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IS?
Requiring you to buy more product each month than you can be
expected to personally use or sell is called "garaging". It's called
that because all that excess product tends to wind up where ever you
can find room for it all, usually the garage. Requirements like this
are illegal. Some of the early MLM companies practiced this and were
forced to stop it under court order. If the "opportunity" you're
considering does this, ask yourself; "if they break this rule, what
other rules are they breaking"?
WHAT IS THE TURNOVER RATE FOR ISR's (Independent Service
Representives) IN
THIS COMPANY?
A company with a high turnover rate, probably isn't meeting the
goals for many of the people who join it. If this number seems high
check extra carefully into how the compensation system works. Are
there too many requirements to qualify for your commissions? These
could be sales volume minimums, a minimum number of personally
sponsored representatives or a compensation plan that doesn't pay
well until you have a very large organization (plans that pay large
amounts for levels well (4+) below you.
WHAT WILL YOU HAVE TO DO TO BREAK EVEN?
How large an organization will you have to have to break even (earn
as much as you're required to spend to receive your commissions)?
How long does it take on average to build an organization that
size)? What percentage of active representatives are earning enough
to break even.
WHAT WILL YOU HAVE TO DO TO MEET YOUR INCOME GOALS?
Repeat all of the questions in the paragraph above only replacing
the amount you need to break even with the amount you hope to earn
($100/month, $1000/per month, whatever your goal is).
ADDITIONAL FEES
Is there a membership fee in addition to a monthly volume
requirement? Dot these fees cost more than the product you receive?
If you're paying substantial fees and commissions are paid on those
fees, how much is this starting to resemble a pyramid scheme? This
is a classic example of the ones who join early making money at the
expense of those who join later (which is why big paychecks in your
proposed upline are not, by themselves, a reason to join). The more
it looks like the business is run by selling membership and the less
emphasis there is on the product, the more it is prone to the
problems that come from a pyramid scheme. If you're one of the last
to join, you lose; if you join early and make money, the company may
fold once the growth slows (growth is the only way to keep things
going) and you'll have to start to build all over again, somewhere
else.
Are there other fees you have to pay or services you as an
Independent Service Representative (ISR) are required to buy in
addition to the products you purchase? Put them to the product test.
If they are worth what you pay for them, fine. If they aren't worth
what you pay for them then they are in essence membership fees and
should be judged by the standards in the paragraph above.
OUTSIDE SOURCES OF INFORMATION (OUTSIDE THE COMPANY THAT IS).
Ask questions of others who have contact with this company, but have
no financial interest in your joining it. These can be: The Better
Business Bureau and similar organizations (no complaints doesn't
guarantee they're good, they could just be too new for complaints to
have been filed yet), The Secretary of State or State Attorney
General of both your state an
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