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Shaklee
View on Wikipediafrom Wikipedia
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Shaklee Corporation is an American manufacturer and multi-level marketing distributor of natural nutrition supplements, weight-management products, beauty products, and household products. The company is based in Miami, Florida, with operations in several countries.
Key Information
History
[edit]Founding
[edit]Forrest C. Shaklee (1894–1985), a chiropractor and nutritionist based in his home state of Iowa, and later in Oakland, California, created the first vitamin in the United States labeled "Shaklee's Vitalized Minerals" in 1915.[2] In 1956, Shaklee founded the Shaklee Corporation with his two sons to manufacture nutritional supplements.[3] Shaklee chose the multi-level marketing business model to market their product.[4][5] Starting in 1956, Shaklee began marketing organic, biodegradable cleaning products.
Expansion, divestiture, and changes of ownership
[edit]Shaklee Corporation was a publicly traded company in the late 1970s and was listed on the New York Stock Exchange. In 1973, the firm relocated its business offices from Hayward, California, to the Watergate office complex in Emeryville.[6] In 1980, the company relocated again to the One Front Street skyscraper in San Francisco's Financial District. In 1982 Shaklee was included in the Fortune 500 list. The company expanded its business operations in 1986 by acquiring Bear Creek Corporation, a direct marketing firm known for its Harry and David Fruit-of-the-Month Club, from RJR Nabisco for $123 million.[7] In 1989, Shaklee sold a 78 percent stake in Shaklee Japan to the Yamanouchi Pharmaceutical Company for $350 million while retaining a licensing agreement and continuing to collect royalty payments from the Japanese operations.[8]
In March 1989, Shaklee Corporation received an unsolicited acquisition proposal from a group led by Minneapolis financier, Irwin L. Jacobs. At the time, analysts estimated Shaklee Corporation's potential leveraged buyout at $35 a share. The Jacobs group had acquired a 14.98 percent stake in the company. Shaklee declared a special dividend of $20 a share. Some observers viewed this as a "poison pill" defense against the takeover, although the company stated otherwise. Shaklee's corporate bylaws included provisions that were triggered when an investor reached a 15 percent ownership threshold.[9]
Shortly after, Jacobs increased his stake,[10] however Shaklee Corporation subsequently announced its acquisition by Yamanouchi Pharmaceutical for $28 per share in a deal valued at approximately $395 million. Yamanouchi's existing partnership with Shaklee Japan was cited as a factor in the acquisition.[11] Following the announcement, Jacobs declined to challenge the offer[12] and the acquisition was finalized, making Shaklee a privately held company.[13] In 2000, the company moved its headquarters from San Francisco to Pleasanton, California.[14]
In 2004, Yamanouchi sold Shaklee Corporation to American multi-millionaire Roger Barnett, managing partner of Activated Holdings LLC and a member of the Wolfson family, for $310 million. Around the same time, Bear Creek and the Harry and David line was sold to investment firm Wasserstein Perella & Co. for $260 million.[15][16]
Shaklee has made environmental sustainability a part of its public brand messaging.[17][18][19][20][21][22] In 2022, the company announced the launch of a body care collection described as "clean" and “anti-aging.”
FTC actions
[edit]In 1974, Shaklee Corporation agreed to stop marketing its product "Instant Protein" as suitable for infants and to discontinue claims that misrepresented the product's protein content, following an order from the Federal Trade Commission (FTC).[23] In 1976, the FTC sanctioned Shaklee again for pressuring its distributors to maintain or advertise suggested retail prices.[24]
Controversy about Shaklee Distributors
[edit]In 2012, New England distributor John "Jack" William Cranney was charged with using the reputation of his 45-year affiliation with Shaklee to solicit financial investments from other Shaklee distributors for non-Shaklee investments, beginning in 2002.[25][26] In July 2012, the Massachusetts Securities Division charged Cranney with implementing a financial investment Ponzi scheme to defraud 36 victims in multiple states of roughly $10.4 million and for using the funds for personal gain.[27] Shaklee immediately suspended distributor payments to Cranney estimated at $45,000 per month.[28] Several victims sued Cranney to recover damages and he sought federal bankruptcy protection for his home, valued at $3 million.[27][29] Cranney lost the battle for his home and the proceeds from the sale were used to satisfy the claims of some of his alleged victims.[30] In September 2014, the FBI arrested Cranney in El Paso, Texas and charged him with four counts of wire fraud, 16 counts of mail fraud, and three counts of money laundering.[31]
References
[edit]- ^ "Contact Us". Shaklee Headquarters, USA. Retrieved August 7, 2024.
- ^ Shook, Robert L. (1982). The Shaklee Story (1 ed.). New York City, NY: Barnes & Noble Books. p. 22. ISBN 0064648036.
- ^ "Dr. Forrest Shaklee; Founded Corporation". The New York Times. December 17, 1985. Retrieved June 21, 2009.
- ^ "The History of MLM". First Class MLM. November 11, 2007. Retrieved June 21, 2009.
- ^ "2022-2023 Shaklee Incentive Booklet (U.S.)" (PDF). Shaklee. Retrieved August 13, 2023.
- ^ "Shaklee Will Move Offices". Oakland Tribune. July 11, 1973. p. 12.
- ^ "Shaklee to Buy RJR Nabisco Unit". The New York Times. November 4, 1986. Retrieved June 21, 2009.
- ^ "Shaklee to Sell Japanese Stake". The New York Times. February 3, 1989. Retrieved June 21, 2009.
- ^ Fisher, Lawrence M. (March 4, 1989). "Shaklee Gets Takeover Offer From Jacobs". The New York Times. Retrieved June 21, 2009.
- ^ "Jacobs Increases Stake in Shaklee". The New York Times. February 25, 1989. Retrieved June 21, 2009.
- ^ Fisher, Lawrence M. (March 15, 1989). "Japan Drug Maker to Buy Shaklee". The New York Times. Retrieved June 21, 2009.
- ^ "Jacobs Cuts Stake in Shaklee to 10.5%". The New York Times. March 15, 1989. Retrieved June 21, 2009.
- ^ "Shaklee Offer Done". The New York Times. April 18, 1989. Retrieved June 21, 2009.
- ^ "History of Shaklee Corporation – FundingUniverse". www.fundinguniverse.com. Retrieved July 29, 2018.
- ^ "Japanese Drug Company To Sell 4 Units, Including Shaklee". The New York Times. April 3, 2004. Retrieved June 21, 2009.
- ^ "Wasserstein Haunts Harry & David in Buyout Doomed to Bankruptcy". Bloomberg Markets Magazine. October 11, 2011.
- ^ "Shaklee U.S. leads the way on global climate change issue". Shaklee, Inc. Retrieved January 26, 2012.
- ^ Ferla, Ruth La (April 22, 2007). "Eco-Socialites Make Cleaning Green a Priority". The New York Times.
- ^ "Shaklee wins 2009 Green Power Leadership Award". Shaklee, Inc.
- ^ "Shaklee wins 2009 Business Environmental Awards". Shaklee, Inc.
- ^ "Shaklee is on Top 20 Retail Partner List with the US Environmental Protection Agency's (EPA) Green Power Partnership". Shaklee, Inc.
- ^ "Shaklee wins 2008 Stevie Award". Shaklee, Inc.
- ^ Federal Trade Commission. "In the matter of Shaklee Corporation consent order, etc. in regard to alleged violation of the Federal Trade Commission Act" (PDF). ftc.gov/. FTC. Retrieved January 11, 2015.
- ^ Federal Trade Commission. "In The Matter Of Shaklee Corporation Co:-Sent Order, Etc., In Regard To Alleged Violation Of The Federal Trade Commission ACT" (PDF). ftc.gov. FTC. Retrieved January 11, 2015.
- ^ Healy, Beth. "Friends fight to recover money from Belmont businessman". Boston Globe. Retrieved March 23, 2015.
- ^ "John William Cranney: Notice of Adjudicatory Proceeding" (PDF). Commonwealth of Massachusetts. Retrieved October 10, 2015.
- ^ a b United States Bankruptcy Court District Of Massachusetts Eastern Division. "Motion of United States Trustee To Convert Chapter 11 Case To Chapter 7" (PDF). gpo.gov. Government Printing Office. Retrieved March 23, 2015.
- ^ Healy, Beth. "Belmont businessman pressed on funds in court: Jack Cranney says FBI seized records of losses". Boston Globe. Retrieved March 31, 2015.
- ^ Barrett, Stephan. "Prominent Shaklee Distributor Accused of Operating Ponzi Scheme". mlmwatch.org/. The Skeptical Guide to Multilevel Marketing. Retrieved March 23, 2015.
- ^ Healy, Beth. "Ex-Belmont businessman arrested on fraud charges". Boston Globe. Retrieved March 31, 2015.
- ^ Department of Justice, U.S. Attorney's Office, District of Massachusetts. "Former Belmont Resident Charged With $6 Million Investment Fraud Scheme". justice.gov. United States Department of Justice. Retrieved March 31, 2015.
External links
[edit]
Shaklee
View on Grokipediafrom Grokipedia
Shaklee Corporation is an American multi-level marketing company founded in 1956 by chiropractor Dr. Forrest C. Shaklee and his sons in San Francisco, California, to develop and distribute nutritional supplements, personal care items, and household products through independent distributors.[1][2] The company traces its nutritional innovation roots to Dr. Shaklee's 1915 formulation of an early protein-based supplement amid his recovery from tuberculosis, which evolved into the corporation's focus on soy-derived products and multivitamins like the 1957 VITA-LEA tablet, marketed as the first multivitamin-mineral supplement.[1][3]
Under subsequent leadership, including Chairman and CEO Roger Barnett since 2004, Shaklee expanded into sustainability initiatives, becoming the first company worldwide to achieve Climate Neutral certification in 2000 and developing concentrated, biodegradable cleaning products alongside plant-based protein innovations.[4][5] Headquartered in Pleasanton, California, the firm operates globally but has encountered regulatory scrutiny, including Federal Trade Commission sanctions in the 1970s for pressuring distributors on pricing adherence and later investigations into unsubstantiated health claims for supplements.[6][7] Critics highlight the multi-level structure's reliance on distributor recruitment over retail sales—reportedly comprising 90% of revenue—as fostering pyramid-like dynamics, though the company maintains emphasis on product efficacy backed by clinical studies.[8][9]
Shaklee's disclaimers emphasize that results depend on individual effort and are not representative, aligning with broader MLM patterns where success requires exceptional recruitment volumes amid market saturation. Critics, including peer-reviewed economic analyses, attribute poor outcomes to structural incentives favoring endless expansion over sustainable retail, rendering the model inefficient for the median participant despite Shaklee's longevity since 1956.[85][80]
History
Founding and Early Development
Dr. Forrest C. Shaklee, born in 1894 in Iowa, established a chiropractic practice in Rockwell City, Iowa, in 1915, where he developed Vitalized Minerals, recognized as one of the first multivitamins in the United States.[1][4] After a 1929 fire destroyed his clinic, Shaklee relocated to California and continued his research into nutrition and natural health remedies, emphasizing preventive care through supplements derived from natural sources.[1] His work over the subsequent decades laid the groundwork for a business focused on scientifically formulated products that promoted wellness without synthetic additives.[4] In 1956, at age 61, Dr. Shaklee founded Shaklee Products with his sons, Forrest Jr. and Raleigh, in California to manufacture and distribute nutritional supplements via a network of independent distributors.[1][3] The company launched with initial offerings including Pro-Lecin Nibblers, a protein-lecithin supplement, and Herb-Lax, an herbal laxative, reflecting Shaklee's philosophy of "Living in Harmony with Nature" through products free of artificial preservatives.[1][4] This direct-selling model, which incentivized distributors through multilevel commissions, enabled rapid initial adoption, particularly in California.[1] Early development accelerated with product innovations in the late 1950s and early 1960s, including the 1957 introduction of Vita-Lea, a multivitamin and multimineral tablet.[1][3] By 1960, Shaklee expanded into household solutions with Basic-H, a biodegradable cleaner, and a natural skin care line, marking its entry into eco-friendly consumer goods.[1] In 1961, the company debuted Instant Protein, one of the first soy protein isolates, further solidifying its nutritional focus.[3] Expansion beyond California began in 1962 with the first distributorship in Minnesota, supporting national growth through distributor-led sales.[1]Expansion and Milestones
In the 1960s, Shaklee expanded its production capacity with new facilities on National Avenue in Hayward, California, supporting growing demand for its nutritional and cleaning products.[10] By the 1970s, the company experienced rapid sales growth, increasing from $20 million to over $320 million annually, driven by its multi-level marketing model and product innovations.[10] In 1971, Shaklee opened the Forrest C. Shaklee Institute, a dedicated research facility to advance product development.[1] A significant milestone occurred in 1973 when Shaklee Corporation went public, enabling further capital for operations and expansion.[10] The following year, 1974, the corporate headquarters relocated to Emeryville, California, consolidating administrative functions.[10] Sales continued to climb, reaching over $454 million in 1981, reflecting sustained distributor network growth despite economic challenges.[11] International expansion began in earnest during the late 20th century, with Shaklee establishing operations in Mexico in 1992 to tap into Latin American markets.[1] Under subsequent ownership, the company prioritized global outreach, including entry into additional overseas markets. In October 2024, Shaklee announced its expansion into Australia, marking a new phase of growth ahead of its 75th anniversary and focusing on wellness and skincare products.[12] These developments underscored Shaklee's shift toward broader geographic presence while maintaining its core direct-selling structure.Ownership Transitions
Shaklee Corporation was founded on April 12, 1956, by Dr. Forrest C. Shaklee Sr., a chiropractor and nutrition pioneer, along with his sons Forrest Jr. and Raleigh, as a privately held company focused on manufacturing nutritional supplements through a direct-sales model.[3] The company operated under family control during its early decades, expanding into multi-level marketing while remaining privately owned until it went public on the stock exchange sometime in the mid-20th century.[1] In March 1989, Yamanouchi Pharmaceutical Co., Ltd., a Japanese drug manufacturer, acquired Shaklee for approximately 20 per share dividend on top of $28 per share, effectively taking the company private and ending public trading of its shares.[13] This transaction followed a competitive bidding process that thwarted an unsolicited takeover attempt by investor Irwin Jacobs, with the Shaklee family selling their remaining 28% stake as part of the deal.[14] Under Yamanouchi ownership, Shaklee continued operations as a subsidiary, with Yamanouchi leveraging it for entry into the U.S. consumer health market, though the acquisition primarily targeted Shaklee's nutritional and personal care divisions rather than its core pharmaceutical assets.[15] On June 2, 2004, Yamanouchi sold Shaklee's worldwide business to a consortium of private equity firms, including Ripplewood Holdings and Activated Holdings, for about $310 million, with Roger Barnett, an American investor, appointed as chairman and CEO.[16] This deal transitioned Shaklee back to private ownership, with the buyers acquiring approximately 81% of the equity while leaving 19% publicly traded on Japan's JASDAQ exchange initially.[17] Barnett, who effectively became the controlling figure and is widely regarded as the acquirer, has maintained ownership since, leading the company as a privately held entity focused on natural nutrition and wellness products without further major transitions reported as of 2025.[18]Products and Innovations
Nutritional Supplements and Wellness
Shaklee's nutritional supplements originated with founder Dr. Forrest C. Shaklee's development of Vitalized Minerals in 1915, recognized as one of the first multivitamins formulated in the United States, emphasizing mineral and vitamin combinations for health support.[19] The company formalized production of such products upon its incorporation in 1956, initially focusing on soy-based formulas and multivitamins distributed through direct sales.[1] In 1961, Shaklee introduced Instant Protein, among the earliest soy protein isolate powders commercially available, aimed at providing a plant-derived protein source for dietary supplementation.[20] The core of Shaklee's wellness offerings includes the Vita-Lea line of multivitamins, such as Vita-Lea Gold and Vita-Lea Methylated, which provide 100% or more of daily values for vitamins A, C, D, E, K, and all eight B vitamins, alongside minerals like zinc and magnesium, formulated to support immune function, bone health, and energy metabolism.[19] Targeted products like Vivix incorporate polyphenol extracts from sources including grape seed, red wine, purple carrot, black currant, and pomegranate to promote cellular health and address aging-related biomarkers.[21] Additional lines feature personalized nutrition via Meology, which tailors vitamin packets based on user-submitted data on diet, lifestyle, and health goals, and individual boosters like sustained-release vitamin C and B-complex for specific deficiencies.[22] Innovations in delivery systems include Shaklee's 1981 launch of the first plant-based sustained-release mechanism for vitamin C, designed to extend nutrient absorption over time.[4] The company reports over 100 patents and pending patents related to supplement formulations, with products emphasizing bioavailable, nature-derived ingredients such as whole-food sourced vitamins and probiotics.[23] A 2007 cross-sectional study published in Nutrition Journal examined long-term users of multiple Shaklee supplements (averaging 20 years of use) and found significantly higher blood concentrations of nutrients like iron, folate, vitamins A, C, and E compared to non-users from the general population, alongside lower rates of inadequate nutrient intake.[24] Preliminary clinical data on Vivix suggested a 40% reduction in telomere shortening rates among users versus non-users, though larger independent trials are limited.[25] Shaklee claims over 110 published studies on product safety and efficacy, primarily company-sponsored, with no major regulatory findings of unsubstantiated health claims as of 2023.[26]Cleaning and Household Solutions
Shaklee introduced its first household cleaning product, Basic-H®, in 1960, marketed as one of the earliest biodegradable cleaners available commercially.[1][27] The formula utilized natural ingredients derived from sources like corn and coconut, emphasizing non-toxicity and environmental compatibility at a time when phosphate-based detergents dominated the market.[28] The company's Get Clean® line, building on this foundation, comprises concentrated, nontoxic solutions designed for various household tasks, including all-purpose cleaning, laundry, and dishwashing.[29] Products such as Basic-H2® Organic All-Purpose Cleaner feature biodegradable surfactants without phosphates, nitrates, dyes, or chlorine, rendering them safe for septic systems and gray water reuse.[30][31] Shaklee claims these formulations outperform 16 leading national brands in cleaning efficacy while minimizing environmental impact through super-concentration, which reduces packaging volume and shipping emissions compared to ready-to-use alternatives.[32] For instance, the Get Clean® Starter Kit equates to approximately $3,400 in equivalent ready-to-use cleaners, highlighting the dilution efficiency.[33] Specialized items include Scour Off® for heavy-duty removal of baked-on grease and rust without abrasives, and Fresh Laundry® Concentrate, a phosphate-free liquid that softens water to enhance cleaning.[34][35] Germ Off® Wipes in the line demonstrate superior soil removal—57% better than Seventh Generation® disinfecting wipes and 24% better than Lysol®—per internal testing, though independent peer-reviewed validation of these comparisons remains limited.[32] Shaklee pioneered super-concentrated biodegradable cleaners to address waste, positioning the products as earth-friendly alternatives, with recyclable packaging and avoidance of volatile organic compounds that contribute to indoor air pollution.[36][37] While company-sourced data supports biodegradability and safety claims, third-party certifications like EWG VERIFIED® apply primarily to Shaklee's personal care items rather than the full cleaning portfolio.[38]Environmental and Sustainability Firsts
Shaklee introduced Basic-H, one of the first non-toxic, biodegradable household cleaners, in 1960, marking it as the first such product in North America.[39][40] In the 1970s, the company launched one of the first biodegradable laundry detergents, expanding its line of phosphate-free cleaning solutions designed to minimize environmental impact.[41] In 1987, Shaklee was chosen by oceanographer Jacques Cousteau and the Cousteau Society to supply non-toxic, biodegradable cleaning products for the research vessel Calypso, underscoring early recognition of its eco-friendly formulations in high-profile scientific applications.[42] A pivotal milestone occurred in 2000 when Shaklee became the first company worldwide to achieve Climate Neutral certification by fully offsetting its CO2 emissions from company-operated facilities, resulting in net-zero carbon impact.[43][44] This certification involved comprehensive accounting of greenhouse gas emissions and investment in verified offsets. By 2006, Shaklee extended this commitment as the first consumer products company to offset 100% of its emissions via the U.S. EPA's Climate Leaders Program while powering operations with 100% green energy.[43] These initiatives were complemented by broader efforts, including planting over one million trees through partnerships and maintaining carbon neutrality across operations since 2000.[42] Shaklee's sustainability claims, while company-reported, align with third-party verifications from programs like Climate Neutral and EPA partnerships, though independent audits of long-term offsets remain limited in public disclosure.[45]Business Model
Multi-Level Marketing Operations
Shaklee utilizes a multi-level marketing framework wherein independent distributors, designated as Ambassadors, engage in direct sales of nutritional supplements, personal care, and household products to retail customers while sponsoring additional Ambassadors to construct downline networks. This structure enables earnings through personal retail margins—obtained by acquiring products at a 15% discount from member pricing and reselling at suggested retail—and commissions on customer transactions, supplemented by bonuses derived from the aggregate sales volume of recruited downline members.[46][47] Customer-focused commissions form the foundational layer of compensation, featuring a "30 for 30 Bonus" granting 30% on purchases by new customers within their initial 30 days, with potential escalation to 35% upon reaching $7,500 in sales across 20 customers or 40% for $10,000 across 30 customers. Subsequent commissions on recurring customer purchases vary from 10% to 40%, calibrated by total personal customer volume and the number of active customers maintained. Group-level incentives commence with 6-10% bonuses on purchases by first-level downline Ambassadors (from Ambassador II rank) and extend to 2% on second-level purchases (from Director rank), alongside a 6% Director Team Bonus on broader team volumes excluding volumes from other Directors.[46] Deeper multi-level earnings manifest through generational and infinity bonuses, accessible from Coordinator ranks onward: a 6% Generation Bonus applies to sales by the first generation of qualified leaders, tapering to 4% from the third generation across up to six generations, while Infinity Bonuses yield 2-4% on volumes beyond sponsored leaders in infinite depth, further augmented by 10-25% matching on downline infinity earnings for senior ranks. At the apex, Presidential Master Coordinators receive 0.5% to 1/8% on point values from multiple subordinate Presidential Master organizations. Although the plan explicitly precludes direct compensation for recruitment alone, operational progression hinges on sponsoring to amass organizational volume, with rank advancements—from Ambassador I (75 active volume points minimum) to Presidential Master Coordinator (requiring 500,000 organizational volume points, among other metrics)—mandating thresholds in personal, team, and total downline sales activity to unlock these escalating bonus tiers.[46]Distributor Network and Compensation
Shaklee operates a multi-level distributor network comprising independent Ambassadors and higher-ranked Distributors who sell products directly to customers and sponsor others to generate organizational volume across sponsorship lines and generations.[46] Participants join as entry-level Ambassadors by purchasing a starter kit, such as the $49.95 Business Starter Kit, which provides training materials, product samples, and access to wholesale pricing; no prior sales experience is required, but ongoing active status mandates 75 points of active volume monthly from personal or team purchases.[47][46] The network structure defines downlines by levels (direct sponsors as Level 1) and generations (sequences of Business Leaders at Director rank or above), enabling earnings from personal customer sales up to infinite organizational depth for qualified ranks.[46] Compensation centers on product sales commissions rather than recruitment fees, with personal sales yielding a 30% bonus on new customer purchases within the first 30 days, transitioning to tiered rates of 10% to 40% on subsequent purchases based on total customer sales volume and purchasing customer count—for example, 20% for $1,000–$2,999 in sales with five customers, or 40% for $10,000+ with 30 customers.[46][47] Downline commissions include 6–10% on Level 1 volume (direct recruits) starting at Ambassador II rank, 2% on Level 2, and a 6% Director Team Bonus on qualifying team volume; advanced ranks access infinity bonuses of 2–6% on volume beyond six generations, plus matching bonuses of 10–25% on downline infinity earnings.[46] Rank advancement, from Ambassador II (75 active volume) to Presidential Master Coordinator (7,000 personal team volume, 500,000 organizational volume, and 10 master legs), unlocks higher commission rates and bonuses, with requirements emphasizing balanced growth across multiple legs excluding the strongest.[46] Supplemental incentives include the Star Club Bonus, paying $75 weekly for each $500 increment in join orders from at least three new participants (up to 15 per month), and annual Rank Up Bonuses scaling from $1,000 to $20,000 based on achieved rank.[48][47] Shaklee's 2022 U.S. earnings disclosure, based on 1099-NEC forms, reveals highly skewed income distribution among active Business Owners (27% of participants), with 74.4% in entry-level ranks averaging $750 annually for Ambassadors and $1,350 for Associates, while the top 0.1% Presidential Master Coordinators averaged $574,205; 21.6% of new Ambassadors earned nothing, and figures represent gross commissions excluding expenses like monthly fees or inventory costs, with no income guarantees.[49]| Rank Category | Percentage of Distributors | Average Annual Gross Earnings |
|---|---|---|
| Getting Started (Ambassador/Associate) | 74.4% | $750 (Ambassador), $1,350 (Associate) |
| Business Builders (Director to Senior Coordinator) | 22.7% | $12,466 (Director) to $37,199 (Senior Coordinator) |
| Business Executives/Key (Executive to Senior Key Coordinator) | 1.6% | $49,695 (Executive Coordinator) to $131,609 (Senior Key) |
| Business Masters (Master to Presidential) | 0.7% | $206,338 (Master) to $574,205 (Presidential) |
Partnerships and Achievements
NASA and Scientific Collaborations
In 1993, Shaklee Corporation collaborated with the National Aeronautics and Space Administration (NASA) through the agency's Joint Sponsored Research Program to develop AstroAde, a specialized rehydration beverage designed to address the physiological effects of microgravity on astronauts, including fluid shifts and dehydration during space shuttle missions.[50][51] The formulation, led by NASA researcher Dr. John Greenleaf at Ames Research Center, focused on rapid vascular uptake of fluids in hypohydrated individuals, with testing evaluating electrolyte compositions for optimal plasma volume restoration both at rest and during exercise.[52] AstroAde was supplied for use on NASA space shuttle flights from the early 1990s until the program's retirement in 2011, serving as part of the pre-flight fluid loading protocol to mitigate blood volume loss experienced by astronauts.[53] Shaklee nutritional supplements have also been utilized by NASA astronauts in space. In May 2011, Commander Mark Kelly carried Shaklee Vitalizer strips aboard the space shuttle Endeavor during STS-134, the final mission to the Hubble Space Telescope, to support his health regimen amid the mission's demands.[54] Similarly, astronaut Scott Kelly incorporated Shaklee supplements into his routine during his 340-day stay on the International Space Station from March 2015 to March 2016, as part of efforts to maintain physical condition in prolonged microgravity.[54] These instances highlight Shaklee's products integration into NASA's astronaut support protocols, though NASA has not independently endorsed the supplements beyond the targeted rehydration collaboration.[50] Beyond NASA, Shaklee has pursued scientific collaborations yielding over 135 peer-reviewed publications and presentations, including approximately 90 clinical studies on supplement efficacy in areas such as cardiometabolic health, telomere length maintenance, and athletic performance.[55] These efforts involve partnerships with external researchers and institutions, exemplified by investigations into resveratrol's role in muscle damage repair and omega-3 impacts on fatty acid indices, published in journals like the Journal of the International Society of Sports Nutrition.[56] A 2024 cross-sectional analysis compared long-term Shaklee supplement users (over 20 years) to non-users and organic food consumers, finding superior biomarker profiles in heart health, brain function, and cellular aging among consistent users, though the study's observational design limits causal inferences.[57] Shaklee's internal research infrastructure, including the Dr. Forrest C. Shaklee Global Innovation Center established in 2015, facilitates these collaborations by centralizing R&D for product formulation and testing against over 350 contaminants.[58]Sports and Exploratory Endorsements
Shaklee has endorsed and supplied nutritional products to athletes since 1980, supporting hundreds of competitors in various disciplines.[59] Company-backed athletes have collectively won over 150 Olympic medals, including gold, silver, and bronze, across events such as rowing and pentathlon.[60] In 2019, Shaklee became the official nutritional product partner of USA Judo, providing supplements to national team members.[61] The firm also sponsored modern pentathlon athletes Samantha Achterberg and Charles Fernandez, emphasizing product use for performance enhancement.[62] For the 2020 Tokyo Olympics, Shaklee planned to back over 50 athletes, many of whom were independent distributors, through its Pure Performance program.[63] Notable users include rower Caryn Davies, a multiple Olympic gold medalist who relied on Shaklee supplements for training and recovery.[64] In exploratory contexts, Shaklee products powered seven of Time-Life Books' 25 Greatest Adventures of All Time, including the 1983 first American ascent of Mount Everest without supplemental oxygen by climbers using Shaklee nutrition.[51] The company supported the 1986 Voyager aircraft's nonstop, non-refueled circumnavigation of the globe by pilots Dick Rutan and Jeana Yeager, supplying vitamins and supplements.[65] Additional backed expeditions encompassed the first unsupported dogsled trek to the North Pole in 1986, led by explorers relying on Shaklee for sustenance in extreme conditions, and Will Steger's 1989-1990 trans-Antarctica crossing, the first unassisted foot traversal of the continent.[4] Shaklee also sponsored the 1980 American Everest Expedition in collaboration with Sir Edmund Hillary, providing financial aid and products while contributing to environmental efforts like tree-planting via the American Himalayan Foundation.[66] These endorsements highlight Shaklee's role in furnishing nutrition for high-stakes ventures demanding endurance and recovery.[67]Legal and Regulatory Scrutiny
FTC Investigations and Settlements
In 1974, the Federal Trade Commission (FTC) entered into a consent order with Shaklee Corporation, a distributor of food supplements, cosmetics, and household products, to address allegations of deceptive acts and practices under Sections 5 and 12 of the FTC Act. The complaint charged Shaklee with misrepresenting the earnings and profits achievable by its distributors, including unsubstantiated claims that participants could realize substantial income primarily through recruiting others rather than retail sales, and failing to disclose that most distributors earned minimal returns. It also alleged false advertising of products, such as claiming its "Instant Protein" supplement was suitable for infants without evidence, and misrepresenting the therapeutic benefits of various supplements and cleaning agents.[68] The order prohibited Shaklee from making such misrepresentations, required substantiation for future product efficacy claims through competent scientific evidence, and mandated disclosures in promotional materials about the limited success of distributors.[69] In December 1982, the FTC initiated an investigation into whether Shaklee had violated the 1974 consent order by continuing certain marketing representations to distributors regarding income potential and business opportunities. The probe focused on compliance with prohibitions against exaggerated earnings claims in Shaklee's multi-level distribution model, but no further enforcement action or settlement details were publicly documented beyond the inquiry phase.[70] On April 13, 2023, the FTC issued a Notice of Penalty Offenses Concerning the Substantiation of Product Claims to Shaklee, among approximately 670 companies in the health and wellness sector, warning that unsubstantiated advertising of product benefits—such as health or performance enhancements—could result in civil penalties of up to $50,120 per violation. This notice highlighted prior FTC determinations on deceptive practices, including failures to possess reliable evidence before disseminating claims, but did not allege specific ongoing violations by Shaklee or lead to a settlement.[71][72]Litigation Involving Distributors
Shaklee Corporation has pursued legal action against distributors for alleged breaches of distributorship agreements, particularly involving recruitment of other distributors to competing direct-selling companies or violations of non-compete provisions. In a notable 1988 case, Shaklee sued an 18-year distributor in California state court after the individual recruited fellow Shaklee distributors to join a rival firm, leading to the distributor's termination; the court upheld Shaklee's right to enforce the agreement's exclusivity clauses, affirming that distributors operate as independent contractors bound by contractual restrictions on competitive activities.[73] In Shaklee U.S. Inc. v. Giddens, decided by the U.S. Court of Appeals for the Ninth Circuit in 1991, Shaklee obtained summary judgment against distributor Robert Giddens for breaching the distributorship contract through unauthorized sales practices and failure to adhere to company policies; the court rejected Giddens' counterclaim for wrongful termination, ruling that Shaklee's actions were justified under the agreement's terms, which emphasized independent contractor status without guaranteed tenure.[74] Similarly, in Shaklee Corp. v. Turner (10th Cir. 1984), Shaklee initiated breach of contract claims against distributors El Marie Turner and others for diverting business opportunities and violating sales protocols; the distributors counterclaimed for wrongful termination, retirement benefits, and defamation, but the Tenth Circuit affirmed the district court's directed verdict in Shaklee's favor on the primary claims, holding that the distributorship agreements did not confer employee-like protections or vested rights to ongoing participation.[75] Distributors have occasionally countersued Shaklee in related disputes. Long-term distributor Superior Consulting Services, Inc., which joined Shaklee in 1978, filed a trademark infringement action in 2016 against Shaklee U.S., Inc., alleging misuse of the "Healthprint" mark in connection with nutritional testing services marketed to Shaklee's network; the Eleventh Circuit in 2021 vacated partial summary judgment for Shaklee, remanding for further consideration of consumer confusion in distributor channels, though the case centered on intellectual property rather than contract termination.[76][77] In cases involving external misconduct, Shaklee has suspended distributor privileges without direct litigation. For instance, in 2012, Shaklee suspended John W. Cranney, a prominent distributor since 1967, amid Securities and Exchange Commission allegations of a Ponzi scheme defrauding investors of over $10 million through unrelated investment vehicles; Cranney's subsequent bankruptcy filing referenced the suspension as impairing his Shaklee earnings, but no breach suit by Shaklee ensued, with enforcement limited to contractual halt of distributor rights.[78][79]Criticisms and Counterarguments
Pyramid Scheme Allegations and MLM Efficacy
Shaklee has faced allegations from critics and former distributors that its multi-level marketing (MLM) structure functions as a pyramid scheme, primarily due to an emphasis on recruitment over retail sales to end consumers. These claims argue that a significant portion of revenue derives from distributor purchases rather than external customer demand, with compensation plans rewarding downline recruitment more heavily than product sales. For instance, online forums and consumer advocacy sites have highlighted Shaklee's 13-tier hierarchy as exacerbating wealth concentration at the top, where ongoing purchases by lower-level participants sustain commissions for upline members. However, no U.S. Federal Trade Commission (FTC) ruling has classified Shaklee as an illegal pyramid scheme; the company maintains compliance by offering legitimate products and retail incentives, distinguishing it from pure recruitment-based models prohibited under FTC guidelines.[80][81] Individual distributor misconduct, such as a 2013 Ponzi scheme by Massachusetts-based Shaklee promoter John Cranney defrauding victims of over $10 million, has fueled perceptions, though Shaklee suspended the individual and cooperated with authorities.[78] Empirical data on MLM efficacy, including Shaklee's, reveals low financial success rates for most participants. Shaklee's 2022 U.S. Average Annual Earnings Statement, based on Form 1099-NEC data for active business owners, shows that 74.4% of participants are in entry-level "Getting Started" ranks, with average gross commissions of $750 for Ambassadors (35.1% of business owners) and $1,350 for Associates (39.3%). Higher ranks, comprising just 2.9% of business owners, yield substantially more, but overall median earnings remain negligible after accounting for required fees like the $49.95 joining cost and optional ongoing expenses such as $14.95 monthly website fees. The statement discloses that 21.6% of new Ambassadors earned nothing in 2022, and earnings exclude business costs, taxes, or product purchases, implying net losses for many given high attrition rates typical in MLMs—over 99% of participants industry-wide report net financial losses per FTC analyses of similar structures.[82][83][84]| Rank Category | % of Business Owners | Average Gross Annual Commissions (USD) |
|---|---|---|
| Ambassador | 35.1% | $750 |
| Associate | 39.3% | $1,350 |
| Director | 14.6% | $12,466 |
| All Higher Ranks | 2.9% | $50,000–$574,205 (varying by level) |