MLM: It’s the cheapest way to become self-employed!
Usually it costs somewhere between 500 and 1000 dollars to start in a MLM-enterprise. This is toted to be a cheap boxed-edition of a company, a poor-man’s franchise. Of course, when you start to look at the long-term perspective - you start to see the problems. I have read a few of the agreements that they use - and to sum it up… it isn’t a golden business opportunity. I’ll try and outline the differences towards both normal employment and being truly self-employed.
First off is the customers - they are not your’s. If the MLM-company decides to sell their customers to another company, if they mis-manage the accounts or loose them to any cause… they are not responsible - the customers are lost to you. If you were self-employed, you’d be the one having the power to do these things - and decide for yourself. As a normal employee, you would normally write this stuff in the contract or be able to move with the customers. MLM-contracts typically bar you from working for more than one MLM-company at a time (it’s breach of contract if you do - which means you are entitled to … nothing).
Second, you have no control over your colleagues, marketing material and marketing methods. These are all up to the MLM-company - if you don’t agree - you have the option of… well, leaving with no compensation. If you use any material not on the list of the MLM-company… you are breaching your contract. You cannot even make a homepage using the name of the company according to the contract without approval from the company.
Next, the compensation plan - the MLM-company reserves the right to change this in any way they want with no compensation to you. This means that if they decide the new provision is 0% - they are perfectly within their rights to do that. You cannot do anything about the customers since they are still in the hands of the MLM-company… basically you are left at the mercy of this company. If you were self-employed, you would be very carefull to bind yourself this way (basically so many has been screwed over that you wouldn’t take the risk). As a normal employee, if the company changed your contract in this way - they would be breaching the contract, and you would be entitled to compensation.
If you become unable to do your job for any reason - both MLM-employment and self-employment, you are left in the lurch. As an employee - you are protected within certain limits and if it happens while working - you get compensation. Also, if you want to quit - you can normally sell your company… but it isn’t worth anything in a MLM-structure - you have no inventory, no customers - no nothing. You cannot transfer anything to a new owner.
Oh and now comes the fun part - the legal parts. If you do anything wrong - even using their own material, you are to blame 100%. This means that they have left you with any legal trouble that may arise. Oh, and to top it off, it’s breach of contract on your part - so they may terminate your contract, withhold payment or penalize you in another way. Most contracts even state that they can withhold payment pending an investigation - this means that if they “think” you are misbehaving - they can refuse to pay you for an indefinete period of time. As a self-employee, you would have none of these problems (unless, you are explicitly looking to get into trouble) since legal matters follow who’s to blame regardless of contract - if there is a dispute, any given supplier cannot withhold payment before a court-decision has been reached. As a normal employee - the company would bear the legal problems (if it is your fault - they can at most terminate your contract and sue you for direct losses).
All these things combined would make me more than carefull entering such a contract. MLM becomes somewhere in the middle of normal employment and self-employment, but with the drawbacks of both. The sad part is that normally it takes years to build up even a moderate income in these systems - and you are relying on a foundation that can be changed over-night if they so choose. And don’t tell me that this never happens. It happens every day.
I think, it may be cheap in the start, but it will avenge itself pretty quickly. In my oppinion it is a really poor substitution to either form of employment.