Multi level marketing, or MLM, is a form of direct sales home business in which independent representatives sell goods and services from a company to an end consumer. The multi-level aspect refers to each representatives ability to recruit and train other representatives, and earn a commission on their reps' sales.
Income earned in MLM comes from the commission earned on personal sales, as well as a percentage of the sales earned by other reps recruited by you.
There are many myths and misconceptions about MLM, including it's illegal. For an MLM to be legal, it needs three things:
1. A quality product or service
2. Income is earned off sales of products or services
3. The focus is on sales, not recruitment alone.
A program with no or a low-quality product, or with a focus on getting paid per recruit, could be an illegal pyramid scheme. However, don't let the term pyramid throw you off. It's not the shape of the organization that makes it illegal. What makes it illegal is the lack of a quality product, or that income is earned on recruiting, not commissions from sales.
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