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MLM and pyramid schemes

want to talk about the differences between pyramid selling (illegal) and the multi-level marketing.

This is to clarify some issues that perhaps are not clear, or to provide answers to your questions.

Multi-level marketing (MLM) (or Network marketing or multilevel sales) is a method of distributing products or services that allows a distributor or retailer to create a network of distributors without substantial investments in money.

Usually individuals, buying a license identifying a "code" which are related commissions and sub-distributors, may engage in independent sales on behalf of principal.

Distributors are rewarded on the basis of the goods or services directly or distributed by others in their distribution network, as a percentage of overall turnover of the organization, and difference bands. The MLM was born in 1934 in the United States.

In multi-level marketing, products are distributed all types, and not necessarily the franchisees have to directly use these products, although it is recommended to improve the climate of "trust" in the "recommendations of the buyer that the seller makes to potential buyers.

Any other company that uses the MLM as a distribution system has a different remuneration system for its dealers, and therefore different training systems.

If the agreements do not specify a product to advertise and distribute, it is called a chain letter, believed to be illegal.

The basic concept of MLM is that earnings are directly proportional to the type and quantity and quality of work. Potentially they are also very high, but must struggle with the difficulties of creating a network of sales. It is comparable to a franchise system, but the company does not have high costs of implementation and management, but offers greater flexibility.

Unlike the pyramids or chains Anthony MLM allows a potential gain for each member and is not illegal in most countries of the world, because an MLM is a win-win (Win-win), where those who want to achieve results must inevitably help other people achieve theirs.

Multi level Marketing focused on various Italian universities (including Bocconi), who have called this system "The new frontier of marketing."

But often people with few scruples, bring up, impersonating Multi Level, pyramid schemes (illegal) in which the victims cheat dreamers of easy money. Especially since to get to member of these organizations must often pay a high membership fee or sign a real contract, not to be protected from any point of view.

In summary, the fundamental differences between an MLM and a pyramid selling are as follows:



MLM SYSTEM - the multi-level marketing is based on the actual distribution of products;

- MLM in the employees are paid based solely on sales products;

- the multi-level marketing requires in some cases responsible for the sale or independent start-up investment costs and no minimum penalty for leaving the industry,

- Marketing offers multi-profitable long-term business opportunities;

- the multi-level marketing warranties and consumer protection rules which guarantee the right of withdrawal and "money back" pyramid selling



- no basis for the sale of profitable products from the commercial point of view;

- the payment of commissions is calculated only on the number of recruits;

- require high entry costs and the obligation to store products maybe difficult to resale

- pyramid schemes or illegal, are scams that usually disappear within a short time;

- no warranty applies and defense of consumer rights.

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