For a full list of videos on the multilevel marketing industry, visit the Video Library.

Visit us at www.mlmlegal.com to learn more.

A Conversation with Jeff Babener Video Series: Know of an illegal pyramid scheme operating as a legitimate/legal MLM? Where do you go to report it? Are there regulatory agencies that accept reports of pyramid schemes? Trade associations, like the DSA, can help you determine if a company is legal or not. Check the Better Business Bureau. Do MLM companies have to register their company as a legal operation? Talk to other distributors in the company and in the industry. Does the company have competent legal representation? A startup without legal representation is not looking after their legal affairs. Watch the video.

For more information, visit mlmlegal.com.

Visit us at www.mlmlegal.com to learn more.

Multi-level marketing is a diverse and varied industry, employing many different structures and methods of selling.

Although there may be significant differences in how multi-level marketers sell their products or services, core consumer protection principles are applicable to every member of the industry. The Commission staff offers this non-binding guidance to assist multi-level marketers in applying those core principles to their business practices.

The FTC offers 18 common questions about MLM and running a direct selling business.

1. What is direct selling? What is multi-level marketing?

Direct selling is a blanket term that encompasses a variety of business forms premised on person-to-person selling in locations other than a retail establishment, such as social media platforms or the home of the salesperson or prospective customer.

Multi-level marketing is one form of direct selling. Generally, a multi-level marketer (MLM) distributes products or services through a network of salespeople who are not employees of the company and do not receive a salary or wage. Instead, members of the company’s salesforce usually are treated as independent contractors, who may earn income depending on their own revenues and expenses. Typically, the company does not directly recruit its salesforce, but relies upon its existing salespeople to recruit additional salespeople, which creates multiple levels of “distributors” or “participants” organized in “downlines.” A participant’s “downline” is the network of his or her recruits, and recruits of those recruits, and so on.

2. Under Section 5 of the FTC Act, what is an MLM with an unlawful compensation structure, which is sometimes called a pyramid scheme?

The most widely-cited description of an unlawful MLM structure appears in the FTC’s Koscot decision, which observed that such enterprises are “characterized by the payment by participants of money to the company in return for which they receive (1) the right to sell a product and (2) the right to receive in return for recruiting other participants into the program rewards which are unrelated to the sale of the product to ultimate users.” In re Koscot Interplanetary, Inc., 86 F.T.C. 1106, 1181 (1975).1

1 This document is focused specifically on MLM practices that may violate the FTC Act. It does not address other types of unlawful structures that do not involve the right to sell a product or service, such as chain referral schemes (sometimes called “chain letters”) and Ponzi schemes.

3. How do MLMs with unfair or deceptive compensation structures harm consumers?

READ MORE.

Visit us at www.mlmlegal.com to learn more.

With the costs of the compensation plan, attorney’s fees, software, hiring staff, recruiting consultants, creating/designing products, the list goes on… starting a direct selling company can be expensive and difficult! We understand how complex it is to tackle a MLM startup. That’s why we offer the Starting and Running the Successful MLM Company Conference.

We offer MLM entrepreneurs a way to network with experts from all sectors of the direct selling industry: legal, recruiting, technology/software, compensation plans, funding, generate leads, website and back office, business model, and more – all in one place, for one affordable price ($195 for the first attendee, each additional is $150).

So, if you’re starting a MLM, network marketing, direct selling company, or just thinking about starting a MLM company, come join us at the MLM Startup Event/Seminar in Las Vegas! The Hosts are Business Consultant and MLM Legal Expert, Jeff Babener, and MLM Compensation Plan Consultant, Mike Sheffield.

Our next conference takes place October 25 & 26, 2018 in Las Vegas (who doesn’t want a good reason to go to Las Vegas?). We even offer the Innovation Campaign for those who are on an even tighter budget.

Visit our website, www.mlmlegal.com, or our conference page to learn more and to see the full line-up of speakers. Read testimonials and watch our invitation videos. Anyone who is starting or running a MLM, network marketing, direct selling, party plan company is welcome to attend.

Call us at 800-231-2162 to register.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

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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 hire the talent to make recruiting happen. And in the absence of the recruitment asset, a company should plan on a much longer trajectory to profitability.

And the recruitment challenge dovetails with the second major reason that companies fail at the onset: lack of adequate capital or funding. Many companies start the business without adequate capital to allow for a one or two year run to become profitable. In fact, many companies assume that they will be profitable within months or that they will not need capital for growth. The lack of buffer capital to survive the early unprofitable days of a company is a prescription for early failure.

As to mature companies – who’ve been around for years and years but find themselves on a downward spiral, the key answer is to continuously innovate and create ways to bond with both distributors and customers. Companies that can’t grow with the market, or maintain loyalty of distributors and customers, will find that sales will plateau and ultimately decline. This is a branding business and a relationship business. Unless a mature company is ready to continually reinvent itself and stay fresh, it may find itself on a slow, or sometimes rapid, road to contraction and failure.

MLM, network marketing, otherwise known as direct selling, is a relationships business. Those that succeed do so because they have a deep relationship with their customers and distributors. To maintain long-term success as a MLM business owner, you too have to make sure that you’re not just running a company, but a business of relationships.

As mentioned, networking is a big part of MLM. Come network with us. If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register. It’s run by the most trusted and knowledgeable man in the business, offering legal services for over 25 years to companies like Avon and Mary Kay, Jeff Babener.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Learn more: Watch the Video. What are the two main reasons for a MLM company’s failure?

Visit us at www.mlmlegal.com to learn more.

There are so many MLM, network marketing companies in operation. How do you know which one is a good fit for you? Have you thought about what type of product you’d like to sell? Or the compensation plan that would work best for you? Do you have a sponsor that will support you in growing your home-based business?

As you are researching your options, keep the following six questions in mind before you choose to sign up with a direct selling company.  

1. Does the direct selling company have a valid product or service that you believe in—that you are passionate about selling?
2. Does the company management have proven experience in network marketing?
3. Does the compensation plan provide retail profit to the distributor and pay bonuses for developing a downline organization?
4. Does the MLM company offer top quality promotional and support materials?
5. Does the network marketing company offer ongoing field training and support available throughout the country?
6. Do you have a sponsor that is willing to work with you and help you in your efforts?

These questions are all imperative to the success of your distributorship business. Weigh your options carefully. Network with other distributors about the companies in which they’ve had success. Do your research, compare each company apples to apples, or apples to pears. Make sure that you choose a company that you are not only passionate about, but that is also supportive of its distributors.

Watch some of our most popular videos to learn more about network marketing and MLM.

Do You Have Some Tips to Become a Successful Network Marketing Distributor?

If I’m a New Distributor Then Should I Focus My Selling In Areas Where Other Distributors Are Successful Or Should I Focus On Untouched Territory?

If a Sales Kit or Startup Fee Is Several Hundred Dollars, Then Is This Considered “Frontloading”?

Why Do MLM Companies Require Distributors to Use Replicated Websites Rather Than Distributor-Created Websites?

What Do I Do with Distributors Who Go Passive (for MLM Distributors)?

Visit us at www.mlmlegal.com to learn more.

It’s always a good idea as a MLM distributor to keep yourself encouraged and engaged in your career by participating in company-offered training events. Company training events are meant to enhance your sales skills and increase your motivation. Enthusiastic network marketing companies will offer their distributors tools and seminars to help you improve and grow your business. Many MLM companies offer training tools in an online, back-office environment, while others will host elaborate in-person events in select cities.

You can always find ways to improve your sales and business skills online, either through your company’s training materials or by performing your own online research. Articles, business and sales books, and blogs written by successful distributors are great places to start.

MLM company seminars are particularly encouraging for MLM distributors. At company events, you’ll be able to meet other like-minded, goal-oriented distributors who will inspire you. Networking at company training events will empower you to meet other distributors within the company.

When you attend a distributor recognition or training event, shake plenty of hands and ask a lot of questions. We suggest a few starter tips for networking at company-sponsored events:

• What is your motivation story? Successful distributors will share motivational stories and tips for successful selling and recruiting. Have you ever wondered how top distributors earn incomes in the $10,000, $50,000 or even $100,000 range? At your company’s training event, successful distributors will share their stories of how they became successful as MLM consultants.
• How do you use social media? There are top distributors who have mastered networking and sales through social media. Be sure to meet people who have creative ideas on how to use social networking sites, like Facebook and Twitter, to sell bucket-loads of products/services.
• Who do you sell to? Do you feel like you’ve exhausted your friends, family, neighbors, and acquaintances? Company events are a great place to hear the secrets of how top-earning distributors have reached outside of their social circle and sold to the rest of the world.
• Why are your customers eager to make purchases from you? It’s not magic, but tricks do exist in selling and creating memorable introductions to potential customers. Make sure to ask how top distributors are engaging with their customers. What makes them good at selling? Perhaps you too can learn a few tricks to help you in your business?

Try to attend as many company events as possible. Take advantage of these events, meet people, and soak in the knowledge offered by the company and its top distributors. A MLM company training event is the absolute best place to learn how to grow your own business. If at all possible, use these events to find yourself a mentor or sponsor who will support you in your sales goals and teach you how to sell, where to sell, and how to meet your sales goals.

Being around people who are pursuing similar goals can help you stay focused and work harder to attain professional success. MLM company events will help you get excited about what you’re doing, and give you the extra boost you need to set your goals a little higher than before.

And always, with hard work and dedication, you may find yourself mentoring new distributors or starting your own direct selling business some day!

MLMLegal.com is bursting with educational content for direct sellers and startup/existing MLM companies! Be sure to visit us often!

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Sign up for the MLM News Global newsletter for top headlines, news stories, scam alerts, videos, articles, and more information on the network marketing industry.

Want to learn more? Watch these videos by MLM expert attorney, Jeff Babener.

What Are the Most Important Things to Remember When You Host a Distributor Recognition Event?

If I’m a New Distributor Then Should I Focus My Selling In Areas Where Other Distributors Are Successful Or Should I Focus On Untouched Territory?

What Do I Do with Distributors Who Go Passive (for MLM Distributors)?

Visit us at www.mlmlegal.com to learn more.

Because we are globally-connected, you are bound to become involved in long distance sponsoring.

Embrace the opportunity to recruit beyond your city walls. You never know if – in a city a thousand miles away – long-distance sponsorship will be your most productive downline.

Like everything else in this business (in life); however, there are right and wrong ways to go about long distance sponsoring.

In a Business Start-Ups magazine interview, a national developer and producer of marketing and training materials for MLM companies and distributors, notes that “a conscious game plan may make all the difference in effective long distance sponsoring.” The interviewee points out that the helter-skelter approach to sponsoring (“go wide and see where it goes”) won’t necessarily yield the best results for your time and effort. Using this approach, he says, people are told to sign up anyone “as long as they breathe.”

Like any other important financial decision, the interviewee goes on, give it thought. “Just because you know a guy in Ohio, doesn’t mean you should sign him up, particularly if he is going to do nothing in your organization but draw on your time.”

This approach may support a few heavy hitters at the top of a network marketing organization, but not the average distributor. The interviewee points out that the top people in a network organization always try to put active, motivated people on their organization.

Here are 10 tips to help you when it’s time to cash-in on long distance sponsorship:

1) Know your craft: Before you start sponsoring long distance, make sure that you’ve mastered sales and recruiting in your own locality. The interviewee advises, “Know what you are doing and what you are going to teach.” Be a deal closer!

2) Choose wisely: If you want to increase your chances of success in long distance sponsoring, look for people who are “wired to win;” independent people with a track record of success. In fact, the further the distance, the more independent and reliable that person must be. The interviewee parallels the long distance sponsoring relationship to that of a long distance romance, saying, “If I am in LA, can I have a successful romance with someone in NY? Perhaps if I choose wisely.”

3) Create a system: You should start off with a comprehensive plan of attack and communicate it to your downline distributors so that you are all singing from the same song sheet. This is best accomplished at the beginning of the relationship by emailing them your proposed plan of attack.

4) Agree on responsive commitments: When you first establish relationships with long distance recruits, take some time to qualify the candidates. You need to talk to them, says the interviewee, and determine what they want, how much they are willing to commit in time, money and resources, and in what timeframe. Although you are all operating independent businesses, you are somewhat dependent on one another. Once you find the right person, develop an agreement that details your respective commitments – at the very least – in an email dedicated to the subject of business goals and plans.

5) Establish a long distance sponsoring budget: You have to spend money to make money. Long distance sponsoring is going to create expenses you don’t normally have when you sponsor distributors locally. To determine whether it will pay off for you, you’d better understand the costs involved. The first obvious expense is of calling charges and data rates on phone plans that don’t have unlimited data. Are you going to be mailing support materials to downline distributors? Plan on postage and mailing expenses for communication and shipping expenses for support materials. Are you planning on flying out to meet your downline or join an event? Plan a travel budget to support your downline group. This is obvious, but must be mentioned anyway: Make use of free technology (email, Skype, messaging services, etc.) to cut down on your long distance communication expenses.

6) Get some support from your company: If it looks like long distance sponsoring will be a real winner for you, you should take a close look at the multilevel marketing company you are working for to see if it has systems that will work to support your efforts. These may include voice messaging systems, national conference call service, digital communications and documents, email services, distributor website, as well as engaging materials to support retailing and team building.

7) Make sure the company training program supports long distance growth: Although this has been a problem in the past for some network marketing companies, many MLM companies today are developing new systems to support essential training for long distance recruits. Just take a look at their marketing materials.

8) Build your downline in geographical areas supported by your company: When you build your organization long distance, try to build in areas where the company is supporting growth through tours, rallies, events, and training. It’s much easier (and less expensive) to arrange meetings if most everyone in your downline is located around the same regional area.

9) Focus on areas where other successful distributors are located: Geographical areas where there is an infrastructure of successful distributors should be your first focus. It is particularly helpful if you can develop a reciprocal relationship where you support distributors of long distance recruits in your city in exchange for your distributors being supported by successful leader outside your city.

10) Provide the personal touch: The interviewee suggests that “training is everything and three-way calling is the name of the game in long distance sponsoring.” Be sure that you are on the phone with the first 10 contacts your new, long-distance distributor calls. This bonds potential customers to your organization from the very beginning. And also – when your distributors contact their potential customers – your new recruit will have the opportunity to listen to your presentation, gather information, learn how to overcome resistance, learn how to close the sale, and begin to build their own successful business.

In network marketing, long distance sponsoring opens a world of opportunity. If you’re willing to do it right, it can be an extremely profitable world. Remember, it takes time. It take a lot of effort and patience. And, above all, it takes determination.

Learn more about recruiting from Attorney Jeff Babener!

What is the benefit of recruiting experienced distributors? Video!

What’s the difference between sponsoring and recruiting? Video!

Visit us at www.mlmlegal.com to learn more.

A good MLM company, seeking longevity in the marketplace, will put a lot of effort into training their distributors on how to manage and build their business. Businesses will provide online training, event training, and incentives.

Not every MLM company has the same opportunity, or compensation plan. There are many types of compensation plans and many variations on the original compensation plans (stairstep, unilevel, breakaway, matrix, binary). Each compensation plan and MLM company is unique in how it approaches consultant training.

Regardless of what compensation plan you’re using, there are common distributor training techniques among all companies and compensation plans. From a legal perspective, MLM companies must be realistic about their distributors’ statistics for success. It is not easy to become a MLM multimillionaire. Only a small percentage of distributors achieve such high success. Therefore, when legitimate direct selling companies present their training, management and support programs to encourage and train distributors they use some (or all) of the techniques in the list below.

If distributor training in your company sounds a little like this list, then it is likely looking good from a legal perspective. A MLM company opportunity should prioritize some or most of the following:

1. Enhance distributors’ self-image.
2. Enhance the image of the network marketing industry as a whole.
3. Educate distributors about the direct selling, MLM industry.
4. Create a realistic picture of what it takes to succeed in operating a network marketing business.
5. Help distributors understand the responsibility of being in business for themselves.
6. Make product education paramount in training programs.
7. Develop business management skills.
8. Help consultants understand the dynamics of people-interaction or person-to-person relationships.
9. Teach (or encourage the learning of) new business technology application to the business, such as computer software programs and website platforms.
10. Help distributors understand the basic concepts behind the network marketing method of distribution.
11. Create an appreciation of ethical standards.
12. Teach distributors how to run a small business, such as managing taxes, distributor networks and accounting.
13. Work on goal-setting and planning; develop one, two, and three plans, rather than promote unrealistic instant success schemes.
14. Develop the art of prospecting (finding and recruiting new distributors for your downline).
15. Help distributors understand the concept of commitment.
16. Learn to value the contribution of others in their home business.
17. Prepare to give effective presentations.
18. Learn how to deal with objections, rejections, and discouragement; helping distributors understand that an objection is nothing more than a question in disguise.
19. Develop an understanding of the legal issues impacting the network marketing industry and the individual distributor business owner.
20. Help distributors understand the art of duplication and the power of setting an example (in recruiting).
21. Help consultants understand that people are involved in network marketing for different reasons; allow those who are interested in the business opportunity to develop at their own pace and resist the urge to pressure satisfied consumers to engage in the business opportunity if they simply want to remain customers.

When MLM companies work to encourage their distributors to work hard, learn about the business, and have realistic expectations, then they are working to support a network of distributors that will last a long time.

If a direct selling company tells you that you’ll become a millionaire in a month then the chances are likely that they are not operating a legitimate business. Remember, if it’s too good to be true, then get out quick!

Would you like to learn more about distributor training, legal MLM compensation plans, or the MLM industry in general? Watch some of MLMLegal.com’s videos, presented by MLM Attorney, Jeff Babener. Visit MLMLegal.com for the most trusted MLM legal information on the web.

Visit us at www.mlmlegal.com to learn more.

1. You must be able to meet people! This is a people business. The only way you’ll find recruits and customers is by getting out there and marketing! If you’re not a people person, this business likely isn’t for you!

2. Do you believe in the products you’re selling? You must be excited about the product you are selling. If you don’t believe in the product it will impact your sales results. You must be the type of person who gets enthusiastic about sharing your product with others. Excitement plays an important role in a purchase decision in the network marketing business!

3. Have patience. It takes time to grow your business, as it does with any other business. Give yourself at least two years to succeed. Try. Try. And try again. Create goals lists. Take small goals and turn them into huge goals. It make be slow, but you can grow!

4. Attend company training programs. Network marketing / MLM companies often offer training programs to help you succeed in recruiting and training new consultants. Take advantage of the training programs your company offers. Don’t let those valuable networking opportunities go to waste either!

5. Work with your sponsor, and work with those you sponsor. You should soak up as much experience as you can from your sponsor and pass that knowledge down to those that you sponsor. A successful sales organization has successful distributors. If you’re not willing to help others and be helped, this business is not for you.

6. Think positively. Remember, the MLM business will subject you to a lot of motivational speakers, sales and promotional materials. Some of it will be useless, while some of it won’t. When things don’t go smoothly keep yourself in a positive frame of mind. On average, you’ll have to make ten presentations to make just one sale! You need to be able to positively deal with rejection. Maintaining a positive attitude will go a long way in keeping you motivated and encouraged to succeed!

7. Get organized. Set aside a place in your home that is used just for business. Make good use of the incredible amount of free computer software and apps. Keep a daily planner. Keep track of customers, prospective customers, etc. Send out those emails and reminders. Stay organized!

8. Be loyal. Don’t become a “multilevel junkie!” Some distributors fail because they bounce from one network marketing opportunity to another – again and again. This is a prescription for failure! While many successful distributors may be involved in promoting two or three direct selling product lines at once, the most successful distributors are those who focus on promoting the products or services of a single network marketing / MLM / direct sales company over a long period of time. Find the right company for you, and then stick with it! Loyalty pays.

9. Work hard! Network marketing is not a quick, easy path to a lifetime of prosperity. Nor is it a free ride to wealth that requires absolutely no effort on your part. It doesn’t work that way. In fact, it doesn’t work at all unless you do! You have to devote time and effort to it especially in the very beginning. It can pay out huge rewards. But regardless of what everyone tells you, you must work for those payoffs! Work as hard as your competition is working – then harder!

Want to learn more?

MLMLegal.com has tons of resources to help and motivate successful distributors. Here are just a couple of videos out of the Video Library that you may find helpful!

What is the Benefit of Recruiting Experienced Distributors?

Tips to be a Successful Network Marketing Distributor

What do I do with Distributors who go “Passive?”

Visit us at www.mlmlegal.com to learn more.