13-11-2014, 10:16 AM
Abstracts: Since an MLM compensation plan specifies how participants are rewarded, it reveals whether the primary income emphasis is on recruiting or on retailing – and therefore, whether or not a given MLM is a disguised pyramid scheme. MLM spokesmen speak of the validity of a company’s products, the integrity of its leaders, and the company’s solid financial condition. It seems that the one thing MLM leaders do not want regulators to understand – the compensation plan is the one thing investigators must grasp in order to answer the question of where the emphasis is on company payout resulting primarily from recruiting(or product sales to recruits), or primarily from retailing to consumers outside of the MLM’s network of participants. The problem of evaluating MLM programs is further complicated by a wide array of complex MLM payout formulas, or compensation plans. In this system there will also be a problem of handling a database which is having a very large size. So we have to define the particular solution for that too. Independent non-salaried participants, referred to as distributors (or associates, independent business owners, dealers, franchise owners, independent agents, etc.), are authorized to distribute the company's products or services. They are awarded their own immediate retail profit from customers plus commission from the company, not downline, through a multi-level marketing compensation plan, which is based upon the volume of products sold through their own sales efforts as well as that of their downline organization.