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The Presentation

About 75 persons were present for the Saturday morning presentation when Angela McCambridge introduced herself as a Natural Choice distributor. She described the decision by herself and her husband to get involved with this "wonderful opportunity" 6 years earlier.

She then started talking about Dana Bashor's involvement with creating the Natural Choice opportunity, segueing into a 10-minute video introducing Dana Bashor:

Dana is always portrayed as enjoying a life of leisure. I suppose the audience is supposed to associate the wealth necessary to support this lifestyle with owning their own vending machines, but Dana's wealth is associated with convincing others to buy his vending machines, not collecting quarters from a vending route.

Dana tells us that he created Natural Choice, the "finest business opportunity in the United States today" ten years ago, and reminds us that the "path to success" may come along only "once or twice in a lifetime."

The bulk of the video, however, is spent not on Dana, nor on the Natural Choice opportunity, but trying to convince the audience of the high quality of the vending machines sold through the Natural Choice programs. We're shown scenes at Frigidaire and at Alltool Manufacturing of people working on the manufacturing floor, and describing the rigid standards demanded by Dana when creating specifications for the equipment. (Note that Natural Choice's current web page http://www.naturalchoice.com/manufacturers.html shows that Edina Technical Products manufactures its vending machines.) Of course, these companies are happy that Dana is able to generate increasing demand every year for those vending machines of his.

After the video, Angela gets back to her own experience with herself and her husband both spending a lot of time working and not having made much progress to creating a college fund for their children, who were already in junior high school. By becoming part of the Natural Choice program, they could control their money... if they wanted more income, it was as easy as getting another machine and another location. Angela pointed out that during the company's 15 year track record, they had sold $250,000,000 in equipment and over $30,000,000 in just the last year, and that there were 5000 distributors nationwide. But then Angela pointed out that buying these machines wasn't going to make us rich if they just sat in the garage. That's the Natural Choice difference.

Sidebar: Checking Out the Numbers

$30,000,000 in sales of equipment translates into 1667 "basic" packages of 3 sets of machines, at a cost of $17,987 per package. They certainly sold some larger packages and they sold additional sets after the initial purchase. In 2001, the Cagey Consumer identified 167 weekend presentations. As you'll read later, part of the Natural Choice presentation mentions that they'll be limiting the number of new distributors. This number is typically 15, but from the numbers above, we know that they can't be averaging more than 10 such packages per presentation, and from this, we infer that over 90% of all the machines are sold in the initial 3-package set.

The $250,000,000 of equipment sales over the life of the program translates to 14,000 packages. Based on the 90% number mentioned above, a total of over 12,000 packages have been sold, suggesting that 60% of the purchasers have dropped out of the program. Although a certain number of distributors would eventually leave through attrition , the equipment and the distributorships, if they had real value, should have been transferred to others. If we just consider the last 5 years of sales, assuming they've been level at 1667 per year, this would still represent a 40% dropout rate.

Perhaps Dana would point out that either of these numbers would actually represent a good success rate for people still being in business after 5 years, but if this significant risk of failure was mentioned at the presentation, I don't recall it. Never mind that many of the people who attend the presentations never had any thoughts about starting their own business until they received the Natural Choice solicitation.

The Natural Choice difference is the personal coach who's provided to ensure your success. The coach helps distributors learn how to locate the machines. The coach provides advice on when to search for a new location, or when it might be advisable to obtain new machines and new locations, machines which can be obtained at a discount of almost half of the price paid for the initial machines.

We're advised about some other techniques to run our new business:

Then we're reminded of the rules:

It is against the law for any business opportunity promoter to make any earnings claims or projections.

Sidebar: Earnings Claims and the Law

The pertinent Federal Trade Commission rules prohibit earnings claims and projections if the promoter has no reasonable basis for those claims. Additional information, which serves to clarify the significance of the earnings claims made, must be provided along with the earnings claims. (See http://www.centercourt.com/usa/jeffers1.html for details.) Additionally, as indicated at http://www.ftc.gov/opa/1998/9810/minuteme.htm , "a contradiction between a franchisor’s actual practices and its written disclaimers is a violation of the FTC’s Franchise Rule."

Now that we've been read the law, we can take a look at the "Sales & Operations Comparison Report", published in 1995. For those folks trying to figure out whether spending this much money on vending machines is worthwhile, this will be the clincher of the whole presentaton.

In short, the median sales per machine for "small operators, under $1 million in sales, [who] were most active with accounts (locations) with 10 to 50 employees" were $3225 for snack machines and $3324 for drink machines. After pointing out that most locations will have both a snack and a drink machine, this number is extrapolated to $6549.

From the handout, there's actually no way to know what the numbers are supposed to represent? If they're sales, why does it say "Average Gross Profit" at the bottom of the chart? Why at the top does it talk about "small operators" but in the fine print, it says they are "statistics for large and small vending machine companies"? And if larger vending companies have higher sales per machine than smaller vending companies, what's the relationship between "small operators reporting sales under $1,000,000" and the average Antares startup operator with estimated sales under $25,000?

Read more about my thoughts on Natural Choice Earnings Claims web search for Natural Choice Earnings Claims

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