A very good question.
And when I had answered it, TB said, “Simply the most useful piece of information I have received from anyone in MLM in decades. Thank you.”
Well that made me feel great, of course. But I also realized that there were probably thousands (if not hundreds of thousands) of people with the same question.
So, I made this video. Here’s the question . . .
“I have only one question, what happens if the MLM [multilevel marketing or network marketing company] you are with does not allow you to advertise, anywhere . . . without their permission. The concept of online marketing is not lost on me but advertising an MLM is, isn’t that why they focus on friends and families?” — TB, AUS
If you have a question where the answer might be of value to lots of people, feel free to submit it by email or in the comment section below. I can’t guarantee I can get to it. But if it’s big enough and important enough to help a lot of people, I will sure try!
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{ 6 comments… read them below or add one }
Lou, This is really a two part question.
1. There appears to be a conflict between what companies will and will not allow one associated with them to do and being classified as an “Independent Contractor?”
2. Some companies are adding newer policy updates now including some nearly hidden clauses that forbid distributors from working for another company “for up to 12 months after the distributor quits the first company…….?” Worded something like “not allowing your name or likeness to be used in the promotion of another company or product…etc.”
Again begging the question, is this not restraint of trade and in conflict with being classified as an independent contractor?
(Lou, please feel free to edit the above in any way which may best suit your purpose in presentation addressing these questions.)
Hi Craig,
Many MLM companies want to have it both ways: they want to keep you under control like an employee, but they don’t want the responsibilities of actually employing you.
In most countries, this is illegal and carries stiff penalties — and can result in companies being hit hard under local tax laws.
There’s nothing an MLM company fears more than having a court or government rule that their distributors should be classified as employees (due to the company’s one-sided policies and practices), because it means the company is now responsible for paying income and employment taxes, insurances, and all the other on-costs of employment, which can amount to 40% to 50% more than just wages and salaries.
The only way an MLM company can get away with this kind of behaviour (restraint of trade, unconscionable conduct, tortious interference with business, etc) is to BLUFF their distributors into complying, then cut off their income and threaten them with legal action or, worse still, binding arbitration that’s tilted in the company’s favour if they don’t comply.
Bottom Line: if your company uses these tactics and requirements, you’re working with the wrong company.
Lou,
Several years ago there was a lawsuit between a marketer and a company. The marketer was building a seperate business that produced simular products and he was not robbing his present downline but the company said he could not do it, and they terminated his distributorship, which was producing a very substancial income for him.
The distributor in turn sued the company and it went all the way to the Supreme Court, which ruled that the company was interfering with the man’s right to earn a living. They ruled that the company had to re-establish his distributorship and also had to pay him all of the compensation he would have earned.
You may want to check on this for future refference.
Hi James,
This would be a very useful post if you had some names or details.
I know of one arbitration that went very well for a distributor under similar circumstances as you describe, but I know of no case that went to the Supreme Court.
(see: Judgement will Cost Usana $7,000,000
If you could pass along some details, that would be helpful to all.
Lou
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