Hard to believe, but it’s been a year since my post with the following information on evaluating Network Marketing. Far too many people sign up with companies before giving these types of questions much thought.
6 Questions for Evaluating MLM
1. Do you understand the compensation plan or is it confusing?
2. Would you buy the products for the retail price or are they too expensive?
3. Are the start up fees reasonable and is their value added to the start up?
4. Is the training included, or is training something you have to pay extra for?
5. Is the company using today’s technology or are they still meeting 2-3 times a week in hotels and conference centers?
6. How good is the company reputation?
The FTC’s TIPS TO AVOID PYRAMID SCHEMES
1. Avoid any plan that offers commissions to recruit new distributors.
2. Beware of plans that ask you to spend money on costly inventory.
3. Be cautious of claims that you will make money by recruiting new members instead of on sales you make yourself.
4. Beware of promises about high profits or claims about "miracle" products.
5. Be cautious about references; they could be "shills" by the promoter.
6. Don’t pay money or sign contracts in a high-pressure situation.
7. Check out all offers with your local Better Business Bureau and state Attorney General.
The FTC on Multi-Level Marketing
1. Avoid any plan that includes commissions for recruiting additional distributors. It may be an illegal pyramid.
2. Beware of plans that ask new distributors to purchase expensive inventory. These plans can collapse quickly — and also may be thinly-disguised pyramids.
3. Be cautious of plans that claim you will make money through continued growth of your "downline" — the commissions on sales made by new distributors you recruit — rather than through sales of products you make yourself.
4. Beware of plans that claim to sell miracle products or promise enormous earnings. Just because a promoter of a plan makes a claim doesn’t mean it’s true! Ask the promoter of the plan to substantiate claims with hard evidence.
5. Beware of shills — "decoy" references paid by a plan’s promoter to describe their fictional success in earning money through the plan.
6. Don’t pay or sign any contracts in an "opportunity meeting" or any other high-pressure situation. Insist on taking your time to think over a decision to join. Talk it over with your spouse, a knowledgeable friend, an accountant or lawyer.
7. Do your homework! Check with your local Better Business Bureau and state Attorney General about any plan you’re considering — especially when the claims about the product or your potential earnings seem too good to be true.