MXI Corp (Xocai) Review: Autoship + healthy chocolate
MXI Corp was founded in 2005 by mother and son team Jeanette and Andrew Brooks and is based out of the state of Nevada in US.
Prior to launching the MLM opportunity MXI Corp, Jeanette Brooks founded Pure De-Lite which marketed a low-carb chocolate bar via a non-MLM wholesale model (they marketed to retail companies who then sold to consumers).
As far as a track record and research into the background of MXI Corps’ two founders go, there’s an article published by the Brisbane Times that lays out a pretty detailed history of Jeanette and Andrew Brooks (photo right) as well as their past ventures that’s worth reading in full.
Here’s the cliffnotes:
Just three years ago, as they were launching their Xocai chocolate range through their network marketing company MXI Corp, Jeanette and Martin Brooks were facing more than $US36 million in claims from 25 individuals, companies and government agencies as part of bankruptcy proceedings in their home town of Reno.
The couple, who quote celebrities such as Larry King, Oprah Winfrey and Marie Osmond as supporters of their latest product, fled creditors for Canada 15 years ago, but they are back in lavish new Nevada headquarters.
MXI Corp and websites it has spawned worldwide through its distributors claims heady success for the Brooks family’s past businesses. But their four previous companies distributing diet and health foods have been involved in litigation and bankruptcy in Nevada, Utah, Alabama, two Canadian provinces and the Cayman Islands, the Herald has found after examining hundreds of pages of US court documents.
The Brookses’ creditors included the US and Canadian tax offices, business partners and angry distributors of a previous product, the Phoenix Fiber Cookie, which was withdrawn after the US Food and Drug Administration found that false health claims were being made for it.
The Brookses have had several brushes with the law. Mr Brooks, the chief executive of MXI Corp, was arrested in Montana and pleaded guilty to unlawfully transferring funds from Nevada to the Cayman Islands 15 years ago.
The following year, he and his wife consented to a civil judgement for fraud for about $US600,000.
Mrs Brooks promotes herself as a millionaire at 29 and as the driving force behind the $300 million in retail sales achieved by MXI’s predecessor, Pure De-Lite.
She does not advertise that that company was placed in receivership, nor that its “low carb” Pure De-Lite Chocolate Bar was found in violation of the law because it was not sugar-free as claimed, while its carbohydrate content was understated.
Not exactly confidence inspiring, however MXI Corp along with the Brookses are still in business today in 2012 so that’s something to consider.
Read on for a full review of the MXI Corp MLM business opportunity.
The MXI Corp Product Line
MXI Corp’s flagship products are branded under ‘Xocai’ (pronounced ‘sho-tsai’) and are based on dark chocolate infused with acai and blueberries.
MXI Corp claims this combination delivers a large ‘ORACfn’ rating, which the company claims was ‘developed by industry scientists (and) measures the antioxidant load of any given food’.
The United States Department of Agriculture, previously a publisher of ORAC data, withdrew its web publication of ORAC values for common American foods in 2012 due to absence of scientific evidence that ORAC has any biological significance.
Numerous health food and beverage companies and marketers have erroneously capitalized on the ORAC rating by promoting products claimed to be “high in ORAC”.
As most of these ORAC values have not been independently validated or subjected to peer review for publication in scientific literature, they remain unconfirmed, are not scientifically credible, and may mislead consumers.
That said, MXI Corp don’t certify their own products but instead pay ‘Brunswick Labs’ to do so. MXI Corp claim Brunswick Labs are ‘an independent, third-party analytical laboratory that provide analytical services‘ (not to be confused with the ‘New Brunswick Laboratory’, a state-run nuclear testing facility in the US).
The Xocai ‘healthy chocolate’ product range is available in nugget form, cookies, chocolate shake, peanut butter cups, squares, energy drinks, sipping chocolate. There’s even an “anti-aging” range of Xocai chocolate marketed under the ‘XoVitality’ brand which includes energy and immunity, antioxidant and heart and brain capsules.
The MXI Corp Compensation Plan
Before we get stuck into the MXI Corp compensation plan, here are some definitions of a few of the abbreviations used below:
- QV – Qualifying Volume is volume generated through sales that qualifies for commissions. It is used in the calculation of how much of a commission members are owed, depending on which part of the compensation plan is being looked at.
- PV – Personal Volume is sales volume generated by an individual member. This can be volume generated by self consumption or the sale of products to retail customers.
- BV – Business Volume is sales volume generated by your entire downline (your binary team).
In order to qualify for commissions in the MXI Corp compensation plan, members must qualify with an eight or four-week minimum product purchase.
- Affiliate – 100 PV every 8 weeks
- Associate, Royal, Royal 500 and Royal 1k – 100 PV every 4 weeks
- Executive and above – 200 PV every 4 weeks
As you read up on the MXI Corp compensation plan, you’ll notice several commissions and bonuses are tied into a MXI Corp member’s membership level.
There are twelve membership ranks in MXI Corp and along with their qualifications they are as follows:
- Royal – personally recruit 2 associates (one on your left binary team and one on your right)
- Royal 500 – generate at least 500 QV in your weaker binary leg over a 2 week period
- Royal 1k – generate at least 1000 QV in your weaker binary leg over a 2 week period
- Executive – generate at least 2000 QV in your weaker binary leg over a 2 week period and have at least two Royal 500 or higher members in two separate personal enrolment trees
- Bronze Executive – generate at least 5000 QV in your weaker binary leg over a 2 week period and have at least two Royal 1k or higher members in two separate personal enrolment trees
- Silver Executive – generate at least 10,000 QV in your weaker binary leg over a 2 week period and have at least two Executive or higher members in two separate personal enrolment trees
- Gold Executive – generate at least 10,000 QV in your weaker binary leg over a 2 week period and have at least two Bronze Executive or higher members in two separate personal enrolment trees
- Platinum Executive – generate at least 15,000 QV in your weaker binary leg over a 2 week period and have at least two Silver Executive or higher members in two separate personal enrolment trees
- Diamond Executive – generate at least 20,000 QV in your weaker binary leg over a 2 week period and have at least two Gold Executive or higher members in two separate personal enrolment trees
- Double Diamond Executive – generate at least 25,000 QV in your weaker binary leg over a 2 week period and have at least two Platinum Executive or higher members in two separate personal enrolment trees
- Presidential – generate at least 50,000 QV in your weaker binary leg over a 4 week period and have at least two Diamond Executive or higher members in two separate personal enrolment trees
- Ambassador – generate at least 75,000 QV in your weaker binary leg over a 4 week period and have at least two Double Diamond Executive or higher members in two separate personal enrolment trees
MXI Corp don’t themselves pay out a retail commission but instead set a recommended retail price. The idea is that members purchase product at wholesale from the company and then sell the products at their designated retail price.
MXI Corp count retail commissions as the difference between the wholesale price paid by the member and the price they resell the products for.
The ‘Quick Check Bonus’ rewards MXI Corp members who sign up new members on autoship orders.
- sign up an affiliate on autoship and earn $25
- sign up an associate on autoship and earn $50
- sign up a business builder on autoship and earn $150
Additionally MXI Corp pay out a ‘X Bonus’ on every 3rd member personally recruited and placed on autoship. The X Bonus pays out $75 cash and 50 PV credit towards an autoship order.
At the heard of MXI Corp’s residual commissions is a binary organisation structure. A binary organisation places you at the top with two legs branching out underneath you (your left and right team):
In turn these two positions branch out into another two and so on and so forth. Each of these positions is a member position and when these members purchase products from MXI Corp they generate business volume (BV), with each left and right team generating its own separate volume).
In a pay period (weekly) MXI Corp pay out a commission on the weaker volume generated by your two teams. This commission is 10% up to $100,000 in BV a week generated by your weaker leg, equating to a take-home commission cap of $10,000 a week (10% of $100,000).
Unused leftover volume in your stronger leg is carried over for the next week, meaning that unless the weekly sales of your weaker team drastically changes, there’s a good chance that once your strong and weak teams are defined they won’t change.
Executive Generation Bonus
The Executive Generation Bonus functions as a check match commission and is available to MXI Corp members who are at the ‘Executive’ membership level or higher.
The Executive Generation Bonus is paid out using a unilevel structure on the binary commissions paid out on personally recruited members down seven levels.
Within a unilevel structure, each member you recruit is placed directly underneath you (your level 1). Any members they recruit are placed directly under them (your level 2) and so on and so forth.
The Executive Generation Bonus defines your first generation as the members between you the first qualified executive found in any given unilevel leg (each unilevel leg pays independently of the others with its own generations). The second generation is then defined as all members falling between this first qualified executive and the next qualified executive found.
MXI Corp claim to pay out up to 50% of commisionable volume (sales) and don’t guarantee the percentage commission of the Executive Generation Bonus, citing it as a floating point percentage that varies.
8% is given as a flat rate example by the company, however no indication is given as to whether or not this is average or a completely random figure.
pay out a flat rate 8% matching bonus on the binary commissions of all members that fall within a generation. How many generations a MXI Corp member is paid out on is determined by their membership rank:
- Executive – 1 generation
- Bronze Executive – 2 generations
- Silver Executive – 3 generations
- Gold Executive – 4 generations
- Platinum Executive – 5 generations
- Diamond Executive – 6 generations
- Double Diamond or higher – 7 generations
MXI Corp has four bonus pools consisting of 4% of the global binary volume (1% for each pool).
- Gold Executives earn 1 share in a Gold Leadership Pool
- Platinum Executives earn 1 share in both the Gold and Platinum Leadership Pools
- Diamond Executives earn 1 share in the Gold, Platinum and Diamond Leadership Pools
- Double Diamond Executives earn 1 share in the Gold, Platinum, Diamond and Double Diamond Leadership Pools
Upon achieving the Presidential Double Diamond Executive membership rank, MXI Corp members are able to creat an ‘expansion center’.
An expansion center creates a new binary on top of your existing binary with your existing binary forming the stronger leg of the new expansion center binary.
Effectively you leverage your existing binary to create a new income stream as you work on building the weaker leg of your new expansion center weaker leg (the additional revenue stream is the binary commission this new weaker leg generates).
As your organisation continues to grow, when the lesser leg of an expansion center generates 50,000 BV or more a month, a new expansion center is then placed on top of your existing one(s), for a total of 3 expansion centres on top of your original binary team.
Lifestyle Rewards and Car Bonus
At the upper levels of the membership ranks MXI Corp offer members ‘lifestyle’ bonuses including a trip to MXI Corp’s HQ in the US and cruises to the Caribbean and Alaska (note that these are one-time bonuses).
MXI Corp’s car bonus starts at the Diamond Executive membership rank and pays out members $500 – $2000 (Ambassador) a month for purchase or lease of a black Mercedes-Benz car.
Joining MXI Corp
Membership to MXI Corp comes in four different options.
- Distributor membership costs $39 a year and only permits you to purchase goods from MXI Corp and resell them yourself.
- Affiliate membership costs $25 (optional $14 member kit) + a 100 PV initial product order. In addition to being able to order from the company at wholesale and resell goods, Affiliate membership places you in the binary of your upline (you can’t start your own).
- Associate membership builds on Affiliate membership in that if you increase your initial order to 200 PV, you can create your own binary and place people under you.
- Business Builder membership increases your options again but requires a 600 PV initial order. Business Builder membership allows users to create three initial positions on their binary (one at the top and two underneath themselves).
Despite being a sales orientated company with a tangible product, I still have a few reservations about the way in which MXI Corp have structured their compensation plan and business model.
My concerns are twofold, firstly the way in which MXI Corp appear to have shifted product liability to their members and secondly strong incentives to simply recruit members and sign them up on a monthly autoship order.
Whereas the norm these days is for affiliates to take orders and then have the company ship products to the end-user, MXI Corp instead seem to only conduct sales through their members. The wording in the compensation plan regarding this is very specific:
1. You purchase the product at wholesale price.
2. You have the opportunity to mark up the product to the suggested retail price.
As I see it this is no different then buying something from the supermarket and selling it on eBay. The first sale between members and the company is the actual sale and any subsequent sale has nothing to do with the company. MXI Corp get their wholesale money from their member and whatever price the goods are resold at is between the MXI Corp member and their customer.
Whilst there’s nothing wrong with this, as far as MXI Corp go as a MLM business opportunity, technically this means that 100% of the sales generated within the company itself are internal. Customers pay distributors, distributors purchase goods from the company and then pocket the difference.
There is a retail sale between the MXI Corp member and their customer but as far as the company goes, only a wholesale sale exists between itself and the purchasing MXI Corp member.
Whenever I see 100% internal sales (or even a majority) it always raises a red flag to me because I see it as a strong indication of a lack of genuine retail customers (members buying at wholesale prices from the company is not retail).
In the MXI Corp compensation plan material I cited as well as further research into the website and what’s available to affiliates, I couldn’t see anything about retail storefronts. Thus as I understand it anyone who wants to buy chocolate has to buy stock from company members.
MXI Corp do ship the orders directly to customers but as I understand it members themselves make the order with MXI Corp whilst pocketing the retail difference (how much this is depends on the price the MXI Corp member decided to sell the product for).
This gearing towards internal sales plays well into my second concern regarding compulsory autoship. There’s a reason for the stereotype of MLM distributors sitting on garages full of company products they don’t want and compensation plans like MXI Corp’s are largely to blame for it.
For starters there’s a blanket requirement for a minimum monthly autoship on all of the commissions except the wholesale resell commission paid to members by customers they resell MXI Corp goods to.
By definition this is a commissions qualification requirement so right from the getgo there’s a strong incentive to jump on autoship. Then if you look at the membership ranks this autoship requirement only increases.
Meanwhile the recruitment bonuses covered only apply to members who sign up on autoship with the rest of the commissions offered being tied into membership rank, which carries its own autoship requirements.
Thus with the exception of “retailing” products you’ve bought yourself to customers, all commissions are in one way or another tied into signing members up and placing them on autoship.
In this sense the company can boast about a large amount of sales but when you break down the mechanics there’s far too much of an incentive here to just sign members up, whack them on autoship and go out and recruit new members.
As a prospective MXI Corp member this would be a primary concern of mine. Of course that’s not to say there aren’t members concentrating on actual end-customer sales, however then there’s still the technical 100% internal sales issue to consider.
One way to ascertain how MXI Corp affiliates are by and large working the opportunity would be for prospective members to assess how they were introduced to the company and how much pressure (if any) there has been to sign up on autoship.
Noticeably the more you pay in autoship at the start the more commissions you earn, regardless of whether you’re actually going on to sell product to end-consumers or not.
That actually brings me to one final concern with the comp plan, that being able to sign up under yourself. Apart from double (triple?) dipping in commissions, I fail to see the real world advantage of signing up business centers under yourself under the ‘Business Builder’ sign-up option.
Just as I can’t fathom someone opening a franchise and then buying two additional franchises under the same roof and counting it as three businesses, I’m not seeing the benefit of having three binary positions in the same binary other than to pay yourself more on your own orders and effectively game the system (pay more, order more each month and earn more on your own purchases).
Again with the whole autoship thing this to me simply seems like a way to increase the autoship members are paying each month. By spreading out the increased volume over three binary positions you might visually reduce the amount of autoship on a Business Centre (as opposed to increasing the autoship on one center), but at the end of the day it’s still just coming out of one member’s pocket.
A slightly different way to look at the whole autoship thing could be to consider it as a monthly deadline to make sales but as someone starting out, I don’t think it’s worth bothering taking the risk.
Chocolate isn’t something that can be stored for too long and if your inventory continues to increase at the end of the day all you’re going to be left with is a garage of chocolate and autoship debt.
That said MXI Corp have been around for seven years so at the very least some distributors within the company must be experiencing success with reselling MXI Corp products to end-consumers.
My final advice? Definitely mull over how the MXI Corp business was marketed to you to ascertain if it’s sales or autoship based and strongly consider the shift of inventory risk from the company to you as an affiliate when considering the MXI Corp MLM business opportunity.