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Organizational Structure of an MLM

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Multi-level marketing companies commonly claim to offer large return on investment.

A multi-level marketing (MLM) business structure is based upon products or services sold by representatives or agents, known as distributors. Recruitment of new distributors is a key component in MLM.

  1. Distributors

    • MLM companies function by signing up large numbers of sales people, known as distributors. These individuals usually pay a fee for the right to distribute the pyramid-style company's products and recruit more sales people for commissions, according to CNN.

    Recruitment

    • MLM recruitment is usually unlimited in the number of levels of distributors. Most MLMs usually have at least four levels of distributors, according to MLM-Thetruth.

    Commissions

    • Distributors usually earn commissions through selling products and recruiting new agents. Although legality of MLM commission schemes is still unclear, companies making money primarily by collecting fees for recruitment are questionable, according to CNN.

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  • Photo Credit stretching the money image by Pix by Marti from Fotolia.com

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