Network Marketing legal issues - BizBasket's view

Dear viewers,

The vision of BizBasket team is to create large number of educated professional networkers across the country so that they build healthy networks and ensure this industry gets the name and reputation which it deserves. In pursuance to this we have written several articles related to network marketing education in past and we suggest our viewers to go through our previous articles so that you get a good grip of the subject.

This article is aimed at providing you an insight in determining whether or not a program is a legitimate multilevel marketing opportunity. We suggest that you or the would-be participant or the entrepreneur, who is considering a multilevel marketing program, should consider several important points:

1. Product or Service. The company should offer a high quality product or service in which consumer satisfaction is guaranteed. It must have a "real" demand in the marketplace. If the product is consumed by distributors themselves, it must be one that distributors would want to buy on its own merits, irrespective of participation in the marketing plan.

2. Price. The price of the product or service must be fair and competitive in the marketplace. Distributors should be able to purchase the company product at wholesale or at a substantial discount from prices found in retail stores.

3. Investment Requirement. There should be no investment requirement at all, except a sales kit or demonstration material sold at company cost.

4. Purchase and Inventory Requirement. A legitimate marketing program should have no minimum purchase requirement, nor any inventory requirement, for one to become a distributor or sales representative. Once in the business, however, ongoing activity or qualification requirements are typical of leading network marketing companies - i.e. minimum monthly personal and group wholesale purchase volume.

5. Use of Product. Products should be used by consumers and not end up in a garage or basement.

6. Sales Commissions. Sales commissions should not be paid for the mere act of sponsoring other distributors.

7. Buy-back Policy. A legitimate multilevel marketing company will agree for some reasonable period of time to buy back inventory and sales kit materials in resalable condition from distributors who cancel participation in the program.

8. Retail Sales. The focus of the marketing program should be to promote retail sales to nonparticipants. Many states and programs recognize that purchases for personal or family use in reasonable amounts by distributors are also retail sales.

9. Distributor Activity. Many of the new statutes regarding multilevel distribution companies require that distributors perform a bona fide, supervisory, distributive selling or soliciting function in moving the product to the consumer, i.e. that they have meaningful contact and communication with their downline sales organization.

10. Earnings Representations. The basic rule is that a legitimate marketing program should not make any earnings representations unless those representations are based on a track record. Testimonials by individuals of their own experiences are not uncommon, however.

11. Training. A good network marketing program should offer solid training in sales and recruitment to its distributors.

We will keep posting various topics related to Network Marketing/Direct Selling/Multilevel Marketing in our coming articles. Stay tuned with us so that you get a real in depth knowledge of this subject and apply it on your business to achieve the dream of Financial Freedom.