RESIDUAL Income Spelled Out
by, David G. Eisenstein, Esq.
All too often it is brought to my attention that a distributor who has been induced to build a productive downline organization through a promise of residual income has been unfairly and/or illegally stripped of that hard earned item of personal property. In other words the downline which has been built in reliance upon the company’s repeated promise in its literature, from the stage or the front of the meeting room, on conference calls, and in trainings, that if the distributor will invest time and money in building his or her distributorship through product purchases, trainings, tools and hours upon hours of three way telephone calls and business opportunity meetings, when the organization of downline distributors has been built, the residual income built in the process will not only be forthcoming, but will be continuous and permanent.
Unfortunately, residual income is more myth than reality because all too often the company finds excuses to reduce or eliminate altogether this property right which should be held sacrosanct, much like a retirement account or pension earned by employees in corporate America. If a company is not prepared to back up its promises of residual income to its distributors it should not make those promises in the first place. In order to help distributors and corporate executives alike remember the importance of considering the promise of residual income to be a rock solid commitment from the company to the distributors, regardless of future conditions in which the company finds itself, consider the following components of residual income:
Repetitive income paid out to the distributor who has earned it regardless of 
whether the distributor continues to be active with the company, and
whether the distributor continues to be active with the company, and regardless of the company’s condition.
Enforceable in arbitration or a court of law.
Secured by the company’s assets and net worth.
Independent contractor business is the personal property of the distributor and the income earned from it cannot be forfeited for any reason.
Definite and paid like clockwork for the life of the company on the basis of downline production.
Upline distributors should support the rights of downline distributors to residual income regardless of the status of the downline distributors with the company since some day the upline distributors will want to receive or assign their residual income.
Assignable to the buyer of a distributor’s business and can be devised by will or trust to the heirs of the distributors.
Liable, as in the company is liable for breach of its promise of residual income.
