Network marketing is a type of business opportunity that is verypopular with people looking for part-time, flexible businesses.Some of the best-known companies in America, including Avon, MaryKay Cosmetics and Tupperware, fall under the network marketingumbrella.
Network marketing programs feature a low upfrontinvestment–usually only a few hundred dollars for the purchase ofa product sample kit–and the opportunity to sell a product linedirectly to friend, family and other personal contacts. Mostnetwork marketing programs also ask participants to recruit othersales representatives. The recruits constitute a rep’s “downline,”and their sales generate income for those above them in theprogram.
Things can get sticky when a network marketing networkcompensates participants primarily for recruiting others ratherthan for selling the company’s products or services. A networkmarketing system in which most of the revenue comes fromrecruitment may be considered an illegal pyramid scheme.
Since network marketing programs are usually exempt frombusiness opportunity regulation and aren’t defined as franchisesunder state and federal franchise laws, you’ll need to do your owninvestigation before investing any money.
