How do you distinguish legitimate MLM operations from illegal
pyramid schemes? Here are five things pyramids do that
differentiate them from legitimate companies:
1. Promote the business opportunity as the
"product." Always determine exactly what the product is
before giving the opportunity a second look.
2. Require front-end inventory loading. For legitimate
MLM companies, you pay a small fee to get into the business, and
inventory is optional.
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3. Require substantial cash investments. The red flag is
when you're required to spend $500 or more to get into the
business opportunity. Most MLM offers initially cost less than
$100.
4. Pay fees for recruiting. "A legitimate MLM
opportunity will have compensation based on product sales and not
recruiting," says Jeffrey Babener, a partner in the Portland,
Oregon, law firm Babener & Associates who represents many
network marketing companies.
5. Don't buy back. Says Babener, "Any plan that
doesn't agree in writing to repurchase a reasonable percentage
of unused inventory or sales materials for a stated time after
purchase should be avoided."
Contact Source
Sheffield Resource Network, (602) 968-6199, http://www.sheffieldnet.com
Sean M. Lyden is the principal and senior writer of The
Professional Writing Firm Inc., a Kennesaw, Georgia, company that
writes articles for consulting and advisory firms. He specializes
in management, marketing and motivation issues. E-mail him at
seanlyden@mindspring.com