LifeVantage Rebukes Distributor, Cancels Contract and Downline with Money Owed
SALT LAKE CITY — In just 14 days world-renowned speaker, author and network marketing consultant, Burke Hedges, will bring on what is possibly the biggest civil trial in MLM history. The civil suit is between Hedges, his company Backbone Worldwide, Inc. and supplement empire, LifeVantage (LFVN).
Hedges, an industry expert in network marketing, is best known for travelling the world to coach companies and distributors on how to embrace the American dream with MLMs. But now Hedges alleges that a piece of that dream has been stolen from him by his former employers, LifeVantage.
So, how did a well-known, happy-go-lucky entrepreneur like Burke Hedges end up on the prosecuting end of this lawsuit?
It all started in 2009, when Hedges was offered the opportunity to work as a distributor for an emerging new company, LifeVantage.
LFVN is a leading network marketing company that sells supplements direct-to-consumer through a network of distributors. Today, LFVN does over $196 million in revenue each year.
Hedges’ contract with the Company was to provide him the following for services rendered:
- $20,000 per month for the first three months;
- $10,000 per month for the subsequent nine months of the Support Period;
- An option to purchase 120,000 shares of LFVN’s common stock at $0.70 per share;
- Full qualification at the highest active rank under LFVN’ s compensation plan; and
- Paying travel expenses up to $5,000 per month.
If that sounds like a lot for a distributor, it is. MLMs build their wealth on the backs of distributors who usually start from the bottom and work their way up making commissions that increase as their team grows. But Hedges is no ordinary distributor.
A company like LFVN would hire a business like Backbone Worldwide, Inc. to build the infrastructure for product revenue. They would do this by promoting to an established network, consulting and providing assistance with marketing and materials.
As such, Hedges was an independent contractor providing services and experience to LFVN while simultaneously promoting the product as a distributor.
And so began what should have been a match-made-in-Heaven, on paper at least.
In a press release issued by LFVN on May 18th, 2009, shortly after Hedges joined the company, David Brown, CEO of LifeVantage Corp., calls Hedges “a legend in the network marketing industry”.
But by May of 2010, Hedges would find himself fighting for his honor in a battle over money that would end in his termination. The question on everyone’s mind is what possibly could have happened over the course of that year to make this relationship go South so fast?
According to Hedges, LFVN owes him restitution for damages due to breach of contract, defamation and tortious interference of business relations all resulting in the loss of income. The lawsuit has left the confident Florida businessman questioning the American dream and if it can truly be stolen from him.
Only time and a civil trial will tell. Stay tuned to this blog for the latest developments in Backbone Worldwide, Inc., and Burke Hedges v. LifeVantage Corp.
