Definition: A business model in which
a distributor network is needed to build
the business. Usually such businesses
are also multilevel marketing in nature
in that payouts occur at more than one
level. .
Network marketing is a type of
business opportunity that is very
popular with people looking for part-
time, flexible businesses. Some of the
best-known companies in America,
including Avon, Mary Kay Cosmetics
and Tupperware, fall under the
network marketing umbrella.
Network marketing programs feature a
low upfront investment--usually only a
few hundred dollars for the purchase of
a product sample kit--and the
opportunity to sell a product line
directly to friend, family and other
personal contacts. Most network
marketing programs also ask
participants to recruit other sales
representatives. The recruits constitute
a rep's "downline," and their sales
generate income for those above them
in the program.
Things can get sticky when a network
marketing network compensates
participants primarily for recruiting
others rather than for selling the
company's products or services. A
network marketing system in which
most of the revenue comes from
recruitment may be considered an
illegal pyramid scheme.
Since network marketing programs are
usually exempt from business
opportunity regulation and aren't
defined as franchises under state and
federal franchise laws, you'll need to do
your own investigation before investing
any money.
