A number of states have multilevel distribution statutes that require registration. States such as Massachusetts, Georgia, Louisiana, Wyoming, and Montana require MLM registration. Other states with MLM statutes, such as Texas, Washington, Idaho, Indiana, South Dakota, etc., do not require actual registration.

No state approves MLMs and there are no advisory opinions to be sought in the U.S. on MLM. I.e. there is no approving of MLMs in all 50 states.

In regards to registering as “doing business,” states generally do not regard selling through independent sales representatives as “doing business,” requiring registration to do business. MLM companies resist this classification, which is

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This blog post is the companion post to the video Raise Capital in Order to Recruit Key Distributors. MLM Attorney Jeff Babener discusses the need to raise capital in order to recruit key distributors below.

Hi, I’m Jeff Babener of MLMlegal.com and I’d like to talk to you about capitalization, can you recruit? Do you have a great recruitment background, the ability to recruit? Or a lineup of strong distributors? If so, your need for capital will be substantially diminished.

In the end your ability to recruit a talented and motivated sales network will be the number one key to your success. In fact, your need for capital is in direct inverse proportion to your ability to recruit. If you can recruit then you may have a cash cow on your hands. If recruitment is slow then your business plan needs to allow for buffer capital to hold you through one, two, or three years of break even or loss scenarios. That capital should be lined up ahead of time either through personal and close relationship resources or through angel investors.

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