Making the world healthier. · Posters of products, the Herbalife building, Herbalife Broadcast Network (HBN), company. founder Mark Hughes and CEO Michael O. Johnson.. If required,

Making the world healthier.

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Copyright © 2005 Herbalife International, Inc.No reproduction in whole or part without written permission.All rights reserved.

The guidelines contained in this document have the force and effect of Rules of Conduct & DistributorPolicies. Violations may result in disciplinary action, up to and including royalty forfeitures, suspensionof buying privileges, and/or the termination of Distributorships.

3 Introduction

4 Acquire Any Necessary Licenses

4 Choosing a Location

4 Setting Up the Physical Layout of the Club

5 Recruiting Members

5 Roles and Responsibilities of Each Distributor and Support Team

7 Step-by-step Procedure When Members Enter the Club

8 Saturday Training

8 Nutrition Information

8 Product Education

8 Retailing the Products

9 Recruiting New Distributors

9 Planning the Monthly Party

10 Operating Guidelines

12 Summary

13 Tools for a Successful Club

Table of Contents

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To be successful in opening your first club and growing the Nutrition Club business, it isimportant to understand the philosophy that has worked for clubs in Mexico and SanFrancisco, California. This philosophy is at the heart of the club’s success and includes thefollowing:

. The first goal is to provide good nutrition to the members.

. The club’s social atmosphere is a key to its success.

. Members usually first sample the products before deciding to purchase the products for home use or deciding to become a Distributor.

. After trying the products, most members become regular retail customers, buying the products for their personal use and/or for their families.

. Some members choose to become Distributors and/or to open their own clubs.

Introduction

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Acquire any Necessary Licenses

Prospective club operators must first contact the appropriate local, state or nationalgovernment agencies in order to acquire all necessary business, tax and health permitsand/or licenses. In connection with this process, the prospective operator must comply withall inspection requirements or requests and make any requested or required improvementsin a timely manner.

Choosing a Location

When selecting a location, consider the following: A club operated from a home can belocated anywhere. However, all clubs need to be of adequate size to accommodate allmembers and to operate a hygienically clean kitchen for product preparation.

For an office club:

. Look for a busy place that attracts a large number of people.

. Locate the club near schools, hospitals, bus stations, stores, churches or office buildings.

. The club should be within easy walking distance for a large number of people.

Setting Up the Physical Layout of the Club

The club or home needs to have enough room for all the members. If the club starts in ahome and the membership grows, an office space may need to be rented to accommodatenew members. The following are required:

. Clean and adequate kitchen space.

. Enough industrial blenders to serve all members quickly and efficiently (one for each flavor) and one or two large tea pots.

. Sufficient Herbal Concentrate tea and Formula 1 Nutritional Shake Mix.

. Purified water.

. Fresh fruit, if used in the shakes.

. Plenty of chairs and tables.

. Several 8 to 10 oz plastic cups.

. Clean restrooms.

. An area for registration.

. An area for sharing nutrition information.

. An area for a product display (when preparing products for consumption during meetings, there must be a display that allows participants to inspect the products that are being served.

. Posters of products, the Herbalife building, Herbalife Broadcast Network (HBN), companyfounder Mark Hughes and CEO Michael O. Johnson.

. If required, an overhead projector for information sharing and training.

. Do not use Herbalife banners or signs identifying the location as a Nutrition Club on theoutside of the club. Herbalife banners, signs and product displays should be used inside the club, however, they must not be visible from the outside.

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Recruiting Members

. The best way to make people aware of your club is by word of mouth.

. Invite neighbors, friends, and relatives for a nutritious meal.

. Ask them to bring their family and friends.

. Visit a nearby school and invite the mothers to join you for a nutritious breakfast.

. Ask family and friends to get you started.

. Give out your business cards.

. Invite people for seven days of nutritional talks.

. Invite people to the weekly training or monthly party.

When inviting people to your club, it is not acceptable to use the following:. Wall posters.. TV or radio advertising.. Newspaper, magazine or phone book advertising.. Outdoor banners.. Flyers.

Once a few people come and they experience the benefits of good nutrition, they will mostlikely spread the word and your club will start to grow. Many members ask their families andfriends to join the club. Please note that club operators are prohibited from paying forreferrals, whether directly or indirectly.

Roles and Responsibilities of Each Distributor and Support Team

In a small home club, many of the duties will be performed by the club owner and his or hersmall team. However, the same tasks need to be accomplished whether the club is in a homeor an office.

A. Club Owner/Herbalife Independent Distributor

Work hard to spread the word about the club and locate prospective new members. Overseethe smooth operation of the club and ensure that the members are comfortable and satisfied.

Ensure the kitchen is clean, all supplies are available and the guests do not have to wait fortheir tea and shake.

Mingle with the members to greet them, ask how they are doing, listen to them, and smile.

Conduct information sessions on nutrition and the products and coordinate the testimonialsof the members. Reinforce the unique quality of the products and their ability to improvenutrition and well-being.

Talk about the income opportunity and the ability for members to become Distributors andeventually open their own clubs.

B. Registration clerk

Sign in each member, collect the membership dues and direct the members to their seats.

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C. Product preparation support teamBe sure to operate the kitchen and prepare the tea and shakes according to sound hygienerules applicable to each country. For example, wash hands before preparing the teas andshakes and after use of the bathrooms; use purchased purified water for the HerbalifeConcentrate tea; and keep milk and yogurt refrigerated. Be sure the kitchen is properlystocked with the tea and Formula 1, in addition to milk, purified water and fruit, if used.Prepare the hot tea ahead of time so it is ready when the club opens. Have the shakes readyto be made and be sure there is enough of each flavor.

Tea preparation

Use 1/2 teaspoon per six to eight ounces of purified water.

Shake preparation

The shakes are prepared to order in the flavor desired by each member. The following shakepreparation techniques will help give your shakes variety.

. The first is with eight ounces of milk, two tablespoons of Formula 1 and any popular andeconomical fruit (optional). In Mexico and San Francisco, banana is popular.

. Use six ounces of yogurt, two ounces of purified water instead of milk, two tablespoons of Formula 1 and fruit (optional).

. Mix eight ounces of juice (orange, pineapple, etc.) and two tablespoons of Formula 1.

. Ice can also be added, if desired.

Product sales

A Distributor needs to respond to members who want to buy any of the products for homeuse. Be sure there is sufficient product on hand, and collect and record payment.

Testimonials

Testimonials are a key part of the success of Herbalife. The main reason for using the productsis to receive a health benefit. When a member tells others about their personal success withthe products, it encourages others to try the products and also reinforces their own belief inthe products. Testimonials are given when members are chatting with each other in the club.From time to time, members also share product results with the entire club. They also sharetestimonials at the Saturday training meeting and the monthly party.

To protect the Distributor from supporting any excessive or misleading claims the following sign should be posted in a convenient place:

Many people, including members of this club, feel better and experience generalwell-being after taking Herbalife products. However, their experiences are personalto them and there is no guarantee you will have the same or similar results. Herbalifeproducts are not intended to prevent, treat or cure medical conditions or illnessesand should not be taken for that purpose.

Nutrition information

Provide information on nutrition and health. Discuss the obesity crisis in the world and thehealth issues that occur due to poor nutrition and lifestyle behaviors that can lead to poorhealth.

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Step-by-Step Procedures When Members Enter the Club

Upon first entering the club, the member proceeds to the registration table, near theentrance, registers and pays the membership fee. It is important to register each person forhistorical data, follow up and accounting requirements. The registration form should bestandardized with the Herbalife name and logo (See Appendix I-Registration Card). Amembership card should be provided to each member for identification purposes andcontain the Herbalife name and logo (See Appendix II-Membership Card). Every personentering the club should pay the membership fee. The first three visits should be free in orderfor the member to recieve a product benefit. Members can pay in advance (See Appendix III-weekly-bi-weekly-monthly bonus record). A record of each day’s attendance should bemaintained. A simple notebook can be used. If possible, a computer file can be created withtheir name, address, sponsor, phone number and a record of any products they eventuallypurchase. The use of a computer is applicable for the larger office clubs where there are over100 members and a manual system may be insufficient. Members’ attendance records canalso be updated. This is a great follow-up tool for customer service.

After paying the fee, each member receives one Herbal Concentrate tea coupon and oneFormula 1 Nutritional Shake Mix coupon (See Appendix IV-Tea and Shake Coupon). Thesecoupons are used to receive their beverages. The member then proceeds to the serving areato get a hot Herbal Concentrate tea beverage. In some clubs, the tea is served to the membersat their table. After the tea is consumed, the member is served a Formula 1 Shake. The HerbalConcentrate tea and the Formula 1 should be on display so the members know what theyare consuming.

The Herbal Concentrate tea, Formula 1 and other adult products are only to be given tomembers who are at least 12 years of age. Children can be given the children’s products.

The atmosphere is one of relaxation, fun, simplicity and socialization. The members need tobe able to sit where they wish, talk with their neighbors, relax and be comfortable. After thetea is served, the shakes can be prepared and served according to the flavor desired by themember. At the appropriate time the member will hear or give testimonials, receive nutritioninformation, ask questions about nutrition, health, or products, and share local informationin a relaxed setting. Members usually stay for the entire time period, which can be threehours or more, or they can come and go as they wish.

There is no pressure to buy the products or to become a Distributor. The magic of theNutrition Club concept is the sharing of the results that members achieve from taking theproducts. The members begin to share their stories with others and they usually bring morepeople to the club. They will then ask to buy the products on their own. In fact, if a personwalks in for the first time and wants to buy the product, they should be encouraged to firstcome to the club and try the products before they buy them. The club owner wants to besure the person likes the products and they receive a nutritional benefit. The same is true forthose members who want to be Distributors and open their own club. Ideally, they shouldbe club members for a while, understand how the club works, and have a personal productstory.

After the club closes for the day, the home or office must be cleaned, made ready for the nextday, the product inventoried for re-supply and the membership attendance updated in thecomputer, if one is used.

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Saturday Training

Ideally, we recommend two meetings take place on every Saturday or other convenient day.

The first is a two-hour meeting of all local club owners and central club leaders. The centralclub leaders are the owners of the largest club and usually the first founder of the clubs inthe area. The purpose of the meeting is to share new ideas, discuss club performance anddiscuss any ethical and philosophical issues. The meeting provides for stronger relationshipbuilding among the club owners.

The second meeting is a business opportunity meeting and it follows the normal HerbalifeOpportunity Meeting (HOM) process. It is attended by members, Distributors and any oneelse who is invited. Company background information is provided so members and guestscan receive a better appreciation of the company. Attendees learn about the products, howto buy the products, and the business opportunity. They also hear testimonials. It is aninformation and recruiting opportunity.

Nutrition Information

Receiving nutrition information is an essential part of club membership. The main goal ofthe club is to provide nutritional products that improve the well-being of the members. It isimportant to explain the importance of good nutrition.

This information should be made very simple and presented in a fun way. Cartoons,drawings, and pictures can be used. The club owner should explain the world obesity crisis,and health issues related to poor nutrition. The importance of healthy skin should also bediscussed. The education should be low key and enjoyable, and there should be no statementof implication that consuming Herbalife products will prevent, treat or cure any healthcondition or illness.

Product Education

It is important to inform the members that the products are unique, of the highest quality,available only from Herbalife, and especially, that they work. The main purpose of the clubis to achieve the overall feeling of well-being that follows from taking nutritional products.These products are uniquely formulated to improve the lives of the members. The mainproducts are the Herbal Concentrate tea and Formula 1, but members might be interested ininformation about other products such as Formula 2 Multivitamin Complex, Xtra-Cal®,Herbal Aloe Drink and Herbalifeline® in addition to many of our other Targeted Nutritionand Outer Nutrition® products.

Retailing the Products

A secondary goal of the club is to have members buy the products for their home use and forthe use of their family. Ideally, this should occur after they have received a product benefitand developed a personal story. Product should be on display (inside the club but not visible

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from the street) and available for purchase. Products sold inside the club can only bepurchased by members. The only products that can be sold in a nutrition club are authorizedHerbalife products.

It is important not to push the products on club members. Ideally, they will ask to buy theproducts on their own because they want their family and friends to have similar healthbenefits. Members will see others buying the products for their families and they might beencouraged to do the same.

Recruiting New Distributors

Another goal of the Nutrition Club is to develop new Herbalife Independent Distributors.After a person is a member for a while and receives a positive product benefit, he or she willoften ask about the business opportunity. It is also important during the informationsessions and the Saturday training to explain the availability of the business opportunity. Thebusiness opportunity and the Marketing Plan should be explained in a simple way.

If the member wishes to open his or her own club, ideally, the person should fullyunderstand how the club operates and the philosophy of Nutrition Clubs. After he or shebecomes a club owner/Distributor, it is important to provide a training program and spendsufficient time in getting him or her started. The member should feel that they are supportedby their Sponsor and part of a great team.

Planning the Monthly Party

The party is attended by members, Distributors and guests. It is not for the general public.The purpose of the party is to have a good time, but it is also to thank the members for theirsupport, to hear testimonials, to sign up new Distributors and new members. The party canbe held in the central club or in a larger facility and should be a location that is convenientfor most of the members. The meeting place needs to be set up with a registration area,sufficient chairs, a place to contain the products, a head table for any guests, microphones,video equipment, and a kitchen for tea and shake preparation.

Jobs and responsibilities need to be assigned before hand at a party planning meeting. Anagenda should be prepared and all roles assigned. Product prizes can be given away with araffle. A video of company founder Mark Hughes or CEO Michael O. Johnson can be shownto educate guests about Herbalife. Future events and local club activities can also bepromoted by video. People can be asked to tell their product success story. Distributors whoachieve new levels of Distributorship can be recognized by receiving their new pins. Thereshould be music and dancing and a lot of fun. The party is to reward the members for theirloyalty and to provide the Distributors with recognition for their hard work. The atmosphereshould be one of fun, enjoyment, laughter and friendship. The results should be a specialfeeling for Herbalife and an understanding that Herbalife is fun, simple and magical, with agoal of bringing healthy nutrition to the world.

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Operating Guidelines

A. Nutrition Club model and traditional model

Nutrition Clubs are another way to build a Distributor’s business. A Distributor can developclubs and continue working with the traditional Herbalife business model of HerbalifeOpportunity Meetings (HOMs), Success Training Seminars (STSs), advertising, flyers, pulltabs, the Internet, etc. The goal of a Nutrition Club is to bring healthy nutrition to peoplewho cannot afford a monthly program and thus the typical Nutritional Club member will bea different customer or incremental business. We have only one business, one corporatepolicy, one set of products per country, one Marketing Plan, but many different ways ofbuilding a business. The Nutrition Club should be viewed as a new tool to build a business.It is not a substitute for Herbalife’s traditional business model and may not be applicable toevery country or Distributor. The goal of Herbalife is to meet the needs of all the people inthe world, and therefore we should adjust our business-building model to fit the individualculture, economic, educational and nutritional needs of each country. One size does not fitall and we need to look for additional methods of serving all the people in the world. TheNutrition Club and Herbalife’s traditional business model are just two methods or businesstools and are not in competition with each other. Distributors can use one model or bothmodels to build their Herbalife business.

B. Club membership

It is possible that a current Herbalife customer might join a Nutrition Club. Attending a clubis basically a daily decision. A person can attend the club once and stop, or can attend as longas he or she wishes. There is no ownership of members by a club, and no obligation toattend. A person can join many clubs but, this is not likely. A club member can become aDistributor and decide to develop their business by opening their own club or by using thetraditional model or both. Club members are free to attend one or many clubs and purchaseproducts from any qualified Distributor.

C. Licensees and permits

It is mandatory to contact all local, state and federal agencies to determine what types oflicensees are required to operate a Nutrition Club. Often it is necessary to pay for and displayin the club business, tax and health licenses. Each city, county, state and country may haveits own unique requirements. These licenses must be renewed according to statue and all feespaid on time. The club must cooperate with any health inspections and must implement anysuggested changes in a timely fashion. It is important to check with the appropriate agenciesfrom time to time for any changes to license requirements or for new regulations.

D. Territories

There are no territory assignments for clubs. Nutrition Clubs can be opened anywhere aDistributor chooses to open a club. Of course, opening too close to a current club may makeit more difficult to attract new club members. However, a Distributor can open a home oroffice club anywhere it is legally allowed.

E. Monthly party

Once a month a party is held to reward members, recognize Distributors, attract newmembers, and promote the Herbalife business. In order to be most effective all the club

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owners in an area need to work together to have a successful party. Therefore, all the clubowners need to support each other and share their successful techniques and ideas. Ofcourse, club owners are not required to have a party or join with other club owners inplanning, organizing, and conducting the party.

F. Corporate policies

As with all Herbalife Independent Distributors, all corporate policies must be followed. If aNutrition Club owner operates outside the corporate policy they will not only damage theirown business, but will damage all Distributors. The same corporate policy will be enforcedequally with all Distributors. As with all other Distributor business methods, Herbalife doesnot approve, endorse, authorize, guarantee or assume any other obligation with regard toDistributor-operated Nutrition Clubs.

G. Retailing

Retailing the products in a Nutrition Club follows the same corporate rules and regulations.Herbalife suggests retail prices, but as in all other contexts, individual pricing decisions areleft to the Distributor’s discretion. There is no difference in accounting for volume or royaltypoints whether sales are made through Nutrition Clubs or the traditional model. The dailymembership fees go toward the expenses of operating the club including, rent, overhead, anystaff, product costs, licenses if required, in addition to any traditional business expensesassociated with the clubs and a profit.

All products approved for the country are available for sale to any club member. Tablets maynot be sold individually, and must instead be sold by the bottle (e.g., size as advertised in thecatalog and as approved by local regulators). Only Herbalife authorized products are to besold in a Nutrition Club.

All opened products sold in the Nutrition Club must be consumed on club premises sincethis is the essence of the Nutrition Club. Opened products cannot be removed from the club.This is a key differentiation from operating a retail location, which is not allowed.

H. Recruiting

There is no difference in recruiting rules and regulations. If a club member wishes to becomea Distributor, he or she must purchase an International Business Pack (IBP) and complete thesame application form any potential Herbalife Independent Distributor would be required tofill out. All the rules and regulations for recruiting Distributors who wish to operate aNutrition Club are the same as for any Herbalife Independent Distributor.

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Whether a Distributor employs the Nutrition Club model or the traditional model allcorporate rules and regulations must be followed. Distributors choosing to operate aNutrition Club must also follow the rules included in this manual. All Distributors operateunder the same Marketing Plan, sell the same products available in their country, followall country laws, and have all the same rights, duties and responsibilities. The NutritionClub model and traditional model should be viewed as two methods to build a business ordifferent tools to reach different markets. Herbalife Distributors use marketing methodsthat are adapted to the needs of the people in each country, always operating incompliance with corporate policies.

Operating a Nutrition Club furthers the vision of Herbalife founder Mark Hughes to bringgood nutrition to the entire world. Nutrition Clubs can play a vital role in fulfillingHerbalife’s corporate mission of “Changing People’s Lives.”

Summary

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Tools for a Successful Club

The following pages are various pieces of collateral you’ll need to efficientlymanage your Herbalife Nutrition Club. All pages can be photocopied. Theinvitations will have to be “duplexed” – photocopied on two sides.

Membership Registration Cards

Membership Identification Cards

Bonus Cards

Shake Tickets

Tea Tickets

Invitations

Disclaimer Sign

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Membership Number:

Last Name: First Name: Date:

Telephone Number: ( )

Birthday: (Month) (Day)

Is this your first visit to a Nutrition Club?

Who influenced your decision to come today?

Supervisor who pays:

Interviewed by:

MEMBERSHIP REGISTRATION CARD

“Where Friends of Good Nutrition Meet Every Day”

Membership Number:

Last Name: First Name: Date:

Telephone Number: ( )

Birthday: (Month) (Day)

Is this your first visit to a Nutrition Club?

Who influenced your decision to come today?

Supervisor who pays:

Interviewed by:

MEMBERSHIP REGISTRATION CARD


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Name

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Member Since

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This membershipis personal and notinterchangeable.

Signature Club Signature


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WeeklyBonus

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Name

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WeeklyBonus


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Name

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SHAKE“Where Friends of Good

Nutrition Meet Every Day”

































































































































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TEA“Where Friends of GoodNutrition Meet Every Day”

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“Where Friends of GoodNutrition Meet Every Day”






















































































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We are very pleased to invite youto be a part of our club and find out the benefits

that we offer:

. Tasting our shakes and teas

. Family health information

. Personal development

. Cultural and social activities

. Nutrition information

This pass is valid for three days free admission

CUT ON DOTTED LINES

FOLDHERE

FOLDHERE

Personal Invitation

INVITATIONS


that we offer:







Personal Invitation


that we offer:







Personal Invitation


that we offer:







Personal Invitation

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CUT ON DOTTED LINES

FOLDHERE

FOLDHERE

Location of club:

Hours of operation:

Location of club:

Hours of operation:

Location of club:

Hours of operation:

Location of club:

Hours of operation:

“Where Friends of Good Nutrition Meet Every Day” “Where Friends of Good Nutrition Meet Every Day”

“Where Friends of Good Nutrition Meet Every Day” “Where Friends of Good Nutrition Meet EveryDay”

Many people, including

members of this club, feel

better and experience general

well-being after taking Herbalife

products. However, their

experiences are personal to

them and there is no guarantee

you will have the same or similar

results. Herbalife products are

not intended to prevent, treat

or cure medical conditions or

illnesses and should not be

taken for that purpose.


© 2005 Herbalife International of America, Inc. All rights reserved. Printed in the U.S.A. 6741-US-00 05/05


Documents

Making the world healthier. · Posters of products, the Herbalife building, Herbalife Broadcast Network (HBN), company. founder Mark Hughes and CEO Michael O. Johnson.. If required,