Giant corporations have marketed some of their own products and services through network marketing. For many corporations who observed some of the earlier successes of this alternative channel of distribution, a number of conclusions were reached.
1. It was a great way to introduce brand new products.
2. It seemed to work well for products that needed demonstration or testimonial.
3. It was a great way to reward the consumer for sharing excitement about products.
4. This method could result in rapid penetration of the market.
5. In that commissions were only paid on the movement of product, and massive and costly advertising campaigns could be avoided, it seemed efficient and economical.
6. In recent years, corporations expanded offerings far beyond home and personal care products to offer consumer services such as telecommunications, prepaid legal representation, financial products and consumer member benefits packages that offer customers significant savings across the board.
The federal government has recognized network marketing
Congress recognized the industry by amending its tax laws on independent contractors to provide that, if distributor agreements were properly worded, direct selling companies are not employers and distributors are not employees for federal withholding and tax purposes. The IRS developed its own special publication (publication 911) to aid direct sellers in preparing their income tax returns.
State governments have recognized it too.
Recent network marketing distribution statutes, which have been adopted in several states, are perhaps the clearest indication that the industry is reaching maturity. The new statutes specify requirements for distributor agreements, buy‑back policies, registration, disclosures of information, earnings representations, etc., but they also specifically recognize the legitimacy of personal use by distributors.
Thanks, I needed that.
Networkers need not reach far for cogent explanations of legitimacy for their industry. The facts speak for themselves. Good Luck!
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