by Jeffry R Fisher

Created on: February 14, 2010

Yesterday, a former high school classmate invited me to join a "business opportunity of a lifetime". It's called ACN.

The business plan is for me to sell heavily discounted telecommunications services from big-name companies so I can earn commissions (residuals) in the future as those service contracts play out. Even better, if I recruit others to do more selling, then I earn residuals on their sales too. I could earn... dozens of dollars per month for hundreds of hours of work outside my core skill set.

But wait, that's not where the big money is. By recruiting new sales people who achieve some minimum threshold of sales, I would earn bonuses. When I saw that the bonuses were bigger than the sales, I wondered where the money would come from.

"Oh yeah, to get started, you need to pay a $499 franchise fee..." A red flag went up in my mind. "...and each new person you recruit needs to pay that fee too." More red flags. "You can earn up to $30,000 in a 30 day period if your down-line hierarchy adds about 125 new franchisees."

That set off all of my mental warning klaxons and flashing red lights. I started feeling claustrophobic and looked around the sales office for the nearest emergency exit. I asked point-blank: "When my primary motivation to buy a franchise is the opportunity to sell more franchises, isn't that a pyramid scheme? Isn't it bound to disappoint the last layer of franchisees who join only to find that there aren't enough people left on the planet to build another layer?"

"Oh no, it's not a pyramid scheme. Donald Trump endorsed ACN after doing months of research. Donald Trump!" I lost count of the number of times his name was trotted out during the sales talk. Yeah, Mr Trump may have tried to buy himself the top spot at the apex of the pyramid, but he doesn't appear to have chosen the turkey route of buying in at the bottom. What does The Donald know about ACN that new franchisees don't?

I'll tell you what it is: The folks at the apex earn 10% on each sale while the grunts at the bottom earn 1/4%. There's no money in being at the bottom, only the hope of building more pyramid below. Unfortunately, at least half of the people at any given time must be at the bottom. Eventually, at least half of the people who ever sign up will be left holding a 1/4% full bag (i.e. virtually empty).

ACN's day of reckoning is fast approaching. It has already turned the corner from virtually unknown to "as seen on TV". When a legitimate, value-creating network like eBay breaks into the public consciousness, it is empowered to create even more value via networking advantages. However, with an ouroborean enterprise like ACN, TV reports are the sound of the bubble bursting.

If those 1/4% sales residuals at the base of the pyramid won't cover your entry fee, then stay away... stay far away.

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