If you’re considering becoming a part of a startup network marketing company, learn how to recognize some red flags

There are ways to make sure that a direct selling company operates as a legal and ethical business. Firstly, contact the industry association websites, such as the Direct Selling Association (DSA), to see if the company is a member and if they abide by the DSA’s Code of Ethics.

Secondly, if you’re considering becoming a part of a startup network marketing company, learn how to recognize some red flags. Is the company offering a tangible product or service? Make sure that the company offers a product or service, and not something intangible, such as prayers or wishes. Does the company ask for an unreasonably-high investment to join? Startup kits average anywhere from $50-$150. If a company is asking for $500 for their startup kit, perhaps you should begin asking more questions. This alone is not a sign of a company operating illegally, but can be a sign to look for additional clues for questionable practices. Does the company focus its mission on primarily recruiting new members and not focus on the sale of product (or service) to the end consumer? A legally-operated MLM company will have a primary focus of selling products (or services) to the consumer, not just in recruiting new consultants.

Be sure to investigate any opportunity that you are considering joining and do your own due diligence. And, if you are starting your own network marketing company, it would be wise of you to hire a credible MLM attorney who specializes in direct selling law who can help you determine if your company is legal.

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All studies have shown that recruitment and retention have a direct correlation with how your distributors bond with management, leaders, corporate mission, and product.

First, we must note that this is a bit out of our area of legal expertise. However, we have attended many recognition events and been involved in meeting planning, from hotel logistics, to program, to meeting planners. And, we have been involved with these kinds of events scores of times with many of the leading direct selling companies.

With that said, the point is that you are in a relationship business. All studies have shown that recruitment and retention have a direct correlation with how your distributors bond with management, leaders, corporate mission, and product. Obviously, a company will lead with the goal of rewarding distributors with recognition, providing good education on the product, opportunity and recruitment, inspiring them as to the past and future, demonstrating sincere appreciation and making sure they have a good time. This is “experiential bonding” and it is a company’s opportunity to showcase both objectively and emotionally why distributors should bond with management, other leaders, other fellow distributors, company product, and mission of the company and hopefully, if there is a philanthropic program, with the community “giveback” of the company.

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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. If you’d like to see how you can get free tickets to the next MLM Startup Conference, visit our Innovation Campaign page.

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