*==============================================* M A S T E R N E T W O R K E R The Art of Building A Business by Professor Lon Lindsey MASTER NETWORKER #38 July 23,1997 *==============================================* INSIDE YOU WILL FIND: "The Art of Building A Business - What Makes MLM Legal? The Archive of Master Networker Publications What's Hot Directory" Our weekly one liner. The humorous side. The Master Networker recommended business web page for the week . . . A Business that has passed the legality test for years! Master Networker Recommended Readings. ================================================== Hello fellow "Master Networker" subscribers! This is number thirty- eight in the Master Networker series. If you happened to miss the first thirty-seven publications, you can retrieve them at: http://masternetworker.com/mailfiles/mailfile.html or you can retrieve them by email from the auto-responder: MasterNetworker-issue-#.txt@masternetworker.com Substitute the desired issue number in place of the "#" Example: mailto:MasterNetworker-Issue26.txt@masternetworker.com **************************************************************** My wife, Jan, and I just returned from a lovely two week vacation in Minnesota. Although Minnesota DOES have computers, I wasn't around any. Minnesota is the land of 10,000 lakes . . . and beautiful lakes they are. It is good to be back in the "land of 10,000 computers" as I can now get my computer and Internet fix. Due to returning to mounds of postal mail and hundreds and hundreds of email messages, the ole "Prof" is a bit unprepared for his Wednesday lecture . . . however I have a good backup thanks to Gerald Nehra is who a MLM specialist private practice attorney. Mr. Nehra's "legality test" is something all aspiring networkers need to read. In fact, those of us who have been around the industry for awhile need to review it. With so many new companies coming and going, it is wise for us to give the "legality test" ourselves BEFORE we make a decision to join a particular company. <><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><> T H E A R T O F B U I L D I N G A B U S I N E S S W H A T M A K E S M L M L E G A L ? MLM Legality Test by Gerald P. Nehra There are many characteristics, or "red flags" that distinguish an illegal pyramid from a legitimate multi-level business opportunity, (often shortened to MLM.) They have been written about often in many publications and by necessity often contain legal terms and industry jargon. Also, danger signs of a few years ago may have been camouflaged or fixed by the newest drafters of plans so one needs to be on guard for new and different twists. Is there a simple, easy to apply, test one can give to a business opportunity, that addresses the pyramid law risk without all the pyramid law legal terminology? There is. What follows addresses that need. It is the single-level test for the multi-level business opportunity. It goes like this: Can one make some money SINGLE-LEVEL, that is, without sponsoring another business opportunity seeker? Note the specific use of the word "can", not the word "would". It is usually a given that the business opportunity prospect is urged to sponsor, and that the business opportunity presenter will say or imply that the "real money" is in building a group. But that is O.K., SO LONG AS - those who choose not to sponsor at all, CAN STILL MAKE MONEY. Note also the use of the word "MAKE". It's "MAKE MONEY" not "SPEND MONEY", meaning paying income taxes if the gross income exceeds expenses associated with producing the income. Buying for personal use at distributor prices rather than customer prices, while a savings, does not generate INCOME upon which one is required to pay taxes. Buying for personal use by itself is not an income opportunity. If the proposed business opportunity consists ONLY of buying for personal use and sponsoring more representatives, with no provision for sales to customers, it is flawed. This simple test needs to be applied to two aspects of a business opportunity. The first aspect is the design. What do the company documents say about how one makes money? How does the compensation plan work? Not all the fine details of every commission, bonus or reward need be understood, but simply, can one make SOME money without sponsoring. Remember, one does not MAKE money when one buys any product or service for personal use. The application of this test should in no way imply that there is anything wrong or illegal about personal consumption. It is just that it alone cannot be the sole basis for a business opportunity. The second aspect of the application of the test is the plan implementation. Some plans are designed correctly but are flawed in the implementation. Can one make money, even without sponsoring, as the plan is being taught and implemented by the prospective sponsor and the distributors closely associated with him or her? If there is no acknowledgment or support for the non-sponsoring participant in the business opportunity, something is wrong, maybe not in the design, but surely in the implementation. Reputable and legally designed and implemented multi-level business opportunities provide a money making opportunity SINGLE LEVEL to those who choose not to sponsor. Of course, if one sponsors others, then ADDITIONAL money making opportunities exist when those sponsored generate sales. Apply this test to multi-level business opportunities. Look at the plan design, and look at the way the plan is being implemented by the prospective sponsor and associates. If the ONLY WAY to make money is by sponsoring, STAY AWAY, the plan is fatally flawed. Gerald P. Nehra is an MLM Specialist Private Practice Attorney. He is one of only a few attorneys nationwide whose practice is devoted exclusively to direct selling and multi-level marketing issues. His 25 years of legal experience includes 9 years at Amway Corporation where he was Director of the Legal Division. He can be reached at 1710 Beach Street, Muskegon, MI 49441, 616-755-3800, 616-755-4700 FAX. Credentials and Billing Information are available through Fax-on-Demand at 803-548-3299, ext. 3088, and E-Mail Auto Responder at MLMAtty@memo.net. His E-Mail Address is MLMAtty@aol.com Permission is hereby granted to duplicate this article, AS LONG AS the biographical information above is included. ************************************************************************ How would you like to be the only representative from your business opportunity to be listed in this "What's Hot" Directory. Explode your opportunity by registering and setting up a web page today. Visit: The American Dream Network, Inc. http://www.munymaker.com **************************************************** This week's one liner ---------------------------------- Don't throw away the old bucket until youre sure the new one will hold water. ========================================================= The Humorous Side - When parents cannot control their children in the home, it is extremely difficult for the government to control them in the streets. ****************************************************** >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Website of the week: Looking for a FEEL GOOD company that WON'T go out of business? Looking for a company you can plan your future on? Looking for a MLM company that PASSES the legality test? http://www.watkins-inc.com (if you like what you see . . .say my friend Ken Wedel (115029) sent you OR email me for a preferred information package. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Master Networker Recommended Readings: BOOKS WAVE Three - Richard Poe Money, Money, Money, Money, Money - John Milton Fogg The Future Is Knowing Network Marketing - Patrick W. Higgins Who Stole The American Dream? - Burke Hedges Working Smarter From Home: A Guide For Network Marketers - Crisp Paul J. Meyer & The Art of Giving - John Edmund Haggai The One Minute Sales Person Did Your Well Before You Get Thirsty - Harvy MacKay Live Your Dream - Les Brown Publications Bad Blues - Venus Andrecht The Network Marketer's Guide to Success - Jeffrey Babener & David Stewart How To Succeed in Your Own MLM Business - Debbi A. Ballard How Secure if Your Financial Future?- Allen Baytes Beyond The Veil - Leonard Clements Network Marketing: The Business of the 90's - Crisp Publications Tax Advantages of HOme-Based Businesses - Carol Dilley A Better Way to a Better Life - Nancy Failla & Jerry James The Basics - Don Failla The Greatest Networker in the World - John Milton Fogg MLM Special Reports - Randy Gage You Can't Steal Second With Your Foot On First - Burke Hedges Beingthe Best You Can Be - John Kalench Mail Order MLM Techniques - Charles Possick Big Al Tells All - Tom "big Al" Schreiter How to Create A Recruiting Explosion - Tom Schreiter Power Multi-Level Marketing - Mark & Renee Reid Yarnell Winning the Greatest Game of All - Randy Ward Are You Walking Past A Fortune?- Tom "Big Al" Schreiter MAGAZINES Cutting Edge Money N Profits Entrepreneur Magazine Success Magazine The Network Trainer Upline ------------------------------------------------------------- Any suggestions for Master Networker article ideas? Submit to: professor@multi-level.com Remember, on the internet, it's not only who you know and what you know, but also WHERE YOU GO! See you there! Professor Lindsey If you want to unsubscribe from "The Master Networker" send e-mail to professor@multi-level.com and put unsubscribe in subject area.