FlexKom Review: Merchant network and recruitment
FlexKom operate in the e-commerce MLM niche and appear to be based out of Germany under “FlexKom Europe GmbH”.
I say appear because further research into the company revealed several instances of the company’s affiliates claiming that FlexKom was headquartered in Turkey.
This is supported by the fact that FlexKom’s website domain (“flexkom.com”) is registered to a “Cengiz Ehliz” (the owner of FlexKom), with a provided address in Ankara, Turkey.
FlexKom was founded in 2010 and is headed up by CEO Asker Sakinmaz.
On his personal website, Ehliz (photo right with Asker Sakinmaz (right)) claims to have begun his network marketing career in 1993, however no involvement in any specific companies is mentioned.
Turkey was chosen as the first country to test FlexKom’s business model in, with the company now looking to expand internationally.
Read on for a full review of the FlexKom MLM business opportunity.
The FlexKom Product Line
FlexKom themselves have no retailable products or services. The company sells “FlexCards” to its affiliates and participating store owners, which they are then able to sell of give away to consumers.
Each FlexCard is loaded with 20 EUR worth of “FlexMoney”, which is a virtual currency used by FlexKom.
FlexMoney can be redeemed for cash or used to purchase products online via FlexKom’s various shopping portals (stocked by third-party merchants participating in the FlexKom merchant program).
FlexCards can be used to earn discounts on products and services offered via the FlexKom merchant network, as well as for keeping track of customer’s cashbacks from merchant partners.
FlexKom claim that 1 FlexMoney is worth 1 EUR.
The FlexKom Compensation Plan
The FlexKom compensation plan revolves around affiliates and participating merchants purchasing FlexCard from the company as well as purchases from merchants within the FlexKom merchant network.
Merchants can earn money on each customer they give a FlexCard to.
Merchants sign up to FlexCom for 330 EUR and are provided a fixed number of FlexCards to give away or sell to customers. I believe merchants are able to order more FlexCards from FlexKom if they run out, however this wasn’t clarified in any compensation material I cited.
In anycase, everytime a customer receives a discount from a merchant in FlexKom, the merchant pays an equal value to FlexKom in fees.
Eg. If a merchant offers a customer a 2 EUR discount, they must also pay an additional 2 EUR fee to FlexKom.
This fee is then split up with FlexKom keeping 40% of it and 60% being paid out via the compensation plan.
Of this 60% paid to the FlexKom compensation plan, merchants receive a 20% commission each time one of the customers they gave a card to receives a discount from another FlexKom merchant, thus generating a fee for FlexKom.
Eg. A customer purchases a $10 widget and receives a $2 discount. The widget merchant pays FlexKom an additional $2, of which FlexKom keeps 80c (40%). The remaining $1.20 (60%) is paid out via the comp plan, with the referring merchant receiving 20% of the $1.20 (20% of the 60%).
Referred to as “franchise partners”, FlexKom affiliates are paid commissions on the purchases made by businesses they refer and on the fees generated by customer purchases.
How much of a commission an affiliate earns on these purchases depends on how much money they pay in initial affiliate membership fees to FlexKom:
- Basic Franchise Partner (E-Biz Kit, 149 EUR a year) – able to earn 5% on customer and referred merchant purchases
- Junior Team Member (399 EUR) – 10% on customer and referred merchant purchases, 20 FlexCards included (20 FlexMoney preloaded onto each card) and able to recruit new affiliates within their home country
- Business Team Member (799 EUR) – 15% on customer and referred merchant purchases, 50 FlexCards included (20 FlexMoney preloaded onto each card) and able to recruit new affiliates within their home country
- Global Team Member (1490 EUR) – 20% on customer and referred merchant purchases, 100 FlexCards included (20 FlexMoney preloaded onto each card) and able to recruit new affiliates globally
Note that Basic Franchise Partners are unable to recruit new affiliates.
In addition to customer and merchant network commissions, FlexKom also pays out recruitment commissions on the recruitment of new affiliates and any FlexCard purchases they make.
Recruited affiliates are sorted via a unilevel compensation structure, with level 1 being personally recruited affiliates, level 2 being any affiliates that level 1 affiliates recruit and level 3 being any affiliates that level 3 affiliates recruit and so on and so forth up to a maximum of 6 levels of recruitment.
How much of a commission earnt depends on a FlexKom affiliate’s membership rank. There are seven membership ranks within the FlexKom compensation plan, and along with their qualification criteria they are as follows:
- Business Distributor (buy Basic Franchise affiliate membership) – unable to recruit new affiliates so no recruitment commissions paid
- Team Member (buy Junior Team Member or higher affiliate membership) – 5% on level 1
- Marketing Manager (recruit 3 Team Members) – 10% on level 1
- Sales Manager (recruit 3 Marketing Managers) – 15% on level 1, 1% on level 2 and 2% on level 3
- Sales Director (recruit 3 Sales Managers) – 20% on level 1, 1 % on level 2, 2% on level 3 and 3% on level 4
- National Director (recruit 5 Sales Directors) – 25% on level 1, 1% on level 2, 2% on level 3, 3% on level 4 and 4% on level 5
- President’s Team (recruit 5 National Directors) – 30% on level 1, 1% on level 2, 2% on level 3, 3% on level 4, 4% on level 5 and 5% on level 6
Note that at all affiliate membership ranks, 149 EUR out of the initial affiliate membership fee is non-commissionable.
Starting from the Sales Manager affiliate membership rank, affiliates are provided a leased car to use. As an affiliate is promoted the value of the car provided also increases.
A share in a bonus pool is offered to Sales Director ranked affiliates and above:
- Sales Director pool – 1% of FlexKom’s global revenue
- National Director pool – 2% of FlexKom’s global revenue
- President’s Team pool – 3% of FlexKom’s global revenue
Flexi-Kobi City Coordinator Bonus
When FlexKom enters a new country they zone off areas by population. Flexi-Kobi Zones have roughly 100,000 people living in them and 5% of the shopping volume in any zone is paid out as a bonus ot the affiliate who has the largest downline in that zone.
Affiliate membership to FlexKom is available at four levels, with the more money spent on membership resulting in a higher percentage commission being paid out on merchant fee revenue and merchant purchases.
- Basic Franchise Partner (E-Biz Kit) – 149 EUR a year
- Junior Team Member – 399 EUR
- Business Team Member – 799 EUR
- Global Team Member – 1490 EUR
I don’t know what it is about European e-commerce MLM companies but they always seem to give me a big headache when I try to analyse them.
For starters nothing but vague information is provided on FlexKom’s website about the mechanics of their compensation plan and what their MLM income opportunity is about.
What information is presented is then a mixture of perfectly understandable English or is written in German (this is with the “English” language option selected).
There is no excuse for such a poorly presented website for any MLM company looking to enter into English-speaking markets, much the less operate on a global platform.
That said, from what I have been able to piece together via research first and foremost the thing that stuck out at me was the deficit between affiliate and merchant money going in and FlexMoney being generated.
Each membership level generates more FlexMoney then affiliates put in to purchase the cards.
FlexMoney is of course a virtual currency only worth something within the FlexKom opportunity, however the company does claim 1 FlexMoney is worth 1 EUR so how they pay out more than affiliates pay them for the cards is a mystery to me.
The idea might be to recover costs eventually through the merchant network (shopping) however this does appear to be a bit of gamble.
That is of course if affiliates even bother to focus on the merchant network at all.
Whilst FlexKom’s merchant network appears to be a legit cashback system (with cashbacks offered by the merchants themselves), unfortunately it appears to be attached to a recruitment driven scheme.
Affiliates can join FlexKom, completely ignore the merchant network and earn commissions on the recruitment of new affiliates, who also can ignore the merchant network altogether.
Commissions on new affiliates joining FlexKom are increased by solely by an affiliate recruiting more new affiliates, with later requirements requiring an affiliates downline to recruit more and be promoted themselves. How much an affiliate earns (purely in recruitment commissions) has nothing to do with how much revenue is generated in merchant fees (via consumer discounts).
The mechanics of how these recruitment commissions are paid out are completely detached from FlexKom’s merchant shopping network.
And on the topic of merchant discounts, having to pay FlexKom a 100% matching fee on any discounts offered to customers doesn’t seem all that attractive.
A merchant who signs up a lot of customers might generate the money back via the 20% commission, but that’s assuming the customer spends money at other FlexKom merchants.
In anycase, given the recruitment commissions offered in the big picture it’s only a minor issue.
Affiliates being able to earn commissions via the recruitment of new affiliates (who go on to do the same to earn commissions) is a glaringly huge red flag that needs to be addressed. Otherwise, apart from an attached merchant network there doesn’t appear to be anything differentiating FlexKom from your regular run of the mill “pay-to-play” pyramid scheme.
Footnote: I was unable to find the cost of FlexCards for affiliates and merchants (purchased after signing up), if someone is able to provide that I can add it to the review.