Multi-level marketing is defined as a strategy which is used by direct-sales companies to recruit new distributors. This is essentially done by encouraging the existing distributors to bring in new distributors. In turn, they are given a percentage of the recruit’s sales. The new recruits are referred to as the distributor’s downline. And the good thing is that all the distributors make money through this process. This is when the direct sales of products are made to customers.

What Are The Important Aspects?

The key part of multi-level marketing is the recruitment phase. You can take Amway for example. The company might invite you to become a distributor directly, or through other distributors, or even through an advertised meeting. Distributors will earn money if they are dealing with the direct selling company. The sales of the MLM products will be the source of the money along with a portion of the extra distributors.
Although this is a legitimate mode of business, it still stands on the controversial side. The pyramid scheme of the business might cause some problems. Distributors, at times, take advantage of the scheme by pretending to be a part of the marketing method. The scheme focuses more on the recruitment phase rather than the actual sales.

The Advantages Of Multi-Level Marketing

The advantage of the multi-level marketing scheme is that it is inexpensive. Joining as a distributor is relatively cheap than starting a new base of business. Turning a business into a franchise is rather difficult. Multi-level marketing is legal in the USA, and it is regulated by the Federal Trade Commission. Even in Canada, the pyramid scheme is legal as long as they do not conflict with the Competition Act. Many of the Multi-level marketing companies are not legal and largely unregulated. The laws surrounding this pyramid scheme of marketing are not specific or defined properly. If you want to be a distributor in a company’s multi-level marketing scheme, evaluate the company properly. Investigate through the company thoroughly and see if they satisfy all the legal conditions. The defense prosecutions in these cases are powerful. Most of the companies are well-settles and can afford powerful representation.