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Is Beachbody a Pyramid/Ponzi Scheme?

(I would like to personally thank Coach Laura whom I found through her website and posted an excellent blog on this subject.)

I’m actually a lot like Laura and for those of you that know me personally, you know that I have dabbled in direct sales for a few years. Until last year, did I find a company that truly was my calling. It’s held me accountable with my own weight loss and fitness goals. So many times, I probably would have given in but knowing that I have over a growing list of Team GladiatorX members, family, friends and prospects who are looking for me to help them, has kept me motivated to keep plugging away and keep exercising, taking it one day at a time. I finally found that exercise can be fun if you find the right things to do. Beachbody has given me that! For those of you who have wondered if Beachbody was a Pyramid Scheme or not, this post may address some of your questions. If it doesn’t and you still have questions or have decided that you too, would like to sign up as a coach, either email me directly at CoachBrendan@TeamGladiatorX or go to my website at www.HowCanIGetCut.com. I, unfortunately, can not give credit for this post as I found it on Coach Laura’s site and it was forwarded to her without any information. Thanks to who ever wrote it!

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I received a brilliant email yesterday from my top coach in Colorado, Mike Bent, and I absolutely have to share it with every one who thinks that BB is a pyramid scheme:

“My fiance and I were having a discussion the other day over a remark that one of her friends made. That remark went something like this “oh, that is just one of those pyramid schemes”.

One of our problems is dealing with the negativity surrounding the reputation of the phrases “pyramid scheme”, “network marketing”. “multi-level marketing (MLM)” or “direct selling business”.

First of all, the grand daddy of them all, Amway, went under very serious, expensive and prolonged investigation into this sort of activity back in the early 70’s. The results proved that Amway was not a “pyramid scheme” (which is illegal) and paved the way for the whole multi-level marketing industry that has boomed over the past 35 years.

In Quixtar’s (the current name used for the Amway distributor business) Business Rules and Regulations it states:

“A pyramid is a scheme in which an individual pays for the right to recruit additional persons into the scheme who, in turn, receive the same right to receive profits from recruiting others.

Three common elements of a pyramid scheme have been identified as: (1) a large, required initial investment or purchase of inventory: (2) direct payment for recruiting additional persons into the scheme; (3) heavy emphasis on recruiting additional persons, with little or no emphasis on selling products to consumers.”

Beachbody certainly has none of the above components of a pyramid scheme. Anyone who refers to Beachbody as a pyramid scheme is talking out of ignorance combined with obvious negative past experiences with MLMs in general or, perhaps, an illegal pyramid scheme. In fact, I was duped into one such scheme because the Chief Economic Advisor of the Reagan administration, Art Laffer of the infamous “Laffer Curve”, was on the Board of Directors of this company. That company did have several of the components mentioned above.

In fact, Beachbody is squeaky clean on this one as: (1) Beachbody has no required inventory, period; (2) there is no direct payment for recruiting in Beachbody, period; (3) Beachbody is all about products to consumers. In fact, on the last point, Beachbody is currently paying $90 million this year for new customers that it passes on to Emeralds and above. I am not aware of any other MLM that does this.

Another interesting fact is that Beachbody was not created to be an MLM. It was already a very successful company before adding a network marketing component. I am not aware of any other MLM company that has ever had such history before becoming a MLM. Are you?

There is no question that adding a coaching program was in the best interest of Beachbody’s customers. If you were the executive of Beachbody would you have created a coaching program with all the overhead of adding a coaching division within the company (the salaries of the coaches, office space, additional phone lines, computers, etc) where the employees true incentive was to keep his job. Or would you opt for the brilliance of the network of independent coaches where:

1. There is no additional employees with additional salaries
2. The only way a coach can be successful is to be a product of the system
3. Being a product of the system he/she is a few steps ahead of the customers and any new coaches that he/she sponsors
4. There is a non-salaried advocate of the company to create new customer activity and to advise existing customers of different or additional products to improve their fitness goals
5. Because, in essence, coaches get paid to be fit through the system of sharing, existing coaches will help the whole system grow. As the coaching network grows Beachbody will have a tremendous impact for turning around the greatest epidemics in the history of the US – Type 2 Diabetes because of a grossly overweight society.

Our opportunity is unprecedented. There has never been a greater need for a fitness and health system that works. And I have never been exposed to a fitness and health company that works as well as Beachbody. Most people will not get involved because it is a network marketing (MLM) company and/or opportunity. I believe the reasons they will get involved will be one of these:

1. To personally improve their physical appearance
2. To look and feel healthier
3. They were convinced that Beachbody has superior products to achieve their weight and fitness goals
4. Because a medical advisor or doctor told them that they must loose weight (this will be big soon with the coming Type 2 Diabetes product)
5. That they needed a motivation or reason to be fit other than number 4 above (I was in this category)
6. They want to be part of society’s weight solution instead of part of the problem
7. They want an at home business that makes sense
8. They like the idea of getting paid to be fit

It is my opinion that after someone is involved and really understands this company’s vision, that they will stay in this program for most of the above reasons.

The company desperately needs additional active coaches to succeed in its mission. In my opinion, that is why they are having current recruiting contests and, most importantly, that is why they are going to get new coaches the same way they know how to get new customers – infomercials.”

Here’s another article I found earlier:

Fact: Beachbody is the 69thfastest growing company in the United States according to an article in Entrepreneur Magazine, March 2008.

Fact: Beachbody was started by Carl Daikeler and Jon Cogdon with $500,000 borrowed from family and private investors and is now a $250 million company that spends $90 million on marketing annually.

Fiction: Becoming an Independent Beachbody Coach is a get rich quick scheme.

Fact: With a modest investment of time, it takes about four months to start making money and then only about $100 a week to start.When you invest more time, you make substantially more money.

Fiction: Beachbody coaches are part of a pyramid scheme – a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered.

Fact: Beachbody coaches market fitness and sell products from their own websites and are rewarded for encouraging people to become members of the Team Beachbody Club, get commissions on the fitness products that they sell and can build a business team where everyone is rewarded for their efforts to promote fitness, weight management and improved quality of life. Network Marketing is a business distribution model that allows a parent multi-level marketing company to market their products directly to consumers by means of relationship referral and direct selling.

Fiction: You have to spend a lot of money to be an Independent Team Beachbody Coach.

Fact: It costs $47.99 to become an Independent Team Beachbody Coach and then $14.95 a month if you decide to continue being a coach.There is no other cost for becoming a coach and the $14.95 monthly fee pays for your own coach website and e-commerce fitness product and supplement store.

Fiction: All that you have to do is sign up to be a coach and you will start making money.

Fact: Like any other business (each coach has their own coach business center) you have to work to make money.The more effort you put in, the more money that you will make. Beachbody helps you make money by providing a wealth of information and resources including live and recorded conference calls explaining the company and providing ideas on how to be successful, business building videos, product training sheets to familiarize you with all of the products, success stories, downloadable materials, access to everyone in the management of the company and most of all, your own personal coach to help you build your business.

Fact: The top coach in the company, a now retired school principal, in his first year (which is also the first year of the Beachbody network marketing business model)earned $305,938.00.

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