Stay Informed & Take Action
Herbalife is a pyramid scheme that harms millions of people around the world.
“Nutrition Clubs operate primarily as a tool for recruiting new members rather than as a method for profitably retailing Herbalife products.” FTC vs. Herbalife, Complaint, par 58.
The vast majority of Nutrition Clubs fail.
There are many ways to do the Herbalife business. Some methods are designed to appeal to different groups of people based on their geographic location, fitness level, personal finances, or their willingness to deceive others. Some methods have fallen out of favor with the passing of time, like direct mail and internet “lead generation.”
No matter the method, 89% of Herbalife distributors don’t make any money from the company.
One of the most popular ways of doing the business is through a Nutrition Club. Herbalife’s products are much more expensive than other comparable products so in 2006 in Mexico, the nutrition club concept emerged as a way to break down the prohibitive cost of Herbalife’s products into more manageable daily, single-serving portions. These “clubs” are usually storefront shops in densely populated areas, although suburban and “home clubs” exist as well.
Distributors who are already in the system make opening a club and earning a significant income sound easy. But the truth is, it’s not. Distributors have no way of knowing if there are other clubs already open in the area. They often don’t understand how much it will cost to operate the business and can’t afford unanticipated expenses. Any training provided doesn’t actually prepare them to run a business. But nonetheless, many distributors trust their sponsors’ promises of riches and try to open a club.
A new distributor has a 1 in 10,000 chance of making it to the president’s team — the same odds that she would die in a canoe accident.
“Club owners reported spending an average of about $8,500 to open their club.” FTC vs. Herbalife, Complaint, par 67.
HERE’S HOW NUTRITION CLUBS WORK
NO ADVERTISING
NO AWNINGS
NO VISIBLE INTERIORS
NO OPEN/CLOSED SIGNS
Nutrition Clubs are hard to find, since Herbalife doesn’t allow them to advertise, have awnings, have visible interiors, use the words “Herbalife” or “shake” or “smoothie” or “shop”, have an open / closed sign, have a public facing website, or indicate in any other way that they are a business. If you somehow manage to find yourself inside a club, here’s how it works…
Distributors can’t actually “sell” the product at the club; instead they sell a daily membership that entitles the customer to a shake (Herbalife’s Formula 1), a cup of aloe water, and a tea (served hot or cold, sometimes you can choose from 3 or 4 flavors) in styrofoam cups. A daily member typically pays somewhere between $5 and $7 in cash for the membership. Herbalife rules dictate that patrons can’t leave the club with these products; they must be consumed in the club.
That’s it.
That’s all that customers are allowed to sample there– just a tea, water and shake. The clubs offering more options are in violation of Herbalife rules and perhaps local law if they don’t have proper permits. There’s also absolutely no formal nutritional training or knowledge required to open a nutrition club which proves problematic for both the operators and patrons.
If this doesn’t sound like a lucrative business plan, that’s because it’s not.
ACCORDING TO HERBALIFE’S RULES, MAKING MONEY FROM CLUB MEMBERSHIPS IS ACTUALLY FORBIDDEN. SO WHAT CAN THEY SELL?
Distributors are only allowed to cover their costs. What legitimate business on the face of the earth would be structured in this way?
Clubs can’t sell the product, so what can they sell? The Herbalife business opportunity.
There are no rules against selling that. In fact, club owners are encouraged to host an “HOM” or Herbalife Opportunity Meeting in their club at least twice a week. These meetings serve as opportunities to recruit new distributors and potential club owners. The primary purpose for the vast majority of these clubs is to serve as a recruiting center. Clubs that don’t recruit new distributors fail quickly. Sadly, almost all of those that do recruit fail too.
90% of new Herbalife distributors fail each year. 2 million people churn through the system each year. If customers enjoyed and used the product and if the business opportunity actually resulted in a prosperous business, these statistics would be very different, but they’re not.
To learn more about nutrition clubs and their recruiting methods, watch our nutrition club presentation, here:
“Some Nutrition Club owners continue to operate their clubs for little or no profit —or at a loss—for years, in the hope that things will turn around and their investment will eventually pay off. However, the promised retail-based business opportunity is simply not there.” FTC vs. Herbalife, Complaint, par 68.
The top 1% of Herbalife distributors receive nearly 90% of the total rewards.