Forever Living Products

Forever Living Products International, Inc.
Multi-level marketing
Industry Manufacturing, marketing, distribution
Founded 1978
Headquarters Scottsdale, Arizona, USA
Key people
 Rex G.Maughan, Founder
Products Aloe vera and bee-based products
Revenue $2.6 billion (2014)
Number of employees
 4,100 (2006)
Subsidiaries Forever Resorts, Aloe Vera of America, Forever Aloe Plantations, Forever Nutraceutical
Website www.foreverliving.com

Forever Living Products International, Inc. (FLPI) is a privately held multi-level marketing (MLM) company based in Scottsdale, Arizona, which manufactures and sells aloe vera-based drinks and bee-derived cosmetics, nutritional supplements, and personal care products.[1] The company was founded in 1978 by CEO Rex Maughan. After acquiring the company Aloe Vera of America by the 1990s,[2] In 2010, the company reported having over 4,000 employees, a network of 9.3 million distributors, and revenue of $1.7 billion.[3][1]

History

Forever Living was founded in 1978 in Tempe, Arizona as a direct-sell company[4] by businessmen Carl Jensen and Rex Maughan.[1] By the 1990s, Maughan had purchased the Texas company Aloe Vera of America, with Aloe Vera of America selling its products to Forever Living for distribution.[2] Some journalists have likened the multi-level marketing business model of Forever Living's distribution system to that of a pyramid scheme.[5]

Forever Living Products headquarters in McCormick Ranch in Arizona in 2007. The company's resort division owns several similar properties.

In 1983, the company was named No. 6 on Inc. Magazines annual Inc. 500 list of the fastest-growing private companies in the United States.[6]

According to Arthur Andersen's Top 100, as of 1993, Forever Living Products International was Arizona's second-largest private company.[7] As of August 1995, Forbes reported the company's product line included "deodorants, toothpaste, laundry detergent and three dozen other products, nearly all of which contain extract of aloe."[8]

Annual revenue exceeded $1.15 billion in 2005[1] and Forever Living ended the year with around 150,000 distributors,[9] and 55 employees.[10] The following year Forbes named Forever Living as No. 340 on the Forbes 400 list, which ranks the largest private companies in the United States. With 4,100 employees, at the time Forbes stated the company was "the world's largest distributor of aloe vera and beehive-based products."[1] At that point the company was selling "aloe vera gel, natural aloe vera drinks, vitamins, and glamour and skin products in 100 countries."[1]

In 2010, revenue was $1.7 billion, and the company was selling its products through 9.3 million distributors.[3] In 2013 the publication New Vision reported that Forever Living had over 20,000 distributors in Uganda, of which only 83 had reached a managerial level and begun to recoup expenses; their investigation concluded that Forever Living Products' "distribution system does not guarantee profits and majority of members drop out along the way, after losing millions."[11] The company was active in over 150 countries as of 2015.[4] In February 2015, the company announced they had appointed a new management team to "oversee the affairs of the company in Nigeria."[12]

In 1996, upon suggestion of the American authorities, the Internal Revenue Service (IRS) and the National Tax Agency Japan (NTA) initiated a joint audit of Rex and Ruth Maughan and related entities Aloe Vera of America (AVA), Selective Art Inc., FLP International, and FLP Japan for the period of 1991 to 1995.[13] In 1997, the NTA imposed a penalty tax of 3.5 billion yen on Forever Living’s Japan division for concealing income of 7.7 billion yen over the five-year period.[14] Later that year, AVA, Rex and Ruth Maughan, Maughan Holdings, Gene Yamagata, and Yamagata Holdings[15] sued the IRS for unauthorized disclosure of tax return information.[14] In the midst of the lawsuit, The IRS asked the NTA to drop its decision against Forever Living, and in 2002, the agency “grudgingly complied with the IRS's request”, announcing that the penalty tax had been effectively withdrawn.[14] In February 2015, a USA district court ruled that the IRS knowingly provided some false information about AVA to the NTA, in violation of the United States' tax treaty with Japan.[16] and awarded three of the plaintiffs one-thousand dollars each in statutory damages.[16]

In 2004 claims made about Forever Living products were found to be in violation of several laws in Hungary related to advertising, registration of nutritional products, and the use of cosmetics as medicinal agents. As a result, the company was fined 60 million HUF (approximately $280,000 USD).[17]

In 2007, author Richard Bach made claims against the company for copyright infringement and trademark infringement.[18] The lawsuit stated that for over 20 years Forever Living had used the character, storyline, and copyrighted excerpts from the novel Jonathan Livingston Seagull to promote its marketing plan, and also used the motion picture and novel as its corporate logo.[19][20] The claim was satisfied through arbitration,[21] and shortly after, Forever Living changed its company logo[22] from a seagull to an eagle.

See also

References

  1. 1 2 3 4 5 6 "The Largest Private Companies: #340 Forever Living Products Intl". forbes.com. 2006. Retrieved June 29, 2008.
  2. 1 2 "ALOE VERA OF AMERICA INC v. UNITED STATES". Case Law. July 30, 2009. Retrieved June 6, 2015.
  3. 1 2 Emmert, J.M. (2011). "DSN Global 100: The Top Direct Selling Companies in the World". Direct Selling News. Retrieved June 6, 2015.
  4. 1 2 "About Forever Living". www.foreverliving.com. Retrieved January 31, 2015.
  5. ↑ Max de Leon (April 28, 2003). "A very thin line between multilevel marketing and pyramid schemes". Retrieved April 21, 2014.
  6. ↑ Richman, Tom (December 1, 1983). "Going Their Way - Whatever else catapulted them to the peak, it wasn't conformity to the norms of business". Inc.com. Retrieved May 27, 2015.
  7. ↑ Huston, Jenni (November 12, 1993). "No. 2 private company is 'best-kept secret' in state. (Forever Living Products International Inc.) ( in state)". The Business Journal. Trove. Retrieved June 6, 2015.
  8. ↑ Palmeri, Christopher (August 14, 1995). "The aloe juice man. (Forever Living Products International)". Forbes. Business: Highbeam. Retrieved May 27, 2015.
  9. ↑ "Forever Living Products hopes to see sales up in H2". Ziarul Financiar. August 2006. Archived from the original on August 4, 2008. Retrieved June 29, 2008.
  10. ↑ "Forever Living Products hopes to see sales up in H2". Ziarul Financiar. August 2006. Archived from the original on August 4, 2008.
  11. ↑ Kagolo, Francis (February 17, 2013). "Network marketing sucking billions out of Ugandans". New Vision. Retrieved January 29, 2015.
  12. ↑ Bilbur, Jon (February 20, 2015). "Forever Living Product Gets New Management Team In Nigeria". The Tide News Online. Retrieved May 27, 2015.
  13. ↑ Cope, Charles W. (February 2015). "United States Held Liable for Making False Statements to Foreign Tax Authority". copetax.com. Retrieved May 27, 2015.
  14. 1 2 3 "Tax agency takes back penalty tax on U.S.-affiliate firm.". Kyodo News International, Inc. July 26, 2002. Retrieved May 27, 2015.
  15. ↑ "376 F. 3d 960 - Aloe Vera of America Inc v. United States". OpenJurist. July 19, 2004. Retrieved May 27, 2015.
  16. 1 2 Kroh, Eric (February 11, 2015). "Ariz. Judge Docks U.S. $3,000 For Disclosing Taxpayer Info". law360.com. Retrieved May 27, 2015.
  17. ↑ "Hungarian Economic Competition Office fined FLP for 60 million HUF".
  18. ↑ Schwabach, Aaron (2011). Fanfiction and Copyright. Ashgate. pp. 39–40. ISBN 978-0-7546-7903-5.
  19. ↑ Law Updates: Richard Bach et al
  20. ↑ "Bach v. Forever Living Products US, Inc., 473 F. Supp. 2d 1110". February 6, 2007. Retrieved May 27, 2015.
  21. ↑ "Bach v. Forever Living Products U.S., Inc.". Law Updates. July 13, 2007. Retrieved May 27, 2015.
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