Question Summary:
Herbalife Sales Question Detail:
I want to be MUTMAYIN that I informed you every minutest detail and then only you have reached your conclusion. Whatever you say I will InshaAllah do.
There's this company which was formed in USA in 1980, Herbalife International which makes Nutrition, Weight Management and Personal Care Products. Herbalife is a Direct Selling/ Network Marketing /Multi Level Marketing company. They're a member of the Direct Selling Association and also listed in New York Stock Exchange.
As of today it does business in 91 countries including Malaysia, Indonesia (Muslim dominated countries). Bangladesh to open up soon.
The product results are amazing. I myself have benefitted from the products Alhamdulillah and many in my family too have enjoyed using the products and improved their health. And I've met hundreds of people who have improved their health by using these products. According to Herbalife, they have more than 10 crore documented satisfied consumers. The products are exclusively available through independent distributors. Now, they offer a business opportunity too. I have a question regarding that.
I was looking for an income opportunity and I came across Herbalife. You have to basically sell their products and you get a profit. You join the company by paying Rs.1900 as Licensing Fee and you get a bag containing-
1. Two of their star products for self consumption so that you have a result on yourself and you know what you're selling. (MRP Rs.1589 + Rs.591 = Rs.2180). Not a bad deal for Rs.1900.
2. Books and DVDs which have a lot of information on selling, and growing business and company rules and i found every minutest detail in these books and DVDs.
3. A button on which Lose Weight Now Ask Me How is written which you can wear to attract people.
4. You get an access to a world renowned Herbalife in house training system.
5. You get a person who invited you to see the business opportunity who is called your Sponsor who guides you all through your Herbalife journey.
There's this term Volume Point which you should know. As Herbalife operates in different countries having different currencies, a point value is assigned to each Herbalife product that is equal in all countries. Volume points are used for qualifications and bonuses.
As soon as you buy this Business Pack, your starting profit is 25℅. For example if I go to their Office to buy products after my membership form is submitted, I'll get a Rs.1000 MRP product for Rs.800. Rs.200 will be my profit when I sell. (25% * Rs.800= Rs.200).Now, if I want a higher profit I'll have to buy in bulk. If I buy 500 Volume Points I'll get them at 35%. (Indian Rupees 27000). And this will be a permanent position. All my future purchases will fetch me 35% profit until I decide to raise my level.
So if I buy 1000 Volume Points I'll get that order at 42%. If in three months I buy a total of 2500 Volume Points I reach permanent 42% 50% is the maximum profit you can draw out of Herbalife. This is called the Supervisor Level. 3 ways to qualify this level.1. Buy 5000 Volume points in 12 months.2. Buy 4000 volume points in one single month. (Rs. 2.2 lacs)3. Buy 2500 volume points in two consecutive months. When you are a Supervisor, your areas of income increase. Upto 42% you have only one area of income that is Retail Profit.
At Supervisor level your areas of income are-1. Retail profit2. Wholesale profit3. Royalty4. BonusLet's go through each area in detail.
1. Retail- For doing the same work you were doing when you joined, you're getting a 50% profit instead of 25 or 35 or 42. That's all for this area.
2. Wholesale- You have two activities in Herbalife. One compulsory. One optional. Retailing is compulsory. Optional is Recruiting. Like somebody made you join business, you too can make people join this business. You will be their sponsor. When they join and pay Rs 1900, Sponsor gets nothing. This 1900 goes to the company. That means you get nothing to simply make people join the business like some Multi Level Marketing companies do. You make 3 people join the company you get a cheque for Rs.1500 or something. That's not what happens in Herbalife. Sponsor gets nothing to make people join.
Now when this new distributor buys something from the company, for example at 25%, the Sponsor who is a Supervisor (MUST) gets the remaining 25% profit as Wholesale profit in the form of a cheque. Taking my example, if I'm a supervisor, and I recruit a distributor who buys at 25%, I'll get a cheque from the company for 25% profit on his purchase. If he raises his level to 35%, I'll get a wholesale profit cheque of 15%. If he further raises to 42%, I'll get a wholesale cheque of 8% profit. I can have as many people under me buying at less than 50% and I'll get cheque from the company. This cheque is a reward for me for helping this distributor with the business and teaching and training and guiding him and helping him succeed. 3. Royalty- when a distributor under me decides to raise his level to Supervisor himself (50% profit) I don't get wholesale profits. 50 minus 50 is zero.
In this case, I get royalty up to three active supervisor levels, that is on my first level supervisor, my second level supervisor and my third level supervisor, I get a 1% to 5% royalty depending on my Total Volume Points( ME + My Non Supervisor First Level Downline) every month. For example, if I'm A and I have recruited B who has become a supervisor, and B has recruited C who has become a Supervisor, and C has recruited D who has become a Supervisor, I'll get royalty of 1%-5% up to D's organisation.
0% royalty - 0-499 Total Volume points (TVP)1% - 500-999 TVP2% - 1000-1499 TVP3% - 1500-1999 TVP4% - 2000-2499 TVP5% - 2500 plus TVPIS ROYALTY HALAL FOR ME?
4. Bonus- When I reach a higher level (two levels above supervisor, profit margin remains same 50%), I become a Top Achiever of Business, I have quite a good organization, I start getting bonus on my entire downline organization's volume, irrespective of the 3 levels. If I have 6 levels I'll get bonus 2% to 7% on all organization's volume.
Also you get annual bonus, and vacations as well. I may or may not know all the guys in my 2nd line organization, and so on. First line organization I will be knowing and training them all because I myself have recruited them.
I'm in a business of improving people's health and wealth and people really thank me when their health status improves. My own health has improved and wealth too by retailing. I have not recruited anyone yet so no wholesale or royalty or bonus received till date.
My question is, are Royalty and Bonus incomes lawful for me? I'm looking for detailed explanations please.
Answer :
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
On the face of it, there does not appear to be anything objectionable since one is simply purchasing a product, and selling it on with a mark-up.
However, there have been many negative comments about this product with regards to their marketing strategy. First of all, the profit that they promise you will be making is not very realistic as the costs are very high in relation to other similar products. As such, many enthusiastic investors end up with a stock they can’t get rid of and are forced to sell it on ebay at a loss. Secondly, their product seems to be devoid of a significant amount of real consumers. It is unavailable in the normal supermarkets and it seems that the majority of their purchases are achieved by gullible people who in turn intend to sell it an unrealistic profit. Thirdly, they claim that they have done a lot of scientific research in the product to make it the top of the line. In actual fact, only a very meagre amount has been spent on research and consequently their product is not that much different from other products.
More of the negative feedback on this scheme, which some accuse of being a pyramid scheme disguised as trade, can be found at the following links: http://www.businessinsider.com/bill-ackmans-herbalife-presentation-2012-12#-1
The Darul Iftaa does not have the authority, resources or time to make a factual finding in respect of this scheme, or whether the criticisms have merit. However in light of the many disgruntled customers, we strongly caution against involvement with this product without due and proper investigation.
And Allah Ta’āla Knows Best
Khalil Johnson
Student Darul Iftaa
Canada
Checked and Approved by,
Mufti Ebrahim Desai.
|
