Many people associate multilevel marketing with Ponzi or
pyramid schemes of the mid-20th century. In many ways they
are similar, except Multi-level marketing takes place
online. This is because in the age of computers and
declining employment opportunities, multilevel marketing
programs often look to target those looking for
work-at-home opportunities with promises of easy money.
Multilevel marketing is similar to franchise opportunities
in which franchised dealers pay an initial and monthly
franchise fee for the right to sell the products of the
company. Their fees cover initial training as well as sales
materials, but any products they purchase is paid for by
the new business owner. With multilevel marketing, these
business owners are encourage to recruit additional
business owners and will receive a percentage of their
sales as well as their own sales commission.
Companies that emphasize more on recruitment than on
product sales are often found to be contrary to guidelines
established by the Federal trade Commission and usually end
up losing their sales representatives once the market
becomes saturated and sales are no longer available to al
of the sales representatives. People should be wary of
companies that pay part of the fee to join the company to
the one that recruited them as legal multilevel marketing
plans do not pay for recruitment.
In many cases the number of people in the downline of a
recruiter is limited, based on the division of the sales
commission. Although it is not unusual to see downlines of
seven or more people in one person recruitment map. Other
companies may have a two-line downline that requires sales
representatives to have two equal length downlines before
commissions are paid on any sales, even their own. This
practice is also frowned upon by the FTC, but the rules
have not yet been established to make this practice illegal.
Many companies also require the sales people to have a
certain amount of inventory of the company products on hand
to sell, and may even require the distributor to buy a set
monthly amount of inventory to continue to qualify for
sales commissions. The FTC has established a 70 percent
rule that states the distributor cannot be required to
purchase more inventory until at least 70 percent of their
inventory has sold. While many in government believe that
products used or kept for personal use by the distributor
should not be counted as part of the 70 percent of
inventory sold, many others, including some distributors,
claims it should not matter who buys the inventory.
As the downlines grow, the sales commissions become
smaller, but those in the top of the rankings usually
continue to receive small commissions based on the sales of
everyone working under them. It has been argued that the
only ones who walk away with real money in multilevel
marketing are the ones who were with the company from the
beginning, while the ones who joined later lose money.
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Member of IAHBE(International Association of Home Business
Entrepreneurs), Thierry Goho constantly tests and provides
through his site, some of the most trusted, easiest and
profitable home business opportunities on the net. Click
here to see which money making programs are best today.
http://www.gohomoney.com
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