International Law

USANA Recruiting Down

According to the Salt Lake Tribune, Usana posts hefty sales, but Recruiting Down"

"After reporting the company's sixth year of record sales and earnings, Usana Health Sciences' chief financial officer said the company will be looking for opportunities that could result from the deteriorating U.S. economy. "

But, there is more trouble: USANA is having trouble recruiting.

" The fourth quarter in North America it experienced softer-than-expected sales and associate numbers.

"We attribute this decline primarily to the toll that various false allegations have taken on our associates during 2007," said Dave Wentz, the company's president. "We believe that these challenges are now largely behind us."

Wentz was referring to a report released last year by Barry Minkow, an investigator who spent time in prison for securities fraud but now runs a business known as the Fraud Discovery Institute.

Minkow's report, which was initially cited in The Wall Street Journal's well-known "Heard on the Street" column, contended that Usana's business model was "primarily based upon sales to a continuously collapsing pool of associates that need to be replaced monthly and yearly."

So the associates are not recruiting? Why? And shouldn't this be disclosed to the new associates?

Full post as published by Misleading Advertising Law on February 08, 2008 (boomark / email).