Differences between MLM and Pyramid

In vogue since the '50s, Multi Level Marketing, Multi-level marketing, Network Marketing (and its other names) are puzzled millions of people in France. Whether you're interested in a business opportunity where you may have doubts about the new "business" of your brother, I will try here to explain the differences between a genuine MLM (legal) and a pyramid scheme.



MLM = Scam???
While many scams are "disguised" in MLM, you just have to recognize them. In France, there is a body, which regulates the FVD all Direct Sales Companies. This body is directly attached to the Ministry of Labour. Many MLM companies are members of the FVD. This simple relationship allows to show that the French government is perfectly consistent with the principle of selling "multiple levels". Moreover, specific laws exist in France in MLM.

What is a pyramid?
A pyramid - in either - it's not too serious. The government is a pyramid, the hierarchy within a large company is a pyramid, a large family is a pyramid ... But by misuse of language, a pyramid now refers to a system of illegal enrichment. One can recognize a pyramid with several features:
1. Revenues are generated through the "recruitment"
That there is a product or not, the only activity that can generate revenue is to recruit distributors in his organization. It also tells you that there is no need to sell, it suffices to pay entrance fee and hire two or three friends to get rich.
2. The person "above" you will always win more than you:
When analyzing the compensation system shows that it is impossible to obtain a higher income than his mentor, he is clearly a pyramid, or the last entered are badgers ... For example, a compensation plan that pays you a certain percentage of your entire organization to "infinity" is a pyramid.
3. You are paid to recruit:
In a MLM 100% legal (in France) on recruiting a new distributor does not generate any direct income. You sell a "kit distributor" exactly the same price as you bought, your sponsor does not earn a penny either. Revenues are generated only when the distributor makes a new order with the supplier. There are many systems that pay you a bonus to boot "for each new distributor that you affiliate. This is absolutely forbidden in France.
4. The company in question does not really exist in France:
Although this does not directly characterize a pyramid, the fact that the company called "MLM" has no structure in France may leave a doubt about the legality of its sales system, or products and services sold. Note however that the system can be legal without necesita offices in France.

What are the advantages of MLM?
From the perspective of the distributor, the advantage of MLM is that revenues will depend on either of his studies or his qualifications nor his current financial situation, but only his personal effort. The MLM is one of the few opportunities in the world (if not only) that may have started with no money (the deductible costs less than 500 €) and can make you a millionaire.
From a customer perspective, the advantage lies in the fact that it can provide quality products or services at a competitive price and has a real relationship with the distributor - which allows him to use the products in any confidence, and often receive products directly from him.
From a business perspective, the advantage is obvious: the distribution costs are much cheaper, thereby increasing profits, and provide products or services of better quality.