Is Your MLM/Multilevel
Marketing Business
Legitimate?
By: Ted Riley
INTRODUCTION
A legitimate multilevel
marketing business is a
great way to get a
legitimate residual income
that could change your life
from the 9-5 rut to a life
of financial freedom. But
there are many pitfalls out
there that will make
achieving this difficult.
(Or even illegal depending
on the MLM you decide to
sign up with.)
There are several ways for a
person to ascertain whether
or not a multi level
marketing company is or is
not a legitimate MLM. There
are a few things that can be
checked to make sure you are
not going to get involved in
something that breaks the
fifty or so statutes that
govern this type of company.
TYPE OF PRODUCT
One of the ways to separate
the legitimate MLM from the
scams is by looking at the
type of product that the
multilevel marketing home
business will provide. Many
multilevel marketing home
business ideas work on the
principle that they will be
charging way too much for
the service or product they
will provide. So check that
the company is charging a
fair price for their
product. Also check that you
can become involved with the
company without having to
pay for a huge amount of
inventory. This is also the
way that many scams operate,
on the idea of selling to
people who think that they
will be selling in large
volume from the get go and
not caring what happens to
the investor after that. If
you have to invest thousands
in a multilevel marketing
idea then it is best to head
in the other direction fast.
It is best to ensure that
you can be a sales
representative with little
or no more than the purchase
of a sales kit or
demonstration materials.
COMPENSATION PLAN
Looking at the compensation
plans of your prospective
multilevel marketing company
is one fo the best
indicators as to whether or
not it is a scam. Check
whether the compensation
plan pays bonuses or
commissions purely on the
basis of recruiting more
people into the company. If
it does, it is illegal. It
is also not a legitimate MLM
if it pays headhunting fees
as this is also illegal.
A home business idea such as
a legitimate MLM is great
because of the relatively
low financial risk involved.
This may not ring true to
the work at home business
ideas you have seen but the
good multi level marketing
companies will buy back the
sales kit and any
re-sellable materials from
any of those who wish to
cancel. This is actually
required by law so have a
look at this before handing
any money over.
PERSONAL USE OF GOODS
The FTC also rejects the
idea of personal use of the
goods or services that you
will be providing as a
legitimate retail sale. But
the debate continues over
whether or not the sales to
non-participants and
purchases in reasonable
amounts are retail. There
are big grey areas in the
world of multilevel
marketing so keep abreast of
the laws and statutes in
your state.
TRAINING
Probably the single best way
to ascertain whether or not
a company is a legitimate
MLM is to look at the
training that will be
provided in the way of sales
and recruitment. Any company
worth its salt will want to
have people who know what
they are doing. So they will
provide training to those
who have little or no idea
how to sell or market a
product.
Also, having a clear idea as
to what you will be doing is
important in choosing a work
at home multilevel marketing
business. It is astounding
to see how many companies do
not stipulate whether or not
you will be in a selling,
supervising, distributing or
soliciting role which is
required under federal law.
Copyright 2004 Android
Technologies, Inc.
Ted Riley is an entrepreneur
and educator interested in
teaching others on the
benefits and rewards of
having your own home
business. He writes
frequently for the web site
"A Grandmother's Business",
a web site dedicated to the
needs and requirements of
the mature woman
entrepreneur and job-seeker.
To see more articles like
this visit:
http://www.grandmabiz.com/
Ted Riley is the managing
editor for
Web2Voice.com. Web2Voice
is dedicated to bringing
consumers and small business
entrepreneurs useful
articles that are
thought-provoking, timely,
and informative
