AdvoCare claims to offer an opportunity to earn extra income and build a better life. In this article, I walk you through an objective analysis of the AdvoCare opportunity and reveal the statistical truth.
What is AdvoCare? AdvoCare is a privately-owned Direct Sales company founded in 1993 and headquartered in Plano, Texas. AdvoCare markets nutritional supplements, weight-management & sports performance products and a business opportunity through a sales force of independent distributors.
Wikipedia describes AdvoCare as a multi-level marketing company. The sales force, made up of independent distributors, is indeed structured in multiple levels. However, AdvoCare does not describe itself as an MLM.
Because AdvoCare is a member of the Direct Selling Association, I will refer to it as a Direct Sales Company.
Update 25May2019. BehindMLM has reported that AdvoCare will be dropping the MLM opportunity. Although Advocare was in good standing with the Direct Selling Association the FTC found that most of it revenue was coming from sales of products to distributors. By definition, that behavior makes AdvoCare a pyramid scheme.
The AdvoCare Business Opportunity.
Perhaps you were approached by a friend or relative about the AdvoCare Business Opportunity.
Maybe they said you could earn extra income as an AdvoCare distributor or even build a business that would bust your debts and make you financially independent.
All worthy goals, to be sure.However, if you’re considering joining AdvoCare to make money, it is essential that you treat it as a business from the beginning. That means, checking your emotions at the door and looking at the facts objectively.
As with any business decision, it is essential that you perform your own due diligence. This article walks you through a due diligence process for AdvoCare and reveals information you may not find anywhere else.
Put on your business hat and remember, sometimes the best decision is to walk away.
What Do You Expect from AdvoCare?
If you are looking at the AdvoCare business opportunity as a chance to improve your life, take a moment to determine specifically what you hope to gain.
- Do you only want to buy AdvoCare products at a discount?
- Do you want to earn extra money?
- Do you want to build a business that frees you from your job?
- Or, do you want to be financially independent?
- To the above questions, I would add;
- Is the AdvoCare business opportunity a genuine opportunity?
- What does it take to win big with AdvoCare?
At the end of this article, after we’ve looked at the numbers, we’ll revisit these questions.
AdvoCare is a Member of DSA.
In 2018, AdvoCare International was recognized by the Direct Selling Association as a leader in the industry. Keep in mind that DSA was created by Direct Sales companies for Direct Sales companies.
However, not all Direct Sales companies are members of DSA. In fact, member companies are more restricted than non-members.
Code of Ethics.
If you want to be a distributor for a Direct Sales company, it would be better to join one that is a member of DSA because they have a code of ethics eachmember company must follow.
For example, as a member of DSA, AdvoCare must publish an Income Earning Disclosure Statement. Without this statement, it would be impossible to perform proper due diligence on the opportunity.
Buy Back Policy.
Also, as a member of DSA, AdvoCare must have a buyback policy and guarantee they will buy back excess inventory from distributors. This policy prevents AdvoCare from making money from pushing excess inventory onto distributors, a practice that is common in the industry.
Although AdvoCare has a buyback policy, that does not prevent them from offering incentives to distributors to buy excess inventory. For example, AdvoCare offers a 40% discount when a distributor purchases $3,000 worth of products.
When you’re a distributor for a company that is a member of DSA, and you have a complaint that cannot be resolved at the company level, you can turn to the DSA for mediation.
However, there is at least two occasions when DSA mediation did not provide adequate remedy and lawsuits against AdvoCare were the result. Both of these lawsuits give us insight into the true values of AdvoCare.
In a moment, I’ll discuss these lawsuits in more detail.
67% Did Not Earn Anything!
Due diligence begins with a look at the AdvoCare Income Disclosure Statement.AdvoCare is one of the more transparent Direct Sales companies I’ve researched. However, they do pull a few tricks to make the number look better than they are.
That said, several places on the AdvoCare website remind us that “67.28% of Distributors did not earn any income from AdvoCare.”
Let that number sink in. Nearly 70% of all AdvoCare distributors did not earn anything.
We can assume that most of these distributors bought product, had business expenses and may have had to pay self-employment taxes.
In other words, they lost money.
But, what about the distributors who made money? How much did they make? The AdvoCare Income Disclosure Statement has that information.
The AdvoCare Income Disclosure Statement.
It takes a little digging on the AdvoCare website to find the Income Disclosure Statement. To find the link, go to the AdvoCare website and click on “Become a Distributor.” Then scroll to the bottom of the page. You’ll find the link there.
Or, you can just search for AdvoCare Income Disclosure Statement in Google, Bing or Yahoo.
When you get to the Income Disclosure Statement page, there is a lot of irrelevant text in the top two-thirds of the page. The important numbers are on the bottom one-third of the page.
I’ll be discussing the income numbers for 2017 which is the most recent at the time of this writing. Looking back at earlier AdvoCare Income Disclosures the percentages were consistent over time.
The left column in the Income Disclosure is the amount distributors earned for the entire year. At the top, you’ll see a big fat zero. Across from it, you’ll see the number 67.28%, the same number we saw earlier showing that nearly 70% of AdvoCare distributors did not earn anything.
Check out the second row in the left column. It shows an annual income of one penny to $200. Over on the right, we see that 20% of the distributors earned between a penny and $200 for the year!
Again, I think it’s safe to assume they spend more than $200 during the year on product.
If you add the top two percentages in the right column together, you’ll see that 87% of all distributors earned less than $200 for the year. If they purchased more than $200 worth of product or incurred business expenses, they probably lost money.
With these numbers in mind, I think it is safe to say that 87% of all AdvoCare distributors are not earning even a supplemental income. $200 a year minus expenses doesn’t leave much.
If we add the distributors who earn $2,000 or less for the year, we see that 98.83% of all distributors earned between 0 and $2,000 for the year.
We can only speculate about what their expenses might have been, but they undoubtedly incurred expenses. Of the few that earned $2,000 for the year, you can bet their profit was less than that.
The Money Makers.
The top four income categories range between $20,001 and $4 Million for the year. That’s a very large spread.
In these categories, we begin to see income that would make a difference in someone’s life. However, if you add up the percentages for the top-earning categories, you’ll discover that only 0.31% of AdvoCare distributors earned a living wage or better.
Where’s the opportunity?
Winner Take All.
When you look at the AdvoCare Income Disclosure Statement, you can see that it’s a game of Winner Take All. Out of 387,372 distributors, only 175 earned enough to live comfortably.
When 98.83% lose money, and only 0.05% earn a comfortable income, there isn’t room to earn a supplemental income.
Now, consider how long it takes a distributor to earn a respectable income.
How Long Does It Take?
On the same page as the Income Disclosure Statement and above the blue chart, you’ll find a table with three rows. On the left side, it says “Percentile of Paid Distributors.” On the right side, it says “Average Time as Distributors.”
The top 50% of PAID distributors earned a minimum of $125 for the YEAR and were distributors for 3.6 years. You could mow lawns and earn a much better income.
Look at the top 1% of PAID distributors. They earned a minimum of $17,826 for the year and were distributors for 7.9 years. There are many ways to earn more than that and earn it faster.
The AdvoCare Compensation Plan.
I did not find the AdvoCare Compensation Plan on the AdvoCare website, but I did find a copy online. I suspect the reason the compensation plan is not on the website might be because AdvoCare wants to use it as recruiting tool.
My guess is AdvoCare uses the Compensation Plan as a recruiting tool and requires an experienced distributor to explain the plan to a prospect.
To be sure, the Compensation Plan is designed to create the illusion that success is possible with AdvoCare when in truth only an extremely small percentage of distributors succeed with the opportunity.
In the copy I found online, the Comp Plan showed four ways to make money. A detail worth mentioning is the more product you buy as a distributor, the greater the discount.
Clearly, the incentive is to buy product.
For example, at the Advisor Level, a distributor gets a 40% discount on all products. However, to achieve the Advisor Level, a distributor must purchase at least $3,000 worth of product for personal use or to retail.
Imagine spending $3,000 on product when less than 2% of AdvoCare distributors earn $3,000 in a year!
When a distributor spends $3,000 on products, the odds are they will never earn that money back.
More on the Compensation Plan.The Compensation Plan is AdvoCare selling the dream. If you only look at the Compensation Plan, you might think that it’s easy to make money with AdvoCare, just share their wonderful products.
The Compensation Plan is designed to make you feel hopeful about the opportunity.
Think of the Compensation Plan as what could be but understand the Income Disclosure Statement is what really happens.
Don’t base your decision to join AdvoCare on the Compensation Plan. Instead, base it on the Earning Disclosure Statement.
Paying for the Privilege.
According to the Compensation Plan I found, it costs $79 to join AdvoCare as a distributor and $50 a year to maintain your distributorship.
The Direct Selling industry is the only industry that expects people to pay the company for the privilege of selling their products.
Think about it this way. Advocare expects you to pay them for the opportunity to make money for the company. Doesn’t that strike you as odd?
Outside of the Direct Selling industry, there are thousands of companies that will happily pay you to sell their products. It’s ridiculous to pay a company so you can then make the company money.
Are You Really a Customer?
Because very few AdvoCare distributors make money and because distributors are required to pay AdvoCare for the privilege of selling their products and because there are hefty incentives to buy products, it raises the question are AdvoCare distributors really unwitting customers?
Is the promise of an opportunity really just a ploy to trick people into becoming customers buying over-priced products?
Would you buy AdvoCare products if you knew you would not make money with the opportunity? I’m guessing most people wouldn’t, and that exposes the “opportunity” ploy.I suspect that AdvoCare sells the opportunity because that’s the only way people can be enticed to 1.) Buy their over-priced products. 2.) Pay the Company for the license to sell their products.
Also, AdvoCare Products are available on Amazon, which means if you’re a distributor, there is no reason anyone needs to buy from you. They can get AdvoCare products online.
If you search for AdvoCare products on Amazon, you’ll see that Amazon will suggest similar competing products. Many of the competing products are less than half the price AdvoCare charges for their products!
Yet, another reason for people not to buy from you.
Not only are competing products less than half price, their retail price is less than the AdvoCare wholesale price. As a distributor with a 40% discount, you can’t buy AdvoCare products for what your competition is selling their products for retail.
You have to wonder, is the AdvoCare discounted price really a discount? Or, is the AdvoCare products so horribly over-priced that the company can discount their price by 40% and still make a tidy profit at your expense?
Is it any wonder that most AdvoCare distributors lose money?
99.54% Lose Money.
In 2009, Dr. Jon Taylor conducted an in-depth analysis of 300 Multi-level marketing companies, including Advocare. He concluded that 99.54% of Advocare distributors lost money.
And, that most Advocare distributors were unwitting customers whose product purchases enriched the few at the top of the organization.
Is MLM is a Con Game?
In his exhaustive study of MLM, The Case (for and) against Multi-level Marketing, published on the Federal Trade Commission website, Taylor wrote that as a business, MLM is probably the most successful con game ever devised.
The same people who are out recruiting are victims too until they run out of money and quit. Because victims seldom file a legal complaint, law enforcement does not act. And the cycle continues. No complaints. No law enforcement; no law enforcement, no complaints. And the con goes on.
Is it Really a Business?
Legally, as an AdvoCare distributor, your relationship with the company is not a business. An AdvoCare distributor is a contracted commission sales agent.
If you choose to join AdvoCare as a distributor, read the contract carefully, and you’ll see that AdvoCare has many ways they can kill the contract. As a distributor, you serve at the pleasure of AdvoCare. If you build a sales force, you are building a sales force for AdvoCare.
In the past, AdvoCare has terminated successful distributors and taken their downline. At least two cases resulted in lawsuits.
AdvoCare Lawsuits.In 2009, a jury in Dallas County, Texas concluded that AdvoCare had engaged in deceptive trade practices and had unfairly canceled contracts with two of its successful distributors, Teresa, and Bruce Badgett. The Badgetts had been AdvoCare distributors for over 12 years. The jury awarded the Badgetts $1.9 million in damages.
I mention the Badgett lawsuit, so you will understand that building a business with AdvoCare is building a business the company controls, not you. The Bagetts saw 12 years of their combined work vanish overnight.
If it can happen to them, it can happen to any AdvoCare distributor.
A second lawsuit against AdvoCare resulted when Olympic swimmer Jessica Hardy tested positive for a banned substance after consuming the AdvoCare supplement Arginine Extreme which later proved to be tainted with the banned substance.
A Flawed Industry.
Direct Sales, Multi-level Marketing, Network Marketing, call it what you will, it is a flawed industry, at least from the perspective of the little guy.
Across the board, throughout the industry, less than 1% of the distributors earn more than they spend on product.
If you join AdvoCare or any MLM as a distributor, you are guaranteed to spend money, but you have less than 1% chance of earning more than you spend. In other words, as a distributor, you are first and foremost a customer.
You can be certain that your product purchases enrich the company and the few people at the top of the organization.
MLM is extremely lucrative for company owners and the few at the top of the organization.
No other industry has a sales force that pays the company for the privilege of selling its products! And no other industry has a captured customer base that buys over-priced products month after month.
Can AdvoCare Fulfill Your Expectations?Earlier in this article, I asked you to check your emotions and to think about the AdvoCare opportunity as an objective businessperson.
I raised a series of questions to help you focus on what you might expect from the AdvoCare opportunity and to determine if AdvoCare is capable of fulfilling those expectations.
For the remainder of this article, I will revisit our opening questions.
Do you only want to buy AdvoCare products at a discount?
As an AdvoCare distributor, you can certainly do that. However, there are similar products available on Amazon that are half the price and that do not require you to pay the company $79 or more for the privilege of buying their product.
Do you want to earn extra money?
In this article, I showed how MLM in general and how specifically AdvoCare is a game of Winner Take All. Only a very small percentage of distributors at the top of the organization make money. The majority of distributors spend money buying products. It is the purchases of the majority of the distributors that create the profit the few at the top enjoy.
Because AdvoCare is a Winner Take All game, I see no opportunity for a distributor to make “extra money.”
Do you want to build a business that frees you from your job?
I understand the dream to leave your job. However, it is doubtful that an AdvoCare distributorship will ever let you quit your job. At best, it would take years to get to that level.
Remember that little chart above the Earning Disclosure Statement? It showed that on average, the top 1% earned about $17,000 a year and had been with AdvoCare for nearly 8 years!
It is doubtful AdvoCare will ever replace your day job.
Do you want to be financially independent?
If AdvoCare can’t replace your day job, it will never make you financially independent.
Is the AdvoCare business opportunity a genuine opportunity?In my opinion, the AdvoCare business opportunity is not genuine. The promise of making extra money or building a business appears to be little more than a marketing ploy to trick people into buying AdvoCare’s over-priced products.
There are hundreds of ways to build a business that will replace or surpass your day job in a reasonable amount of time. Service businesses such as lawn care, handyman, and the trades are typically profitable within a few months.
More lucrative enterprises such as internet marketing and franchises require more time to get established.
What does it take to win big with AdvoCare?
We’ve shown that only a few distributors at the top of the organization earn a substantial income. Getting to the top requires high energy, relentless recruiting skills and unwavering commitment to the final objective.
It helps if you have influence over large numbers of people or have the internet marketing skills to drive tons of people to your offer.
If you want to be at the top of the AdvoCare organization and make the big bucks, you must be able to earn someone’s trust and sell them the AdvoCare dream while at the same time knowing in your heart, they will probably lose money that can’t afford to lose and waste a portion of their lives.
If you found this article helpful or if you have experience with AdvoCare you would like to share, please leave a comment below. Thank you.