Multi-Level Marketing: A Warning For Would-Be Franchisees

International Law Office:

Some forms of contract are presented as franchise agreements even though they have few or no characteristics in common with franchising. This is the case of multi-level marketing, which is often promoted as franchising.

Multi-level marketing is a distribution method for products or services which allows a distributor or vendor to build a network of distributors without significant initial investment. Usually, the distributors are paid on the basis of the products or services distributed directly or by third parties within their distribution network, as a percentage of the global profit from the sale of such products or services. In multi-level marketing networks, distributors may purchase some products for personal use and some for resale to third parties, and are encouraged to find new members for the network.

The only potential connections or similarities between multi-level marketing and franchising are the resale of products or services, the existence of a network and the provision of administrative services. More.

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