The first, and most essential, member of your startup MLM or Network Marketing company team is an experienced MLM attorney. The legal arena in this field is impacted by a complex array of regulatory and operational legal issues that affects every direct selling company.

For better or worse, the practices of the MLM industry have induced scores of legislative and regulatory control, such as pyramid statutes, MLM statutes, business opportunity rules, securities, FTC, and postal regulations. Notwithstanding the success of the industry, there is always tension between the regulatory community and the MLM industry.

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As we talk with companies, we’re often asked “Is there a level playing field for all types of compensation plans?” Whether they are binary, matrix or Australia 2-Up, and for products, whether they are the sale of financial services, educational products, health products and vitamins, the answer is “The same legal principals apply no matter what your compensation plan is and no matter what your product is.”

The basic legal principal and the question I’ll always ask is “What is it that people are paying?” and “Why are they paying it?” If you are selling a quality product at a fair price to consumers that use it, you are probably on the legitimate side.  If it’s a program in which you are merely moving money or you are selling over-priced products to distributors who are buying only to qualify, then you probably have a pyramid scheme.

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From Nothing to Everything

At first, a trademark may be the least valuable of assets.  Famous marks such as Coca-Cola, Microsoft or IBM were nearly valueless at one time. However, for a mature company, the brand name may be its single-most valuable asset. Valued names such as GE, Disney or Intel add billions of dollars to the balance sheet.

Similarly, there was a time when the names Avon, Mary Kay or Tupperware had little or no value.  And yet decades later, the goodwill associated with those direct selling brands would allow their products, if the companies so chose, to be sold in any retail venue in the world.  As they say, “mighty oaks from small acorns…..”

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Another successful MLM Conference has ended! Were you unable to join us? No problem! Come to our next conference, in Las Vegas, in October! (Reserved for the executives of startup and existing MLM companies!) Visit our website for more information! www.mlmlegal.com

The MLM Startup Conference in Las Vegas takes place October 25th & 26th, 2012!

October 25th & 26th, 2012 – 9:00AM-4PM, and one-on-one time with the speakers from 4PM-7PM, both days

The MLM Startup Conference is an educational conference for executives of startup and existing MLM, Network Marketing, Party Plan, and Direct Selling Companies. This conference has been in existence for over twenty years and is hosted by the industry’s leading experts.

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MLM News Headlines:

WASHINGTON, May 09, 2012 (BUSINESS WIRE) — As the association representing more than 200 leading firms that manufacture and distribute goods and services sold directly to consumers, the Direct Selling Association (DSA) would like to set the record straight in response to questions raised about the direct selling business.

Unfortunately, even though these questions have been asked and answered many times by the direct selling industry over the years, stock prices of Herbalife and other publicly traded direct selling companies fell as a result of inquiries by hedge fund manager David Einhorn.

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Well grasshopper, first thing is first. If it is not working, take a deep breath and ask yourself what parts of it are working and what parts are not. Chances are that you will discover, in the words of Yogi Berra, “The ball went right where I hit it.” It may be that you need to dissect your approach.

First, ask yourself if you really believe in the product. Do you believe in the company? Do you believe in its basic mission statement? If you are not passionate about the products and the company, it will show as you try to sell the products and services to consumers or to recruit others into the business.

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The answer is yes and no. Almost all leading MLM companies require the purchase of a modestly-priced sales kit to in order to join the company. The kit price may range from $50 to a few hundred dollars. Usually, optional inventory purchases are available, as well as optional administrative services. Leading direct selling companies adopt very generous refund rules for mandatory sales aids and also usually adopt a standard 90% buyback policy on unsold inventory from distributors who wish to quit the business.

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The jury is in on this point. One only needs to look at Wall Street’s investments and acquisitions of MLM companies in recent years. It was Warren Buffet’s Berkshire Hathaway that invested hundreds of millions of dollars in acquiring Pampered Chef.

Wall Street made the owner of Excel Communication a mega millionaire when Excel’s Book of Business was purchased and the company made was public.

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Take a look around at the health industry. Natural health products are everywhere. Herbs and dietary supplements have gone mainstream in the last 20 years. The MLM industry accounts for a very substantial portion of sales of nutritional products.

Distributors are often perplexed as to what they can say about the dietary supplements they sell. The answer can be found in federal legislation, adopted in 1994, called DSHEA, the Dietary Supplement Health Education Act.

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