Written by Chris Walton, JDOne expert valued it at $352,000. The other valued it at $26,000. Same Scentsy distributorship. Same date. A fourteenfold spread. The wife had built a massive downline — approximately 3,700 consultants, a SuperStar Director rank — generating substantial commission income. The husband’s expert said the business was worth $352,000. The wife’s expert said $26,000. The trial court didn’t split the difference. It adopted the $26,000 figure — entirely rejecting the higher valuation. The Ohio Court of Appeals affirmed.
Naiman v. Naiman (2025-Ohio-1589, Ohio Ct. App. May 5, 2025) is the clearest judicial statement to date on what an MLM distributorship is actually worth in a divorce: probably very little, because the structural reality of the business model makes almost all of the value non-transferable. The expert who understood that won. The expert who treated the downline revenue as a transferable asset lost by a factor of thirteen.
The wife operated a Scentsy distributorship at the SuperStar Director level — one of the highest ranks in the Scentsy compensation structure. Her downline included roughly 3,700 consultants, and the commission income flowing from that network was substantial. On the surface, this looked like a real business with real revenue.
The husband’s expert valued it at $352,000, presumably treating the downline revenue stream as a going-concern asset that could be capitalized into enterprise value. The wife’s expert valued it at $26,000, focusing on the severe transferability restrictions inherent in Scentsy’s distributor agreement and the dominant role of the wife’s personal efforts in sustaining the network.
The trial court sided entirely with the wife’s expert. The appellate court affirmed. The reasoning goes to the fundamental nature of an MLM distributorship: the “business” the husband’s expert was trying to value doesn’t exist as an independent, transferable entity. It exists as a contractual position in someone else’s compensation structure, sustained by one person’s personal effort. An expert who ignores those constraints isn’t valuing the business as it actually operates — he’s valuing a hypothetical business that doesn’t exist.
The Naiman result reflects three structural features of MLM distributorships that make them fundamentally different from traditional closely held businesses:
The “business” is a contractual position, not an entity with transferable assets. A Scentsy SuperStar Director doesn’t own the product, the brand, the manufacturing, the logistics, or the customer platform. She owns a rank within Scentsy’s compensation structure — a rank that exists at Scentsy’s discretion under the terms of a distributor agreement that Scentsy can modify or terminate. The distributor agreement’s restrictions on transferability are not a minor detail. They are the defining constraint on value. If the position can’t be freely sold to a willing buyer at a negotiated price, the “fair market value” is limited to whatever value the agreement permits the holder to extract through a transfer — which may be very little.
The downline’s productivity depends on the upline leader’s personal engagement. A network of 3,700 consultants sounds like a substantial enterprise asset. But those consultants are independent operators who can quit at any time, and their ongoing activity is typically sustained by the upline leader’s coaching, motivation, recognition events, and personal relationship management. If the wife stops actively working the network, the downline atrophies. Consultants go inactive, stop ordering product, and eventually drop out. The commission stream erodes — often within months. An income stream that evaporates when the owner stops working is personal goodwill by definition.
The revenue the owner “earns” is overwhelmingly a function of personal effort. In a traditional business, the owner’s personal contribution is one input among many: the brand, the location, the staff, the systems, and the customer relationships all contribute independently. In an MLM, the owner is the business. The wife’s personal sales, her recruiting activity, her leadership of the downline, and her relationship management are not contributions to an independent enterprise — they are the enterprise. Without her specific involvement, the revenue doesn’t just decline. The structure that generates it ceases to function.
The husband’s expert valued the Scentsy distributorship at $352,000 — and the court gave that number zero weight. The likely failure points, based on the appellate holding and standard MLM valuation challenges:
Treating downline revenue as transferable without addressing the distributor agreement’s restrictions. If the Scentsy agreement limits or prohibits free transfer of the position, the income approach is capitalizing a stream the buyer can’t acquire. The expert must demonstrate that a willing buyer could actually purchase this position and receive the associated commission stream — not assume it.
Failing to separate personal goodwill from enterprise value. A SuperStar Director’s 3,700-consultant downline is a product of years of personal networking, recruiting, coaching, and relationship management. If the expert didn’t isolate the portion of the revenue that would continue without the wife’s involvement, the valuation included personal goodwill that isn’t transferable and — in jurisdictions that distinguish the two — isn’t marital property.
Ignoring the attrition risk. MLM downlines have high churn rates. Consultants go inactive, stop ordering, and eventually terminate. The upline leader’s ongoing effort is what replaces lost consultants and motivates existing ones. A valuation that capitalizes the current revenue stream without modeling attrition under a departure or reduced-activity scenario overstates the going-concern value.
The wife’s expert, by contrast, produced a $26,000 figure that reflected the structural reality: after accounting for transferability restrictions, personal goodwill, and attrition risk, the enterprise value of the position — the value that could be divided as marital property — was minimal. The court agreed.
If you’re retaining a valuation expert for an MLM distributorship, the engagement needs to address the unique structural features that Naiman highlights:
Start with the distributor agreement. Is the position transferable? Under what conditions? Does the MLM company have approval rights over any transfer? Can the company modify the compensation plan unilaterally? If the position can’t be sold freely, the enterprise value may be close to zero regardless of how much revenue it currently generates.
Analyze the downline independently of the owner. Pull the network data: active consultant count, churn rate, average tenure, revenue concentration in the top performers, and the percentage of downstream revenue that comes from consultants the owner personally manages versus those who are multiple levels removed. A deep, self-sustaining network with low churn is more transferable than a shallow network dependent on the owner’s daily involvement.
Disaggregate the revenue streams. Personal product sales (stop when the owner stops), first-level commissions (dependent on personally recruited consultants who may be personally loyal), and deep-level commissions (potentially more transferable if the sub-networks are self-sustaining). Each stream has a different risk profile and a different likelihood of surviving a change in ownership or reduced involvement.
Model the attrition scenario. What happens to the downline revenue if the owner reduces involvement by 50%? By 100%? Over what time horizon does the commission stream erode? MLM companies often publish rank-maintenance requirements and historical consultant retention data. The expert should model the revenue decay curve under a departure scenario and value the business based on what would remain — not what currently exists under full engagement.
Not every MLM distributorship is worth $26,000. Some have genuine enterprise characteristics:
A distributor agreement that permits free transfer of the position (and the associated compensation) to a willing buyer creates a market — and market value. A mature, deep downline with low churn and distributed revenue that has continued producing even during periods when the owner reduced involvement demonstrates self-sustainability. A downline with its own sub-leaders who independently recruit, train, and motivate their networks reduces the dependence on any single upline leader. And a track record of successful position transfers within the MLM company provides comparable transaction data the expert can use.
If these characteristics are present, the MLM distributorship may have meaningful enterprise value that should be included in the marital estate. But the expert must demonstrate each one with evidence — not assume transferability, self-sustainability, or independence. Naiman shows what happens when the expert assumes the revenue is transferable without doing that work: the court rejects the valuation entirely.
The trial court in Naiman didn’t split the difference between $352,000 and $26,000. It adopted $26,000 — the lower figure, entirely — because the higher valuation failed to account for the structural reality of an MLM distributorship. A Scentsy SuperStar Director with 3,700 consultants in her downline generated substantial income, but that income was personal — driven by her effort, sustained by her engagement, and non-transferable under the distributor agreement’s restrictions. The expert who understood that produced a number the court could credit. The expert who treated the downline as a transferable asset produced a number the court rejected.
For family law attorneys: if your case involves an MLM distributorship, the valuation question isn’t “what does the business earn?” It’s “what would a buyer pay for this position, given the transferability restrictions, the personal goodwill dominance, and the attrition risk?” After Naiman, the answer may be very little — and the court that reaches that conclusion will be affirmed.
If you’re handling a divorce involving an MLM distributorship and need to determine what portion of the value — if any — is transferable enterprise versus personal goodwill, happy to talk through the approach. The distributor agreement and the downline data usually reveal the answer before the formal valuation begins.
Schedule a free consultation meeting to discuss your valuation needs.
