A post on Facebook is really no different than a mass email.

Clearly, while consultants are with a company they are asked not to get involved in raiding activity. Network marketing companies have mixed opinions on post-termination behavior. Most companies ask that consultants not raid the downline for a certain period of time after they stop consulting for the company. Companies that ask this of their consultants argue that the consultant’s Facebook profile is basically an email list; a post on Facebook is really no different than a mass email. Not many companies specifically outline post-termination rules in their policies and procedures; however, most companys’ position on the issue is effectively the same as if you started sending emails to everyone in your downline once you left the company.

Several approaches have been noted, including the drafting of agreements where companies and distributors have bifurcating social media pages. Basically, consultants would have a personal and professional Facebook page. This causes a bit of a dilemma because many consultants will make close friends with those in their downline. Perhaps not everyone fits into a personal or professional-only account. Companies look at it as more black and white. Companies see it as a consultant holding a lengthy email list, whether it be on Facebook or Twitter, etc., and once they’ve sent our an announcement saying “come join me at my new company…” then it is just as if they are sending a mass email to their downline. Both perspectives are understandable, and so far, there is no industry-wide solution to the problem.

Your best educational resource on the web: check out the hundreds of articles, videos, company profiles, and more at MLMLegal.com.

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.

Our next Starting and Running the Successful MLM Company Conference takes place 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.

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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A Conversation with Jeff Babener Video Series: Is cross-sponsoring legal? What rights does the distributor have? What rights does the MLM companies have? Can a company legally ask that distributors only work for one company at one time? Distributors are independent contractors. But companies may lose distributors through raiding. What are your rights? And if cross-sponsoring is legal, is it a good idea?

Watch the video to learn the legalities of cross-sponsoring from both the distributor’s and the company’s perspective. To view more videos in this series, visit MLMLegal.com.

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

Watch this video and more here.

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

Interviewed by Robin Seymour.

A Conversation with Jeff Babener Video Series: A network marketing distributorship is an asset of a marriage. State law will determine what happens to your distributorship in the event of divorce. Watch the video. And to learn more visit www.mlmlegal.com.

Watch the video!

For more information on legal aspects of direct selling, visit MLMLegal.com.

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In all seriousness, the above comment too often has more than a kernel of truth.

Companies that pay people to bring recruits with them to the new company are not conducting good business strategy. They will often claim to bring thousands, only bring a few, and still get their money. Unfortunately, this happens time and again and it is not an ethical way to do business.

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.

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.

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.

As a theoretical goal, the regulatory position is admirable. The fact is that personal use in the direct selling business creates high sales revenue for many companies from the moment of their inception.

For many years after the 1979 Amway decision, a “live and let live attitude” prevailed between the MLM industry and regulatory community. Although periodic legal skirmishes occurred, the industry and regulators appeared to be content to “agree to disagree.” Instead, the focus on legal investigation was upon inventory loading, cash pyramids, phony products, and earnings hype.

The comments of a federal appeals court in a 1996 class action case involving a company called Omnitrition invigorated the debate on personal use. In that decision, which involved an interim ruling in the case, the federal appeals court questioned whether or not a network marketing company could be viewed as legitimate if its sales were not derived from nonparticipant customers (i.e. distributors). The language in the decision was heavily criticized by the MLM industry, and the Direct Selling Association (DSA), in fact, filed an amicus brief citing the importance of personal use in direct selling marketing programs. However, the decision stood firm. In the trial court’s ruling, the court recognized that products purchased for personal use by distributors constituted a retail sale in the same fashion that sales to nonparticipants would constitute a retail sale.

In the aftermath of the decision, both state and federal regulatory agencies were emboldened to sue or obtain consent decrees against network marketing companies which contain very restrictive requirements regarding recognition of personal use by distributors. State agencies were all over the board on their position. Some demanded 50 percent sales to non-distributors. Some demanded 70 percent sales to non-distributors. Some demanded 80 percent to non-distributors. Even the FTC awakened after 20 years of dormancy and demanded that more than 50 percent of sales be to non-distributors in various consent decrees.

The aggressiveness of government activity was alarming to the industry. The industry quickly marshaled forces, and in short order, at least four states adopted legislation specifically recognizing personal use as a legitimate end destination for products. Other states were likewise targeted for such legislation and the industry was of the belief that a trend would be started that ultimately would be recognized by all state and federal agencies. So strongly did the industry feel about it, that its leading trade association, the DSA, undertook consideration of a formal amendment to its ethics code which would recognize that, for purposes of a pyramid analysis, a retail sale would include sales to nonparticipants, as well as sales to participants for actual use or consumption.

Notwithstanding the ongoing debate on personal use, the industry seems to thrive in almost all states. These is no question; however, that the “personal use” issue is a thorny issue and one issue upon which the industry and regulators must carry on an earnest ongoing dialog to reach a consensus that protects consumers, distributors and network marketers.

Learn more about the multilevel marketing industry and personal use. Watch expert Attorney Jeff Babener’s videos:

What Is the U.S. and International Trend in Recognizing the Validity of Personal Use by Distributors in Pyramid Cases?

Is There a Message to the Direct Selling Industry on Next Steps after the Burnlounge Case on Personal Use?

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

Distributors working for MLM companies earn income slightly differently than a typical employee. Here are two basic ways that distributors earn income in MLM:

1. Retailing – They buy products from their companies at wholesale prices, sell them at retail prices, and keep the difference. Or, they simply take orders and receive commissions. This is basically the same compensation offered by conventional marketing companies, except that independent distributors for network marketing companies are not merely employees. Instead, they are their own bosses – the owners of their own business.

2. Sponsoring – For sharing the marketing opportunity with others, distributors build their own sales organizations and receive bonuses or override commissions on the sales of the distributors in their organizations. Network marketers can multiply their earning potential by creating their own sales forces and helping the distributors within their networks do the same.

What’s the Difference Between Sponsoring and Recruiting? Watch this video to learn more.

Learn more about how compensation plans operate at mlmlegal.com.

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Workplace Prospects:

– People who need to earn extra income

– People who are intrigued by new opportunities

– People who are in a similar line of work, like sales

– People who are high-energy and gregarious

Neighborhood Prospects:

– College students looking for extra money

– Stay-at-home moms/dads who are looking for extra money

– Landlords/tenants

– Members of Neighborhood Watch

– Retired people looking to supplement their income

– Members of community organizations

– People you commonly run into at the grocery store, post office, library…

Service-Provider Prospects:

– Diaper service delivery

– Dry cleaners

– Meter readers/electricians

– Exterminators

– Firemen/policemen

– Gardeners

– Housekeepers

– Postal employees

– Salespeople

Religious Organization Prospects:

– Minister/rabbi/priest

– Ministers of music

– Religious educational directors

– Youth workers

– Members of the religious organization

– Religious community outreach opportunities

Professional Prospects:

– Accountants

– Attorneys

– Dentists

– Doctors

– Nurses

– Hairdressers and salons

Athletic Prospects:

– Clubs

– Fitness centers

– Teammates

– Athletic partners

– Competing teams and their families

School Prospects:

– Alumni associations

– Co-students

– Parents of other children

– Teachers/PTA

Social Contacts:

– New and old acquaintances

– Friends

– Social media networks

– Website networking

– Online forums and groups

Organizations:

– YMCA

– Lodges

– Boy/girl scouts

– Volunteer groups

Other prospects who may be interested in joining your organization:

– Babysitter/child care center

– Bakery

– Banker

– Builder/contractor

– Carpet cleaner

– Department stores

– Druggists

– Florist

– Gift shops

– Health spas

– And plenty more

Solicit the Solicitors:

– All door-to-door or party plan salespeople

– Other direct selling representatives

Relative Prospects:

– Distant relative

– In-laws

– Extended family members

Newspaper Prospects:

– People who are actively looking for part time work

Potential customers and distributors are everywhere. We hope that this extensive list will help to give you some ideas of where you can start to begin growing your network marketing business.

Just remember, you’re lucky to make one sale out of 10. Don’t get discouraged. Embrace rejection. Hard work and confidence will go a long way in your success!

Want to know expert MLM Attorney Jeff Babener’s advice on finding new leads? Watch this video:

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

It is common for distributors to be recruited based on an attractive compensation plan. Instant monetary benefits, promises of instant wealth, and enormous payouts are often advertised by companies. However, no company has ever been successful based on its compensation plan alone. An out-of-this-world compensation plan often gives the company an initial jump start, but time will prove that a great compensation plan alone isn’t enough to sustain a company.

Of course, a competitive compensation plan with great incentives are important, but “ground breaking” plans are more often a mirage for poor products, that you may have a hard time selling, or poor company management.

In the short term, “unprecedented” compensation plans may work, but they are not sustainable in the long term. Great products, which attract quality distributors and customers, and an organized management team, are what carry a company long-term.

For more information, visit www.mlmlegal.com.

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