MLM, (Multi Level Marketing), an often maligned business model.

What it is:

Multi-level marketing is a business that functions by recruiting salespeople to sell a product and offer additional sales commissions based on the sales of people recruited into their downline.

Why does it have a bad image?

Often, it may be necessary to pay to join or new salespeople may be required to buy a significant amount of inventory.

My observations:

In the brick and mortar world, when you apply for a sales job, you are not asked to pay for the privilege of selling the company's products and you do not have to purchase inventory to do so.

This should be no different in the virtual world.

How to tell a good MLM from a bad:

Legitimate MLM companies, offer commissions earned only on sales of the company's products or services. No money will be earned from recruiting alone ("Sign-up/Membership fees"), however money will be made from sales in your downline.

Money earned from the sales of members recruited is one attraction of MLM arrangements.

Bad signs are if participants are paid:

• Primarily from money received from new recruits,

• If they are required to buy more product than they are likely to sell

If these are factors, then the company is a pyramid or Ponzi scheme, (illegal in most countries).

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