Where can you go to learn what you need to know about MLM legal regulations?
The answer is the Direct Selling Edge Conference, the two-day corporate school for owners and executives of direct selling companies.
MLM Law is comprised of a tapestry of statutes, government regulations and cases. There are several governing bodies watching over the industry including the Federal Trade Commissions, Securities and Exchange Commission, state Attorney Generals, Food and Drug Administration and the Department of Justice. With the mixture of old statutes and confusing cases, it’s difficult for any company to successfully navigate all of the landmines.
Starting a network marketing business can be challenging at first, but with a properly configured network marketing business, the ends justify the means as the entrepreneur operates a lucrative business while empowering ambitious people with the ability to change their finances. There’s no better business model that offers these perks.
However, to whom much is given, much is required. When you empower everyday citizens with the ability to represent a brand and recruit other participants, it triggers several responsibilities that are unknown for most entrepreneurs. When the sales force has a financial incentive to sponsor others, they can get creative to induce people to sign up. “Bubba Juice is so great, it can cure cancer! Make your first million before the end of the week!”
Statements made by people in the field, whether they’re big or small in your business, are attributable to your company and need to be monitored.
Things you should consider:
- Do you have the right policies in place to prohibit bad behavior?
- Are these policies incorporated in your distributor agreement?
- Do you have a history of enforcing your policies?
- Is your compensation structure built in a way that properly incentivizes retail sales?
- Is your business structured in a way that runs afoul of securities statutes?
- Do the Business Opportunity regulations apply to your business?
- Is your business properly registered?
- Do your marketing materials have the proper income disclosures required by the FTC?
- Is your intellectual property protected?