Contributor of Forbes, Jody (Coughlin) Greene reestablishes that success in MLM is significantly based on sponsorship and mentoring in her article titled “Success and Mentorship.”

In multilevel marketing, individual consultants (or representatives, or distributors – which all generally mean the same thing) act as sponsors by recruiting other consultants beneath them, and then the process is repeated. The process of multilevel marketing produces a system in which top-tiered consultants benefit from the sale of products by downline distributors. In fact, multiple distributors can benefit from the sale of one product. Ms. Greene believes that the consultants who experience the most success are those who received mentoring by their recruiting sponsor.

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The emergence of online penny auction companies have recently been under analysis in the direct selling industry. The Federal Trade Commission (FTC) has recognized the difficult and complex circumstances of online penny auctions. The FTC offers the following consumer information, stated verbatim, line-by-line, released in 2011 (http://www.consumer.ftc.gov/articles/0037-online-penny-auctions):

How does a penny auction work?

In a penny auction, the site owner posts items and you pay to bid for them. Unlike a traditional auction, where only the winner pays, penny auctions require you to pay before – and as – you bid, win or lose.

You may have to pay a fee just to register for the site, and sometimes, it’s substantial. Then, you have to buy a “bid package.” For example, you may “buy” 100 bids for $50. Additional bids cost more money, often between 50 cents and a dollar per bid.

The price of auction items usually starts at zero, and each bid bumps the price of the item up a penny. Each bid also adds time – from 10 seconds to 2 minutes – to a countdown clock. The goal is to be the high bidder when the clock runs out. But because the clock resets with each bid, the auction process can be unpredictable and take time to complete.

What does “winning” mean?

Winning the auction doesn’t mean you’ve won the auction item: It means you’ve won the right to buy the item at the final price. For example, your $50 winning bid for a camera might seem like a bargain, but if you placed 200 bids that cost $1 each, your cost will actually be $250 – plus shipping and handling, and possibly a transaction fee.

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Each direct selling company has its own rules about what distributors can say and do on the internet. It is common for MLM companies to closely guard their trademark(s) and the company has the right to regulate the usage of all of their media, whether it appears in print or online.

The internet has opened up incredible opportunities for both MLM companies and distributors. However, at the same time, MLM companies often wrestle with these opportunities. For instance, some MLM companies will provide a location on their homepage for distributors; some will require a link from the distributors’ homepage to the company’s main website. And, in some cases, direct selling companies won’t allow distributors to promote the company’s product or opportunity (compensation plan) on the internet at all. There are two reasons for this. If the company name appears on each distributor’s homepage then search engine results will produce thousands of “hits” on distributors’ websites instead of the company’s homepage. Amid the thousands of searches, MLM companies may be concerned that people won’t be able to find the company’s homepage.

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Herbalife: What Short Sellers Missed on the Way to the Press Conference…

The Personal Use Issue in Pyramid Analysis; Who is an Ultimate User?

An excerpt from the article and link to the full article at www.mlmlegal.com

Déjà vu, all over again … Yogi Berra

History repeats itself.

The 2012 billion dollar short seller attack on Herbalife, a 32 year old NYSE listed direct seller of nutritional products in 80 plus countries with annual sales in excess of $3 billion, is akin to a replay of seminal challenge to the MLM/Direct Selling model, won by Amway in 1979. In the Matter of Amway, 93 F.T.C. 618 (1979).

In the 1970’s FTC challenge, the criticism went to whether or not the core of the MLM referral selling model was a “deceptive” way to market. In the 2012 short seller attack, along with other criticisms, a principal complaint is that evidence of “substantial personal use and consumption” of company products by distributors themselves, renders an MLM/Direct Selling model inherently deceptive and an illegal pyramid scheme.

Memo to short sellers and algorithmic financial bloggers:

It may be time to reassess.

Some very salient facts and cases may well have been missed in the rush to challenge direct sellers.

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Surprisingly, many of the giant direct selling companies in the industry today had humble beginnings, often with one individual’s dream. That individual usually had little or no money and became a MLM mogul after years of dedication; stirring laundry detergent in their bathtub or selling bibles door-to-door. Some were lucky enough to grow their companies without the financial backing of investors, but others were not. (Like the rest of us!)

Many MLM entrepreneurs are lucky enough to have a dream to start a MLM company but lack the capital needed to fund the project. Most people turn to family and friends, to co-workers, then to angel investors, and finally to private placement venture capitalists to find the money they need to grow their business. Investors may listen to the presentations, but the money is never a guarantee.

Searching for MLM Startup Capital – Funding the Direct Selling Company

What is the first step in the process to secure capital to fund the MLM startup dream? It is the business plan, of course! Before any sophisticated investor or angel financier will consider funding your marketing program, they will look for an organized presentation of your ideas, projections and abilities. A good business plan will be the backbone for any private investment of capital and will also help to bridge financial gaps as your company grows.

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Visit www.mlmlegal.com for your FREE copy of the Starting and Running the Successful MLM Company manual.

CLICK HERE TO SEE IF YOU QUALIFY

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The “How To” Manual: Starting and Running the Successful MLM Company – FREE (For qualifying executives of direct selling, network marketing, MLM companies only.  Click HERE to see if you qualify.)

Some Chapters Topics Include:

Legal Issues
MLM Law in 50 States
FDA Health Claims: The Final Rules
The Snail that got Mugged: FTC v. Direct Selling
Start-up  Issues
Incorporating the Network Marketer
Five Dynamics that Drive An MLM Company
Product
Creating Your Next Million Dollar Product
Treasure Hunting for New Products
Compensation Plans
Comp. Plan Conversion: Direct Sales to MLM
Your Compensation Plan’s Competitive Edge
Communications and Media
Focus on the Mission…Not the Commission!
When the Media Calls… Who Answers the Phone?

Some of the Key Corporate Issues included in the manual are:

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