Is Your MLM / Network Marketing Company Failing? Here’s Why.

Is Your MLM / Network Marketing Company Failing? Here’s Why.Who or what is generally responsible for the failure of the majority of MLM companies?

To answer this question, it is best to look at the two phases of MLM companies: start up and maturity.

Although many things can go wrong in a startup direct selling company, two factors are repeated with frequency for the failure to launch. The first factor is inability to recruit. MLM is a business based on recruiting a successful sales force to market products. (Obviously, there are many important factors ranging from logistics to personnel to technology to quality control to distribution… and all these can go wrong as well.) It should be noted that the need for capital is in inverse proportion to the ability to recruit. A MLM company that can recruit is often positioned for fast growth and may even become a cash cow. If the company does not have that native ability, it needs sufficient capital to Continue reading

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FTC and Direct Selling Come to the Table as Stakeholders: H.R. 3409

And now...an opportunity for the FTC and direct selling Industry to work together for certainty that they both deserve. A bi-partisan bill, H.R. 3409, the Anti-Pyramid Promotional Scheme Act of 2017.by Jeffrey A Babener
(First Published in World of Direct Selling)

Everything dies baby, that’s a fact.

But maybe everything that dies someday comes back.

Bruce Springsteen, Atlantic City

By Jeff Babener, Copyright 2017

What a difference a year makes. In a well-received presentation to the November, 2017 DSA Regulatory Conference, FTC Acting Chairperson, Maureen Ohlhausen, struck a totally different tone in regard to forward looking FTC enforcement policy on direct selling, contrasted with the October, 2016 presentation of former FTC Chairperson, Edith Ramirez.

The contrasting messages:

2016: Ramirez: We are the regulator, new rules to live by, just live with it, it’s our way or the highway…

2017: Ohlhausen: We are all in this together…we are all stakeholders…let’s work together for the benefit of both, fostering the success of an entrepreneurial  and small business direct selling industry, and protecting the security of consumers.

Came floating on a lemon leaf

Flying in on a jasmine wind

The Band’s Visit, Broadway Show, 2017

What happened? Why the rapprochement? Why the goodwill? Will it take hold? Well, it’s a guess, but there are many factors: Continue reading

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How have raiding rules evolved in direct selling contracts and policies and procedures? New Video!

Some companies state that you can’t recruit people that you didn’t personally sponsor. If you personally sponsor a friend or family member then why can’t you recruit them to join you at your new company?
The short answer is that company policies have evolved over the years resulting from a combination of increased raiding by distributors who switch companies, on the one hand, and secondly, direct selling companies have become more rigid in trying to retain their sales force, sometimes with good reason, and sometimes appearing to be an “overreach.”
Leading direct selling companies, for instance, around 20 years ago, maintained a policy that required consultants to only offer the opportunity to people that they personally sponsored. That policy was common 20 years ago.
Over time that policy changed. With the increased ease of communication due to technology, many companies asked that consultants not participate in raiding anyone in their organization while they were active with a company. The policy morphed again to require consultants not to sponsor anyone in a new opportunity except for those that they personally sponsored upon leaving for a new company. Then the policy changed again to where companies required that consultants who left a company not sponsor anyone into the new company. In a few instances, some companies have provided non-compete agreements, which aren’t considered fair and not Continue reading

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Search for Certainty in Direct Selling… A Legal and Business Rationale for H.R. 3409

H.R. 3409By Jeffrey Babener, © 2017/2018
(First Published in World of Direct Selling)

Executive Summary: The legal environment and the accepted business model of leading direct selling companies has been relatively stable for 50 years. That equilibrium was upset by the regulatory proposals of a former FTC commissioner to upend that environment with new arbitrary rules that lack a basis in case authority or legislation…creating confusion in today’s direct selling market place. H.R. 3409, a mirror of many established state anti-pyramid statutes and the language of long adopted case authority, is intended to return predictability and stability and certainty to that market.

 

Like a poem poorly written

We are verses out of rhythm

Couplets out of rhyme

In syncopated time

Paul Simon, The Dangling Conversation

 

How We Got Here …Talking Past One Another

 

Creating Uncertainty and Confusion in an Established Market

 

He was born on third, but thought he hit a triple.

Continue reading

Posted in Consulting, Consumer Protection, Direct Selling, For MLM Executives, FTC, Headlines, Home-Based Business, Law Cases, Legal, MLM, MLM Articles, MLM Attorney, MLM Companies, MLM in the News, Network Marketing, Personal Use, SEC, Securities and Exchange Commission | Tagged , , , , , , , | Comments Off on Search for Certainty in Direct Selling… A Legal and Business Rationale for H.R. 3409

How Many Distributors Fail in Network Marketing?

How Many Distributors Fail in Network Marketing?

What does failing mean to you?

What is the meaning of failure? If a distributor only makes a few hundred dollars a month, does that mean they have “failed?” What would that make the distributor who doesn’t make any money from network marketing at all? Or the one who loses money?

It’s difficult, in a sense, to lose money as a network marketing distributor in today’s world. This is due to the policy changes in direct selling companies. Most network marketing companies offer a full refund (or at least a 90% refund) to distributors who have changed their minds and want to return their starter kits.

In addition to policy changes within the company, the majority of leading MLM companies offer earnings disclosures on their websites which disclose the level of earnings and average earnings of all active distributors. Some consultants join a direct selling company to simply become discount buyers of the company’s products. These sorts of independent business owners don’t actually make money with their distributorship since they aren’t pursuing the opportunity to begin with. Continue reading

Posted in Capitalization, Commission, Compensation Plan, Consulting, Direct Selling, Distributor Education, Distributors, Home-Based Business, Just for Fun, Marketing, MLM, MLM Articles, Network Marketing, Part Time, Party Plan, Recruiting, Sales Tools / Kits, Sales/Selling, Startup, Success, Videos | Comments Off on How Many Distributors Fail in Network Marketing?

Incentivize to Increase Company Sales in Network Marketing

Incentivize to Increase Company Sales in Network MarketingIncentivize to increase sales across your business. There are vastly different types of incentive programs.

The most assumed and expected incentives are monetary and come in the form of bonuses and commissions. Since direct selling companies are trying to incentivize different types of consultant behavior, the compensation plans of MLM companies are often complex and multi-task to provide incentives for retail selling, preferred recurring customers, building wide, building deep, Continue reading

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Legally, are all Compensation Plans Viewed the Same?

Legally, are all Compensation Plans Viewed the Same?Being in the MLM law business for over 30 years, we’ve been asked this question countless times. Direct selling business owners – especially MLM startup company owners – want to know which compensation plan structure will be the most supportive in the eyes of federal regulators. The answer is somewhat simpler than you’d imagine.

Whether your compensation plan is binary, matrix or an Australia 2-Up, and regardless whether your products are financial services, educational, health products, or vitamins, the answer is: The same legal principals apply no matter what your compensation plan is and no matter what your product is. Continue reading

Posted in Compensation Plan, Compliance Guidelines, Consultants, Consumer Protection, Direct Selling, Distributor Education, For MLM Executives, Home-Based Business, Legal, MLM, MLM Articles, MLM Attorney, MLM Companies, MLM Startup, Network Marketing, Party Plan, Personal Use, Products, Pyramid, Startup, Videos | Tagged , , , , , , , , , , | Comments Off on Legally, are all Compensation Plans Viewed the Same?

The Thorny Issues of “Personal Use” in Direct Selling

The Thorny Issues of “Personal Use” in Direct SellingThere exists tension between the direct sales industry and industry regulators as to the role of “personal use” of products and services by distributors of MLM companies. The broad and ambiguous language in pyramid legislation has contributed to the problem. Pyramid statutes have always prohibited the payment of commissions in a multilevel program unless based upon the “sale of goods or services.” To whom must those goods or services be sold in order to avoid being a pyramid? The distributor, the end-consumer, or both?

Almost all major direct selling companies have defined “retail sales” to include sales to non-distributors, as well as sales to distributors for actual use or consumption (distributors like to use the products they sell too). Many regulatory officials, however, have maintained that the “mark of legitimacy” is found in the programs where primary sales revenue comes from sales to non-distributors, i.e. consumers. Continue reading

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6 Direct Selling Companies with Humble Beginnings

Rich DeVos and Jay Van Andel mixed their first product, LOC Cleanser, in their bathtubs when they began their business.Aerodynamically, the bumble bee shouldn’t

be able to fly, but the bumble bee doesn’t

know it so it goes on flying anyway.

Mary Kay Ash

Humble Beginnings

Can you become the “million-dollar earner?” Don’t sell yourself short just because you’re starting fresh in the multilevel marketing business. History tells us that, in America, many billion-dollar businesses – including MLM – have been started on a shoestring budget in garages and basements. Cases in point: Bill Gates of Microsoft, Phil Knight of Nike shoes, and Steve Jobs of Apple Computer. There are countless inspiring network marketing success stories about individuals whose companies or distributorships had very humble beginnings, such as:

1) The Bathtub?

Continue reading

Posted in Avon, Consultants, Direct Selling, For MLM Executives, Just for Fun, MLM, MLM Articles, MLM Companies, MLM History, MLM Startup, Network Marketing, Party Plan, Sales/Selling, Startup, Success, Success Stories, Videos | Tagged , , , , , , , , , , , , , , , , | Comments Off on 6 Direct Selling Companies with Humble Beginnings