An experienced and seasoned direct sales attorney can be the single most valuable resource that a MLM company can ever utilize. Look for a professional who has represented leading direct selling companies as well as startup companies.
As industry experts, they commonly know more about multilevel marketing and direct selling than most of their clients. In fact, more than half of our conversations with clients involve discussions about the MLM industry, rather than the mere legal aspects of running a direct sales company. And over time, such an experienced “consigliere” (see the movie The Godfather) may become the most trusted business advisor to a company and a vital member of the business team.
Apart from tremendous insight into the business, an experienced network marketing attorney can answer in five minutes what would take a business attorney five hours to research. And, the business attorney would likely still not completely understand the issue, let alone the solution.
The direct sales industry has – for better or for worse – provoked vast amounts of legislation and regulatory control that network marketing attorneys must navigate.
A brief list of regulations, legislation and legalities that experienced MLM attorneys, such as Jeff Babener of Babener & Associates, must commonly appraise include:
– Pyramid statutes
– MLM statutes
– Business Opportunity Rule
– FTC regulations
– Postal regulations
– FDA rules and regulations
– Distributor relationships
– Vendor relationships
– Distributor discipline
– IRS and tax regulations
– International expansion
– Sales tax
– State law and registration
– And, legal review of sales kit contents, which include:
1) Consultant agreements
2) Policies and procedures
3) Product brochures
4) Compensation plan
5) Marketing plan presentations
6) Forms, from receipts to multiple owner applications, etc.
At the very least, a direct sales company should not enter the marketplace without legal review of its marketing program. Hiccups caused by having to respond to regulatory agencies, consultant complaints, vendor conflicts, etc. can be bad for any MLM business and its reputation.
For more information, watch the video The Legal Issues of Starting and Running a MLM Company.
In addition, our next Starting and Running the Successful MLM Company Conference takes place October 22 and 23, 2015 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.