 |
|
|
|
|
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 us 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
programs 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 down liners. 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 down liner'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 level; 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 exorbitant, 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
to easy to forget about the business, sit back in your easy
chair, and watch TV.
After a hard days 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 member? 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 news letters, 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 also are set up
to do most of the paper work 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
make 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 grated 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 perpetuate 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.
A limitation as to the number of persons who may
participate, or the presence of additional conditions
affecting eligibility for such license or right to recruit
or solicit or the receipt of economic gain therefrom, does
not change the conditions for a consideration other than
personal services, of property-tangible or intangible and
includes without limitation, franchises, business
opportunities and services. It does not include sales
demonstration equipment furnished at cost for use in making
sales and not for resale. The items in the sales kit may not
be sold to the participants for the purpose of resale.
"Investment" covers any amount or value paid for a reason
other than the purchase of a sales kit.
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 or 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 make 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, base 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! |
| |
|
|
|
