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Overview of Multi-Level Marketing
In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor or franchisee and are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the business. This is like many franchise companies where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager.
In a legitimate MLM company, commissions are earned only on sales of the company's products or services. No money may be earned from recruiting alone ("sign-up fees"). One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from money received from new recruits. If participants are paid primarily from money received from new recruits, then the company is an illegal pyramid or Ponzi scheme.
Some less legitimate companies produce revenues primarily by attracting new participants with the hope of reward and selling them products or services of dubious value at inflated prices, as opposed to selling products or services consumers would purchase at the given price without regard to the opportunity attached. One must evaluate the products or services and determine if a significant percentage of consumers would continue to purchase them if the participants do not make money from the underlying opportunity. If the products or services have dubious value or if the participants must purchase excessive quantities without reasonable intent to use or resell said items, then the company is likely a thinly veiled illegal pyramid scheme.
Multi-level marketing has a recognized image problem due to the fact that it is often difficult to distinguish legitimate MLMs from illegal scams such as pyramid or Ponzi schemes. MLM businesses operate legitimately in the United States in all 50 states and in more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid schemes try to present themselves as legitimate MLM businesses.
Some Personal Experiences with Multi-Level Marketing
I became an Amway distributor more years ago than I care to admit. At the time, I was a newly-separated single parent going through a messy divorce. A neighbor invited me to a meeting, so I could help him "evaluate" this business opportunity since he "respected my judgment." He never got involved, but I did. More...
Amway (Quixtar), in the Bill Britt Organization
My name is Penny. I was an active Amway distributor for 4 years. I live in Pennsylvania and was part of the Britt Worldwide AMO (Bill Britt System). I am currently inactive.
And this is my story.
The purpose of telling my story is to help those who have been hurt in any way by being in an AMO (Amway Motivational Organization). It is also to help people make an educated decision before they become distributors. More...
If you're like many people who visit mlmsurvivor.com, you (or a loved one) just attended a presentation for a business opportunity that just doesn't smell quite right. You want to do a little research, so you opened a search engine and typed in "Trek Alliance" to see what you could find. You're in luck. In addition to the sunshine and honey on the official site, you've found a source for information from people who have been inside the system and made an informed decision after months of exposure to the people and business practices of Trek Alliance. More...
Hello everyone, I had the opportunity to spend some time in the Equinox organization a year ago, and have seen several MLM companies since then. I didn't work the latter ones like I did with Equinox. My friend Sean, who was also involved in Equinox, and I made some observations about MLM in general. I hope this helps. More...