It may be a poor attitude to have. My priority is to open up and allow for discussion. My priority is not (necessarily) to enlighten or educate anyone. I would be more than willing to offer a guest post (from either yourself or Michael) to help educate my readers and open discussion in that area. But, I would have to ask that you commit to at least a minimal amount of post-post support in the form of answering the questions that it raises!
I write ‘em as I see ‘em. This is the first time I have heard of this “problem” and, to be honest, I am having a difficult time understanding the whole concept. I simply will not post something (with my name on it) on my blog that I do not understand.
Just as you did not research all the information that Mary Kay offers to the public (because it is not your specialty) I can not hope to research every aspect of Mary Kay’s legal standing. (or to be even more blunt any aspect!)
I learned a long time ago that I can’t know everything about everything. I talk about what I know (again, very little) and let other people talk about what they know.
I try to hold most people who speak “authoritatively” to the flame (at least a little bit) so that I am not inadvertently allowing them to say something that is not true with the impression that I am endorsing their falsehood.
Don’t worry about being blunt. I can take it. My blog is what it is. If I led you to believe that it was other than it is, I apologize! I am not expert!
(now Scam on the other hand…. There is a pro!)
Posted by David: “I try to hold most people who speak “authoritatively” to the flame (at least a little bit) so that I am not inadvertently allowing them to say something that is not true with the impression that I am endorsing their falsehood.”
He speaketh the truth, I got a tsk, tsk, tsk when I mean to say one thing but after it is written, it sounds. well, not the way I actually intended, with no expressions, inflection,, etc.. (I think one time I even got a time out for being a naughty mk4me)
I respect is blog ethic!
Side note, it sort of sounds that it really wouldn’t make a difference if they classified Mk as a franchise anyway, because if there are all the problems with all these franchises and noone bothers to do anything about them and there are no investigations, what would that change?? Obviously the rules aren’t helping those that got involved in Quizno’s and the others that you sighted? ( I am not being sassy so please don’t read it that way) but seriously it seems like it would first be smarter to take the time to have the rules enforced and then go after the different places that should perhaps be reclassified.
mk4me writes: …it sort of sounds that it really wouldn’t make a difference if they classified Mk as a franchise anyway…
The title question asks if MK is a scam club for girls. If the very “foundation” of the Mary Kay opportunity, as Michael suggests it may be, is fraudulent it would seem to have some relevance to the true character of the organization?
Even if MK is an honorable and law-abiding organization, isn’t it relevant that they MK detractors and increasingly vocal and militant Pink Truthers may use this as a weapon to further their insidious agenda? A single 60 Minutes expose on LA Weight Loss contributed to that chain’s downward spiral which it has not yet pulled out of. Amway has such a bad name it must deceive people about its identity just to get them to an initial meeting?
Is that what you want for Mary Kay? Do you want Mary Kay® NouriShine™ Lip Gloss in Berry Sparkle to be the new scarlet letter, a prima facial admission of support for a company with no regard for FTC’s franchise rule? Are you willing to sit idly by and let Mary Kay® Mineral Eye Color in Silky Caramel become the Enron logo of direct sales cosmetics, the oil drenched loon forever associated with the once esteemed Exxon Valdez?
These Pink Truthers are strong in their resolve and increasingly militant in their tactics. If Mary Kay wants “gloss” over these potential time bombs, it’s no powder off my nose.
mk4me wrote: Obviously the rules aren’t helping those that got involved in Quizno’s and the others that you sighted?
The context of that point was that government agencies, specifically the FTC, are not out there rigorously enforcing those rules independent of private legal action. Those rules are, however, significant in the actions being brought in lawsuits against franchise companies. It is quite significant if someone – or a group of someones – alleges that they suffered losses because they were, in essence, sold an illegal franchise, were provided illegal earnings claims, were not provided with required disclosure documents within the proscribed time frame, were sold an opportunity that was not registered in their state, as required, etc.
In my observation, these are the places where these infractions are most often adjudicated – not in FTC actions.
David writes: My priority is to open up and allow for discussion. My priority is not (necessarily) to enlighten or educate anyone.
and also…
I simply will not post something (with my name on it) on my blog that I do not understand.
I think herein lies some of the criticism that others have made against your claim of a “fair and balanced” approach, David. When you say you will not post something on your blog that you do not “understand,” I interprete that as meaning something you have not mulled over and formed an opinion on. Which is fine… but contradicts that your priority is ” is to open up and allow for discussion.”
You do not put your name on opposing viewpoints on your blog any more than I put my name on your guest posts. I’d submit that there’s more power in asking a question that you truly don’t know the answer to rather than waiting ’til you “understand” thoroughly to ask it.
Unless, of course, you are furthering a particular agenda or point-of-view and just pretending to be open to all viewpoints… A Kaybot assuming human form in order to assimilate, as it were?
Sean,
First of all, let me thank you sincerely for your continued patience and for “hosting”, as it were, this conversation on your site.
I think you are misunderstanding my motivation for having this conversation though. I have stumbled on something I don’t know that is being presented by people that seem to be “in the know” and I am asking them (you and Michael) to give me enough understanding of the subject that I can go back to my blog with something of an intelligible explanation of this quandary so that discussion can begin.
As it stands right now, it would go a little like this:
“Something something something something FTC, something something something something legal action. Something something something something illegal franchise opportunity, something something something something Mary Kay?”
And I really don’t think it would benefit anyone.
I understand that you and Michael say this is important. I don’t understand why it is important.
Is Mary Kay doing something illegal? If so, what? And wherein lies the evidence? Or at least what are the specific rules that you (or Michael) are saying they are breaking?
If someone were to bring this up on my blog, I would most certainly not censor them.
If someone were to offer a guest post about this, I would certainly publish it.
My comment:
“I simply will not post something (with my name on it) on my blog that I do not understand.”
Is meant with the emphasis on I will not post something. I will post something written by someone who knows what they are talking about!
Just as I would not post about banjo playing. But if you wanted to write a compelling article abut the merits of banjo playing as it relates to being in a direct sales organization, I would be more than happy to publish it.
It frustrates me a little (and I am sure that this is more a product of difficulty gathering intent via written word vs. spoken word) that I have now spent days trying to understand this concept so that I could bring something intelligent back to my blog BUT in the process of me asking questions so that I could accurately present the concept, you have determined (and pronounced several times) that this activity somehow proves that I am not balanced?!?!?! Wouldn’t it follow that if I were trying to promote the Kaybot’s “ignore all negative” mentality that I would have just let Michael’s original comment settle into obscurity?
Believe me or not, I am really just trying to figure this thing out so that I understand it. I am relying on you (and particularly Michael) to follow up since you are the ones stressing the importance.
Frankly, I would much prefer that one of you write a guest post so that I can stop trying to figure it out. But since neither of you have volunteered…
David wrote: “Similarly, if someone is suggesting (again implied or explicitly) that a level of inventory (other than what we previously discussed) is required (not simply highly recommended) as a prerequisite to representing Mary Kay, then they are more likely to face charges of misrepresenting the company and possible legal action in that direction than they are to face legal pressure from the poor sap they sold an illegitimate bill of goods to!”
No, no and double no.
The starter kit price is MK the legal loophole, so far untested by the FTC.
Now suppose, that MK issues a sales directive which can reasonable interpreted by a jury to say: sell the initial consultants $4800 of inventory.
That is the type of fact pattern that could get MK square before the FTC. The concept of “required” would not be limited to an examination of the starter kit.
Has it happened? From my outside view, yes it would be appear that some people have complained about being pressured into buying unreasonable about inventory.
If there are a significant amount of those people, with cogent stories to tell, and they themselves together properly they could force either the FTC or the Competition Bureau into acting on their complaints.
Best practice: never sell more than a starter kit and minimize the sale of sales motivation items.
This will probably keep you safe from the Franchise Rule.
Personally, I kind of liked:
“Something something something something FTC, something something something something legal action. Something something something something illegal franchise opportunity, something something something something Mary Kay?”
:)
Sean, glad you liked!
Michael, thank you. I feel like I am getting ever closer in my quest to understand.
So, if I understand correctly, a directive from Mary Kay (implied or otherwise) that a jury feels reasonably suggests that recruiters/directors should sell $x of inventory (anything over $500 as I understand it) than Mary Kay would (or could) be held liable for offering a franchise?
Does this directive have to come from Mary Kay corporate? Or could it come from a member of the sales force (say a high ranking, senior member)?
In other words, if Mary Kay says (emphatically) that the only requirement is the starter kit, but a member of the sales force says “$4800″, is Mary Kay culpable or is the member of the sales force to blame? Or neither? Or both?
In terms of Mary Kay Corporate’s position on inventory, it is quite clear.
I am not sure if images are supported in the comments of this blog, but I will try anyway:
If that didn’t work, you can see the image here
Basically, it says that any inventory is optional and is entirely up to the consultant that has just joined the company.
In another place, (a worksheet used to determine how much you should purchase) it says:
“* This Inventory Worksheet provides suggestions to assist you in determining your ideal inventory investment. Your ultimate decision is
completely up to you and will likely depend on multiple factors that may not be represented on this page.”
My understanding (based on those things) is that Mary Kay is very clear (and explicit) that inventory is not required. Essentially, it seems that they say, “Here is what is available, but we can’t make any recommendations about what is right for you.” (Similar to a lawyer that has a blog, but must disclaim that he is just offering information and his words should not be considered legal advice.)
Assuming that this is the consistent message that Mary Kay corporate puts out, but there are members of the sales force that contradict this, who is in legal jeopardy? And how does it get resolved?
I really liked:
“Best practice: never sell more than a starter kit and minimize the sale of sales motivation items.
This will probably keep you safe from the Franchise Rule.
As that seems to be the consistent refrain of most of the commentators on my blog!
Again thanks for all you help and for putting up with my lack of knowledge in this area!
David wrote: “I feel like I am getting ever closer in my quest to understand.”
David, you are a consummate shill. A real professional.
I tip my hat to you.
You have understood this issue for quite some time. Despite your self professed inability to understand “legalesse”.
You are a very clever man.
You have completely understood how MK’s written material serves to deflect a legal challenge to the status of a MK consultant.
But Sean and Tracy are putting groups together whose viva voce evidence may put lie to the written words of MK.
Who will win? Don’t know.
See you at the top.
David does seem to have become wonderfully conversant on the subject.
Perhaps you’re just a great tutor, Michael.
Michael,
Erm… Thanks?!?
They say that flattery will get you anything you want, though I am not sure that your left-handed compliments are what they meant.
I will say that I have not and am not “playing dumb” and I am not trying to promote or accuse the company of anything.
I just told you what I know about the company. It seems (if anything) that you have known this information all along but were hoping that I didn’t?
Is accusing me of being a shill your way of not answering my questions?
I will ask you to trust me that I am not “putting you on” or hiding any agenda of mine.
If there is something that needs attention called to it, and I am in a position to call attention to it, I will. However, your apparent distrust for me seems to be proving difficult.
“You have completely understood how MK’s written material serves to deflect a legal challenge to the status of a MK consultant.”
Actually, I see that as their policy which causes them to fall into a category other than the one that we are discussing (namely a franchise).
I feel like you are saying:
“Mary Kay should be considered a franchise because they say ‘xyz’.”
And I am saying:
“But they don’t say ‘xyz’, they say ‘abc’.”
It seems that certain “ranking” consultants are being accused of saying (in this example) “xyz”, and I certainly believe that if the company is aware of this and is doing nothing to prevent it than there is a case to be had.
But outside of hearsay that is being built up on a hardly credible website, there does not seem to be any evidence that would indicate that this gross misrepresentation of the requirements is anything more than negligible.
That is not to say that such evidence does not exist. I just don’t know how much evidence would be required, where such evidence could be collected, how such evidence could be quantified or, really, anything about it. Is it out there? I think you seem more qualified to answer that. What would I do with that evidence? Again, your the professional.
I once again extend to you the opportunity to write a guest post for my blog, explaining your position on this and what recommendations you would make for people that suspect they were sold a franchise. If you are putting together a class action suit or trying to assemble disen-franchised (hee hee, get it?) ex-consultants, you can (as Sean offered me) place links, email address, even a phone number (if you so desire).
Sean, I try not to be overly disparaging in my comments, but I have to be entirely honest… it has been your tutelage that has helped me become, as you say, conversant about this topic. Michael, in my opinion, has been considerably less helpful. Nonetheless, I do thank both of you for your continued patient (at times not so patient) help in understanding your point of view about this.
Thanks.
Mary Kay “allows” directors to train other directors at Company sponsored events. These higher ranking directors offer “advice” on how to verbally and nonverbally influence consultants to make larger inventory purchases. She may not say out loud, “Pick this package – it’s the biggest and the best” but her body language, voice inflection, etc. convey to the consultant that she will be happier with a larger inventory. These practices are trained at Company sponsored events by INDEPENDENT Sales Director. That is the problem – the company protects itself by having women sign an agreement saying they are independent and allowing said women to train others with their blessing. They protect themselves – not the women whose lives they are claiming to enrich.
It is ironic, I just wrote a post asking for information about this very practice.
http://www.bizop.ca/blog2/multi-level-marketing/ftc-franchise-rule-anpr-commen.html
Thanks for the info: Sean, I am going to steal it!
Michael,
Hi – It’s me again.
I read your post and got stuck (again) on the thing that got you and I talking in the first place.
You said (in the article you just linked to):
“My own legal work with Tupperware distributors makes me wonder how the MLM establishes the wholesale price, given the pennies they pay for the product. Without a reasonable wholesale price, or method to establish it, MLMs who auto ship may be skirting on the edge of the FTC’s Franchise Rule.”
I wonder, because I am not real savvy in terms of how wholesale prices get set, if you know what a “reasonable” method of establishing a wholesale price is?
I only found two things of interest in an admittedly quick search. The first was a wikipedia quote of the United Nations Statistics Division saying, “”wholesale” is the resale (sale without transformation) of new and used goods to retailers, to industrial, commercial, institutional or professional users, or to other wholesalers, or involves acting as an agent or broker in buying merchandise for, or selling merchandise to, such persons or companies. Wholesalers frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots.”
You can see the entry here.
Not very helpful, I know.
The second, which I thought much more enlightening, was a discussion on, of all places, “woodweb”… a “woodworking industry information” website.
The discussion took place back in June of 2001 and can be found here
Some takeaways:
“…retailers in most industries need to make “keystone”, that is a 100% markup between what they pay and manufacturer’s suggested retail price. That allows them to discount as needed and theirs is an overhead intensive situation.”
——
“Market pricing is the price in the market for any given product. You may achieve a very slightly higher price for features, perceived quality or name brand identity. The bottom line is, go out and shop the marketplace. Then set your price and remember a retailer needs at least 40% to cover his cost of doing business.”
—–
“In the outdoor furniture market, retailers of specialty stores mark up product 100%. No exceptions, no matter what their profit per particular piece may be. Look for a manufacturer of a comparable product. Look for the same style, or the same wood and thickness of wood. Also compare how they are made. Some manufactures really cut it down when it comes to fasteners, so that their product will ship easy. Then find a retail price for this and divide it in half.”
******
I realize that there are considerable differences between this industry and the one we are discussing, but my (amateur) understanding of how wholesale works is that the manufacturer pretty much gets to set whatever price they want. The market (more or less) is what keeps them in check (this is one of the important factors of monopoly laws, no?) For example, I can’t brew beer in my bathtub and sell it at $100/case (wholesale) because no one will pay $200/case (retail). But if I found a market for it, there is no “calculator” that says that because my cost was pennies on the bottle, I can’t charge anything that I want!
Ergo, in answer to your wondering, I would guess that MLM’s establish their wholesale price much the same as any other distribution model does.
Mary Kay, in particular, sets their wholesale such that their consultants “Manufacturer Suggested Retail Price” markup is 100%. How they came up with the retail and subsequent wholesale pricing seems that it would be similar to how other (similar) businesses would.
Now, I say all that in spite of the fact that I still don’t understand what their method of determining their wholesale (or retail) price has to do with whether they are offering a franchise opportunity… or something else.
((phew)) that was wordy…
next.
It seems that you are still not interested in answering any of my other questions.
Have you simply settled on the fact that I am a “consummate shill” and therefore not worth the time of day?
If so, that saddens me, as I genuinely would like to understand the accusations you seem to be leveling against the company that my wife represents. It would also be really frustrating if I just spent all this time trying to cajole this information out of you, only to find out that you are unwilling to give up such information.
If that is the case, I ask you to look at it this way. Suppose that I am the “consummate shill” you take me for. Aren’t the rest of the readers here (and on my site) “worth” taking the time to explain this to?
From your “blue maumau” blog:
“…The operation of a franchise, as opposed to running the underlying business, requires understanding complex documents and relationships.
Just because you can boil water doesn’t qualify you to repair your gas range. You need to have professional, experienced help: that is what I bring to your table.”
From the people (like me) who do not understand the complex documents and relationships, the people that ‘can boil water but aren’t qualified to repair our gas ranges’:
Please explain what we (they) are doing wrong!
Thanks.
Erin,
Interesting.
Correct me if I am wrong here. It seems that you are suggesting that Mary Kay is saying one thing but, thanks to their (relatively) detached relationship with their directors, allowing another thing. Is that correct?
But how is it that you are using basically the same technique to make that accusation? The only difference is that instead of “uncontrollable directors”, you use simple prestidigitation to make one thing (sales behavior training) to appear to be the same as another thing (illegal business practices).
Does Mary Kay allow (even invite) its directors to train other directors? Yes absolutely.
Do they offer training on how to overcome objections, fears and concerns to make sure that a consultant purchases a level of inventory that the director feels would be best for them? I would guess (because I haven’t been there myself) that this is also absolutely true.
Is the biggest package always the best? Absolutely not.
Can some people abuse this training and use the same techniques they just learned to manipulate women into buying ridiculous and unnecessary amounts of inventory? Without a doubt.
Should Mary Kay do more to “curb” this from happening? That is the current subject of conversation on our blog Balanced Mary Kay
But does allowing its sales directors to teach certain sales methods (that may seem unsavory to some) really qualify as creating an environment where consumers are misled into thinking that inventory is required?
Consider the difference between the following to approaches.
You should really buy $xxx of inventory. This is absolutely the best thing for you… (on and on… absolutely gushing about the benefits of having that much inventory.
VS.
You have to buy $xxx of inventory. If you don’t buy this much, you can’t sell Mary Kay.
**
For both Michael and Erin,
To be perfectly honest with you, the most “convincing” pitch that I have ever given into, and many times, almost given into, is the one that separates the “sales” person from the company he/she is representing.
It usually goes something like, “Listen, don’t tell anyone I told you this, because if the company finds out, I will be in big trouble… The real “secret” to this business is buying $10,000 of ‘xyz’. They want you to do it the hard way, and to be honest, you will never succeed if you do it that way! Trust me, the only way to make it with this company is to start BIG”
Consider all the “ads” you see on Pink Truth. Most of them start with, “Don’t listen to your upline” and end with “give me your money”!!
I don’t know how widespread the mantra “Don’t listen to the company when they say that you are only required to purchase this much” is. I don’t know if it goes “all the way to the top”. But I suspect that you will need more than, “they allow their directors to train other directors ‘how to verbally and nonverbally influence consultants’” to prove that Mary Kay (directly or indirectly) encourages consultants to represent that large inventory packages are mandatory.
What an incredible string! I wish I’d seen it sooner.
I see I’m not the only one who has concluded David is a “consummate shill ” and is occasionally, perhaps purposely, “naive.” In his defense, I can say I believe (from what one can gather through blog exchanges) Dave is a rather nice fellow who strongly advocates for his wife and loves his dog.
I’m a bit taken aback, though, when I just happened to look at his most recent example of naivete. Dave actually took a screen shot of another web site’s proprietary content (pinktruth.com), posted it on his blog and suggested to readers they should stop visiting pinktruth.com and simply see pinktruth.com content on his site through Dave’s daily acquired screen shots.
__
__
__
Wait. It gets better.
__
After Dave received notice he should stop posting the proprietary content of pinktruth.com on his blog, he (at least for now) complied but has published a recent article describing the matter as “ Pink Truth’s Outrageous Claim of Copyright Infringement” on his blog. I’m looking forward to seeing what an attorney has to say to ya, Dave, about this matter. Your decision to cease and desist, during your consultation with counsel, is (I believe) wise.
Hey, you could make this real interesting. Why not go to CNN.com, get screen shots of their content, and then post it on your blog, daily (just like you proposed doing with pinktruth.com). Then suggest to your readers they should stop visiting CNN.com and just simply see all their daily content (CNN’s) on your blog?
Interesting stuff!
Well, I’m not up on the latest David vs. PinkTruth.Org intellectual property controversy, and I’m certainly not going to pretend he is not a Kaybot apologist pretending to be fair and balanced… Even if he does love his dog (a pit bull with MK lipstick, perhaps) and promote his wife’s business.
However, PinkTruth.org sending him a cease & desist for posting screen shots seems really lame and more than a little hypocritical. After all, PinkTruth.org is a website whose sole purpose is to talk about (and rail against) another organization. I’m sure they’ve done their share of image posting – and maybe been subject to some threats of their own. I would think that Tracy Coenen would be a champion of open communication and free speech – which includes taking some hits from her own detractors.
The charge that David’s free blogspot site could somehow diminish PT traffic via daily screen shots is ludicrous. If anything, he’d send them hits.
David: Time to run with the big dogs and upgrade to a self-hosted blog with your very own domain name. Maybe someone can recommend a hosting company with the backbone to not cave at the first cease & desist or DMCA warning.
I believe Yahoo! will take down disputed content temporarily, but will reinstate it if no lawsuit is filed. Stand up for your right to make fun of those who make fun of Mary Kay!!!
Thank you for your encouragement! Not sure if this fight is really THAT important.
I am just a guy trying to expose the lies of one website, promote conversation about a company and allow for anyone that has an opinion (or relevant factual information) to express it in one place. All while putting up with one particular loud-mouth that thinks people like obnoxious!!
Blessed,
I’ll take my naiveté over your ignoring facts any day.
Yes, a small part of my purpose was to allow people to read Pink Truth without going to Pink Truth.
And, yes, if that was my only reason for doing so, it would have doubtless stood a chance of being copyright infringement (assuming that Tracy could… and more importantly did… copyright the entire site… you and I both know that this is impossible)
However, you ignore the far more important facts of this fascinating (sarcasm intended) story.
I know you will completely ignore what I am about to say, so I am saying this to Sean and his other readers (not that I think they particularly care either!).
1. Everything that I have posted from Pink Truth was for the purpose of criticism. With the exception of 1 (one) time, I always added my own commentary to the work – which was (you guessed it) always critical.
2. The “copyright” infringement that Tracy (ha) ‘threatened’ me with was not for the solitary time that I posted a screenshot.
Your CNN example is spot on. If, and that is a very BIG if, you were comparing apples to apples – you are not – you might have had a point.
P.S. I have not heard from you in a while, I genuinely hope all is well with you and your family.
Dave,
I’ve not posted on your blog lately because I lost the log-in and password I used to set up my account. I even had a neat icon for my log-in. Oh well, it goes to show, there is such a thing as password overload. Considering all the passwords I juggle for various systems, it’s no surprise this one just fell through the cracks.
From what I gather you and your wife have been associated with the “dream” for a few years now (I’m not sure). It would seem to me most would cultivate at least some doubt by now, at least those with the ability to think objectively, those blessed with a healthy dose of skepticism re reportedly injurious pursuits. It’s difficult to gauge the depth & accuracy of my perceptiveness through the peephole provided by typed characters on a blog. That said, though, I’ve got to admit I pegged you as being a very thoughtful person. I doubt I’m wrong.
My bet is there’s something else here. I’m wondering if your dedication to management of a blog about the Mary Kay Cosmetics opportunity is 100 percent about exploring whether Mary Kay Cosmetics is “hot or not.” There’s something else, I suspect. I’m wondering if your advocacy for the MK MLM is as undivided as some may think. You’ve vacillated (more so recently) from one portraying the MK MLM as a wonderful opportunity for any women willing to “do it right,” to one willing to acknowledge the risk, the danger, involved in MK and MLMs generally. Perhaps I’ve misread your position re MK; I’m confident you’ll let me know.
My point, however, is acknowledgment of what may be your accompanying motivation for maintaining your MK blog. You seem to take exception to the presentations of pinktruth.com. My guess is you’re particularly bothered by the editing constraints of the discussions on PT. My guess is you’d like to see a more open debate. In fact, I’d guess, you find it particularly loathsome that any blog could present itself as an outlet for discussion of any topic and not allow a free flow of thoughts and opinions. My guess is this is something that irks you as much as any personal need to promote the MK opportunity. You passionately dislike any forum promoting “truth” which simultaneously disallows a complete range of opinions. Further, my guess is pinktruth.com could be discussing the quality of one toothpaste over another and you’d still be as dismissive if it didn’t allow posting of all opinions. Your motivation, at least in part I surmise, stems from the disdain you feel toward an outlet of information which takes a decidedly one-sided view about a subject. Am I anywhere close? Is your revulsion over the lack of a free flow of ideas something that (at least in part) motivates you? Again, I’ve little doubt you’ll correct me if I’m wrong.
In a perfect world I could perhaps be standing next to you protesting with you. In a perfect world, though, there would be no need for a polished, tenacious, continuos reply to the abuse of women so effectively promulgated by the Mary Kay Cosmetics Corporation. In a perfect world MKC & its minions wouldn’t be permitted to abuse women and their families simply because they’re a business (and woo be us if we should begin to promote too much regulation of business).
The balance of the free market and reasonable regulation has been way off kilter in recent years. Have you taken a look at your 401K recently? Perhaps a new administration will grow a pair and allow the FTC to pen some (and enact) reasonable regulation which does more to guard the interests of unsuspecting women and their families. The little I’ve read of the most recent revised proposed business opportunity rule does little to give me hope in this regard.
So long as MKC and its minions may continue to promote the “opportunity” as something which will allow women to work at home only a few hours per week and earn an executive income; to fulfill God’s plans for them; to achieve all their dreams if only they “beelieve…” Well, there will continue to be a need for the balance provided by places of refuge like pinktruth.com. There will continue to be a need for a counter to the polished confidence scam sold by Mary Kay Cosmetics. There will continue to be a voice yelling daily, through a bullhorn, a reply to the trite yet harmful machinations peddled by this seductive predator.
Can ya hear that voice Dave? Can you hear the repeated proclamations? Can you hear pinktruth.com’s daily reply to the polished scam peddled by marykay.com and its minions?
Listen…
___
“BULL SHIT!”
___
“BULL SHIT!”
___
“BULL SHIT!”
___
Now listen to me applauding! Can ya see me? I’m standing, clapping, shaking my head “YES”! and applauding. And that noise you hear in the background, that’s a vast multitude of women and their families across the globe cheering with me.
The last thing this wonderful outlet of information needs is the fog induced blather of MKC or K-bots babbling about the power of dreams and reaching God’s goals through creative credit card acquisition. Oh Please!
I salute pinktruth.com and the mission it fulfills. More and more people are learning the truth about the cult-like entity that is Mary Kay Cosmetics. More and more people are avoiding the pain of Mary Kay Cosmetics thanks to outlets like pinktruth.com.
Keep it up pinktruth.com!
And Dave, I too hope you and your family are well.
Blessed
OMG! Blessed, you are back full force. I really enjoyed that rant. I really did. I wish you could remember your password. Dave’s site is not nearly as interesting since you aren’t there.
I didn’t read through all the comments but through several of them at the start- I did not read through this most recent Dave vs. Blessed stuff. It seems most people are vehemently pro or vehemently anti Mary Kay. I’m in the middle.
I did join up as a consultant because, after trying their skin care products and absolutely loving them, I decided I’d have been dollars ahead to have just bought the $115 kit (kit plus tax and shipping) and $200 (wholesale price add in tax and shipping) of products compared to the $200 I spent on not quite everything I wanted to try but enough to get me hooked.
So, here I am facing the MK math.
There is NOT a minimum $600 purchase. You have to order/purchase $200 wholesale in products each year to maintain your consultant status. If you want to buy less than $200 wholesale, unless you’ve made a $200 purchase in the past 3 months you’ll have to pay retail price.
When you sign up they hit you up for a few different types of product packages- $600 gets you $100 (retail) in free products plus, if you order in the 1st 15 days you get a special make up compact (filled in) that’s “specially” designed for your coloring. How special can that be?
Anyway, the packages go from $600 to $3,600. If you buy the package within your first 3 months (and it’s your first product purchase after your startup kit), your director will come to your home and give a Business Debut party for you- you invite every person you’ve ever known or heard of, and she goes over the MK product line and you just sit and look pretty- easy enough.
And there’s the tax issue. MK taxes their consultants on the retail price. I have lots of tax questions because if I purchase (as a consultant) direct from MK, I shouldn’t be paying sales tax because A) I’m a reseller and B) I’m buying over state lines. But that’s another long discussion- I’m willing to deal with MK’s taxation because I understand that they don’t know for sure that you’re reselling the product- the state lines still bothers me, though. MK pays the sales tax to your state so you don’t have to track that (keep in mind- I just started so I’m not sure how that works yet- that should be the case if they collect it).
Here’s the catch on the packages- taking into account taxes and the “total package price.” The math doesn’t add up right.
Just taking the $600 package… I was told that the total price for the package is $900. If you’re paying tax on the retail for $600 (which is $1200) plus the retail for your “free” products (which is $100) plus the retail on your make up kit- if you get it (which is $113.50- and that doesn’t add up quite right just for that total which bothers me- I must be missing a lip stick or something- I only got $100.50). Your tax is being paid on $1413.50. My tax rate is 7%. That should be $98.95 in sales tax. Add $8.75 for shipping (they say shipping is the same whether you buy one product or 1000).
$600 + $98.95 + $8.75 = $707.70
not quite $900
Even if you wind up BUYING your supposedly free products:
$600 + $50 ($100 in free product retail price) + $56.75 (wholesale price of the make up kit- giving them the benefit of the doubt that that extra $13 retail I can’t account for is really there) + $98.95 + 8.75 = $814.45.
Still not quite $900.
After talking with my director about this price discrepancy, she explained that the total package price also includes samples. But (going with the math in my first paragraph) $192.30 seems like an awful lot of samples considering that the startup kit comes with samples.
I’m not so appalled that MK doesn’t share records on what their consultants sell. If MK charges sales tax up front and then I, as a consultant, charge my customers sales tax in order to recoup what I paid MK, then they have no way to be certain that I actually resold the product. I’m sure they keep records of these things, but, with all the pressure people talk about to look like your selling, MK can’t be sure these numbers are accurate (since they depend on providing your director a weekly productivity sheet- whatever it’s called).
I’ve been self employed for 13 years so running the numbers, talking taxes and thinking it through is more natural to me than I imagine it is for the average MK recruit.
If I want to do a business debut, I think I’ll save myself the cash and go through the info myself. It won’t be as polished and I won’t get the perks and the power start and all that, but it’s far more sensible for me to step away from the hype and make a safer start at it. I don’t have $900 budgeted for a business start up right now.
That reminds me of another thing that bothered me. They definitely suggest that you borrow money to stock product- get a loan, use a credit card, etc. My director was at least reasonable enough to insist that you pay the loan/credit card off asap. Regardless, I have a real issue with going into debt over that. We have no storefront here. Inventory isn’t the worst idea in the world, but inventory you can’t afford and haven’t budgeted for and don’t have reserves in place to cover is not a great idea.
I told my director that I have a problem going into debt to buy product. She said it’s an investment. Bah!
Taking money you HAVE and investing it in something is an investment. Taking money you DON’T have an investing it is debt. Bad, bad idea.
Disclaimer: I’ve done the math several times but not for this comment- this comment may have a typo and may be off by a few bucks here and there due to my laziness but the concept is correct. I would hope that any woman considering MK would do this math. The business debut is neat, but it’s not the end of the world if you don’t do it.
As an additional disclaimer- I do realize that my math doesn’t account for every possibility and aspect. It’s the concept that bothers me and seems deceptive to me.
As far as a MK franchise goes, I just don’t think so. No expert here but the ftc is: http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv07.shtm
And as far as calculating the time invested in the business (when figuring up your ROI), I’d just like to say that I imagine most people waste an awful lot of time running around doing useless things like hitting Wal-Mart to quench the urge to buy and chatting it up at the local coffee shop.
I was in trucking for the last 13 years and if you ask a truck driver how much they made on the hour (talking over the road trucker- not a local guy who is paid by the hour), the number is dismally low- especially considering the cost of being gone from family and friends.
It’s even worse for a trucking owner operator.
I’ve been getting informed about MK for a while now and some of the ranting just strikes me funny coming from my trucking background. You want to talk about someone getting scammed? Investigate the lease purchase programs offered by most trucking companies.
IMO, women who fall hook, line, and sinker for the MK trap (and I’m not saying MK IS a trap- just types faster than saying “if you wind up drowning in product and no sales”) did it to themselves. Yes, they seem to promote this path, but it takes a sucker to go down it for themselves.
I do definitely like the products. A lot. And to those who wine that the mark up is ridiculous, I’d have to agree with those others who mention that the mark up on EVERYTHING YOU BUY is ridiculous. That’s called business. It’s the American way (and I say that as a die hard capitalist and fan of financial success).
My suggestion to those considering starting up in MK and those trying to determine if it’s a scam is to check out Dave Ramsey- the financial guy. Put .com behind his full name and you’ll get there. Get out of debt the old fashioned way- by cutting your expenses and paying it off. And don’t let anything put you back into it- not even the lure of inventory.
MK4 Me–you are straight up brainwashed!! That is exactly the words that they teach directors to tell new consultants to get them to order products!!! “Do you want to start a business with only working 2 hrs?? BLAH BLAH BLAH!!!
She clearly does Mary Kay now and has no idea that all of her friends have proabably spammed her from e-mail and cannot stand to get her e-mails, phone calls, see her in public, and hear her crock of crap about how “wonderful” her fake life really is!! Trust me I was there–which is why I know that you are the worst type of person to run into at the store. I would imagine that you “warm chatter” with every girl in the store, you probably have a gym membership just to me people and tell them all about the “opportunity they are missing by having a JOB”, and you probably spout out without even thinking–God 1st, Family 2nd and Mary Kay 3rd–PHONY!!!
I’ve been a Mary Consultant for 11 years and have built a large and loyal customer base. I stock a full inventory so why should anyone go to the mall when they can shop with me. The beauty of the Mary Kay biz is that it is mine and I am the CEO. There are no quotas and no territories. I can work when I want to work or not work when I don’t want to. I can build a team if I want to but I’d rather have the customers. I rarely have parties and prefer selling one-on-one. What store or business, for that matter, enjoys a 50% profit with almost no overhead?
So, let the critics amuse themselves. They have it all wrong.
Good luck to ya Sharon. I hope you’re able to avoid the negative consequences stemming from participation in this MLM as experienced by multitudes of women and their families.
What is up with Mary Kay ladies defecating on people’s front porches?
Is this some new sales technique? How much do I have to buy to keep them off my porch?
Is there nothing some people won’t do to land a pink car?
http://www.tcpalm.com/news/2009/jan/08/visitor-defecates-fort-pierce-womans-porch/
I have to acknowledge this story is distasteful. Nonetheless, it is a gift from the patron saint of metaphors! Seriously, those interested in exposing Mary Kay Cosmetics for what it is could not have dreamed-up a better illustration. If one were tasked to write a fictional piece capturing the ridiculousness of the MK MLM, this little vignette would cover it!
Mary Kay Cosmetics Corporation has been
s#!ting on women’s porches for years, and years…
I have admire your unselfishness in taking the time to make this web site.
Hi there!
I’m a new Mary Kay consultant, and I am truly loving it right now. You are right that the consultant turnover rate may not be ideal, but that’s because it takes a certain type of person to be able to sell. Not everyone would be comfortable working in car sales and guaranteed nothing more than a commission on sales and no hourly wage for putting in 60 hours a week. The people that are comfortable taking that risk are the people who have proven sales skills and abilities. Most consultants that don’t make it to their 6-month mark are people who are excited about signing up and being able to buy their own makeup for 50% off of retail, and they’ll get their immediate family and friends to buy some too, but after that, they have gotten what they wanted from it and they move on.
I don’t criticize those people, it may just not have been for them. It’s convenient for me right now because I’m a stay at home mom who’s attending school in the fall and I have my summer free to gain a loyal customer base, and then when I’m in school and have less time to spend on my business, I can count on the sales from my loyal customer’s reorders.
Inventory is not required for new consultants to purchase, and while I see your point that some Directors may push for them to buy the largest inventory option because it does increase their commission, most Directors are not made of greed. They don’t have to be, they make fine income getting to the point of a Director anyway. Also, they want you to LOVE the company and be passionate about working for the company, so they aren’t going to push you to charge $3,600 worth of inventory to your credit card and then have you regret that decision the next month when your bill arrives and have you doubting the business.
The reason behind offering the inventory packages as an OPTION, not a REQUIREMENT, is that Mary Kay Ash found that when she didn’t have her own inventory in stock and was simply taking orders for the products, a week later when the product arrived and she went to deliver it, customers were no longer excited about the products they tried at their free makeover or demonstration, and because Mary Kay offers a 100% Satisfaction Guarantee, they weren’t obligated to still pay for the products upon delivery. She needed to devise a plan to have the products in hand and ready to give to the customer the second they tried it on and loved it and made the decision to buy it. It also saves us consultants time, because we don’t have to spend a great deal of time creating a supply order and submitting it and then waiting for the products to be delivered to our homes and then have us separate them and spend our own money to ship and deliver them, because Mary Kay also prides itself on Free Shipping and Delivery.
Now, I will agree that Mary Kay products are not as competitively priced as a couple other companies out there are a great deal of companies out there who are more expensive than Mary Kay, and their products are not as proven to deliver results as Mary Kay, and they do not offer free shipping and delivery or 100% Satisfaction Guarantee. As for the companies that charge less than Mary Kay, they may get more initial customers because of the lower price of the products, but the sales consultants have a lower turnover rate because, at least in a lot of cases, they find that they don’t make as much money as they were led to believe. Mary Kay offers the highest commission to it’s consultants more than any other company, which inspires and motivates us to be outgoing and constantly finding new customers.
As for the strategy to get consultants to recruit new consultants, that certainly is an option for us to earn money, but we aren’t out there recruiting just anyone. To give you an example, it costs $100 to order your starter kit and become a Mary Kay consultant, and the product package you get is worth well over $400. I could go out and easily get $100 from everyone I meet and sign them up as a consultant by promising them a $400 retail value starter kit, and allowing them to purchase any additional products at 50% off, but we don’t do that, because we want to recruit the people who will excel in this business. I have a great deal of friends, many of whom live in other areas and would be ideal for me to sign up as consultants for that reason because they can reach the customers I would never meet, but I know they don’t have the desire and motivation to be a successful salesperson and grow with the company, so I don’t waste my time or their money by trying to recruit them.
I have no complaints about Mary Kay products or the way it conducts it’s business. We have great Sales Directors who would never lead us in the wrong direction and are there for tips and strategy advice every step of the way. They go above and beyond their job descriptions, making themselves available to dozens of consultants who work under them in their areas, and they stretch their time to be at every meeting and class and party they can possibly be at so they can constantly coach and teach and offer constructive tips for us to improve our businesses.
Hope that cleared up a little bit for you.
Hi Suzanne!
I’m also a new consultant, and I also didn’t purchase the inventory. In fact, I’m at a bit of a disadvantage, because I signed up as a consultant on June 13th, and the week before I went on vacation for a week, so I only had 7 of the 15 days where you have to place your $600 order to receive the free products. My husband just started a new job two days ago after being unemployed for 3 months, and I am a stay-at-home mom who will be starting school this fall, so we definitely didn’t have the means or the credit to front $600 or more dollars for a business start up.
I’m excited to say that I did meet my $600 goal in the amount of time, just from offering it to my immediate family that was on vacation with me, (There were 23 women of us that rented a beach house for a week). Now what I did do, is rather than take my 50% commission on their orders, I took that 50% profit and used it to buy some inventory for myself, so I haven’t seen a true “profit” from it yet, but I have my debut scheduled for July 11th and plan on making quite a bit of commission from those orders, and since I’m a stay at home mom anyway, it’s not like I’m missing out on a paycheck because I’m not used to getting one anyway.
Just thought I’d respond because I was in a similar situation. Take care!
Hi Guys!
I am a brand new consultant for Mary Kay. . . I was reading your posts and noticed that you keep refering to MK as a franchise. I just wanted to add what it says about Consultants in our Agreement we sign when we order our Start-up Kit ($118.00) and other inventory ($600-4000?)
The Agreement states for the Consultants and so on, that we are not joint venturers with, or franchisee, partner, agent or employee of the MK company. We are independent contractors and responsible for our own self-employment matters such as federal & state taxes and social security taxes.
We have no power or authority to incur any debt,obligation or liability on behalf of the MK Company.
Mary Kay also offers to buy back products (90%) if the Consultant is not satisified within 30 days, or 1 year if the start kit is not used. This is only with the cancellation of the contract agreement. in doing so, once you return your product and cancel the contract (according to my Director) you can never be a MK Consultant again.
I will say that the personalities of the MK world are very friendly and positive. The Mary Kay Ash company promotes God, Family, and than Career. My “I” story, is that I started Mary Kay in order to have a job in this economy. I was about to lose my home. There were student loans piling up from earning my Masters in Business degree (May 2009) and I was unable to find work. So, I am now an Independent Consultant-Independent Businesswoman and all of the world is my oyster.
It is up to me what I earn, not someone in a tie. The hours are whatever I want them to be and I get to meet tons of people while treating them to FREE facials and selling them make-up that they love.
http://www.marykay.com/RockinBeauty
Corralee
RockinBeauty@marykay.com Take Care Everyone!!