Policies and Procedures
1.1 BECOMING AN AFFILIATE
1.2 Independent Representative (Affiliate)
hempSMART Inc., hereinafter “Company,” is a direct selling Company, marketing health-related products and other consumer products to the consumer through Independent Representatives. The policies and procedures herein are applicable to all Independent Representatives (hereinafter “Affiliate”) of the Company.
- As an Affiliate with hempSMART™, you are required to understand and comply with the rules, regulations, policies and procedures contained in this handbook and any additional hempSMART™ training materials.
- An Affiliate is one who has completed a Company application and agreement and has been accepted by the Company as an Affiliate. The Company reserves the right to accept or reject anyone as an Affiliate.
- All Affiliates must be the age of majority in the state in which they distribute Company products and services.
- hempSMART™ honors and complies with all international, federal, state, and local regulations governing direct sales, network marketing, of its products and requires every Affiliate in the program to do the same.
- Unless waived in writing by the Company upon application, the Company will consider each married couple, whether married or a statutory recognized domestic partnership, a single Affiliate. Neither spouses, nor statutory domestic partners, may sponsor each other directly or indirectly, nor have different sponsors. If one spouse or a statutory domestic partner is already an Affiliate, the nonparticipating spouse or statutory domestic partner may elect to become an Affiliate, but must join the same Affiliate position as his or her spouse or statutory domestic partner. The Company reserves the right to reject any applications for new Affiliates or applications for renewal. Should spouses divorce or should a statutory domestic partnership dissolve, they should notify the Company as to how the Affiliate position is to be managed thereafter. Otherwise, the Company will recognize the final judicial or adjudicatory disposition of the Affiliate position.
- Affiliates are independent marketing representatives of the Company and are not to be considered purchasers of a franchise or a distributorship. The agreement between the Company and its Affiliates does not create an employer\employee relationship, agency, partnership, or joint venture between the Company and the Affiliates. Each Affiliate shall hold harmless the Company from any claims, damages or liabilities arising out of Affiliate’s business practices. Company Affiliates have no authority to bind the Company to any obligation. Each Affiliate is encouraged to set up his\her own hours and to determine his\her own methods of sale, so long as he\she complies with the policies and procedures of the Company.
- Transaction Submission Integrity. It is essential to the success of the Company, its Affiliates and customers that submissions of transactions to the Company maintain integrity of communication. It is to be expected that all transactions submissions to the Company, including, but not limited to, Affiliate applications, Affiliate communication, Affiliate financial transactions and consumer transactions, be submitted by the individual or entity involved in the transaction. Third party submission of any and all transactions submissions is prohibited. An Affiliate may not communicate any transactions submissions on behalf of another Affiliate, Affiliate applicant or customer. An Affiliate may not use his or her credit card or bank account on behalf of another individual or Affiliate. This rule is applicable to any and all forms of transactions submissions, including, but not limited to, online, telephone, fax, email, etc.
1.3 Ethical Conduct
Affiliates will, at all times, conduct their business in a professional and ethical manner that is supportive to both the Company and other Affiliates. An Affiliate shall engage in no conduct which negatively impacts, disrupts or impairs the reputation or business of the Company, its products/services or other Affiliates, including, but not limited to: disparagement of the Company, its officers or employees, its products/services or other Affiliates; manipulation of the compensation plan or unauthorized manipulation of the placement program or genealogy structures; undermines or is at odds with the training systems utilized by and authorized by the Company; conduct which is abusive, disrespectful, bullying or intimidating of other Affiliates, customers, employees, or Affiliates of the Company; conduct that undermines the relationship between the Company and Affiliates or relationships between Affiliates; conduct which disrespects the privacy of other Affiliates; conduct which is false, fraudulent, dishonest or deceptive in any way; or any other conduct which the Company deems disreputable or, in any way, negatively impacts the Company or other Affiliates.
1.4 Personal and Family Use
The Company’s program is built upon retail sales to the ultimate consumer. The company also recognizes that Affiliates may wish to purchase product or service in reasonable amounts for their own personal or family use. For this reason, a retail sale for bonus purposes shall include sales to nonparticipants, as well as sales to Affiliates for personal or family use, which are not made for purposes of qualification or advancement. It is company policy, however, to strictly prohibit the purchase of product or service solely for the purpose of qualifying for bonuses or advancement in the marketing program. Affiliates must fulfill published personal and down line retail sales requirements, including requisite retail sales to nonparticipants, as well as supervisory responsibilities, to qualify for bonuses, overrides or advancements.
1.5 Affiliate Sponsorship.
Any Affiliate, who sponsors other Affiliates, must fulfill the obligation of performing a bona fide supervisory position in the training or guidance of those sponsored for the purpose of selling product to the ultimate consumer. Affiliates must have ongoing contact, communication, and management supervision with his or her sales organization. Examples of such supervision may include, but are not limited to: newsletters, written correspondence, personal meetings, telephone contact, voice mail, e-mail, training sessions, accompanying individuals to Company training, sharing genealogy information with those sponsored, and website navigation. Affiliates should be able to (but is not required to) provide evidence to the Company semiannually of ongoing fulfillment of sponsor responsibilities. If an Affiliate is an Enroller in the marketing program entitled to Enroller bonuses, then the Enroller is obligated to the same responsibilities of supervisory, communication and training activities with respect to Affiliates he or she has enrolled, irrespective of whether the Enroller is also the Sponsor of those Affiliates.
1.6 External Contracts
No Affiliate shall enter into any agreements or make purchases in the name of hempSMART™. No Affiliate shall involve hempSMART™ in any contractual relationship. Affiliate’s cannot and will not sign any contract, rent or lease office space or equipment, open any bank account, secure credit, cash any negotiable instrument, make purchases or enter into agreements of any kind in the name of hempSMART™. Each Affiliate shall hold harmless hempSMART™ from any claims, damages, or liabilities arising out of said hempSMART™ business practices.
1.7 Communication, Suggestions, Complaints
Communication is very important at hempSMART™. It is crucial that Affiliates have all questions answered. To that end, Affiliates are encouraged to make inquiries and discuss issues. Every Affiliate will be given the opportunity to discuss whatever he/she wishes with management to whatever level is necessary to receive due consideration for his/her ideas.
1.8 Contractual Relationship
The policy statements that follow were established to explain and define the relationship and responsibilities between hempSMART™ and its Affiliates. The relationship begins with the completion of the hempSMART™ Affiliate Application in hard copy or online format, which constitutes a binding agreement between the parties, and the policy statements contained in this Handbook are, by reference, an integral part of that hempSMART™ Application. The application, the policies & procedures accompanying the application, and this Handbook thus constitute the entire understanding between Affiliate and hempSMART™.
1.9 Acceptance of application
The term of this Agreement begins when a completed Affiliate Application is received, processed and accepted by hempSMART™, which reserves the right, in its sole discretion, to decline any application it receives. This Agreement will continue until terminated in accordance with the provisions of the termination section of this Policy and Procedure manual. The Affiliate is subject to all conditions set forth in this Policies & Procedures Manual.
- Application. Please be sure to provide all information requested on the Affiliate Application. Failure to do so may result in the Application being denied. If the Affiliate is a USA citizen or foreign citizen working in the USA, they must provide hempSMART™ with an American social security number or tax ID number. All citizens foreign to the USA and not living or working in the USA must provide an identification number for that country where they report income.
- Note to Applicant: It is imperative that you understand that the Affiliate Application (together with these policies and procedures) is a contract which gives you and hempSMART™ certain rights and imposes certain duties. If you have questions about any aspect of the application, you should consult an attorney. After reading these Policies & Procedures, by you putting a check in the online check box on the Affiliate Application portion of the hempSMART™ website you are legally binding yourself to each and every provision of the application and these Policies & Procedures once it is accepted by hempSMART™.
II. SALES MANAGEMENT
2.1 Company Retail / 70 Percent Policy
The Company sales and marketing program is based upon retail sales to the ultimate consumer. Every aspect of the program is designed to assist our Affiliates in the marketing of our products and services to the general consuming public. As a dual consumer safeguard, of the utmost importance to the Company is the policy that Affiliates should purchase products and services in commercially reasonable quantities, and under no circumstances may Affiliates cause others to purchase products or services in amounts that are not reasonably expected to be sold to the consuming public or in unreasonable amounts for personal or family use. In furtherance of these policies, the Company has adopted specific rules on retail sales and retailing referenced as the Company retail/70 percent rules. In the interest of protecting the consumer and the opportunity of its Affiliates, the Company enforces this rule through a verification program.
2.2 70 Percent Rule
- Retail Rule: Although the primary function of the Company is to sell products and services to the general consuming public, the Company realizes that its Affiliates may wish to purchase product for personal or family use in reasonable amounts. For this reason, the Company defines a retail sale to include sales to nonparticipants, as well as purchases for personal or family use in reasonable amounts, which are not made solely for purposes of qualification or advancement. This is a standard followed by leading direct selling companies. Notwithstanding this policy, the Company, in order to specifically further retail selling, has adopted a requirement that an Affiliate will not be eligible for bonuses or overrides unless he or she has made five (5) requisite sales per month to nonparticipant retail customers.
- Required Retail Sales: To qualify for leadership bonuses and awards, an Affiliate must achieve requisite personal volume to meet active status, and stated nonparticipant retail sales volume mandates. If active status is fulfilled Affiliates are encouraged to maintain a minimum of 5 ongoing preferred retail customers for nonparticipant retail sales. The company will track and measure the retail sales volume to maintain a 70% retail customer ratio. The company will provide retail programs and expects active Affiliates to contribute to the successfully maintaining the 70% retail customer ratio.
- Ramp-up Grace Period: To be eligible for sales force down line commissions, an Affiliate, in addition to achieving stated personal and group volume requirements, shall strive for the stated retail sales requirements of five (5) recurring active customers in any one month. With the understanding that Affiliates will need time to build their book of business of active retail customers, Affiliates shall be allowed to ramp up their book of business. Each Leadership position has a larger personal sales volume requirement from 150 at Regional to 500 at Presidential. Anything volume over the accepted reasonable amount for persona and family use must be through retail sales to nonparticipant customers. If one of those customers shall discontinue, the Affiliate shall replace that retail customer with a new retail customer, so as to maintain the required retail customers per month.
- 70 Percent Rule: As with other leading direct selling companies, the Company has adopted a 70 percent rule. Under this rule, Company Affiliates may not order additional product unless they have sold or used for personal or family use at least 70 percent of previously purchased inventory-type product. This verification form is also intended to support the 70 percent rule policy.
- Retail Sales/70 Percent Rule Audit Verification Program: In its effort to support and enforce the retail sales/70 percent rule, the Company on a quarterly basis will conduct random audit verification follow-ups. The Company’s Compliance Department will contact Affiliates to further verify compliance with the retail sale/70 percent rule. Affiliates should maintain records and be prepared to assist the Company Compliance Department in its task.
2.3 Affiliate Tax Responsibilities
All Affiliates are responsible for paying local, state and federal taxes due on earnings from commissions or any other earnings generated as a seller of Company products and services. The Company will collect sales tax on behalf of the Affiliate, then report and distribute applicable sales taxes to the taxing entity for the state in which the sale is made. Affiliates may apply for a waiver of this practice by submitting a copy of their sales and use tax number (and a statement that they are wholesale purchasers purchasing for resale) acquired through their local taxing authorities.
2.4 Affiliate Advertisements
Company Affiliates shall not advertise Company products and services and/or marketing plans except as specifically approved by the Company. Company Affiliates agree to make no false or fraudulent representations about the Company, the products, the Company compensation plan, or income potentials.
- No purchase or investment is necessary to become a Company Affiliate other than the purchase of, or payment fee for, a sales kit, which is sold “at Company cost.” (Purchase is optional in North Dakota). This “at cost” sales kit fee covers basic and ongoing sales and marketing materials and support in both written and electronic and online media formats, including product and service updates.
- A Company Affiliate may NOT produce, sell or distribute literature, video or audio, which is deceptively similar in nature to those produced, published and provided by the Company for its Affiliates. Nor may an Affiliate purchase, sell or distribute noncompany materials which imply or suggest that said materials originate from the Company.
- Any display ads or institutional or trademark advertising copy, other than covered in the foregoing rules, must be submitted to the Company and approved in writing by the Company prior to publication.
- All advertising copy, direct mailing, radio, TV, newspaper and display company must be approved in writing before disseminated, published or displayed with the exception of blind ads where no reference is made to the Company name or product name.
- No claims as to therapeutic or curative properties about the products may be made except those officially approved in writing by the Company or as contained in the official Company literature. In particular, no Affiliate may make any claim that the Company products are useful in treatment or cure of any disease. Such statements can be perceived as medical claims. Not only is this totally against Company policy, but it is also against the laws governed by the United States Food and Drug Administration.
2.5 Sales Kit
As an extension to the initial “at cost” sales kit, a modest yearly fee will be charged for expanded “at cost” (wholesale) ongoing sales abilities, marketing materials support, back office accounting review, training updates, replicated website privilege, and communication tools to support the sales and marketing process. By submitting this Affiliate Agreement, Affiliates specifically authorize this yearly fee to be charged to the Affiliate’s on-file debit or credit card (or other form of payment acceptable to the Company) each year for as long as he or she remains an Affiliate.
2.6 Trademark, Copyright, Trade Names, Advertising
The name of the Company and other names as may be adopted by the Company are proprietary trade names and trademarks of the Company. As such, these marks are of great value to the Company and are supplied to Affiliate for Affiliate’s use only in an expressly authorized manner. Affiliate agrees not to advertise the Company products or services in any way other than the advertising or promotional materials made available to Affiliate by the Company. Affiliate agrees not to use any written, printed, recorded or any other material in advertising, promoting or describing the products or services or the Company marketing program, or in any other manner, any material which has not been copyrighted and supplied by the Company, unless such material has been submitted to the Company and approved in writing by the Company before being disseminated, published or displayed.
- The Affiliate, as an independent contractor, is fully responsible for all of his\her verbal and written statements made regarding the product or service and marketing program, which are not expressly contained in writing in the current Affiliate agreement, and advertising or promotional materials supplied directly by the Company. Affiliate agrees to indemnify the Company and hold it harmless from any and all liability including judgments, civil penalties, refund, attorney fees, court costs or lost business incurred by the Company as a result of Affiliate’s unauthorized representations.
- The Company will not permit the use of its copyrights, designs, logos, trade names, trademarks, etc. without its prior written permission.
- All Company marketing materials or published intellectual property, whether printed, on video, audio, or on the internet, are copyrighted and may not be reproduced in whole or in part by Affiliates or any other person except as authorized by the Company. Permission to reproduce any materials will be considered only in extreme circumstances. Therefore, an Affiliate should not anticipate that approval will be granted.
- A Company Affiliate may not produce, use or distribute any information relative to the contents, characteristics or properties of Company product or service, which has not been provided directly by the Company. This prohibition includes but is not limited to print, audio or video media.
- A Company Affiliate may not produce, sell or distribute literature, video or audio, which are deceptively similar in nature to those produced, published and provided by the Company for its Affiliates. Nor may an Affiliate purchase, sell or distribute non-company materials which imply or suggest that said materials originate from the Company.
- Any display ads or institutional or trademark advertising copy, other than covered in the foregoing rules, must be submitted to the Company and approved in writing by the Company prior to publication.
- All advertising copy, direct mailing, radio, TV, newspaper and display copy must be approved in writing before being disseminated, published or displayed with the exception of blind ads where no reference is made to the Company name or product name.
- No claims as to therapeutic or curative properties about the products may be made except those officially approved in writing by the Company or as contained in the official Company literature. In particular, no Affiliate may make any claim that the Company products are useful in the treatment or cure of any disease. Such statements can be perceived as medical claims. Not only is this totally against Company policy, but it is also against the laws governed by the United States Food and Drug Administration.
2.7 Recording Policy
- Attendance at Company Events; use authorized in Company Media: Company events may be recorded by Company. Images, video and audio of people attending or participating in a Company related event may be used in Company published media in business support materials, and for promotions. By registering and attending a Company related event, you agree to allow Company to use your image, video, audio and personal information in these recordings.
- Private Video and Recording of Events Prohibited: Audio, video and cellular recording of Company related events is strictly prohibited as they are governed by an all-rights-reserved copyright policy. In accordance with this policy, Company prohibits any and all personal recordings of any Company related event. This includes all Company related conferences, leadership or team meetings, training sessions, etc.
- Audio, video, and cellular recordings: of Company related events are not permitted; all audio and video recording devices are prohibited on the premises except by the expressed written permission of Company. Any attempt by unauthorized personnel to record these events may result in the confiscation of and forfeiture of the recording device. No recording devices will be allowed into Company related events, and all bags, briefcases, and backpacks are subject to be searched.
- Internet and Website Policy: The Company maintains an official corporate website. Affiliates are allowed to advertise on the internet through an approved Company program which allows Affiliates to choose from among Company home page designs that can be personalized with the Affiliate’s message and the Affiliate’s contact information. These websites link directly to the Company website giving the Affiliate a professional and Company-approved presence on the internet. Only these approved websites may be used by Affiliates. No Affiliate may independently design a website that uses the names, logos, product or service descriptions of the Company, nor may an Affiliate use “blind” ads on the internet making product or income claims which are ultimately associated with Company products, services or the Company’s compensation plan. Any person using Company names, logos, trademarks, etc. on the internet or any other advertising medium, except as permitted by Company Rules and Regulations, shall be subject to immediate discipline, including termination of Affiliate status.
- Prohibition of Sales on Unauthorized Internet Sites: Except with written authorization from the Company, an Affiliate may not sell nor promote Company products on unauthorized internet sites, including, but not limited to auction sites such as eBay, nor internet shopping sites such as Amazon or Craig’s List, nor internet malls.
- Unsolicited Email: The Company does not permit Affiliates to send unsolicited commercial email to others unless such emails strictly comply with applicable laws and regulations including, without limitation, the federal CAN SPAM Act.
- Any email sent by an Affiliate that promotes the Company, the Company opportunity or Company products and services must comply with the following:
- There must be a functioning return email address to the sender.
- There must be a notice in the email that advises the recipient that he or she may reply to the email, via the functioning return email address, to request that future email solicitations or correspondence not be sent to him or her (a functioning “opt-out” notice).
- The email must clearly and conspicuously disclose that the message is an advertisement or solicitation.
The use of deceptive subject lines and/or false header information is prohibited.
- All opt-out requests, whether received by email or regular mail, must be honored. If an Affiliate receives an opt-out request from a recipient of an email, the Affiliate must forward the opt-out request to the Company.
- Unsolicited Spam: Except as provided in this section, Affiliates may not use or transmit unsolicited spam, mass email distribution, unsolicited email, or “spamming” or use an automatic telephone dialing system relative to the operation of their Company businesses. Unsolicited broadcast distribution of email or other distribution that may be defined as “bulk mail” or “SPAM” is strictly prohibited. Affiliates may send “general mailings” only to other Affiliates in their down line organizations and their direct up-line sponsors. Any other bulk use of email is prohibited.
- The term “automatic telephone dialing system” means equipment, which has the capacity to:
- Store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.
- The terms “unsolicited faxes” and “unsolicited email” mean the transmission via telephone facsimile or electronic mail, respectively, of any material or information advertising or promoting the Company, its products, its compensation plan or any other aspect of the Company which is transmitted to any person, except that these terms do not include a fax or email:
- To any person with that person’s prior express invitation or permission; or
- To any person with whom the Affiliate has an established business or personal relationship. The term “established business or personal relationship” means a prior or existing relationship formed by a voluntary two-way communication between an Affiliate and a person, on the basis of:
- An inquiry, application, purchase or transaction by the person regarding products offered by such Affiliate; or
- A personal or familial relationship, which relationship has not been previously terminated by either party.
2.8 Retail Establishments
Company products or services may be displayed and sold in retail establishments, the sale of such products or services within such retail facilities must be conducted by an Affiliate and must be preceded by a discussion where the Affiliate introduces the prospect to the products or services and opportunity just as they would if they had met outside of the retail facility. Company produced literature, banners, or signage only may be displayed on a shelf, counter, or wall and must be displayed by itself. Special pricing at the amount of 30% off the retail value of the product is the mandated price when being sold to store front owners or retail establishments. From time to time, the Company may announce policies and rules that expand or contract restrictions on sales in retail establishments.
2.9 Trade Shows
With written authorization from the Company, Company products or services and opportunity may be displayed at trade shows by Affiliates. Request for participation in trade shows must be received in writing by the Company at least two weeks prior to the show. Written authorization from the Company must be received before participating in the trade show. Unless written authorization is secured from the Company, Company products or services and opportunity are the only products or services and/or opportunity that may be offered in the trade show booth. Only Company produced marketing materials may be displayed or distributed. No Affiliate may sell or promote the Company’s products or services or business opportunity at flea markets, swap meets, or garage sales.
2.10 International Sales
No Affiliate may export or sell directly or indirectly to others who export the Company’s products, literature, sales aids or promotional material relating to the Company, its products or services or the Company’s program from the United States or its possessions or territories to any other country. Affiliates who choose to sponsor internationally may do so only in countries in which the Company has registered to operate its business and must comply fully with the Rules of Operation of a Company Affiliate position in that country. Any violation of this rule constitutes a material breach of this contract and is grounds for immediate termination of the Affiliate.
2.11 Change of Business Names
The Company reserves the right to approve or disapprove Affiliate’s change of business names, formation of partnerships, corporations, limited liability companies, trusts or other legal entities for tax, estate planning, and limited liability purposes. If the Company approves such a change by Affiliate, the organization’s name and the names of the principals of the organization must appear on the Affiliate application/agreement along with a social security number or federal identification number. It is prohibited to make changes to attempt to circumvent or violate Company rules on raiding, solicitation, targeting, cross-sponsoring or interference.
The Affiliate agreement may be canceled at any time and for any reason by an Affiliate notifying the Company in writing of the election to cancel.
2.13 Agreement Renewal
If an Affiliate elects not to renew his\her Affiliate agreement by not repurchasing the wholesale packet, all rights to bonuses, marketing position, and wholesale purchases cease. The terminated Affiliate’s sales organization shall be subject to placement in accordance with the then current published compensation plan presentation.
2.14 Product Repurchase
If the Affiliate has purchased products for inventory purposes or mandatory sales aids while the Affiliate agreement was in effect, all products in a resalable condition then in possession of the Affiliate, which have been purchased within 12 months of cancellation, shall be repurchased. [Note: DSA member companies and multilevel distribution statute states mandate 12 months. Thus, 12 months is recommended.] The repurchase shall be at a price of not less than ninety percent (90%) of the original net cost to the participant returning such goods, taking into account any sales made by or through such participant prior to notification to the Company of the election to cancel. Buyback is 12 months in Massachusetts, Maryland, Montana, Georgia, Louisiana, Wyoming, Texas, Oklahoma, Idaho, Utah, Washington and Puerto Rico. In addition, the company will honor statutory mandated buyback requirements of every jurisdiction. A Montana resident may cancel his or her Agreement within 15 days from the date of enrollment, and may return his or her starter kit for a full refund within such time period.
2.15 Repayment of Commissions
The Company shall be entitled to repayment of any commission previously paid on a sale of product/service if the product/service purchase is cancelled or reversed or a refund paid for a terminated purchase. The Company shall recover the commission by adjustment on the next month’s Affiliate check payment. In the event that no commission is available for adjustment in the following month, the Affiliate who has received the commission shall repay the commission paid on the “reversed sale” within 30 days of the Company’s notice to repay.
2.16 Change of Products or Services
The Company shall be entitled to change product or service prices at any time and without notice, and to make changes in the statement of policy and procedures.
2.17 Tax Compliance for Products
Each Affiliate shall comply with all state and local taxes and regulations governing the sale of Company products or services.
2.18 Protecting the Consumer and other Affiliates
- Notwithstanding the Company’s longer retail customer guarantee policy, all retail sales must comply with the FTC Three-Day Cooling Off Rule, which requires statutory language and notice of cancellation on the retail sales receipt. The three-day right of cancellation must be orally explained to the customer and the customer must receive two copies of the notice of cancellation form.
- Consumers must be provided accurate information regarding price, credit terms and terms of payment.
- An Affiliate must take appropriate steps to safeguard and protect private information provided by a consumer, other Affiliates or prospective Affiliates.
2.19 Prohibition on Raiding and Cross-Solicitation
Prohibition on Raiding and Cross-Solicitation of Products or Other MLM and/or Business Opportunities. The Company takes seriously its responsibility to protect the livelihood of its sales force and to the hard work invested to build a sales organization. Raiding and solicitation actions in which Affiliates seek to raid and solicit other Affiliates in the sales organization to non-company products and services and to other MLM/business opportunities, severely undermines the marketing program of the Company, interferes with the relationship between the Company and its sales force and destroys the livelihood of other Affiliates who have worked hard to build their own business, the business of their sales force and benefits they have earned by helping to build a sales organization. Therefore, Affiliates shall not directly or indirectly sell to, nor solicit from, other Company Affiliates non-company products or services, or in any way promote to other Company Affiliates business opportunities in marketing programs of other MLM or business opportunity companies at any time. A Company Affiliate shall not engage in any recruiting or promotion activity that targets Company Affiliates for opportunities or products of other direct selling companies or business opportunities, either directly or indirectly, by themselves or in conjunction with others, nor shall an Affiliate participate, directly or indirectly, in interference, raiding or solicitation activity of Company Affiliate for other direct selling companies or business opportunities. Unless approved in writing by the Company, this prohibition includes sales or solicitation of non-company products or services at meetings organized for Company sales, promotion, training recruitment, demonstration, etc. This prohibition on targeting, interference, soliciting and raiding shall be in effect during the term of the Affiliate agreement and for a period of one year after the termination of the Affiliate agreement. For the term of this agreement and for one year after termination hereof, an Affiliate shall not, directly or indirectly, recruit any of Company’s Affiliates to join other direct sales or network marketing companies nor solicit, directly or indirectly, Company’s Affiliates to purchase services or products, or in any other way interfere with the contractual relationships between Company and its Affiliates.
2.20 Confidential and Proprietary Reports
The Company is able to supply data processing information and reports to the Affiliate, which will provide information concerning the Affiliate’s down-line sales organization, product purchases and product mix. The Affiliate agrees that such information is proprietary and confidential to the Company and is transmitted to the Affiliate in confidence. The Affiliate agrees that he or she will not disclose such information to any third party directly or indirectly, nor use the information to compete with the Company directly or indirectly during or after the term of the agreement. The Affiliate and the Company agree that, but for this agreement of confidentiality and nondisclosure, the Company would not provide the above confidential information to the Affiliate. An Affiliate seeking to sell his/her Affiliate position must acknowledge and agree to this provision prior to the finalization of the sale of their Affiliate position.
2.21 Vendor Confidentiality
The Company’s business relationship with its vendors, manufacturers and suppliers is confidential. An Affiliate shall not contact, directly or indirectly, or speak to or communicate with any representative of any supplier or manufacturer of the Company except at a Company sponsored event at which the representative is present at the request of the Company. Violation of this regulation may result in termination and possible claims for damages if the vendor/manufacturer’s association is compromised by the Affiliate contact.
2.22 Private information
An Affiliate shall take appropriate steps to safeguard the protection of all private information provided by a consumer, a prospective consumer and/or other Affiliates.
- Term of Confidentiality: Except to the extent necessary to properly perform Affiliate services pursuant to this Agreement, Affiliate agrees to hold the Confidential and Proprietary information in the strictest secrecy, and covenants that, during the term of this Agreement and for a period of five (5) years thereafter or for so long as Affiliate is receiving commissions from hempSMART™, whichever is longer; Affiliate will not directly or indirectly disclose to any person or entity, or otherwise utilize directly or indirectly any of the proprietary information, nor attempt to circumvent hempSMART™ by contacting or making any agreements directly with any of hempSMART’s providers.
2.23 Change in Status
- Marriage/Statutory Domestic Partnership: Two Company Affiliates who marry or enter into a statutory domestic partnership, after having established their own individual Affiliate positions, may continue to operate their existing Affiliate positions, as long as they do not originate from the same line. If they originate from the same line, then the couple has the choice of either selling or resigning from one of their Affiliate positions, at their discretion.
- Divorce/Dissolution: Should a couple become divorced or enter into a dissolution, they agree to notify the Company as to who will assume responsibility for the Affiliate position in one of the following manners:
- Written notarized agreement signed by both parties indicating who will retain the Affiliate position.
- A court order delineating who receives custody over the Affiliate position.
- Both parties may choose to retain their joint Affiliate position and operate it as a partnership.
- The divorced/dissolved Affiliate may apply for a new Affiliate position without having to wait 12 months.
- Death: Upon the death of an Affiliate, the rights and responsibilities of the Affiliate position may be passed on to the rightfully legally documented heir as long as that person has filled out a new Affiliate application/agreement and completed the required training.
- Disability: Should an Affiliate become disabled to the extent that he/she can no longer fulfill the required duties of the Company Affiliate, such disabled Affiliate’s legal representative or conservator shall:
- Contact the Company within thirty (30) days of the disability and advise the Company of the Affiliate’s status and the plans for future management or cancellation of the Affiliate position.
- Provide notarized or court confirmed copy of appointment as legal representative or conservator.
- Provide notarized or court confirmed copy of document establishing right to administer the Company business.
- Should the legal representative or conservator plan to continue the business of the Affiliate position, then he/she shall fill out a new Affiliate application/agreement and receive the required training consistent with the disabled Affiliate’s level at the time of disability.
- These requirements shall be satisfied within a deadline of six months.
2.24 Sale or Transfer
An Affiliate may not sell, assign or otherwise transfer his or her Affiliate position, marketing position or other Affiliate rights without written application and approval by the Company. This paragraph is applicable to transfer of any interest in an entity that owns an Affiliate position, including but not limited to a corporation, partnership, limited liability company, trust or other non-individual legal entity. This sale or transfer of an Affiliate position must also obtain written approval of the immediate one (1) up line sponsor, plus the approval of two (2) leadership positions that are bronze level or above. The Affiliate position must be offered in writing first to the Affiliate’s sponsor. If the sponsor declines the offer, the Affiliate may offer the Affiliate position for sale to other entities. The Company reserves the right to review, modify, or refuse any sale or transfer agreement and will verify the waiver(s) from the up-line sponsor and leaders in the event the up-line sponsor declines to purchase the Affiliate position. An Affiliate who sells his or her Affiliate position shall not be eligible to requalify as an Affiliate for a period of at least six months after the sale.
- An Affiliate may not add a co-applicant to their Affiliate position and thereafter, remove their name from the Affiliate position, in an effort to circumvent the Company’s sale, assign, delegate or merger procedure. The primary Affiliate must wait twelve (12) months after adding a co-applicant to the Affiliate position before they are allowed to remove their name from the Affiliate position. It is prohibited to use a sale or transfer to attempt to circumvent Company policy on raiding, soliciting, cross-sponsoring or interference.
- For the term of three (3) years after sale or transfer, an Affiliate agrees that he/she shall not, directly or indirectly, disrupt, damage, impair or interfere with the business of the Company, whether by way of interfering with, or raiding its employees or Affiliates, disrupting its relationship with customers, agents, representatives, suppliers, vendors or manufacturers or otherwise. “Disrupting” or “interfering” shall include, but not be limited to, direct or indirect solicitation or recruitment for other direct selling business opportunities or products or services of other direct selling companies. An Affiliate seeking to sell or transfer his/her Affiliate position must acknowledge and agree to this provision prior to the finalization of the sale or transfer of their Affiliate position.
2.25 Statement of Policies and Procedures
This statement of policies and procedures is incorporated into the Affiliate agreement and constitutes the entire agreement of the parties regarding their business relationship.
2.26 Company Right to Alter or Amend
The Company expressly reserves the right to alter or amend prices, Rules and Regulations, Policies and Procedures, product availability and compensation plan. Upon notification, in writing, such amendments are automatically incorporated as part of the agreement between the Company and the Affiliate. Company communication of changes may include, but shall not be limited to mail, email, fax, posting on the Company website, publication in company newsletters or magazines, etc.
2.27 Non-Individual Ownership
A partnership, corporation, limited liability company or other legal entity may be an Affiliate. However, no individual may participate in more than one (1) Affiliate position in any form without the express prior written permission of the Company. Only in the most extreme and extraordinary circumstances will this be considered.
- An Affiliate position may change status under the same sponsor from individual to partnership, corporation, Limited Liability Company or other form of legal entity or from partnership to corporation with proper and complete legal documentation.
- To form a new Affiliate position as a partnership, corporation, Limited Liability Company or other type of legal entity or to change status to one of these forms of business, you must request a partnership/corporation/limited liability form from the corporate home office. This form must be submitted detailing all partners, stockholders, members, officers and directors in the partnership, corporation, Limited Liability Company or other analogous positions in other forms of legal entities. The partner, officer, member or other person who submits the form must be authorized to enter into binding contracts on behalf of the partnership, corporation, legal liability company or other form of legal entity. In addition, by submitting the partnership/corporation/limited liability company form, such person and the legal entity for whom the person is acting certifies that no person with an interest in the business has had an interest in an Affiliate position within three (3) months of the submission of the form (unless it is the continuation of an existing Affiliate position that is changing its form of doing business).
2.28 Individual and Entity Ownership Information
- An individual can have only one Affiliate position in the Company. He/she may not own any other Affiliate position, either individually or jointly, nor may he/she participate as a partner, owner, stockholder, trustee, director, or association member in more than one Affiliate position in any form.
- An individual shall provide the Company with a Social Security Number or a Taxpayer Identification Number (TIN) on an IRS W-9 form. No individual operating under a fictitious name and no partnership, corporation, limited liability company or other business entity may become a Company Affiliate without submitting an “Entity Information” form following enrollment of proprietorship, corporation, Limited Liability Company (LLC), trust or partnership.
- Proprietorship: A certified copy of fictitious name filing must be submitted, plus a W-9 form.
- Corporation: Copies of articles of incorporation are required, including the page with state seals and notarization. These articles will show who the principals are and prove validation of Federal ID Number / Business Number / E.I.N, plus a W-9 form.
- LLC: IRS acceptance only. The name on the IRS acceptance is required to state the LLC in order to use it as an LLC, plus a W-9 form.
- Trust: An affidavit of trust with the notarized copy of the power of attorney is necessary. If Federal ID Number is to be used and is not noted in the affidavit, an IRS acceptance will be required, plus a W-9 form.
- Partnership: To register as a partner, complete the partnership portion of the Entity Information form, along with all signatures that apply, plus a W-9 form.
2.29 Entity Guarantee for Owners
Although Company has offered Affiliates the opportunity to conduct their Affiliate position as corporate, LLC, trust, partnership or other form of legal entities, it is agreed that since the Affiliate position entity is under the control of its owners or principals, the actions of individual owners or beneficiaries as they may affect the Company and the Affiliate position are also critical to Company’s business. Therefore it is agreed that actions of the ownership entity shareholders, members, officers, directors, trustees, beneficiaries, agents, employees or other related or interested parties and the actions of such parties, which are in contravention to Company’s policies shall be attributable to the corporate, LLC, trust, partnership or other legal entity.
- In the event that any of the ownership entity shareholders, members, officers, directors, trustees, beneficiaries, agents, employees or other related parties shall terminate ownership interests in the Affiliate position, any breaching actions by such parties that continue to have a beneficial financial interest, directly or indirectly, in the Affiliate position shall be attributable to the Affiliate position.
2.30 Members of Same Household; Responsibility
Members of Affiliate’s household may operate together as one Company Affiliate position, but may not become separate Company Affiliates. Household is defined as spouses and dependents. Note: Children of legal age to contract and at least 18 years of age are not considered a part of their parents’ household.
- Company recognizes that members of the same household may belong to competing direct selling opportunities. Although the actions of the parties are normally in good faith, in some circumstances, there is an abuse of relationships in which the non-company household member is engaged in recruitment, solicitation or raiding of the Company sales organization. Since the household member that has an ownership interest in the Company Affiliate position is in the best position to be responsible to prevent raiding or cross-sponsoring activity by their co-household member, the cross-recruiting activity of the non-company household member shall be attributed to the Company Affiliate position, subjecting the Affiliate position to discipline or termination.
2.31 Agreed Use of Affiliate Information
It is agreed that the Company is authorized to use Affiliate’s name, photograph, personal story and/or likeness in advertising or promotional materials and Affiliate waives all claims for remuneration for such use.
2.32 Disciplinary Actions
An Affiliate’s violation of any policies and procedures, the agreement, terms and conditions or any illegal, fraudulent, deceptive, or unethical business conduct may result, at the Company’s discretion, in one or more of the following disciplinary actions:
- Issuance of a written warning or admonition.
- Imposition of a fine, which may be imposed immediately or withheld from future commission checks.
- Reassignment of all or part of an Affiliate’s organization.
- Suspension, which may result in termination or reinstatement with conditions or restrictions.
The Company reserves the right to terminate any Affiliate at any time for cause when it is determined that the Affiliate has violated the provisions of the Affiliate agreement, including the provisions of these policies and procedures as they may be amended or the provisions of applicable laws and standards of fair dealing. Such involuntary termination shall be made by the Company at its discretion. Upon an involuntary termination, the Company shall notify the Affiliate by mail at the latest address listed with the Company for the Affiliate. In the event of a termination, the terminated Affiliate agrees to immediately cease representing him/herself as an Affiliate.
- When a decision is made to terminate an Affiliate, the Company will inform the Affiliate in writing that the Affiliate is terminated immediately, effective as of the date of the written notification. The termination notice will be sent by certified mail to the Affiliate’s address on file with the Company.
- If an Affiliate files a timely appeal of termination, the Company will review and reconsider the termination, consider any other appropriate action, and notify the Affiliate of its decision. The decision of the Company will be final and subject to no further review. In the event the termination is not rescinded, the termination will be effective as of the date of the Company’s original termination notice.
A terminated Affiliate may appeal his or her termination by submitting a letter of appeal to hempSMART™ stating the grounds of the appeal. This letter must be sent Certified U.S. Mail, and must be received by hempSMART™ within fifteen (15) days of the date of delivery of the termination notice from hempSMART™. If hempSMART™ has not received a letter of appeal by that deadline, the termination automatically shall become final. If an Affiliate files a timely appeal, hempSMART™ shall, in its sole discretion, review and reconsider that termination and notify the Affiliate of its decision. If the appeal is denied, the termination shall stand and shall be retroactive to the date of the original termination notice. The decision of hempSMART™ shall be final and subject to no further review.
3.3 Voluntary Resignation
An Affiliate may voluntarily resign his or her Affiliate status by; 1) non-renewal or 2) sending a NOTARIZED written notice to hempSMART™ that he or she desires to terminate his or her Affiliate status. Voluntary resignation is effective 30 days after the date renewal was due, or upon receipt of such notice by hempSMART™ at its corporate headquarters, as applicable. An Affiliate who VOLUNTARILY resigns his or her Affiliate distributorship may reapply after waiting six (6) months from hempSMART’s receipt of the resignation before reapplication.
3.4 Effect of Resignation or Termination
- Resignation or termination results in the Affiliate’s permanent loss of the rights to his or her sponsored Downline Organization. hempSMART™ reserves the right to either move up the Downline Organization to the next Affiliate in the resigning or terminating Affiliate’s Upline Organization or to take the place of the resigning or terminating Affiliate in the Downline Organization, at hempSMART’s discretion. All active customers of a resigned or terminated Affiliate will be considered customers of hempSMART™. Furthermore, the resigning or terminated Affiliate shall have no right to purchase additional products as an Affiliate or receive additional compensation from hempSMART™. If an Affiliate is terminated as an Affiliate of a hempSMART™ Affiliate in a foreign country, the Affiliate’s hempSMART™ distributorship that is governed by these Rules and Regulations can be terminated.
- An Affiliate who has had his or her Affiliate status terminated by hempSMART™ may make reapplication as an Affiliate after waiting twelve (12) months from the date that the termination became effective. Termination is retroactive to the beginning of the month in which the termination is effective; thus, any payment of Commissions, Bonuses and/or Royalty Overrides will be made only for business completed during the last full month prior to termination. No terminated Affiliate shall represent themselves as an Affiliate of hempSMART™ products or services.
3.5 Compliance and Arbitration
- These Policies and Procedures were created as guidelines for hempSMART™ and all Affiliates and serve to protect the rights of both parties. The Policies & Procedures ensure the proper operating of the hempSMART™ program for daily operations. Any Affiliate who violates any provision of the Affiliate Agreement which, by reference, includes all Policies & Procedures herein, may be promptly terminated by hempSMART™. A termination cancels any and all rights and will be effective upon verification of said violation(s) and notification of the offending Affiliate by hempSMART™.
- In the event a dispute shall arise between the Affiliate and hempSMART™ as to their respective rights, duties and obligations under this Agreement, or in the event of a claim of breach of this Agreement by either party, such dispute shall be exclusively resolved by binding arbitration under iii Commercial Rules of the Arbitration Association with arbitration to occur in San Diego, California USA. The arbitrator may award, in addition to declaratory relief, preliminary and permanent injunctive relief and compensatory damages, and shall award reasonable attorney’s fees and cost to the prevailing party. The decision of the arbitrator shall be entitled to enforcement in any court of competent jurisdiction. This provision shall not be construed so as to prohibit hempSMART™ from obtaining preliminary and permanent injunctive relief in any court of competent jurisdiction.
IV. SPONSOR RESPONSIBILITY
All Affiliates have the right to sponsor others. In addition, every person has the ultimate right to choose his/her own sponsor. If two Affiliates should claim to be the sponsors of the same new Affiliate, the Company shall regard the first application received by the corporate home office as controlling.
- As a general rule, it is good practice to regard the first Affiliate to meaningfully work with a prospective Affiliate as having first claim to sponsorship, but this is not necessarily controlling. Basic tenets of common sense and consideration should govern.
- As a convenience to its Affiliates, the Company may provide various methods of registering or informing the Company of newly sponsored Affiliates, including online Internet registration, telephone registration and facsimile registration. Until such time as the Company receives an application, either as hard copy or by e-mail, containing all appropriate information, as well as the signature of the proposed new Affiliate, the Company will only consider the internet, telephone, or e-mail registration in the category of “intended” recognition of sponsor. Thus, although the Company is attempting to create some convenience for its sponsoring Affiliates, it is the responsibility of the sponsoring Affiliate to cause delivery to the Company of a completed and signed Affiliate agreement if the sponsor is to expect formal recognition as the official sponsoring Affiliate.
- There is no “magic” involved in the Company or in any business. Those who sponsor widely but who do not help new Affiliates develop their business will end up with limited success. Therefore, a responsibility of sponsorship is to work with new Affiliates, helping them learn the business and encouraging them during the critical early months.
- Sponsors are not required to carry inventory of products or sales aids for new Affiliates. When tangible product is involved, Affiliates who do so, however, find building a major sales organization much easier because of the decreased response time in meeting a new Affiliate’s needs.
When soliciting a prospective Affiliate to join the Company’s network program, the sponsoring Affiliate must clearly refer the following:
- Products: type, performance and quality of each product.
- Compensation plan
- Policies and Procedures.
- Affiliate’s rights and duties.
- Other important items that will affect the judgment of the prospective Affiliate.
4.2 Transfer of Sponsorship
Transfer is rarely permitted and is actively discouraged. Maintaining the integrity of sponsorship is absolutely mandatory for the success of the overall organization.
Transfers will generally be approved in three (3) circumstances only:
- In the case of unethical sponsoring by the original sponsor. In such cases, the Company will be the final authority.
- With the written approval of the immediate one (1) up line sponsor, plus the approval of two (2) leadership positions that are bronze level or above, and most importantly, from the hempSMART™ company office itself. hempSMART™ retains the authority for the first right of refusal.
- Resigning from the Company entirely and waiting six (6) months to reapply under the new sponsor.
In cases of unethical sponsoring, the individual may be transferred with any down-lines intact; in all other events, the individual alone is transferred without any down-line Affiliates being removed from the original line of sponsorship.
5.1 Accurate Sales Records
The Company encourages each Affiliate to keep accurate sales records. The program is based upon retail sales to the ultimate consumers; therefore, all forms of stockpiling or pyramiding are prohibited. Products and services are offered to Affiliates only for personal consumption and for resale to consumers.
5.2 Rules and Restrictions
See specific addenda to the Affiliate agreement for specific states as to statutory purchasing limitations, buyback rules and other restrictions, disclosures and additional Affiliate rights and responsibilities. In any state with a business opportunity statute, required expenditures during the first six months shall not exceed the statutory amount that initiates applicability of the state business opportunity statute.
5.3 hempSMART™ WEBSITE
The hempSMART™ website makes ordering and accessing information online quick and easy. Available 24 hours a day, 7 days a week, the website allows you to place online orders. You will need your Affiliate username and password (which should be kept confidential) to establish a login at hempsmart.com. You must keep your password secure and order only on your own account. When you sign up as an Affiliate, hempSMART will create a replicating website that you can utilize. This replicated site can be utilized for keeping track of orders, and for orders You will also answer a security question in case you lose any of your information, so please retain your hempSMART™ information in a safe and secure location.
5.4 General Ordering Policies
On mail orders with invalid or incorrect payment types, or anything else that may prevent hempSMART™ from placing the order, hempSMART™ will attempt to contact you by phone or email to correct the order. HempSMART™ will make one attempt to correct the order. If this attempt is unsuccessful after five business days, the order will be cancelled.
With the exception of fast start bonuses on registration packs, for orders to be counted in a given month, they must be received and accepted on or before the last day of the month. Changes made to pending orders that have not yet shipped will keep the original date the order was entered. This may affect commission qualification for that particular month.
Fast start bonuses are paid weekly on packet sales or personal purchases made throughout the given week.
If an item ordered is out of stock or discontinued, it is your responsibility to verify that the products in your order are available when shipped.
No COD orders will be accepted.
Payment plans are not allowed when purchasing product. The balance must be paid in full before the order will be shipped.
5.5 Back Orders
HempSMART™ does not offer back orders. Please review the website to clarify whether a product is in stock. hempSMART™ will be diligent to make sure that supply is accessible to you as soon as possible.
5.6 Month-End Order Processing Cutoff
The month-end order processing cutoff is the last calendar day of the month at 11:59 p.m., Eastern Time (ET). All mailed-in orders must be postmarked by the last day of the month and received within the next three business days of the following month. If not received within the following three business days, the orders will be credited to the following month. All days are considered business days except for Sunday and holidays when the mail is not delivered or when the hempSMART™ office is closed. Only mail-in orders fall under the three-day business exception.
6.1 Shipping Method and Charges
Domestic orders are generally shipped within five to seven business days (excluding weekends and holidays). A packing slip is included in each shipment. It contains the order number, Affiliate’s name and number, product code, product name, price, and the amount and method of payment. Affiliates should keep these packing slips for personal accounting records. Package tracking is available through most major carriers.
6.2 Shipping Discrepancies
When you receive an order, you should check the products against the packing slip to make certain there is no discrepancy or damage. Please notify hempSMART™ of any shipping discrepancies or damage as soon as possible. Failure to notify hempSMART™ of any shipping discrepancy or damage within five business days of receipt of shipment will forfeit your right to request a correction.
The Return Merchandise Authorization (RMA) number is required for the processing of all shipping discrepancies or damage claims.
If the RMA number is not included, hempSMART™ will not process shipping discrepancies, issue credits, or replace damaged products.
The RMA will be included in each order when packaged for return.
To correct any problems you may have encountered with your shipments, please contact: firstname.lastname@example.org. An Affiliate Services representative will discuss the steps to rectify the situation and issue a Return Merchandise Authorization (RMA) number.
VII. PRODUCT RETURNS
7.1 Return Policy
HempSMART™ reserves the right to review each return or exchange on a case-by-case basis. Returns will cause promotions, credits, commissions, and bonuses to be adjusted or reversed, both for the person making the return and for any up-line Affiliates who received compensation on such purchases.
7.2 Return Guidelines
If you are dissatisfied with any hempSMART™ product, you may return:
Any unopened product within 30 days after shipment for a full refund in the same method of payment of the purchase price, shipping, and applicable sales tax.
Any opened product within 30 days after shipment is eligible for a full refund in the same method of payment of the purchase price, shipping, and applicable sales tax.
7.3 Non – Affiliate Returns
If you (as an Affiliate or professional account customer) sell product to non-Affiliates, the same return policy is applicable to the non-Affiliate as outlined in (Section 7.2). Any non-Affiliate is responsible for returning the product to hempSMART™ within 30 days of receiving it. HempSMART™ will accept returns and will provide a full refund in the same method of payment of the purchase price, shipping, and applicable sales tax.
Excessive returns may be deemed an abuse of hempSMART™ return policy and may result in suspension of your return privileges and/or sales organization. Damaged or incorrect shipments of products will not be subject to fees.
7.4 Returns of Inventory by the Affiliate
If you choose to terminate the Agreement, you may return any product inventory or sales aids purchased in the preceding 12 months for a refund if you are unable to sell or use the merchandise. You may return only products and sales aids that are in resalable condition, unless otherwise required by law. Resalable condition is defined as the same unopened condition as it was purchased new.
You must return the products to hempSMART™, prepay the shipping charges, and include a letter explaining that you wish to terminate the Agreement and receive a refund. Upon receipt of the products, you will be reimbursed 90% of the net cost of original purchase price, less shipping charges. hempSMART™ will deduct from the reimbursement any commissions, bonuses, or other incentives received by you as a result of the product you are returning. If your account is terminated, you have 30 days from the date of termination to make arrangements with hempSMART™ regarding the repurchase of all returnable products. You acknowledge that you will be unable to return products more than 30 days from the date of termination.
7.5 Product Kits and Collections
All hempSMART™ product kits and product collections must be sold as a whole unit. Affiliates are prohibited from selling individual items from product kits and product collections separately and promoting such activity within the Affiliate’s business organization.
Any product kit and/or collection returned to hempSMART™ must be complete; otherwise, the kit and/or collection will not be eligible for an exchange or refund. No individual items from a kit and/or collection will be eligible for a refund.
7.6 Return of Promotional Product(s)
For any complimentary item(s) received by the purchaser via a qualifying purchase or through a buy- one-get-one-free promotion or other promotion, returns will be handled as follows:
- If a qualifying purchase is returned in whole or in part and negates your qualification to receive the complimentary promotional item(s), the complimentary item(s) must also be returned, or you will be charged for the free product(s).
- If one of the promotional products is returned, hempSMART™ will not credit the Affiliate, as hempSMART™ will assume the returned item(s) is the promotional product(s). If all promotional products are returned, hempSMART™ will credit the for the product purchased.
7.7 Montana Residents
Notwithstanding the provisions of Sections 3 and 7, if you are a resident of the State of Montana and you cancel the Affiliate Agreement within 15 days of the date of enrollment, you may return the kit to hempSMART™ for a 100% refund.
7.8 Nebraska and Indiana Residents
Although CBD produced from agricultural hemp is federally legal and is being legally sold in all of the 50 U.S. states, it is very important that all Affiliates are diligent to study and abide by local laws. Some States and Counties may have focused and or complicated laws when it comes to hemp based CBD products due to timely transitions in law making policies and education. Nebraska and Indiana are still within these processes of changing laws and it is the opinion of hempSMART™ that they should be avoided when selling hempSMART™ products until those laws stabilize. If the Affiliate does decide to sell within these States, THEY DO SO AT THEIR OWN RISK AND ASSUME FULL LEGAL RESPONSIBILITY.
VIII. TAX RESPONSIBILITIES
8.1 Income Claims
No income claims, income projections nor income representations may be made to prospective Affiliates. Obviously, any false, deceptive or misleading claims regarding the opportunity or product\service are prohibited. In their enthusiasm, Affiliates are occasionally tempted to represent hypothetical income figures based upon the inherent power of network marketing as actual income projections. This is counter-productive, since new Affiliates may be quickly disappointed if their results are not as extensive or as rapid as a hypothetical model would suggest. The Company believes firmly that the income potential is great enough to be highly attractive in reality without resorting to artificial and unrealistic projections.
8.2 Representation of Status
In all cases, any reference the Affiliate makes to him/herself must clearly set forth the Affiliate’s independent status. For example, if the Affiliate has a business telephone, the telephone may not be listed under the Company’s name or in any other manner which does not disclose the independent contractor status of the Affiliate.
8.3 Tax Reporting Applicable to Non-U.S. Citizen/Residents
If the Affiliate is a non-U.S. citizen/resident, then he/she hereby confirms that he/she is not a citizen or resident of the United States, and is obliged to inform the Company of this status. The Affiliate agrees that, if the Affiliate engages in any activities related to the Company while physically present in the United States, the Affiliate will (1) inform the Company about such activities, (2) submit a completed IRS Form 8233* or other appropriate identified IRS Form, such as Form W-8, to the Company if requested by the Company, completed as directed by the Company, for the year in which such activities occur and for each year thereafter, and (3) inform the Company of the aggregate dollar amount of the sales of the Affiliate or the Affiliate’s down line that, as reasonably determined by the Affiliate, are attributable to activities that the Affiliate performed while physically present in the United States (including an explanation of how the Affiliate calculated the amount). The Affiliate understands that, if the Affiliate engages in any such activities in any year, the Company may be required to (1) withhold a portion of each payment to the Affiliate in that year and each subsequent year and (2) report a portion of each payment to the IRS on IRS Form 1042 and report the same to the IRS on IRS Form 1042-S.
* IRS Form 8233 is applicable for distributors in certain countries that are parties to a U.S. tax treaty.
8.4 Enforcement of Judgment, Garnishments, Support Orders, Federal Tax Liens, etc. against Company Independent Representatives
The Company will honor enforceable court orders, garnishments, support orders, etc. that have been properly registered in the jurisdiction where the Company is headquartered or registered to do business as an out of state corporation. The Company will also honor any enforceable Federal Tax Lien.
8.5 Subpoenas Duces Tecum (Demands for Records)
Assuming proper jurisdiction, the Company will comply with all subpoenas duces tecum demanding financial compensation records of an Affiliate in his/her capacity as an independent contractor with the Company.
8.6 Requests for Records
The Company will comply fully with all requests for records accompanied by a properly prepared and signed authorization by the person whose records are being sought. The Company will comply fully with all requests for records by government agencies with the authority to request such records and accompanied by the requisite legal documentation.
9.1 Newspaper and Online Advertisements
Some Affiliates use classified advertising in the newspapers or online, such as Craig’s List, to find prospects. The following rules apply:
- No advertisement may imply that a “job” or “position” is available.
- No specific income can be promised.
- Advertisements must contain no misleading facts or distortions of the Company opportunity or product line.
9.2 Sales Tools
Any printed materials, including business cards and stationery, will be available on the hempSMART™ website. These are preapproved materials by hempSMART™ and are the only physical sales tools that are allowed for use.
9.3 Telemarketing Techniques
The Federal Trade Commission and the Federal Communications Commission each have laws that restrict telemarketing practices. Both federal agencies (as well as a number of states) have “do not call” regulations as part of their telemarketing laws. Although the Company does not consider Affiliates to be “telemarketers” in the traditional sense of the word, these government regulations broadly define the term “telemarketer” and “telemarketing” so that your inadvertent action of calling someone whose telephone number is listed on the federal “do not call” registry could cause you to violate the law. Moreover, these regulations must not be taken lightly, as they carry significant penalties.
Therefore, Affiliates must not engage in telemarketing in the operation of their Company businesses. The term “telemarketing” means the placing of one or more telephone calls to an individual or entity to induce the purchase of a Company product or service, or to recruit them for the Company opportunity. “Cold calls” made to prospective customers or Affiliates that promote either Company products or services or the Company opportunity constitute telemarketing and are prohibited. However, a telephone call(s) placed to a prospective customer or Affiliate (a “prospect”) is permissible under the following situations:
- You may call family members, personal friends, and acquaintances. An “acquaintance” is someone with whom you have at least a recent first-hand relationship within the preceding three (3) months. Bear in mind, however, that if you make a habit of “card collecting” with everyone you meet and subsequently calling them, the FTC may consider this a form of telemarketing that is not subject to this exemption. Thus, if you engage in calling “acquaintances,” you must make such calls on an occasional basis only and not make this a routine practice.
- The prospect’s personal inquiry or application regarding a product or service offered by the Affiliate, within the three (3) months immediately preceding the date of such a meeting.
- If the Affiliate has an established business relationship with the prospect. An “established business relationship” is a relationship between an Affiliate and a prospect based on the prospect’s purchase, rental or lease of goods or services from the Affiliate, or a financial transaction between the prospect and the Affiliate within the eighteen (18) months immediately preceding the date of a telephone call to induce the prospect’s purchase of a product or service.
- If the Affiliate receives written and signed permission from the prospect authorizing the Affiliate to call. The authorization must specify the telephone number(s) which the Affiliate is authorized to call.
- In addition, Affiliates shall not use automatic telephone dialing systems relative to the operation of their Company businesses. The term “automatic telephone dialing system” means equipment which has the capacity to (a) store or produce telephone numbers to be called, using a random or sequential number generator, and (b) to dial such numbers.
9.4 Press Inquiries
Any inquiries by the media are to be referred immediately to the Company. This policy is to assure accuracy and consistent public image.
9.5 Internet and Social Networking
If done correctly and in compliance with Company policies, social networking may be useful in driving traffic to the official Company website and to Company authorized personal replicated websites of Affiliates. The following rules and guidelines, regarding social networking, are applicable:
- The Company encourages Affiliates to join online forums, discussion groups, blogs, and other forms of Internet communication for the purpose of communicating the benefits of Company products and opportunity. Internet social networking is similar to telephoning, emailing, and other technology-assisted communication: it is not a violation so long as it complies with the general policies and procedures governing claims and contacting. Social networks include such sites as Facebook, LinkedIn, Twitter and so on. Additionally, there are social networks of like-minded persons. You may find social networks by doing a Google search using varying topics.
- You must comply with the rules associated with websites and networks. For instance, some sites prohibit the marketing of financial opportunity or the selling of products. On such sites, you may instead choose to share your testimonial of benefits from the technology of the Company; or you may want to talk about how your life is improving. When others in the network hear your testimonial, they will naturally inquire … and that is the opportunity to send them to your authorized Company website.
- Upon notifying the hempSMART™ compliance department via email at email@example.com for review, you may publish YouTube, Twitter, and other communications. You must supply for a link to the material you have posted for content review. In the event your material is found to be noncomplying, you will be required to remove it within 24 hours.
- If you are on Facebook or other social networking sites, join our “Fans” or comparable pages. Here are some guidelines for you to follow as you use Facebook, or other social networking sites, to grow your business online.
- Positive Steps to Help Your Business:
- Post as much as you like to your wall.
- Comment as much as you like on your photos and links.
- Post as many links on your page.
2. Activities to Avoid:
- Do not send more than the allowed friend invites per day or your account may be deactivated.
- Do not post anything to someone’s wall about the Company if they have asked you to stop.
- Do not send emails with links to anyone you do not know unless they have asked for the link.
- Do not post more than the allowed times per day to anyone else’s walls, as deactivation may occur.
An Affiliate must treat Facebook or any other online forum just like real life but in the virtual space. Your property is your page while other people’s pages are their property; and this “ownership” must be respected as if it were the real property of your neighbor. This simple approach will keep you out of trouble with social networking sites and help us maintain the integrity of the Company.
9.6 Online Testimonials
Affiliates must monitor and evaluate customer testimonials while understanding federal guidelines.
The FTC Act requires, and the Guides advise, that testimonials must “reflect the honest opinions, findings, beliefs, or experiences of the endorser” and, when specific results are claimed, the testimonial must reflect a “typical consumer experience.” A testimonial cannot make an express or implied representation that would be deceptive if the same representation were made directly by the advertiser. The FTC can impose liability on both the advertiser and the endorser for such deceptive representations. That means testimonials on a company’s website or other media under its ownership or control, such as Facebook pages and Twitter accounts, must be objectively true, not misleading, and the company must have adequate substantiation for all non-subjective product claims. Any material connection between the endorser and advertiser must also be clearly and conspicuously disclosed.
- FDA has also taken the position that even when a dietary supplement company (or one of its officers) “LIKES” a therapeutic (disease) claim or testimonial, this is the same as if the dietary supplement company itself made the claim.
- So please, DO NOT “LIKE” your customers’ disease-claim testimonials for your hempSMART™ products.
Bloggers or commenters must disclose the following:
- When you receive a free product and review it
- When you link to a product’s website and receive a commission (Affiliate links)
- When you receive money, product, or services for posting about a product or company.
It’s important to be honest:
- Don’t write about a product if you haven’t tried it
- If you were paid to try a product and you thought it was awful, don’t say it was great
- Don’t make claims about a product that cannot be substantiated. Example: “It will cure (put any disease here)!”
9.7 General considerations
(a) Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser. Furthermore, an endorsement may not convey any express or implied representation that would be deceptive if made directly by the advertiser.
(b) The endorsement message need not be phrased in the exact words of the endorser, unless the advertisement affirmatively so represents. However, the endorsement may not be presented out of context or reworded so as to distort in any way the endorser’s opinion or experience with the product. An advertiser may use an endorsement of an expert or celebrity only so long as it has good reason to believe that the endorser continues to subscribe to the views presented. An advertiser may satisfy this obligation by securing the endorser’s views at reasonable intervals where reasonableness will be determined by such factors as new information on the performance or effectiveness of the product, a material alteration in the product, changes in the performance of competitors’ products, and the advertiser’s contract commitments.
(c) When the advertisement represents that the endorser uses the endorsed product, the endorser must have been a bona fide user of it at the time the endorsement was given. Additionally, the advertiser may continue to run the advertisement only so long as it has good reason to believe that the endorser remains a bona fide user of the product. [See General considerations (b) regarding the “good reason to believe” requirement]
(d) Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. Endorsers also may be liable for statements made in the course of their endorsements.
9.8 Consumer endorsements
(a) An advertisement employing endorsements by one or more consumers about the performance of an advertised product or service will be interpreted as representing that the product or service is effective for the purpose depicted in the advertisement. Therefore, the advertiser must possess and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific evidence, to support such claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, i.e., without using endorsements. Consumer endorsements themselves are not competent and reliable scientific evidence.
(b) An advertisement containing an endorsement relating the experience of one or more consumers on a central or key attribute of the product or service also will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product or service in actual, albeit variable, conditions of use. Therefore, an advertiser should possess and rely upon adequate substantiation for this representation. If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.
9.9 Expert Endorsements
(a) Whenever an advertisement represents, directly or by implication, that the endorser is an expert with respect to the endorsement message, then the endorser’s qualifications must in fact give the endorser the expertise that he or she is represented as possessing with respect to the endorsement.
(b) Although the expert may, in endorsing a product, take into account factors not within his or her expertise (e.g., matters of taste or price), the endorsement must be supported by an actual exercise of that expertise in evaluating product features or characteristics with respect to which he or she is expert, and which are relevant to an ordinary consumer’s use of or experience with the product and are available to the ordinary consumer. This evaluation must have included an examination or testing of the product at least as extensive as someone with the same degree of expertise would normally need to conduct in order to support the conclusions presented in the endorsement. To the extent that the advertisement implies that the endorsement was based upon a comparison, such comparison must have been included in the expert’s evaluation; and as a result of such comparison, the expert must have concluded that, with respect to those features on which he or she is expert, and which are relevant and available to an ordinary consumer, the endorsed product is at least equal overall to the competitors’ products. Moreover, where the net impression created by the endorsement is that the advertised product is superior to other products with respect to any such feature or features, then the expert must in fact have found such superiority. [See: 9.7 General considerations (d)]
9.10 Endorsements by Organizations
Endorsements by organizations, especially expert ones, are viewed as representing the judgment of a group whose collective experience exceeds that of any individual member, and whose judgments are generally free of the sort of subjective factors that vary from individual to individual. Therefore, an organization’s endorsement must be reached by a process sufficient to ensure that the endorsement fairly reflects the collective judgment of the organization. Moreover, if an organization is represented as being expert, then, in conjunction with a proper exercise of its expertise in evaluating the product under (expert endorsements), it must utilize an expert or experts recognized as such by the organization or standards previously adopted by the organization and suitable for judging the relevant merits of such products. [See: 9.7 General considerations (d)]
9.11 Disclosure of Material Connections
When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed. For example, when an endorser who appears in a television commercial is neither represented in the advertisement as an expert nor is known to a significant portion of the viewing public, then the advertiser should clearly and conspicuously disclose either the payment or promise of compensation prior to and in exchange for the endorsement or the fact that the endorser knew or had reason to know or to believe that if the endorsement favored the advertised product some benefit, such as an appearance on television, would be extended to the endorser.
9.12 Internet Search Engine Optimization
Affiliates may use, reference, or incorporate the Company names and trademarks in approved Internet advertising.
- When participating in chat rooms and other social media, Company Affiliates may use approved Company language (as represented in the brochures, promotional and training materials of the Company and on the Company website) for the purpose of discussing the Company products and opportunity.
- Affiliates may use the language of approved Company literature for Internet advertising. Company trademarks, trade names, or product names, or any variations thereof, may not be used in search engines.
- Affiliates may communicate the benefits of Company products on the Internet and on search engines in appropriate categories.
- Affiliates may not use language that is sexually explicit, threatening, pornographic, violent or otherwise prohibited.
- In no way should any independent website or link give the impression of being the official website of the Company, rather than that of a Company Affiliate. All Internet advertising must clearly report that the ad is placed by an “Affiliate” of the Company.
- Affiliates may use words from approved Company advertising as “key words” for the purpose of having communications found by search engines.
- With the exception of the Affiliate’s authorized hosted Company website, the use of the Company name within a URL address/domain name, directory, file name, e-mail address, official title for a social media account, or any derivative thereof, is not permitted (by way of example, but not limited to the varying derivatives of the name of the Company that use the Company name in the URL or domain name. Company Affiliates may not use any domain name or email address that includes any reference, whether abbreviated or not, to the Company name, products or services, except in connection with the Company Affiliate’s authorized replicated Company website.
- Company Affiliates may not publish, post, or distribute any material on their websites or in conversation or postings on the Internet, including blogs and social networking in connection with the Company that is defamatory, libelous, disparaging, threatening, offensive, harassing, abusive, obscene, pornographic, in violation of applicable law or that inhibits others from enjoying the Company’s main website or the Company Affiliate’s websites.
- Determination of whether a link is objectionable is solely at the discretion of the Company.
- Affiliates may not use tactics such as “cloaking” or other deceptive means on the Affiliate’s web pages (For example: Cloaking in Google terms means designing a website so that search engines see one thing and visitors see another.)
- As a practical matter, Company Affiliates should make sure that any advertising through digital media, such as the Internet and email, is fully compliant with Company policies and procedures, Internet Compliance Department and existing laws and regulations.
- Company Affiliates may not sell or advertise products over the Internet through independently designed shopping carts or websites that use the names, logos, product or income testimonials, compensation plan or product description(s) of the Company.
Affiliates may send “general mailings” only to Affiliates in their down-line organizations and their direct up-line enrolls. Any other bulk use of email is prohibited by the Company and will result in immediate discipline which may result in termination of Affiliate rights and benefits and the loss of Affiliate rights, including sales organizations and compensation. Various kinds of prohibited emails – either bulk or individual – include, but are not limited to the following:
- Totally Unsolicited or Blind Mass Email: Many “lists” that can be purchased for distribution over the Internet have been illicitly compiled and result in completely unsolicited information being sent to uninterested parties. Since the expense is so low to distribute to these lists, they are even more prevalent than bulk-mailings through traditional channels. Any use of a list not specifically approved by the Company or compiled from a legitimate genealogical listing of the emailer’s down-line organization is subject to immediate discipline.
- Hidden Approval Mass Email: Sites that garner approval by having hidden, discreet or non-prominent “buttons” that are selected by default rather than choice are illegal. For instance, if it is necessary to de-select approval to keep from being added to a list (rather than requesting to be added), the resulting list is illegal. Many supposedly “approved lists” have in fact been gathered illicitly through this means.
- Third Party Approval for Mass Email: Companies that gather approval from inquiries, then sell the lists to third parties where the person giving approval is not informed that a third party will contact them, compile illegal lists. These companies frequently distribute to many third parties who “bury” the user with many emails.
- Legal and Ethical Email Communication: Email is by its nature personal and mutual: An appropriate Company email is a communication in which both parties are interested. Rather than requiring denial to terminate (“If you want your name removed from this list …”), it requires consent to initiate. Any email communication which violates this premise is potentially illegal and subjects the author to disciplinary review.
- Specific Illegal Practices: False Reply-To Address: Any attempt to disguise the identity of the emailer will be taken as evidence for the intent of fraud and subject the sender to immediate discipline.
- Linking: No links may be made from an Affiliate website, except as provided or authorized by the Company. Authorized links include:
- Links made from a Company Affiliate website for the purpose of Company
communication, so long as such communication does not violate the terms and conditions of this agreement and such agreements as a Company Affiliate has with the Company.
- Links from blogs and social networking sites joined for the purpose of networking, marketing, sponsoring, and selling the Company products.
- Links made from a Company Affiliate website for the purpose of Company
- Lawful use of the Internet: The Company supports all laws and regulations regarding use of the Internet, the Worldwide Web, and all other communication technologies. Any person associated with the Company program found in violation of said rules and regulations, including, but not limited to spamming (unsolicited bulk contact using the Internet), etc., is subject to immediate discipline.
- Internet Banner Advertising, etc.: Banner advertising is bound by the same policies and procedures affecting other forms of advertising and must conform to general policies and procedures.
9.14 Federal and State Regulatory Agencies
Federal and State Regulatory Agencies rarely approve or endorse direct selling programs. Therefore, Affiliates may not represent that the Company’s program has been approved or endorsed by any governmental agency.
9.15 Indemnification and Hold Harmless
The Affiliate hereby indemnifies and releases Company, its officers, directors, agents and assigns and holds harmless from and against the full amount of any and all claims, causes of action, judicial and administrative proceedings suits, charges, liabilities, losses, damages, costs and expenses, including without limitation court costs and reasonable fees and expenses of attorneys and consultants, which are or may be made, filed or assessed against Company at any time arising out of Affiliate’s business operations and representations made by Affiliate in the operation of his/her business, arising from the following:
Violation and/or lack of compliance with terms of the Affiliate agreement, policies and procedures, rules and regulations, marketing program manual or guidelines or any other directive from the Company as to method and manner of operation of the Affiliate business; Engaging in any conduct not authorized by the Company in the Company market program; Any fraud, negligence or willful misconduct in the operation of the Affiliate business; Misrepresentation or unauthorized representation regarding the Company’s product or service, marketing opportunity or potential or the Company’s marketing program; Failure to adhere to any federal, state or local law, regulation, ordinance and/or any order or rule issue by any court of appropriate jurisdiction; Engaging in any action which exceeds the scope of authority to the Affiliate as granted by the Company; Engaging in any activity over which Company has no effective control as to the actions of the Affiliate. Engaging in the general business operations of Affiliate’s business.
10.1 Entire Agreement
This Agreement constitutes the entire agreement between hempSMART™ and the Affiliate with respect to the subject matter hereof. This Agreement may be amended only in writing and executed by hempSMART™.
The Company never gives up its right to insist on compliance with these rules or with the applicable laws governing the conduct of a business. This is true in all cases, both specifically expressed and implied, unless an officer of the Company who is authorized to bind the Company in contracts or agreements specifies in writing that the Company waives any of these provisions. In addition, any time the Company gives permission for a breach of the rules, that permission does not extend to future breaches. This provision deals with the concept of “waiver,” and the parties agree that the Company does not waive any of its rights under any circumstances short of the written confirmation alluded to above.
10.3 Governing Law
These rules are reasonably related to Federal and State laws of the United States and shall be governed and construed in accordance with the laws of the State of California, USA in all respects thereby. The parties agree that jurisdiction and venue shall lie with the place of acceptance of the Affiliate application.
10.4 Partial Validity
Should any portion of these Rules and Regulations, of the Affiliate’s application and agreement, or of any other instruments referred to herein or issued by the Company be declared invalid by a court of competent jurisdiction, the balance of such rules, applications, or instruments shall remain in full force and effect.
In order to maintain a viable marketing program and to comply with the changes in International, Federal, State, or Local laws, or economic conditions, hempSMART™ may modify its customer services, charges, marketing programs, and may alter the Policies & Procedures and Rules & Regulations from time to time, as well as modify its Affiliate Compensation plan. All changes, upon notice by hempSMART™ shall become a binding part of the original Affiliate agreement.
Both parties agree that they will do their utmost in all circumstances and conditions to make an amicable settlement of any dispute or controversy, which may arise among them during the continuance of this Agreement. If, at any time, a dispute arises involving the interpretation of the Agreement or any other matter hereunder, the issues shall be submitted for settlement by arbitration in San Diego, California in accordance with the Commercial Rules of the American Arbitration Association.
10.7 Fire, Flood, Etc.
HempSMART™ shall not be responsible for acts beyond its control, including, but not limited to: fire, flood, earthquake, storms, power outages, labor difficulty, equipment failures, supplier problems, sickness, sharks, or other difficulties that might prevent hempSMART™ from fulfilling its obligations to its Affiliates.