How can I tell a legal Network Marketing business from an illegal Pyramid?
Network Marketing — also known as MLM (‘multi-level marketing’), relationship marketing and referral marketing, is the 21st century way for entrepreneurs to build a high income, without having to make huge financial investments. Most MLMs don’t need any premises beyond a computer desk and perhaps a filing cabinet (though some may need storage space for product). Unlike franchises (the business opportunities of the 20th century) in general the upfront investment is small and training is usually free or very cheap. Overheads are low or non-existent, profits can be very high indeed. At first glance, MLM is very similar to the pyramid schemes which have been made illegal in most of the West. In the pyramid, a representative pays his initial stake when he is recruited and is then shown how to recruit other representatives. Every representative recruited brings a bonus and adds to the potential residual income. But, if no customers are required, sooner or later the whole structure will colla
