<p align="Justify">What You Should Know About Multi-Level Marketing
MULTI-LEVEL MARKETING
Just what are all those thousands of programs and solicitations
spreading a swath across the country...called "Multi-Level
Marketing"? Well a good portion of them are nothing but chain
or pyramid schemes, some completely illegal.
A true Multi-Level plan is one in which there is an agreement
between yourself and a manufacturer or distributor to purchase
products at wholesale and sell them at retail, also with the
right to sponsor others (your down line) thus multiplying your
sales base and profits by receiving a percent of the sales made
through your downline. Persons you sponsor show others the
program and sign them up as members under themselves. In effect
you are multiplying your efforts by selling the product through
a network of distributors. The downline is usually set up at
three to five levels deep although it seldom gets that far,
especially if it is a multi-level program being circulated
through the mail.
A small initial investment is all that is usually required to
become a distributor. You should have a flexible schedule but
little experience is necessary. For you and your distributors
to have any kind of success, you must handle high quality items
which can be sold at substantially below retail store prices.
Distributors are charged for the program packet which includes
instructions, literature, samples, etc. To be legal, the
investment must be only a nominal amount. Sale or consumption
of the product must be the prime objective and no fees should be
collected for recruiting endeavors.
A common problem in recruiting people is getting them to "Look
at the Plan". If they have seen multi-level plans before they
won't give anyone a chance to explain the program as they think
they already know all about it. Some get around this by
inserting an ad in the local paper, asking interested parties to
call about "a good money-making plan". They use a telephone
answering machine which advises the caller where and when to
attend an "Income Meeting". The machine doesn't give them a
chance to ask questions. If they are interested and not just
curiosity seekers they may show up for the seminar.
Multi-level selling by large party plan firms are often
successful because they keep their members productive through a
series of coaxing, weekly meetings, phone calls and home visits.
This stimulates activity and better results are obtained. These
elements are missing in multi-level mailorder programs. There
is no motivation, inspiration or force applied to downliners.
The meetings and personal contacts that represent strength are
missing when the business is conducted by mail. Therefore a
good many of the multi-level mailorder programs can't work and
are basically worthless, especially on a 4 or 5 level down line
position.
A typical multi-level get rich scheme is where you are offered a
book selling plan for $5.00. You are assigned a code number and
mail out 500 brochures. When your name reaches the fifth level
you are supposed to have collected something like $50,000 in
commission for 100,000 books which sold for a total of $500,000.
This is based on only 10 orders received by you and 10 orders
received by each of your downliner's who also mailed 500
brochures.
If only 10 people in the entire United States initially worked
this one plan with the same success you are supposed to have,
there would be 5,000 brochures out the first level; 50,000 the
second; 500,000 the third level; 5,000,000 the 4th level, and 50
million in the 5th level. That would amount to some $11,000,000
in postage with brochures delivered to over one-half of the
90,000,000 mailorder buyers in the U.S.
This type of program will collapse under its own weight. After
one level there is usually a complete drop-out.
Most such plans get started because of exhorbitant, dishonest
claims. Tell the truth in an ad on Multi-level marketing and
there are very few takers. Change the ad to greatly exaggerated
claims, such as "Earn $100,000 a year working from the home part
time" and the inquiries pour in. The response on this kind of
ad doesn't mean that anyone will make any money!
There are too many ways to make an honest living without telling
lies so keep your Multi-level plans level!
As mentioned previously unless the organization you are dealing
with offers top quality products at discount prices it is very
difficult to make a living with the multi-level marketing
concept. A person has to knock on a great number of doors, or
send out a massive amount of literature through the mail in
order to find qualified people who are interested in pursuing
this kind of activity.
If multi-level programs worked as good as many of them advertise
the nation would be flooded with solicitations thousands of
times over for every plan on the books.
Being able to work a multi-level plan on a part time basis at
your leisure, with no pressure from the company as to how much
of the product you purchase or the amount of business you must
bring in each month, is one of the attractions of this kind of
activity but results are usually negative. It's too easy forget
about the business, sit back in your easy chair, and watch TV.
After a hard day's work at another job it doesn't take long to
forget that you have a part-time multi-level program going.
That phone call or that meeting to show the plan is too easy to
put off until "tomorrow". Yes; it takes a certain kind of
individual to follow through and they are few and far between.
You may make 200 calls and show the program 100 times before you
get even one member who will take an active part in the program.
Most Multi-level plans state that you can make thousands of
dollars by duplicating yourself a few times and your down line
doing the same. It never works that way. You are fortunate if
a small percent of your down line produces much of anything
unless you are able to spend a great deal of time teaching and
promoting their business as well as your own.
How are you supposed to get prospects and members? Most of the
promotional materials suggest you solicit your friends,
neighbors and relatives, at least as a starter. Many people are
reluctant to "take advantage" of their friends. Of course, if
you have the best bargains available "anywhere" you may be doing
them a great favor.
Phone calls, word of mouth, direct mail pieces and follow-up,
and local classified ads are other methods used to get members
and sell the products.
Multi-level companies usually offer newsletters, catalogs,
direct mail pieces, and Camera/Ready material which members can
have copied or printed locally. They often have name lists
available or advise members how to compile their own lists.
Mail Order multi-level organizations will usually drop-ship
direct to your customers if you wish. They are also set up to
do most of the paperwork and accounting, leaving members with
little detail work.
If you decide to try a multi-level program you are usually
required to pay a fee for which you will obtain all the
materials and information pertaining to the organization, the
products, and how the program works. You may also be asked to
purchase some of the items you will be selling. You will
contact friends and neighbors, explaining how the program works,
try to sell them merchandise from the catalogs and sign them up
as members if possible. You will compile lists of prospects and
make direct mailings. As your business develops you will need
to contact those in your downline periodically and offer
sympathy, help and assistance in order to make the business
grow.
Many other incentives, prizes and extra commissions are offered
by some firms.
Make sure the organization you choose and the programs they
offer are legal. If it is just a pyramid scheme whereby members
are merely signing up others for a fee and little if any
merchandise is being sold it could be illegal. In any event,
this type of operation will produce little if any money-making
opportunity. If in doubt it is advisable to check out the firm
with the Better Business Bureau or with the postal authorities
when it involves direct mail methods.
Remember also, there are some very fine multi-level firms
offering good opportunities for success oriented people. Those
who thoroughly enjoy meeting and working with others, who are
not afraid of hard work, not easily discouraged and who can
persevere in the face of many disappointments, have made their
fortunes in Multi-level marketing. With such attributes and the
right program together with proper training you can be a success
in this kind of business.
ILLEGAL MULTI-LEVEL PLANS!
In certain states most Multi-Level Sales plans can be classified
as illegal since it is unlawful to organize a "pyramid club" or
to induce or attempt to induce membership in a "pyramid club".
In such states a "Pyramid Club" means a sales device whereby a
person, upon condition that the person make an investment, is
granted a license or right to solicit or recruit for economic
gain one or more additional persons who are also granted such
license or right upon condition of making an investment, and who
further purpetrate the chain of persons who are granted such
license or right upon such condition. Pyramid clubs also
include any such sales device which does not involve the sale or
distribution of any real estate, goods or services, including
but not limited to a chain letter scheme.
Pyramids are illegal because they are inherently fraudulent. In
order to achieve the profits that are promised, a never ending
chain of participants must be recruited. A saturation point
will be reached and no more recruits will be available. When
this occurs the most recent recruits can't receive what has been
held out to them to cause them to join, and they lose all or
part of what they paid to join the scheme. After just a few
levels there would have to be millions or billions of
participants to keep the chain going.
Chain letters are not the only illegal pyramids. As noted
above, Multi-level sales schemes can be illegal also. Many of
them are nothing but chain letter schemes with the nominal
addition of some goods or services to be distributed. Legal
multi-level marketing systems are designed to distribute goods
and services and are not disguised as endless chains. A pyramid
club is present if participants make investments in return for
the right to recruit, for economic gain, others who in turn
recruit additional participants.
Both the "investment" and "recruiting" elements must be present
to constitute an illegal pyramid scheme. "Recruiting for
Economic Gain" means if anything is received directly or
indirectly as a result of recruiting new participants. Even
earnings based on sales made by new participants recruited, also
constitutes economic gain.
Evaluating multi-level sales schemes is a difficult process and
many considerations must be answered in order to determine the
legality or illegality of each multi-level plan or program. Is
there more stress toward recruitment than for the sale of the
product? Are the claims, as to what the earnings are, based on
actual experience of typical participants? (They better watch
out for the entries made in the IRS computers pertaining to
their fabulous income claims.)
Are there misleading representations? You would have to get
your attorney to review specific circumstances of each plan or
program in order to determine which ones are legal or illegal!
Even then you can't be sure. I am certain however, that if you
send any of them that are questionable to the Postal inspectors
office you will generally get a negative report back, regardless
of whether the plan may be legal or not.
The fact that the Federal Government, through the private,
non-governmental agency known as the Federal reserve, can print
and issue green paper out of thin air and cause usurious
interest rates across the country, or that the States can hold
lotteries that are considered illegal for private agencies or
persons, has nothing to do with the way people are not allowed
to play the multi-level or chain letter game!
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