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Zinzino to Provide Dip Financing to Zurvita

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After its declared intent to acquire 100% of Zurvita’s shares earlier this year, Zinzino negotiated a purchase of Zurvita’s assets through a Chapter 11 proceeding. Zinzino will now provide debtor-in-possession (DIP) financing to Zurvita following its official Chapter 11 filing last week.

As a financier to Zurvita, Zinzino has also made an offer to acquire the company’s assets in what is called a “stalking horse bid.” If accepted, the DIP loan will convert into part of a debt-settled purchase price to be determined in accordance to the terms of the Chapter 11. If an outside bid is accepted instead, Zinzino’s loan will be repaid and costs will be reimbursed.

“After considering multiple options for the company and under the guidance of our attorneys and third-party advisors, we feel this presents the best opportunity to continue Zurvita’s mission, deliver the highest quality products, and provide continuity for our staff and consultants,” said Jay Shafer, Zurvita CEO and Co-founder. “We are excited to see what the future holds for Zurvita.”

USANA Announces Strategic Acquisition of Hiya Health

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USANA Health Sciences, Inc. has acquired a 78.8% controlling ownership stake in Hiya Health Products, LLC. This strategic acquisition is expected to broaden USANA’s reach in the children’s health and wellness market through Hiya’s subscription model. The deal, which closed today as a $205 million cash transaction, is anticipated to be accretive to USANA’s 2025 adjusted EBITDA and was financed with $200 million cash on hand with the balance covered by the company’s existing credit facility.

Hiya’s 2024 net sales (ending September 30, 2024) reached $103 million, growing 50% compared to fiscal 2023 with expectations to grow 30% year-over-year. USANA anticipates that this margin, profitability and cash flow generation will improve its long-term growth and drive shareholder value while diversifying USANA’s geographic sales mix and creating a more tax-efficient structure.

“The Hiya brand is a natural fit for USANA and this acquisition represents a key strategic milestone for our business,” said Jim Brown, USANA Health Sciences, Inc President and Chief Executive Officer. “Hiya’s co-founders, Darren Litt and Adam Gillman, have disrupted the children’s health and wellness market by building a high quality, better-for-you brand that aligns with our vision of creating the healthiest family on Earth. This strategic acquisition adds a diversified layer of growth to USANA’s overall business, while maintaining our commitment to our core direct sales business, where we continue to invest in initiatives to drive growth. Notably, this acquisition will allow USANA to reach a broader audience by diversifying distribution channels through Hiya, which we believe will enhance our ability to generate sustainable long-term growth and deliver value for our stakeholders. Darren and Adam will continue to lead Hiya through its next phase of growth. Their leadership and expertise is instrumental to Hiya’s business, which is now part of USANA’s mission and strategic objectives.”

Experiencing the Difference

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How retail locations are connecting with customers.

Experiential retail is transforming the way brands interact with consumers, offering immersive and engaging in-store experiences that go beyond traditional shopping. As ecommerce continues to grow, many physical stores are evolving into more than just a place to shop and offering experiences that create an emotional connection between the customer and the brand.

This approach allows retailers to stand out in a crowded market by offering personalized, memorable experiences that build loyalty and create memories. The strategy could be adopted by direct selling companies to create a more engaging experience at conventions, pop-up shops or in-person events and business presentations.

Blending Physical and Digital

A key aspect of experiential retail is the merging of the physical and digital realms. Nike’s House of Innovation is a prime example of this strategy in action. Their flagship store in New York incorporates digital displays, real-time product information and app integration to allow shoppers to fully customize their products. The store itself is a highly interactive space where visitors can explore Nike’s latest technology while engaging with the brand in ways that simply aren’t possible online. This kind of integration offers customers a unique experience, combining the convenience of digital shopping with the tactile benefits of a physical store.

Personalize

Another reason for the success of experiential retail is its ability to tap into the growing demand for personalization. Shoppers today expect brands to know their preferences and tailor the experience accordingly. Lululemon turns some of their stores into wellness hubs, offering not only apparel but also yoga classes, meditation rooms and cafes. This holistic approach aligns with the brand’s focus on health and mindfulness, creating a community-oriented atmosphere that draws customers back not just to shop but to engage with the brand on a deeper level.

Get Social

Experiential retail also appeals to customers’ desire for social engagement. Brands like Glossier have built entire stores designed to be visually striking, encouraging shoppers to share their experiences on social media as well as congregate onsite. Glossier’s New York flagship, with its pink interiors and Instagram-able product displays, is a destination for both beauty enthusiasts and influencers. This turns customers into organic marketers, sharing their in-store experiences online, which in turn brings more people into the store.

Sustainability

Experiential retail also reflects a growing emphasis on sustainability and purpose-driven shopping. Brands like Patagonia have turned their stores into venues for activism, where customers can learn about environmental causes while shopping for outdoor gear. This strategy helps reinforce the brand’s values and builds a community of like-minded individuals who care about sustainability. By creating spaces that reflect their social commitments, brands like Patagonia not only attract eco-conscious consumers but also deepen their engagement with them.

Encourage Interaction

Samsung’s 837 store in New York offers another innovative take on experiential retail. Instead of focusing on sales, the space is designed as an interactive showroom, featuring virtual reality experiences, art installations and workshops. Visitors can engage with Samsung products in ways that are fun and memorable, making the store more of a brand experience center than a traditional retail space. While no products are sold on site, the immersive experiences drive online sales and brand loyalty.

Real-Time Demos

Casper, the mattress company, offers a more imaginative approach to experiential retail with its Dreamery in New York. Customers can book naps in private pods to try out the brand’s mattresses, turning a traditionally mundane product test into an enjoyable experience. By focusing on the sleep experience, Casper connects its product directly to its value proposition, while also creating a memorable and shareable experience for customers.

These in-person experiences offer the opportunity for customers to immerse themselves in a brand’s story and values. Whether through personalized services, interactive technology or community-focused spaces, these experiences make shopping an event rather than a chore.

Whether revamping a store setup at a convention, planning a fashion show to announce new branded apparel or even building physical locations for interactive experiences, direct selling companies could benefit from these strategies as the industry continues to evolve digitally and virtually. 

From the December 2024 issue of Direct Selling News magazine.

Bella Grace Global

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Marrying Network Marketing with Social Influence

Launched | 2022

Headquarters | Tampa, FL

Products | Digital, Beauty & Wellness

Top Executive | Kristina Kajic, Founder & CEO

When Kristina Kajic launched Bella Grace in 2022, she knew the key to its success would be the ability to blend the best of multiple worlds into one comprehensive package—a package that combined a generous compensation plan with the ability to simply monetize social influence.

She believed existing opportunities in the marketplace didn’t appeal to the up-and-coming entrepreneurs who lived their lives on social media. “People wanted what they saw every day, the ability to monetize their passion online through social media platforms. Bella Grace and our new initiative, influencingU were born through the quest to marry the high appeal of monetizing social media and the high-reward compensation plans of network marketing.”

The Right Tools in the Box

Kristina recognized that training on how to monetize social media was available but expensive—sometimes up to $6,000 for a course—putting it out of reach for most people looking for a side gig. Additionally, many of these existing training programs were out of date, creating the need for influencingU. “Social media moves at lightning speed. influencingU is a digital subscription platform with both live and prerecorded video training from influencers who have and continue to grow and monetize their social media platforms successfully.”

influencingU is available in multiple languages with live educators and also through artificial intelligence (AI)-assisted translation. It’s not exclusively tied to Bella Grace, so any network marketer or business that wants to sell on social media can subscribe to get relevant, current training at a much more attractive, attainable price point.

It’s a modern approach that empowers today’s direct sellers. “Our success has been born of not only understanding but accepting that the way network marketing field growth has occurred over the past five—or even 25—years no longer appeals to people. By looking at what does appeal to them, we were able to create a hybrid of network marketing and social influencer models that works,” Kristina explains.

Kristina started Bella Grace Global with no direct marketing field experience, but she did have a front row seat watching events all over Europe. “My solution was to reach out to the channel’s top field consultants and hire a team with vast experience on the corporate side of the channel from some of the most respected talents in direct selling.”

At Bella Grace, it’s more than just having the right people, they’ve also developed the right products. In addition to the influencingU digital product, the company offers unique wellness products. For example, Bella Grace’s Elixir was originally promoted strictly for its ability to restore collagen, but the product’s anti-inflammatory benefits are also in

high demand. Elixir was formulated by a familiar and well-respected face in direct selling, Dr. Mark Miller. “Dr. Miller has extensive experience with the direct selling channel but more importantly is globally respected as a formulator. The product is incredibly effective and essentially non duplicatable,” Kristina shared.

Since their domestic launch in 2022, Bella Grace has enjoyed massive geographic expansion. In 2024 they opened Canada, Australia and the 27 countries of the European Union. Plans are in place to launch in Asia in 2025. “Recruiting is at an all-time high right now with the opening of the EU. Our retention depends on a strong compensation package, products people can be passionate about as well as engagement recognition and healthy leader mindsets.”

A Modern Approach

Those more traditional components of direct selling are getting a modern twist at Bella Grace. The company has increased the number of its incentive trips for a shorter, more inclusive reward cycle, and they are constantly looking at new and different ways to recognize and reward the field. Personal development is also important to Kristina, and she strives to make it available to the field at all levels of success. “Mindset is one of the key categories on influencingU. Our field can earn their subscription to the platform and have full access to these mindset training programs for free.”

Bella Grace Global is excited about the impact they are making in the beauty category and their ability to bring it to the world through influencingU. As Kristina shares, “Influencer marketing currently has the highest appeal of any model. Helping others optimize that is part of our mission.”

From the December 2024 issue of Direct Selling News magazine.

Academic Forum Highlights Atomy’s HemoHIM

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A recent celebration of the establishment of the Korean Holistic Care Academy included an academic forum on Atomy’s HemoHIM, a Korean health supplement designed at the Korean Atomic Energy Research Institute (KAERI) in collaboration with Kolmar BNH. The discussion included the scientific significance and results of HemoHIM, its development and ongoing research to expand its applications.

A number of researchers and professors who have spent time studying HemoHIM participated in the forum as well as Dr. Cho Sung Ki, the original developer of HemoHIM, who led a conversation about the opportunity presented by the product.

“When I took office at KAERI R&D Lab, I learned about cosmetics and HemoHIM,” said Dr. Jang In Sun, KAERI Director. “Despite some disagreement from others, I believed they had the potential to be a valuable business venture that could benefit people, so I advocated for their commercialization. Although there were bumps in the road, Kolmar BNH, Korea’s first research institute company, was successfully established. If a product is developed and produced using taxpayers’ hard-earned money, it should ultimately benefit the citizens. I hope that the next game changer like ‘HemoHIM’ will be developed to enhance the health and happiness of people around the world.”

Professor Kim Mi Ri, Chair of the HemoHIM Review Committee, shared the process of certifying HemoHIM as an individually recognized functional material known for enhancing immunity.

“Health supplements, which include functional materials, should be safe for consumption, and this can be demonstrated through scientific and objective data,” Kim said. “HemoHIM, an impressive new material, was developed based on traditional Korean medicine with the support of advanced biotechnology. WHO has warned of a potentially more threatening pandemic. In such circumstances, new materials like HemoHIM are likely to attract more attention.”

dōTERRA Healing Hands Foundation Raises $100,000 to Build School in India

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The dōTERRA Healing Hands Foundation, the philanthropic arm of dōTERRA, announced the final total for its Giving Tuesday fundraiser held December 3-17. Together with generous donors, dōTERRA raised $100,000 and will use the funds in partnership with Rising Star Outreach to construct a new school in Bihar, India, where underserved children from leprosy-impacted backgrounds can access education and resources.

“The mission of dōTERRA Healing Hands Foundation is to empower people and their communities, which makes our partnership with Rising Star Outreach in supporting leprosy-affected communities a golden opportunity for impact,” said Misty Bond, dōTERRA Vice President of Corporate Relations and Philanthropy. “We hope to empower families, fight the stigma of leprosy, and build pathways to healthier, more fulfilling lives. Through this initiative, you’ll be supporting essential school facilities, clean water systems, and safe, inspiring spaces where children can thrive. We are thankful for the opportunity to assist in making their place of education a positive and safe environment.”

During this fundraising initiative, dōTERRA committed to matching every dollar donated, up to $50,000.

Greenway Global Focuses on Global Expansion

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Greenway Global announced a new focus on its global expansion strategy. Present in 63 countries with more than 4 million registered partners, the company has already experienced international growth of more than 50%.

Greenway Global continues to show stable, positive growth throughout Europe with growth in Germany (24%); Croatia (64%); Switzerland (56%); Czech Republic (48%); and Lithuania (43%). It has also committed to significant expansion in Latin America and announced its official launch in Lima, Peru that will build upon its 123% growth in Colombia and 74% growth in Argentina.

Asia will be an explosive, important market for the company and it is actively expanding there. Its Taiwan presence saw a 50% increase in both profits and number of partners, with positive growth in both Malaysia and Singapore as well.

“The company’s revenue has grown from $49 million in 2018 to $307 million in 2023,” said Svetlana Semenova, Greenway Global CEO. “And it is just the beginning! Greenway’s total growth in 2024 will exceed 30%! The company is open to partnerships and cooperation with other network marketing companies and shows a successful example of such interactions.”

Greenway Global is also building on its strategic partnership with Jeunesse Global, announced in July 2024, as a strategy for accelerating development in international markets.

Mastering Momentum

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Your Bounce-Back Blueprint for Getting Out of Decline

Managing change is always a vital task for any business that seeks to be competitive in the marketplace. Each year we are reminded that managing change is critical to success. Business leaders must understand that growth and profitability are the only path to stability. In this article, I will address two key questions.

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  • What has created a climate of decline for many direct selling companies?
  • How can these companies get back to growth and profitability?

How Did We Get Here?

There are eight fundamental principles that are critical for any direct selling company to embrace.

1/ We are in a momentum-driven business—the loss of momentum can cause severe consequences over time. It would be challenging for any company to recover from a multi-year decline in revenue. As entrepreneur and venture capitalist Reid Hoffman said, “It is like jumping off a cliff and trying to build an airplane before you hit the ground.” Unfortunately, many will hit the ground.

2/ Sales occur when customers buy products or services from a company. Failure to build a growing base of loyal customers will severely diminish the ability to have consistent momentum.

3/ The field is your most important driver of sales. Losing their trust creates grave consequences.

4/ The culture and community of a direct selling company must be managed in a way that drives distributor engagement. Culture is the foundation of a competitive direct selling company.

5/ We are in the relationship business. While hope is an important component to success, hope is created and maintained by experiences. In short, we are in the business of creating great experiences for those in our culture.

6/ We are in a “people-centric” business. Managing a business from a transactional vs. experiential mindset will not work effectively to drive or maintain momentum.

7/ Without financial stability, you cannot invest back into your business. This will eventually lead to an inability to remain competitive in the marketplace.

8/ To remain competitive, you must have a DNA of innovation, and you must be capable of adapting to a changing marketplace.

The graph below will provide perspective on the road map to decline and the long-term consequences. I’ve been in direct selling for 35 years, and I’ve come to believe it is not external factors that control our future. Rather, it is the decisions of management that determine the success or failure of any direct selling company.

What Factors Are at Play?

The term omnichannel is not unique to business. It is a common diversification strategy. From a branding perspective, omnichannel can have major value. However, if you compete with your distributors, you will lose their trust. Over time, your field will disengage which will likely lead to a decline in revenue and a loss of profitability. Once that occurs, the probability of a company moving away from the traditional direct selling model will increase. This is especially true for legacy companies.

We have seen a growing trend of operations managing sales. Operations play a key role in any company, but the main priority must be to support the growth in revenue—not run the company from an operational vs. sales perspective.

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Over the last few years, we have seen a historical amount of change with ownership and senior leadership unlike anything we have seen in the history of direct selling. Leaders who understand our business model are being replaced by traditional management that have no relevant direct selling experience.

A big driver of this change is an influx of private equity investment in the channel. It’s important to understand that these companies answer to shareholders. They are driven by a return on investment and an exit strategy—not the longevity of a direct selling company.

Another growing trend is taking field leadership out of direct selling companies. This has been fueled by companies moving away from a multi-layered compensation model and embracing an affiliate or full ecommerce model.

Many traditional leaders don’t recognize the importance of field leadership in successful direct selling companies. They view leadership as an unnecessary cost that hinders profitability. This is a perfect example of a “transactional mindset.” The goal should not be to get rid of leadership, but to engage leadership toward productivity and sales growth.

Other issues such as branding, technology and having a competitive product line are created by failing to keep the business relevant and competitive. We have never had more competition for both customers and distributors than we do today. Change is happening every day. Failing to adapt will lead to stagnation. Over time, it will likely lead to the downfall of the company.

How Do We Get Back on Track?

I find that while many companies understand what is driving a decline in sales and loss of profitability, they are struggling to steer the ship in a better direction. I believe there are six key steps that will allow a company to change course.

1/ Use the eight fundamental principles discussed earlier as a lens to analyze your business.

2/ Invest your time and resources on those who are committed to the future of the business.

3/ Make your major priority to increase revenue. This creates a performance-based business vs. a political culture defined by entitlement, drama and division.

4/ Avoid holding on to the past. Change requires any company to embrace new ideas and search for ways to stay competitive in the marketplace.

5/ If the ultimate decision maker for your company does not understand the direct selling business model, develop an experienced team that does understand how to thrive and grow in this model.

6/ Reduce debt because it will cripple a company that is in decline. Debt magnifies the consequences of a declining revenue and a loss of profitability.

My belief in direct selling has never been stronger. The channel is alive and well. The challenge isn’t that the model is in trouble. The challenge is in managing the business in a manner that allows the model to work effectively. The blueprint exists, and the path forward is clear. Let’s work together to lead from the front and restore momentum, opportunity and prosperity to our businesses and our field. 

GORDON HESTER is a direct selling veteran, lecturer, consultant and author with over three decades of experience in direct selling with an emphasis on strategic development, analysis and sales. Gordon is currently the Chief Sales Officer of the Americas for PM-International.

PM-International Hosts Record-Breaking Leadership Event in Berlin

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At its Leadership Event 2024 in Berlin, Germany, PM-International welcomed more than 2,200 leaders from around the world. The event was the company’s largest Leadership Event to-date and offered attendees a glimpse into the upcoming product innovation within the FitLine nutritional supplements line planned for 2025.

The event was also the platform for announcing the company’s plans to significantly increase its annual philanthropic efforts. The PM We Care Foundation donates $2.4 million every year to World Vision, a humanitarian aid organization that provides underserved children with access to education, clean water and medical care. With this additional support, the company will now support an additional 600 children, bringing its total number of sponsored children to 6,600 worldwide.

“PM-International is proud to be World Vision’s largest corporate sponsor, contributing to sustainable change,” said Vicki Sorg, PM-International Charity Ambassador. “The latest annual donation total does not yet include all direct donations and emergency aid that PM-International also provides.”

At the event, CEO Rolf Sorg highlighted the company’s continued and successful commitment to the direct sales model, stating: ““Direct sales is not just part of our past at PM-International; it is our present and our future.” Sorg also emphasized the company’s positive growth, including a record number of new distributor registrations in November and its highest-ever monthly retail sales in company history.

Zinzino Sees 26% Revenue Increase in 2024

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Zinzino announced its accumulated revenue results for January – November 2024. Overall, Zinzino’s group revenue reached $23 million, an increase of 26% when compared to 2023.

The company’s presence in Central Europe, which includes Austria, Germany and Switzerland, continues to be one of its strongest markets, with $6.47 million in revenue. East Europe, including Czech Republic, Slovakia, Hungary, Poland and Romania, posted revenue of $4.7 million.

North America showed the strongest growth, with a 70% improvement year-over-year and $2.3 million in revenue, compared to $1.3 million during the same period of 2023.

“November 2024 will forever be remembered as a monumental month in Zinzino’s history,” said Dag Petterson, Zinzino CEO. “We’ve not only exceeded €20 million in sales—a milestone that underscores the strength of our global business—but also welcomed about 100,000 new customers. These incredible achievements reflect the passion, dedication, and tireless work of our partners and teams around the world.”

4Life Wins Protein Innovation Award

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At the World Plant-Based Innovation Awards, 4Life was named the winner in the 2024 Protein Innovation Category for its “Plant-based Transfer Factor Research.” This research focused on immune-benefiting proteins and the system by which mammals pass this benefit on to their babies via colostrum. 4Life’s research shows how plants similarly pass immune information to seeds using analogous immune proteins.

4Life leveraged similar research in the development of its flagship ultra-filtered colostrum-based protein ingredient, 4Life Transfer Factor. This additional research allowed 4Life scientists to screen hundreds of plants and seeds from around the world to find the most potent immune-benefiting proteins.

A New Era Begins

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What obstacles and opportunities await the channel during the second Trump administration.

The seemingly endless election cycle finally come to an end. The tone of the campaign has made many of us weary and could lead to some unfortunate and awkward moments around our holiday dinner tables! But now it’s time to determine the best path forward, embracing the new opportunities that change inevitably ushers in. Everyone has opinions—and when it comes to politics, especially this year, those opinions have often been conflicting, confusing and quite often contentious.

While much remains uncertain, the federal government is undergoing sweeping changes that will have far-reaching impact on everyone. The White House, Senate and House of Representatives will be under Republican control for at least two years when the next mid-term election will have the makeup of the House and Senate back up for grabs.

What will Republican control mean for the channel? Direct Selling News reached out to thought leaders, industry attorneys, consultants and experts to get their perspective on what may—or may not—happen next during a second Trump administration.

Tariffs

One of the most buzzworthy topics surrounding the new administration is tariffs. Whether tariffs are good or bad for direct selling is a bit of a mixed bag—while short-term pain might exist, there could be long-term rewards.

There can be no discussion of tariffs without mentioning the geopolitical friction it could cause between the US and China. The specter of new tariffs on imports and the reshoring of manufacturing to the US will likely be one of the first focuses of the new administration. Tariffs are a political hot potato and could be used ultimately as a bargaining chip, but considerable bipartisan support for tariffs does exist (particularly on China).

Of course, sweeping tariffs are inflationary and will almost certainly face multiple legal challenges both at home and abroad. Plus, higher prices inevitably lead to consumer dissatisfaction and pushback.

Many direct selling companies manufacture in the US but source raw materials, packaging and printing from China. Higher tariffs on imports could disrupt these established supply chains.

The lack of clarity on what will happen with tariffs makes it difficult to ascertain the best path forward. Companies should consider consolidating domestic operations to reduce their reliance on imported goods. Another strategy would be to explore sourcing from countries with lower tariffs than those proposed on China.

Clay Brewer, Partner at Thompson Burton, a law firm specializing in direct selling, worries that direct selling could become collateral damage and recommends being proactive now to avoid repercussions later. “Direct sales could be caught in the middle due to simply not being top of mind. In the second Trump administration, the Direct Selling Association (DSA) should highly increase its lobbying efforts to promote the industry to those willing to listen and who share the industry’s sentiment on an overly invasive regulatory enforcement.”

Regulation

Conventional wisdom holds that there will be less regulation under Republican administrations, but the reality is more nuanced. Deregulation in general eases compliance costs and bureaucratic red tape. New leadership at regulatory agencies such as the Department of Labor (DOL) and Federal Trade Commission (FTC) could usher in more leniency as well as reduce costs associated with compliance and legal issues.

“The regulatory environment is going to be much more favorable for the industry under the new administration. A potentially significant reduction in regulations should lower the cost of doing business,” Michael Lunceford, Principal at Lunceford/WEBB Government Relations explained.

In his estimation, direct selling won’t be a major focus of the administration, but opportunities created by this election are important to leverage. Direct selling can and should be seen as a champion of aspiring entrepreneurs or small businesses. “We recommend that the industry position itself as the representative of the smallest-of-the-small entrepreneurs—those who want to earn a little extra money to buy school supplies or holiday presents.”

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FTC

Changes in leadership will undoubtedly occur at the FTC. Policies under the Biden administration have been less than favorable to direct selling, but the experts agree that there is no reason to immediately celebrate. They expect that initially the status quo will be maintained or that small changes will take place.

The agency is independent and has a history of bipartisan agreement on matters of enforcement. Additionally, it’s important to remember that adverse positions to direct selling have been made in both Democratic and Republican administrations. The new leadership will likely support enforcement but balk at some of the far-reaching initiatives the industry has seen under the Biden administration.

As Lunceford explained, “The agency demonstrated animosity towards direct selling even during the first Trump administration. The chair will change, but the bureaucracy will most likely continue. Many of those who have shared their dislike for the industry are staff who will remain at the agency.”

Bottom line? Entrenched bureaucracy exists, but there are positive signs on the horizon. Hopefully there will be more openness towards direct selling’s history of self-regulation than in the past.

Independent Contractor Status

Distributors have been formally recognized as independent contractors for almost 35 years under federal law and also recognized as such in all 50 states. More than 90 percent of direct sellers choose to work part time on their own schedules with no presumption of actual employment by direct selling companies.

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Under the Biden administration, attempts were made to create that presumption of employment. Most of this was driven by the administration’s ties to organized labor and was meant to address worker misclassification in other industries. It is imperative for direct selling’s survival for distributors to maintain their independent contractor status.

The election takes a lot of the wind out of the sails of this movement, but that doesn’t mean it’s a dead issue. While the executive and legislative branches are under Republican control, lobbying efforts should be made to pass laws preserving this status. Complacency is the worst outcome.

According to leading direct selling attorney Brent Kugler, Partner at Scheef & Stone, the new administration should be open to this type of outreach. “I expect the new administration to be receptive to feedback and criticism from the business community and pursue initiatives that are more pro-business and beneficial to companies that market products and services through independent contractors.”

Non-Compete Agreements

The FTC’s effort to ban non-compete agreements under the Biden administration was troubling to the industry. An August 2024 ruling by a US District Court judge in Texas effectively blocked the final rule that would implement the Commission’s non-compete ban.

Judge Ada Brown stated that the FTC had exceeded its statutory authority, and that “the Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition…instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious.”

In its original Rule approved in April 2024, the FTC described non-competes as an “exploitative practice” that prevent workers from starting new businesses or switching jobs, effectively forcing them to stay with their current employer. It leaned heavily on language from the FTC Act, specifically citing “unfair method of competition” as the basis for the violation.

The final ruling from Judge Brown does not prevent the FTC from prohibiting non-competes or delivering enforcement actions, but stressed it must do so on an individual, case-by-case basis. The FTC’s proposed non-compete is currently pending on appeal.

“While this was a big deal for the industry, and I believe the rule was issued outside the bounds of FTC power, the truth of the matter is that it will not impact the direct sales industry much,” shared Brewer. “Non-solicitation holds the power as opposed to non-competes. I think non-competes are slowly moving out of favor from a business perspective.”

Taking Action

While no one can predict the future, it’s clear that the changes on the horizon could be beneficial to the channel and present the growth opportunities direct selling needs. So, what should you as a leader of a direct selling company be doing right now? According to Lunceford, the answer is obvious—getting involved.

“Companies need to have continual, active engagement and maintain relationships with elected officials on the Hill—regardless of who is in the administration. One means of doing so for companies in states that have a concentration of direct-selling companies is to replicate the Utah Direct Selling Coalition. Texas and Florida are ideal locations for opportunities like this to form and organize into networking groups. Such coalitions are complementary and supportive of the government relations activities of the DSA.”

The timing couldn’t be better. “We recommend developing and maintaining relationships—on both sides of the aisle—well in advance of needing to activate them,” explained Lunceford. “It’s a long game. We recommend companies prioritize continual engagement.”

The good news is that the election results were clear, and there will be a peaceful transfer of power, preserving our democracy and traditions. Hopefully legislatures on both sides of the aisle can now bring about a new period of prosperity. As industry legend John Fleming so eloquently shared, “Now that we know the results of the election, it is time to unleash all of the optimism and energy and go to work on what matters most.”

Digital First article from the upcoming January 2025 issue of Direct Selling News magazine.