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How to Evaluate an MLM Business OpportunityFirst, what is an MLM business opportunity? Multilevel marketing (MLM) refers to a product selling system that relies on independent distributors, and involves multilevel payouts for each product sale. Distributors sell product as well as recruit other distributors. At sale, the immediate distributor collects a fee for making the sale, and the "upline" distributor, who recruited that seller as part of his or her "sales force", also collects a fee on the sale. However many upline distributors are connected to a product sale, by a direct distributor/recruit relationship, there are that many fees paid out on the product sale.
An MLM can be a very supportive environment in which to learn the ropes of running your own business. Unfortunately, a legitimate MLM business opportunity can be easily confused with a pyramid scheme.
Both an MLM and a pyramid scheme rely on a product selling system based on multilevel payouts. The difference is that in an MLM the goal is for everyone to make money from product sale fees. While, in a pyramid scheme, the goal is to defraud all of the distributor/sellers by funneling all fees to the creators of the pyramid scheme – with no interest in the sale of the product or customer service.
Here are five points that will help you separate an MLM business opportunity from a pyramid scheme.
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