If a Sales Kit or Startup Fee Is Several Hundred Dollars, Then Is This Considered “Frontloading?”

Frontloading generally refers to a process in which a MLM company, or a sponsoring distributor, encourages a new distributor to purchase far more than is commercially reasonable under the circumstances. For a more detailed explanation, watch this video by expert MLM Attorney, Jeff Babener.

Front loading generally refers to a process in which a MLM company, or a sponsoring distributor, encourages a new distributor to purchase far more product than is commercially

Continue reading »

Tagged with:
 

Front loading generally refers to a process in which a MLM company, or a sponsoring distributor, encourages a new distributor to purchase far more product than is commercially reasonable under the circumstances. Often the “push” is explained to the recruit as necessary to qualify in the plan. This is an unacceptable practice is often one indicia of a pyramid scheme.

On the other hand, virtually all regulatory agencies recognize that a purchase of an “at cost” sales kit is an acceptable practice in the mainstream of leading direct selling companies. Such mandated kits are typically in the $50-$100 range. They generally entail “hard copy” or online supply of sales and marketing materials as well as ongoing sales and marketing materials updates for a year. Typically the mandated sales kit does not include product and generally a company offers an optional deluxe kit that may include product. Such an optional kit, which is often referred to as a “fast start” kit, may contain several hundred dollars of product. This is not unusual. Although the same regulatory standards on

Continue reading »

Your cost of goods is calculated as your acquisition or manufacturing cost. The more frequent question we come across relates to pricing. Most MLM experts agree that you must have adequate margins to pay commissions and to make a profit. Different products and services carry different profit margins. In addition, smaller margins may be satisfactory with high-priced products because there is still room for profit. Most MLM companies are likely to pay total commissions equal to between 30 and 45 percent of the price sold to distributors for resale, or prices for which consumers buy directly from the company. A typical company will try to achieve a minimum 5-7 times markup to allow for commissions, overhead and profit. Typical markup for resale by distributors is 25% of their purchase price. A good place to visit this issue is at the MLM Startup Conference, offered by www.mlmlegal.com, where experts discuss margins, pricing, profit, proformas, and a whole lot more.

Continue reading »

Visit MLMLegal.com for more information on pyramid schemes and access to books, brochures and videos with all the information you need to know about the direct selling industry.

If you’ve decided that you’re right for network marketing, and that network marketing is right for you then it’s time to go out and find the best MLM company to join. Or, if you’ve already signed up with one, it’s time to make sure it’s worthy of your time and effort.

Choosing the right company is not a matter to take lightly. Due diligence will pay off. Being knowledgeable about the company you represent will help you to determine whether or not you want to join the company. Direct selling can bring you added financial security and many new friendships, but it’s important to be sure that you’re part of a legitimate opportunity.

If you are searching for a direct selling company to join, which you’ll be introducing to your friends and family, your credibility will be on the line. You want to make sure you are representing a company with credibility and with products that stand on their own in the marketplace.

Continue reading »

Some clear criteria for legitimate direct selling/network marketing companies have long been recognized.

In determining whether a program is a legitimate direct selling/network marketing opportunity, the would-be participant should consider several important points:

  1. Goods or Service. Legitimate companies offer high-quality goods or services and guarantee consumer satisfaction. Goods and services must have a “real” demand in the marketplace, or an anticipated “real” demand if the good or service is just being introduced. Goods and services must have their own intrinsic value, such that distributors who purchase them would do so even if they were not involved in a network marketing business opportunity.

    Continue reading »