Is network marketing legal?

Is network marketing legal?

Published on 20.September 2021

Many people dream of starting their small business without risk and without a lot of money and growing it into a profitable company. This is actually possible with network marketing or MLM - if it is serious.

Multi-level marketing, also known as MLM or network marketing, is a sales and recommendation system in which independent sellers sell consumer goods. These goods are produced and supplied by a company. Unlike salaried salespeople, network marketing affiliates make money when they sell successfully and receive commissions for doing so. In many MLM sales organizations, partners are also motivated to set up their own sales team. If these affiliates are also successful, the "Team Boss" will also receive an additional percentage of these sales. His job (in addition to his own sales) is therefore to build up a team and to regularly train and motivate it.

Done right, network marketing is perfectly legal.

Unfortunately, it is not always easy to distinguish legal network marketing from an illegal pyramid scheme, since both have a similar sales structure. Even in large companies, it is common for salespeople to receive commissions and sales managers/sales directors and top managers to receive special arrangements or bonuses on top of that

The main key difference between MLM and a traditional pyramid scheme is that there is an actual product for sale. So when actually selling products to actual customers, network marketing is mostly legal, even when trying to recruit additional sellers. In contrast, Ponzi schemes sell the right to solicit others, whereby participants recoup their investment in products by in turn soliciting potential leads, rather than selling a product or service.

Furthermore, network marketing systems can be dubious and illegal if high income is promised with little time or effort or if interested parties are to invest high fees for starter packages and/or training.

What is the biggest problem with network marketing?

The real problem with network marketing isn't network marketing itself, but rather the "wrong people" it attracts. Network marketing is a proven sales model, and it's akin to "micro-franchising." The advantage of legal network marketing is that on the one hand only very low entry costs are necessary and on the other hand there is great potential for extraordinary income.

However, these opportunities that make network marketing attractive also attract many people who are either not qualified or ready to become entrepreneurs. Thus, many fail who:

  • have not been successful professionally so far,
  • could save little money to invest in building the business,
  • have no experience in leading and motivating
  • have no previous experience in customer acquisition/sales,
  • have little experience in building business relationships and
  • above all, have unrealistic expectations in terms of workload and possible income.

As a result, many people fail in network marketing and blame the system for their failure.

The solution

Legal Network Marketing is a great opportunity for people who want to start their own business risk-free. But always remember: It's a business and you are the business owner. If you've never owned a business before, if you've never sold and built anything, you need to learn how to do it at the beginning.

Network marketers who are serious about building a business should familiarize themselves with business basics, the latest sales and marketing techniques, networking and business development strategies, etc. and engage in regular exchanges. You can learn anything if you are motivated and have realistic goals, especially at the beginning.

If you are interested in starting in legal network marketing, we look forward to getting to know you.
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Is MLM legal?

Network Marketing is a large organization made up of many self-employed individuals who sell goods and services such as beauty products, candles, cleaning products and books from their homes.
If the focus is on selling the products and no high initial investments have to be made, network marketing is usually legal.
Network marketing
Network Marketing is a legal business. It is based on offering people real, legitimate products that they need and want at a fair price. When some people make a lot of money through network marketing, it's always the result of their own dedicated efforts in building an organization that sells genuine products and services.
Pyramid schemes
Pyramid schemes are illegal and based on taking advantage of people. For one person in a pyramid scheme to actually make money, someone else has to lose money. But in network marketing, each person can multiply their efforts, skills, and talents by helping others succeed. Network marketing has proven itself as part of the new economy.
Network marketing is not about taking advantage of your friends, neighbors or relatives. Just a few years ago, network marketing meant selling to people on your "warm list." Although sharing the product or service and the opportunity with people you know is still the fundamental basis of business, today we are seeing more and more people using sophisticated marketing techniques such as the internet, conference calls and other long-distance sponsorship techniques, to expand their network.
Network Marketing is not a get-rich-quick scheme. Of course, some people make large amounts of money quickly. Many would say that these people are lucky. But success in networking is not based on luck. Success in network marketing is based on following some very basic but dynamic principles.

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