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© 2011 MLMAttorney.com - Sponsored by Jeffrey Babener
If you missed the May 2013 MLM Starting and Running the Successful MLM Company Conference, or simply wanted to attend but couldn’t, we have another chance for you. MLM Attorney, Jeff Babener, Co-Host of the MLM Conference and Editor of MLMLegal.com will be hosting our next Conference October 24th & 25th, 2013 in Las Vegas! Get more information by reviewing the details below:
WHAT?
The next Starting and Running the Successful MLM Company Conference is quickly approaching! On October 24th and 25th, 2013 we are hosting the MLM Conference for the 25th year! This is now our 65th annual conference (held almost consistently three times per year over the last 24 years). All executives/owners of MLM, direct selling, network marking, and party plan companies are welcome to attend. This is the original MLM Startup Conference, hosted and perfected by direct selling industry expert, MLM Attorney Jeff Babener.
WHO?
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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):
Not all penny auction companies are illegal.
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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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
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!)
For purposes of raising investment capital, the market section may be the most important part of your business plan.
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 this image for an up-close view of the manual cover
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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This blog post is the companion post to the video: Why Choose the MLM Model for Your Business? – A CEO Interview. Find out what makes MLM, direct selling, network marketing, and party plan business plans desirable to so many CEO and executives.
I believe one thing that is really going to change the climate today and that is if we create a way to support the entrepreneurs of this country.
Babener: It’s my pleasure to be speaking with Kris Krohn, he is one of the Founders of Strongbrook (REIC). When www.mlmlegal.com sponsors conferences in Las Vegas, we often have the CEOs of companies attend because it’s important to know what makes MLM companies great. And, of course, my observation is that nobody starts on top.
Kris: That’s right. Everybody starts at the bottom.
Babener: I’m curious, Kris. Tell me about Strongbrook, tell me about its origins, tell me about the triumphs and difficulties you had in creating this company.
Kris: I appreciate that, Jeff. I’ll tell you, Strongbrook is five years in the making. And, in fact, I can tell you that for the first four years we kept tweaking our formula because we have a very complicated product that produces amazing transformations for people who leverage and use it. And, it took a long time to really dial that in. It came down to very humble beginnings where we started with absolutely nothing. We were encouraged to keep formulating our product in helping people achieve success through real estate investment with the feedback we would get from our clients.
Then we would bring them more clients. And then we would tweak our program so more. And then we’d figure out how to help them successfully purchase more real estate. We learned along the way things like sleep-well-at-night accounts. There’s a certain amount of money that people want to have in bank accounts to feel comfortable. And really, it comes down to an amazing team and culture here at Strongbrook; where everyone works together very, very well. We have a culture of being very hardworking and putting the client first. That is a really short answer for our history over the last four years. It was about a year ago when we finally said, “You know? With this product we have helped over 1,000 people experience some pretty powerful principles, concepts and even financial changes. It has been a major influence in their lives and created some very positive changes.” We decided that we were not going to tweak our formula anymore.
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This blog post is the companion post to the video: Short Course on Network Marketing: Q&A with Jeffrey Babener on Pyramid Schemes. Expert MLM Attorney, Jeff Babener, answers the question, when it comes to pyramid schemes, how do you tell the difference between one that’s legitimate and one that is not? How do compensation plans affect a company’s legality?
You don’t just play the notes. You need to lose yourself in the music. And, that is true for every successful MLM company.
Jeff Babener: There’s a famous Supreme Court decision that where one of the Supreme Court judges was asked to comment on the definition of pornography. He replied that he couldn’t define it, but he knew it when he saw it. Sometimes you need a metaphor to understand the difference between an illegal pyramid, headhunting, recruitment scheme and a legitimate MLM company.
This story is a good example of the difficulty in defining pyramid schemes. And, you may come to your own conclusion. Here is a metaphor that I use a lot to help people with the definition of pyramid schemes:
The metaphor is about a gentlemen, will call him Party #1, and he sells a case of canned tuna fish to Party #2 for $10. And, Party #2 sells it to Party #3 for $20, and Party #3 sells the case of canned tuna fish until it gets to Party #10, who buys the case of canned tuna for $500. And, Party #10 opens up the case of tuna fish and it’s rancid. It’s inedible.
He goes back to Party #9 and complains, “I bought this case of tuna for $500 and it’s rancid.” Party #9 tells him to take it to Party #8, and Party #8 tells him to take it to Party #7, and so on until Party #10 goes all the way back to Party #1 and says, “You’re the one who started all of this! I have a problem!”
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This blog post is the companion post to the video: How to Tell if a Company is a Pyramid or a Legitimate MLM.
You may have been recruited for a network marketing opportunity or you are a recruiter. Inevitably, this question will come up, is the company a pyramid scheme or a legitimate business opportunity?
MLM Pyramid Schemes – Everything You Need to Know All in One Place
Although this is a complex legal area, let me share a simple metaphor that draws a clear line in the sand.
The metaphor is about a gentlemen, will call him Party #1, and he sells a case of canned tuna fish to Party #2 for $10. And, Party #2 sells it to Party #3 for $20, and Party #3 sells the case of canned tuna fish until it gets to Party #10, who buys the case of canned tuna for $500. And, Party #10 opens up the case of tuna fish and it’s rancid. It’s inedible.
He goes back to Party #9 and complains, “I bought this case of tuna for $500 and it’s rancid.” Party #9 tells him to take it to Party #8, and Party #8 tells him to take it to Party #7, and so on until Party #10 goes all the way back to Party #1 and says, “You’re the one who started all of this! I have a problem!”
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This blog post is the companion post to the video: Role of Compensation Plan in a Successful Direct Selling Company. The following is the transcript of MLM Attorney Jeff Babener’s own words:
Hi, I’m Jeff Babener of MLMLegal.com. I’d like to talk to you today about the compensation plan. It better be good.
There are obviously significant legal issues in evaluating and implementing compensation plans. Review of the compensation plan a competent MLM lawyer is essential.
Does a compensation plan make or break a startup MLM company? History suggests that a good compensation plan is helpful and absolutely necessary. Does it drive financial success? Probably not. Will a bad compensation plan contribute to failure? Probably, together with other unlucky breaks. As industry expert Michael Sheffield notes with respect to a good compensation plan, “Its absence will be noted more than its presence.”
Is there anything new under as far as compensation plans are concerned? Probably not. The goal is always the same regardless of the type of compensation plan: motivate varying behaviors of distributors, ranging from direct sales, to building wide to building deep, to supporting a downline, to maximizing sales volume production and retention.
It is of key importance is that the compensation plan is easy to explain to recruits and that it is perceived as fair and balanced.
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This blog post is the companion post to the video Choosing the Right Product for Your MLM Company. The following is the transcript of MLM Attorney Jeff Babener’s own words:
Hi, I’m Jeff Babener of MLMLegal.com, and I’d like to talk to you today about how to get your product right the first time.
If your business is the machine and your software runs the machine then your product or service is, as the French would say, your reason for existence. In looking back on the history of the direct selling industry, a chicken and egg analysis makes it difficult to determine whether the business opportunity or product was the essential reason for commencement of the business. There are instances of both being true. The founders of Avon, Mary Kay, and Home Interiors came from successful experiences in marketing other products. They found a product suitable for their marketing talents. On the other hand, the founders of Nikken, Amazon Herbs, and Shaklee had a passion for bringing uniquely-new products to the world and direct selling became the best vehicle.
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