There are two issues that have surfaced in recent years: 1) social networking, and 2) frequent migration of distributors between companies. With social networking concerns, companies have had to decide on positive protocol for consultants who socialize through technology. In terms of the migration of consultants, companies have often found themselves constantly revisiting policy that both protect the livelihood of all its distributors while also protecting the interest of the company. These issues are constantly under review. Most companies continue to revisit these issues multiple times.

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A post on Facebook is really no different than a mass email, by www.mlmattorney.com.

A post on Facebook is really no different than a mass email.

Clearly, while consultants are with a company they are asked not to get involved in raiding activity. Network marketing companies have mixed opinions on post-termination behavior. Most companies ask that consultants not raid the downline for a certain period of time after they stop consulting for the company. Companies that ask this of their consultants argue that the consultant’s Facebook profile is basically an email list; a post on Facebook is really no different than a mass email. Not many companies specifically outline post-termination rules in their policies and procedures; however, most companys’ position on the issue is effectively the same as if you started sending emails to everyone in your downline once you left the company.

Several approaches have been noted, including the drafting of agreements where companies and distributors have bifurcating social media pages. Basically, consultants would have a personal and professional Facebook page. This causes a bit of a dilemma because many consultants will make close friends with those in their downline. Perhaps not everyone fits into a personal or professional-only account. Companies look at it as more black and white. Companies see it as a consultant holding a lengthy email list, whether it be on Facebook or Twitter, etc., and once they’ve sent our an announcement saying “come join me at my new company…” then it is just as if they are sending a mass email to their downline. Both perspectives are understandable, and so far, there is no industry-wide solution to the problem.

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No one can control all of the challenges that face the direct selling industry, but education and transparency is the best approach to discuss issues.

No one can control all of the challenges that face the direct selling industry, but education and transparency is the best approach to discuss issues.

We have a long-term perspective as a law office that has had three decades of experience in the MLM industry. In the last three years or so, developing trends have posed both opportunities and challenges for network marketing companies. Mr. Babener discusses a few of these opportunities and challenges (paraphrased from the DSWA interview with Nikki Keohohou) in this post.

As far as industry-wide opportunities are concerned, there has been an explosion in party plan companies. The party plan companies that we know and represent are doing quite well. There has been growth in the public recognition of these companies. This is due to large-scale events such as the 2009 Super Bowl where Avon was a primary sponsor. At the 2009 Super Bowl, Avon advertised their opportunity, not just their products, which was really a message to the country that our industry has something special to offer to everyone.

The internet has also helped push the industry in a positive direction in recent years. Social media and growing internet technology has enabled many companies to expand internationally.

However, this also means that the industry has a new challenge: coping with internet technology. Companies have to recognize the creative power of Facebook, Twitter and all of the other social media platforms. Companies have to find a balance between enabling their consultants the ability to be creative and protecting the brand. Protecting the brand presence in search engines, protecting against inappropriate medial/earnings claims and allowing consultants to work with social media, providing basic tools for distributors, are industry-wide challenges that require delicate balance.

In addition, we’ve seen some tension between new companies and distributors in recent years. There are some consultants who are too willing to jump ship and bounce from one company to another. Distributor raiding is undermining to the company and the opportunity, as well as to all of the consultants left behind.

On the other hand, we’ve seen some overreaching companies who’ve been bullying distributors, telling them what they can and cannot do. There will have to be a dialogue to figure out the common ground for what are reasonable expectations for distributors and what control companies can have over distributor actions.

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“Legal Hotspots for Direct Selling Companies.”

“Legal Hotspots for Direct Selling Companies.”

Nikki Keohohou with the Direct Selling Women’s Alliance (DSWA) hosts the Executive Interview Forum titled “Legal Hotspots for Direct Selling Companies.” The interviewee for this hour is Network Marketing Attorney, Jeff Babener, Editor of www.mlmlegal.com.

View the video on our website: mlmattorney.com or mlmlegal.com; or view it on Youtube.

In this hour-long video, Jeff Babener addresses network marketing industry topics such as:

–          Distributor raiding

–          Pyramid scheme

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The need for capital is in inverse proportion to your ability to recruit.

The need for capital is in inverse proportion to your ability to recruit.

This is the million dollar question. The need for capital is in inverse proportion to your ability to recruit. Your network marketing company will either have hired that talent or you will bring on a vice president of marketing to help search for key first leaders, typically under some type of Presidential Founder Program, which will include protocols for products and rewards to key first leaders.

Distributors should first search their “warm market,” that is to say, family, friends, work, church, clubs, etc. Surprisingly, if one looks at the top distributors of many companies, it will be noted that they did not have experience in MLM, but rather their success was driven by their passionate bonding with product, management, sales leaders, and vision of

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