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In a typical network marketing or multi-level marketing arrangement, individuals associate with a parent company as an independent contractor and are compensated based on their sales of products or service (as well as the sales achieved by those they bring into the business).
In a legitimate MLM company, commissions are earned only on sales to the end-user, who is often also a distributor. No money may be earned from recruiting alone ("sign-up fees"). Some companies produce revenues primarily by attracting new participants or selling them marketing services, as opposed to selling actual products. One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from new-recruit bonuses or business support sales.
Multi-level marketing has a recognized image problem due to the fact that it is often difficult to distinguish legitimate MLMs from such illegal scams as pyramid or Ponzi schemes. NM/MLM businesses do operate legitimately in all 50 U.S. states and more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising."
Do yourself a favor. If you've got it in your head that there's something illegitimate about network marketing, invest a half hour or so of your time in a bit of education. Watch the Brilliant Compensation video and make up your OWN mind. DON'T let other people, no matter how well- intentioned, deprive you of your freedom to choose what's in YOUR best interests. Sure, armed with the FACTS, as opposed to other people's OPINIONS, you may still decide, for your *own* reasons, that network marketing is not for you. Fine! But a little bit of independent thought may just open up a whole new world of opportunity.