Here are some ways which you can investigate a MLM company:

1) Check to see if it is a member of any industry associations, like the DSA or DSWA.

2) Call your state’s attorney general’s office or consumer protection division. Most states regulate direct selling companies through these agencies.

3) Check with the Better Business Bureau.

4) You can check the company’s financial information (especially if they are publicly traded – corporate reports are available from online services) by accessing a credit reporting service, like Dun & Bradstreet.

5) Ask your sponsor (or potential sponsors) for the names and numbers of some other distributors. Check the company’s references just as you would check a job applicant’s references.

6) Attend one of the company’s training seminars to see how the company operates first hand.

7) Check industry trade publications for any information on the company, like Entrepreneur magazine.

8 ) Many times the company’s products will be regulated by government agencies, like the FDA. You can check the credibility of the products in some cases by contacting such government agencies.

9) Do some digging: gather as much information from the company itself, like the number of years they’ve been in business, the number of distributors they have, what countries they operate in, etc. This information will give you an idea as to the company’s credibility. A good source for this information is available here.

Checking a company’s legitimacy can be time consuming but highly beneficial in the long term.

Information about pyramid schemes is available here.

And if you are wondering how to make sure that the direct selling company that you’re starting is not an unintentional pyramid scheme, be sure to contact us for your free legal consultation: 503-226-6600 or www.mlmlegal.com.

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

What do you do when you need answers on the go? MLM Legal now offers a free iTunes application.

MLMLegal.com is one of the most informative and reliable websites about network marketing on the web. MLM Legal provides educational articles answering common industry questions, such as:

–          How to start a network marketing company

–          An inside look at a MLM trial

–          Herbalife and personal use

–          How to identify a pyramid scheme

–          How to analyze compensation plans

–          And, many more.

MLM Legal offers over 70 videos where MLM expert Jeff Babener discusses network marketing for both consultants and company owners. The website offers research assistance by providing over 700 MLM company profiles, a vendor and supplier directory, and the latest industry news. MLM Legal also offers free materials to those who qualify, including a free MLM Startup Manual, an insightful DVD, and newsletters.

MLM Legal is free and open to anyone, anytime. However, what do you do when you need answers on the go? MLM Legal now offers a free iTunes application. This application offers up-to-date information on the direct selling industry, news and headlines, frequently asked questions, MLM law in 50 states, hundreds of articles, notorious MLM cases, as well as legal news and articles written by Jeff Babener.

MLMLegal on iTunes is free and will provide you with valuable information on the go. Download the free iTunes app HERE.

Visit www.mlmlegal.com and www.mlmattorney.com for more information on the network marketing industry.

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Our next Starting and Running the Successful MLM Company Conference takes place October 27 and 28, 2016 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register.

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

Fill out a short survey to receive two free tickets (worth $345.00!) to the next MLM Startup Conference in Las Vegas!**

It is not easy take for an entrepreneur to decide to start a network marketing company. There are hundreds of bullet points to consider when preparing to launch a MLM company; funding, products, consultants, legalities, software, compensation plan, key employees, state laws, business plans, recruiting, the list is endless. The initial research and preparation itself can be overwhelming.

A simple Google search results in articles that attempt to convince entrepreneurs to not start the network marketing company of their dreams for one vague reason or another. Or, an online search results in a plethora of articles that are generic and are not written by experts in the direct selling field.

Creating a direct selling company requires vast amounts of research, resources, and relationships. This article will aid MLM entrepreneurs in locating valuable articles on the internet that are actually written by credible experts in the direct selling field (check the names yourself if you’d like!). It will provide network marketing entrepreneurs with links to resources and consultants that have the capability to help MLM business owners startup their direct selling companies. In addition, this article will guide startup companies to free and valuable resources that will prove priceless for their startup company.

1)      The first step to starting any company is investing some time into research and education. There are many articles available online that will allow you to better understand the complexities of starting and running a network marketing company. For instance, the article “Starting Your MLM Company”, discusses how successful operations depend on product demand, a compelling compensation plan, and the corporate leadership of the company, as well as how intangible considerations, such as psychology and trust, are important aspects of company success.  The article series titled “Corporate Startup Essentials” goes to great length to outline the importance of capitalization, recruiting, legal, trademarks, expert advice, software/technology, industry experience, product/service offered, international markets, compensation plans, outsourcing, agreements between owners, and corporate attitude. The blog post titled How do I Raise Capital to Start My MLM Business? delves into detail on funding and raising capital to start your network marketing company. The blogs at both www.mlmlegal.com and www.mlmattorney.com contain great posts for startup direct selling companies and MLM executives. The article “Starting a Network Marketing Company?” outlines ten important points to consider when creating your network marketing company. And, the article “The Hallmarks of Legitimate Direct Selling/Network Marketing Companies” details ten aspects of successful network marketing companies. In addition, there are over 70 videos offered at MLMLegal.com that address various aspects of starting and running a direct selling company.

2)      Secondly, it is always important to gather materials that you can turn to when you come across an unanswered question. One good resource for this is the Starting and Running Successful MLM Company manual. There are also several books and brochures available at Legaline Publications that are compiled by experts in the network marketing industry.

3)      The third step, and frankly the most important step to help you understand if your company is legal, is to contact a MLM lawyer to read your materials and advise you in your marketing, FDA and FTC work, trademarks, regulatory issues, international expansion, sales tax, and distributor and vendor relationships, to name a few. The current and easiest way to do this is to visit the page of our Innovation Campaign. The February 2014 Innovation Campaign enables network marketing company owners the ability to receive two free tickets to our next Starting and Running the Successful MLM Company Conference in Las Vegas (a $345.00 value!). All you have to do is fill out a brief survey at our sister website: www.mlmattorney.com, and we will contact you right away to confirm your free tickets to the event. Attending this event will give you direct access to several MLM industry experts, including compensation plan consultants and MLM legal expert, Jeff Babener. Visit our Innovation Campaign page for complete information about the conference, including the topics that will be covered, the speaker list, videos, and much more. For additional questions call 800-231-2162.

Starting a network marketing company can be a complicated process without industry experts guiding you, but we believe this article will help you in the initial steps. For more information on how to build a legal direct sales company, visit www.mlmlegal.com and www.mlmattorney.com.

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Our next Starting and Running the Successful MLM Company Conference takes place February 27th & 28th, 2014 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register.

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

Multilevel Marketing

In multilevel or network marketing, individuals sell products to the public — often by word of mouth and direct sales. Typically, distributors earn commissions, not only for their own sales, but also for sales made by the people they recruit.

Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.

If you’re considering buying into a multilevel marketing plan, get the details.

Consider the Products

Many companies that market their products through distributors sell quality items at competitive prices and some don’t.

Find out what will you be selling. Are similar products on the market? Is the product priced competitively? Is it safe? Can your sponsor — the distributor who is recruiting you — support the claims about the product’s performance?

Almost any product or service could be sold through multilevel marketing, including health, beauty, and fitness products that aren’t available through retail sales. Apply a healthy dose of skepticism before buying or selling products advertised as having “miracle” ingredients or guaranteed results. Many of these “quick cures” are unproven, fraudulently marketed, and useless. For instance, if you are considering selling nutritional supplements, you may want to check with a health professional before using them — or selling them.

If you decide to buy into the program and promote the products, you must be sure your marketing materials are truthful and that there’s solid evidence to back up the claims you make about the products. Before you repeat any claims the company has made, verify that there’s competent and reliable research to back them up. That’s the standard the FTC uses when evaluating advertising claims.

Learn More About the Company

Find — and research — the company’s track record. Do an internet search with the name of the company and words like review, scam, or complaint. Look through several pages of search results. You also may want to look for articles about the company in newspapers, magazines, or online. Find out:

• how long the company has been in business

• whether it has a positive reputation for customer satisfaction

• what the buzz is about the company and its product on blogs and websites

• whether the company has been sued for deceptive business practices

• Check with your state Attorney General for complaints about any company you’re considering, although a lack of complaints doesn’t guarantee that a company is legitimate.

Evaluate the Plan

Don’t pay or sign a contract in an “opportunity meeting.” Take your time to think over your decision. Your investment requires real money, so don’t rush into it without doing some research first.

Ask your sponsor for the terms and conditions of the plan, including:

• the compensation structure

• your potential expenses

• support for claims about how much money you can make

• the name and contact information of someone at the company who can answer your questions

Get this information in writing. Avoid any plan where the reward for recruiting new distributors is more than it is for selling products to the public. That’s a time-tested and traditional tip-off to a pyramid scheme.

Keep in mind that when you recruit new distributors, you are responsible for the claims you make about how much money they can earn. Be honest, and be realistic. If your promises fall through, you could be held liable, even if you are simply repeating claims you read in a company brochure or heard from another distributor.

If you don’t understand something, ask for more information until it is absolutely clear to you. Your sponsor and other distributors should be willing to answer your questions. Remember that your sponsor (and others above your sponsor’s level) will make money if you join the program. So take your time, and resist pressure to join. Be aware of shills — fake references paid by the company or distributor to pretend they were successful earning money through the plan.

Find out about refunds.

Get the company’s refund policy in writing. Make sure it includes information about returning any unused products, including restrictions and penalties. It may seem like you’re minimizing your risk if you can return products for a reimbursement, but policies vary on whether you’ll get a full refund — and how long it may take. Many plans require you to buy training or marketing materials, or pay for seminars if you want to get product discounts or create your own network of distributors. Find out how much time and money other distributors spent on training, marketing materials, and seminars when they joined the plan, and whether the plan requires you to participate in periodic training. What happens if you opt out of the training?

Ask a friend or adviser to read the materials.

You may want to consult with an accountant, a lawyer, or someone else you trust who is not affiliated with the plan to review the terms of compensation, determine whether the plan can back up its claims about the amount of money you can make, and analyze the information you’ve been given.

Think about whether this kind of work suits your talents and goals.

Ask yourself whether you would enjoy selling products to the public. Find out how many hours a week your sponsor and other distributors spent on the business when they joined and how much time they spend now. Remember that no matter how good the product and how solid the plan, you’ll need to invest sweat equity and money for your investment to pay off. Consider the other demands of the business — for example, going to training, recruiting new distributors, managing paperwork, recording inventory, and shipping products.

Ask Questions

Ask your sponsor and other distributors tough questions, and dig for details. Don’t consider it nosy or intrusive: you are on a mission to check out a potential business deal that will require your money and your time.

Their responses can help you detect false claims about the amount of money you may make and whether the business is a pyramid scheme. Here are some questions to ask before making any decisions:

• How many people have you recruited?

• How long have you been in the business?

• How much time did you spend last year on the business?

• How much money did you make last year — that is, your income and bonuses, less your expenses?

• What were your expenses last year, including money you spent on training and buying products?

• What percentage of your sales were made to distributors?

• How much product did you sell to distributors?

• What are your annual sales of the product?

• What percentage of the money you’ve made — income and bonuses less your expenses — came from recruiting other distributors and selling them inventory or other items to get started?

It’s important to get a complete picture of how the plan works: not just how much money distributors make, but also how much time and money they spend on the plan, how long it takes before they’re earning money, and how big a downline is needed to make money. One sign of a pyramid scheme is if distributors sell more product to other distributors than to the public — or if they make more money from recruiting than they do from selling.

For more information and updates on the direct selling industry visit www.mlmlegal.com and www.mlmattorney.com.

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Our next Starting and Running the Successful MLM Company Conference takes place October 24th & 25th, 2013 in Las Vegas. Call Charity before September 1st to receive a discount! 503-226-6600 or 800-231-2162.

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