If you’re married, you’ve undoubtedly heard the sage, old advice: “You can be right, or you can be happy.” The premise is simple: when in a disagreement with your spouse, it’s probably best not to argue EVEN IF you have him/her dead to rights. If you have concrete proof that dispels your spouse of all stupidity, by all means go for it. You’ll be proven right…just don’t be confused when they refuse your next sly romantic advance. To quote my great, lovely, poetically inclined wife: “If you think you’re right and I’m wrong, just shut up and go to bed.”
This is a lesson that I’m frequently giving company owners. While the context is different, the spirit is the same. Company owners need to be very, very careful when publicly arguing with distributors. Suppose Distributor Diane is talking trash about the company’s product. She started a Facebook Group, recruits some of her friends (also your distributors) to share their miserable experiences with your product, and leads them to a competing company. The policy violations are numerous, e.g., non-disparagement clause, cross recruiting. Litigation is warranted, right? The company founders say, “We want to sue Diane. We have clear proof that she’s violating our policies.”
Well. You can be right, or you can stay in business.
I’m not suggesting that it’s NEVER justified to initiate litigation against a distributor. In fact, our firm has led numerous efforts on that front. In some cases, the behavior is too egregious to ignore. I’m only suggesting that it’s worth careful, slow, thoughtful consideration before entering an arena with a distributor. There are very few attorneys that actually make a living practicing law in this sector. The good ones will all give the same advice on this subject: be careful. The not-so-qualified attorneys see a nail and they want to hammer it. After all, they’re in the business of suing people. There’s a contract violation. There’s proof. The client is angry. The client is willing to pay a lawyer to “make it go away.” Lawsuits are filed. Fees are generated. Speaking of fees, we’ve covered the Economics of MLM litigation before. It’s more expensive than most realize.
It’s the unforeseen consequences that can really bite you in the butt here. While the issues seem so simple at the start, things turn complicated when Diane’s friends show up with torches and pitchforks. Diane, refusing to play dead like a “normal” distributor, decides to go with a scorched earth strategy. She goes on Oprah, cries on TV, recruits other enemies to the business, attacks the company’s merchant processing relationships, sends info to the press, reaches out to prominent YouTube personalities, contacts the FDA, the FTC, contacts the Governor of her state, contacts Truth in Advertising…you get the idea. And while you may be right on the legal issues, there’s an ocean of information that will inevitably “magically appear” online that casts your business in a very negative light. And that online content, regardless if you ultimately win, is not coming down.
Again, you can be right, or you can stay in business. In some situations, it’s best to leave a matter alone. When distributors are saying atrocious things, things that might actually be actionable in court, company owners need to think long and hard before aggressively pursuing a remedy in court. I frequently advise clients to simply rely on their own PR resources: if Diane is talking trash online, the company is certainly free to defend itself online by providing context and giving its side of the story. It’s sometimes as easy as one Facebook post, i.e., “Hey, we know there’s a few of you out there that are posting false information about our products. We’ve terminated these people and we’ve decided we’re not going to give it much energy beyond that…” It’s also important to take stock of the actual harm being done. If people are not really quitting in large numbers, it’s another reason to let it go. “But we need to make an example of this person.” Be careful with that mindset. In my experience, the harder you squeeze the salesforce, the more likely it all slips away.