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MLM Legal Tips from MLM Consultants

It’s a fact of life: business is regulated. But with the basics in place, a business can confidently launch. Successful start-ups keep abreast of legal issues and regulatory demands as they navigate the challenging waters of early years.

The law can actually be a protective wall for your business, and you should diligently close holes and gaps in the wall as they appear. By its nature, the law both protects your company, its distributors and customers, and at the same time it protects consumers by defining and enforcing unsavory and illegal practices. As your MLM Consultants we will help you avoid obstacles and guide you to success!

Taking the right steps at the right time in your company’s development, you can feel more assured that the protections will work in your favor. At the earliest stages of your new business, you must be sure to set in place the important fundamentals listed below:

A. MLM Distributor / Consultant Policies & Procedures
B. MLM Distributor / Consultant Agreement
C. State Registrations
D. Legal Review of Your Company’s Compensation Plan
E. Legal Review of Labels and Ingredients
F. Legal Review of Literature and Promotional Materials

Several excellent law firms specialize in the unique areas of direct selling. Over time, you will want to develop a relationship with a MLM legal services team. These teams can provide services ranging from start-up support through the complex issues related to regulatory actions, distributor litigation, and compliance with federal and state laws.

Many new MLM companies do what they can to get started on their limited budgets. And that’s okay, too. One alternative that we as MLM Consultants favor is to support those companies in the low-cost options for creating their own policies & procedures, distributor agreement, and state registrations, using forms that have been specially prepared to guide them through the process. When it comes to MLM legal reviews of compensation plans, ingredients, labels, and literature, for example, we strongly encourage the involvement of a legal services team.

To help you better understand some of the important MLM legal elements of your direct-selling business that you will encounter during growth phases in the business lifecycle, consider this following general legal checklist for planning your approach to meeting your company’s legal needs:

Define MLM Legal Needs

Start-up Services
Entity Selection and Formation
Product Packaging & Labeling Review
Literature / Copy Review
Business Kit Review
Intellectual Property Protections

Filings, Reviews & Registrations

General Business, Local, Warehousing, Zoning
Importer
State Tax ID Number(s)
Federal Tax ID Number(s)
Non-Prescription Drug Applications
Hazardous Product Submittals
Surety Bonds
Sales Tax & Voluntary Compliance
Intellectual Property Filings & Registrations
Corporate Registrations
Business Opportunity Registrations
Anti-Pyramid Registrations
Direct Selling Registrations
Employment Planning and Compliance

Distributor Forms & Agreements

Application & Field Rep Agreement
Autoship Authorization Provision / Form
FTC "Cooling Off" Documentation
Compensation Plan Review
Policies & Procedures
Contracts and Lease Requirements
Parcel Delivery Services
Customs Brokerage Services
Equipment & Facility Leases / Purchases

In this section the LaunchSmart™ Launch Guide will cover the following legal planning elements in more detail:

Policies & Procedures
Distributor Agreement
State Registrations

MLM Policies & Procedures

MLM distributor policies & procedures set the rules of the game for distributors, consultants, associates, independent business owners, or whatever special designation you use for your independent representatives in the field. Some feel that a “cut & paste” approach to policies & procedures is sufficient, particularly if they borrow from well-established companies. Without question, the great companies have invested much by way of legal fees and experience in crafting policies and procedures that support and protect both business and distributors, and much can be learned by evaluating their legal forms.

The start-up company faces three options for creating policies and procedures:

Hire a legal services firm to draft policies & procedures
Write their own, using a “cut & paste” approach
Use forms that have been specially prepared to guide the process

MLM Policies & Procedures Checklist & Key Considerations

This section will give you the checklist for guiding the design of your company’s field policies & procedures.

Definition of Terms
Distributor ID Number
Development of Customers
Development of Distributors
Product and Income Claims
Products / Services
Multiple Distributorships
Trademarks and Copyrights
Transfer / Sale / Assignment / Succession
Countries of Operation
Methods for Enrolling
Benefits for Distributors
Renewals
Advertising and Internet
Literature, Sales Aids, Promotional Materials, Internet web pages
Media and Media Inquiries
Spamming
Business Entities
Changes
Commercial Sales
Conflicts of Interest
Cross-Sponsoring
Excess Inventory
Taxes
Insurance
International Marketing / Sponsoring
Bonuses & Commissions
Product Guarantees / Returns / Inventory Repurchase
Dispute Resolution
Ordering
Payment & Shipping
Inactivity / Cancellation

The LaunchSmart™ MLM Consultant Team is ready to help. Contact us for a Free Guided Assessment to help you pinpoint where you are and to define the roadmap to launch. Our approach is to help you assess and plan, and then to support you at whatever level you need. Or if you just need our encouragement, that won’t cost you a dime!

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