Checklist for Choosing a Network
Marketing Business

The following questionnaire is intended to help you evaluate most of the important aspects of Network Marketing businesses so that you can make a reasonably informed, objective, business decision based on facts – not hype from people who are often long on excitement and opinion and short on facts!

We’ve divided the checklist into five categories… click the links to go to the start of each one.

Company • Reward Plan • Products • People • Future Prospects

This list is by no means definitive, and there may well be other criteria you need to consider. We offer these questions as a guide only, and urge you to get the full facts (and, preferably, try out the products) before making a commitment to align yourself with any Network Marketing company.

Remember… the key to long-term success and security in Network Marketing is duplication and integrity. We’ve tried to design these questions to help you pinpoint whether or not the business you’re evaluating can satisfy you that it offers both to a worthwhile degree. Only you can be the final judge in regard to your personal preferences and priorities.

Legend
These symbols are a general indication of criteria regarded by us as either desirable, undesirable or of doubtful worth. Bear in mind that there may be valid reasons for a particular business not to meet some highly desirable criteria, or for having what we have generally categorised as undesirable or doubtful. If the final balance is so fine that these distinctions make a critical difference, seek more detailed information and experienced advice.

Desirable — positive perceptions
Undesirable — possible negative perceptions
Of uncertain or dubious value — possible time-bomb!

You’ll find that some questions have no symbols attached. These are questions that relate to personal preferences and priorities, or to more general issues.

Note – Some questions relate specifically to Australia. In some cases, you’ll be able to apply the question to your own country, while others will be too specific (for example, tax related questions).

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A. The Company

MLM Truth Coalition Special Reports relevant to this section:

 1a. Is the company privately-owned?
  1b. Or is it publicly-owned?
 2. Is it debt-free?
 3. Has it been in operation for at least five years?
 4. Is it an Australian-owned company?
 5a. If an overseas company, does it have its own operations here, or
 5b. Does it have an Australian representative, or
 5c. Does it only have people sponsored from other countries, without any official presence here?
 6. Does it have a sound credit rating?
 7. Does it always pay bonuses on time?
 8. Does it offer a 100% money-back product guarantee?
 9. Does it accept returns from its distributors — for a full refund (less a reasonable handling fee)?
10. Does it have a product availability rate of at least 90%?
11. Is it a member of the Direct Selling Association?
12. Does it publish regular newsletters and other communications for its sales network? Does it have a strong, effective Internet presence?
13. Does it offer free training at regular intervals?
14. Does it run company-sponsored meetings regularly?
15. Do the key management personnel have extensive MLM experience, especially in the administration and development of MLM businesses?
16. Do the founders or key management personnel have any prior history of involvement with illegal scams or failed MLM companies?   (This is the #1 threat to you in network marketing.)  
17. Does it allow company staff, shareholders or directors to operate their own sales networks with the company?
18. Does the company have a written Code of Ethics/Rules of Conduct to which its distributors must adhere?
19. Does the company have and observe a policy of fair play for all of its distributors, so that nobody enjoys an unfair advantage?
20. Does it consider the needs and circumstances of its distributors in formulating its policies and procedures?
21. Does it produce useful and attractive sales aids and literature to help its distributors retail and sponsor? Are they affordable?
22. Does it have a history of constant striving to improve its performance and potential?
23. If the company is based overseas, does it take into account local conditions in its literature, products, packaging, etc.?
24. Does the company — and its management — have a sense of vision that rises above mere money-making?
25. Is that vision reflected in everything it creates and in all of its day-to-day operations?
 26. Does the company use excessive glamour and hype in presenting itself?
 27. Does it promote itself as technologically superior?
 28. Does it encourage powerful emotional bonding of its distributors to the products, the company, key company personnel or field leaders?
 29. Does it pay famous people to endorse its products?
 30. Does it use appeasement to encourage people to join? (In other words, does it promote the opportunity as a "ground floor opportunity", "no selling", "we do the work for you", "we build your downline for you" or other inducements that appeal mostly to greedy, lazy, gullible, "something for nothing" types?

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B. The Reward Plan

MLM Truth Coalition Special Reports relevant to this section:

 1a. Did the plan originate in the computer era?
  1b. Or does it pre-date computers?
 2. What is the average commission as a percentage of the RETAIL price?
 3a. Does it recruit for retail sales?
 3b. Or does it recruit for consumption — or both?
 4a. Is it a Trend 90™ Compressed Unilevel Comensation plan?
 4b. Or is it a traditional stair-step breakaway plan with high personal group qualifications that determine your percentage of the group payout?
  4c. Or is it a more recent development, such as an Automatrix, Binary, "PowerLeg" or other forced matrix system?
 5a. Does it operate a Commission plus Bonus System, or…
 5b. Wholesale Profit/Discount System?
 6a. Is the real payout in the first two or three levels, with a lucrative leadership bonus system beyond the third level?
 6b. Or does it bury the real payout deep in the plan where only a few mega-recruiting "heavy hitters" will benefit?
 7a. Does the company calculate and pay bonuses each month?
 7b. Or do the distributors have to calculate and pay downline bonuses?
 8. Does the scale of bonuses/discounts reflect fair reward for effort? Or is it geared to reward skilled recruiters at the expense of skilled retailers?
 9. Does the plan balance retailing and sponsoring evenly?
10. Is your business your own? Can you sell it at some future time? Is it willable to your heirs?
11. Does it offer a worthwhile retirement plan?
12. Does it have an in-built anti-inflation factor that guarantees the qualifying performances remain the same, year after year, yet rewards allow for inflation in the rewards themselves?
13. Can you reach group leadership level simply by purchasing product to the qualifying volume? (Or must you build a genuine sales organisation?)
14. Is there a requirement for consistent group performance in the qualification for group leadership?
15. Can you personally retail the sales volume required for group leadership? (Or does it require a team effort — much more secure?)
16. Do the bonus/discount qualifying levels stretch you further at each step? (Or is it a simple, even ratio? Increasing increments are preferable for security and stability of income.)
17. Does the plan reward you for selling? (Or for just buying?)
18. Does the plan encourage leaders to train and develop new leaders?
19. Is the plan relatively simple? (Or over complicated?) Can it be easily explained (at least in principle) to someone with no experience?
20. How many generations of royalty overrides are paid? (Remember… too many generations push the product prices too high.)
21. What percentages are paid on each generation? Does it maintain a good balance to protect retail prices?
22. Does the plan protect your royalty override earnings against failure to perform in downline groups?
23. Does it have a sliding scale of royalty override percentages linked to your own personal group's performance?
24. Does it allow for “compression” or “roll-ups” should a downline group perform poorly?
25. If you “break out” an distributor as a new group leader, will you be penalised for the loss of sales volume?
26. Can you protect yourself against loss of benefits in this way?
27. In the upper levels of leadership, are there adequate rewards, financial and non-financial?
28. Are the non-financial rewards subject to Fringe Benefits Tax?
29. Can you eventually gain a profit-sharing status?
30. Does the plan recognise achievement at all levels adequately?
31. Are those recognitions tangible — or transient?
 32. Are the royalty overrides paid at the expense of retail commissions or personal group bonuses/discounts? Is this imbalance likely to cause resentment or discouragement among newer distributors?
33. Does the nature of the plan encourage large or small groups? Are there significant advantages for all concerned?
34. Does the nature of the plan encourage stability and consolidation as well as growth?
35. Is the plan ethical?
36. Does it involve you in any financial risk?
37. Can the plan be exploited or manipulated for your own ends? (If so, others can do the same to you!)
38. Does it provide for immediate income from retailing?
39. Does it offer long-term security?
40. Is the initial investment low (under $100, not including products)?
41. Can you set your own pace and limitations?
42. Can you bypass your sponsor through your own efforts? Or are you locked into the organisation at the stage where you joined?
43. Does it require you to use high-pressure techniques?
44. Are your bonuses, etc. paid by the company? (Or by your upline sponsors?)
45. What sort of time is likely to be involved in getting your bonuses?
46. Does the success of the plan rely on any special methods, such as “accelerated sponsoring"?
47. Does the plan allow for international sponsoring (if the company operates in other countries)? Is international sponsoring a genuine incentive, or are the benefits illusory?
48. Does the plan encourage a sharing and caring attitude — or a self-centred one?
49a. Can you order direct from the company?
49b. Or do you have to order through your sponsor or group leader?
50. Does the plan require you to purchase unreasonably-high volumes of product if you wish to order direct from the company?
51. Do you have to meet minimum monthly retail requirements in order to qualify for bonuses/discounts?
52. Do you have to meet quotas to qualify for commissions? (If so, think carefully!)
53. Does the plan allow for genuine “fast track” and high-leverage duplication and merchandising activities that are non-manipulative?
54. Does the plan tie-up or "encumber" large amounts of your group volume so that you can't use them for bonuses/discounts because someone else is into qualifying periods for leadership — without compensating you?
55. Does the plan require you to requalify each year for leadership levels — with an emphasis on consistent performance? (This actually protects your security of income, and is highly desirable if you’re serious about long-term security and stability.)
56. Does the plan accommodate “short-cuts” and “corner cutting” in order to help you qualify for leadership or bonuses/discounts? (If so, beware!)
57. Is the plan changed regularly?
58. What is the total percentage of the retail price of the products that is paid out to the sales network? Add commissions, bonuses or discounts, royalty overrides (all generations and percentages), pool bonuses, extra bonuses, incentives, etc.. Note: in many companies percentages are given only as proportions of the price paid by distributors — not the retail price. You'll need to convert.
59. Does the company benefit from windfall profits caused by excessive "breakage" — money that rolls up to the company when distributors fail to qualify for bonuses or other rewards with very difficult qualifications? (This can account for up to 50% of annual company profits in some plans. While no plan can avoid some degree of breakage, many plans are geared to reward the company more than the network through these "invisible" sources.)
60. Is the relationship between the price you pay for products and the BV or PV (or whatever) on which you receive bonuses fairly close? (Many plans pay on less than HALF of what you pay to purchase products, then claim to pay out close to 100% in bonuses! Beware of the "smoke and mirrors" and "misdirection" built into MOST compensation plans.)

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C. The Products

MLM Truth Coalition Special Reports relevant to this section:

 1. Are the products truly consumable?
 2. Are changes needed in consumer behaviour in order to obtain the product benefits?
 3. Are the products of truly excellent quality?
 4. Is there likely to be a broad-based demand for them?
 5. Can they be safely stored in your home, without risk to you, your family, the building or your insurance cover?
 6. Can they be easily and safely transported?
 7. Are they environmentally-responsible and/or safe for humans and pets?
 8. Are they tested on animals?
 9. Are they Australian-made?
10. If imported, is continuity of supply assured? (How?)
11. If the products are imported, are the prices stable? (How is this achieved?)
12. If the company has a policy of absorbing price increases due to foreign currency exchange rates, how long since prices last rose?
13. Is the packaging adequate in terms of warnings, instructions, consumer information, etc.? Is it legal in your state?
14. Is the packaging reasonably attractive?
15. Are the products easy to sell, even for inexperienced people?
16. Do the products work? Reliably?
17. Do they live up to the promise of the sales literature?
18. Can they be easily and impressively demonstrated so that the benefits are clear to the prospective buyer?
19. Is there a likelihood that excessive follow-up by the distributor will be necessary in order for the buyer to gain the product benefits?
20. Are any specialised training, knowledge, skills or equipment required in order to demonstrate or sell the products?
21. Does the buyer require any special training or skills in order to gain the product benefits?
22a. Does the company indemnify its distributors against any claims arising from defects or inadequacies in the products?
22b. If not, could you be liable for costs or damages if a customer sues?
23. Do the products offer genuine, tangible, unmistakable benefits to the buyer?
24. Are the products genuinely suited to Australian conditions?
25. Are the product prices competitive or, if they're genuinely unique, are the product prices fair in respect of the benefits offered?
26. Does the company offer a manageable range? (Or is the range greater than most distributors can realistically handle?)
27. Are the products genuinely suited to Network Marketing?
28. Are they products that only appeal to a narrow group of people, either for buying or selling?
29. Do the products have a very short shelf-life?
30. Will you need to keep substantial volumes of products on hand in order to meet customer and/or downline demand?
31. Does the company deliver to your door?
32. Is delivery free? (Or do you have to pay? How much?)
33. Are the charges reasonable?
34. Is delivery by a reliable carrier?
35. Will the carrier deliver if you live in a remote area?
36. Is delivery prompt, or are there likely to be delays?
37. Are products properly protected for transporting?
38. Is return of faulty or rejected products relatively simple or is it unreasonably complicated or difficult?
39. Will you realistically obtain repeat sales from your customers because the products are unique/excellent/effective, etc.?
40. Are the products crucial to the success of the business? (Or are they unimportant when compared to the reward plan and recruiting?)
41. Are the products designed to be sold to a retail customer base? (Or are they really designed to take advantage of a captive market within the sales network itself?)

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D. The People

MLM Truth Coalition Special Reports relevant to this section:

 1. Are the people in your sponsor's organisation genuinely positive and enthusiastic about all aspects of the business (not just “excited" by hype)?
 2. Do your group leaders impress you as being experienced and able to help you with training and support on a regular basis? Are they committed to their people? (Remember — actions count more than words!)
 3. Are communications within the group good? Is there a group newsletter?
 4. Is there any sign of secrecy or evasion within the group when it comes to talking about the business opportunity?
 5. Do a large number of the group members seem preoccupied with special “techniques” and methods that are designed to avoid work?
 6. Is there an aura of mystique or awe surrounding the higher achievers in the organisation? If so, is this encouraged from the top?
 7. Does the enthusiasm or interest in you seem at all forced or unnatural?
 8. Does anyone attempt to persuade you to purchase large volumes of product in order to qualify for leadership immediately? Do they promise you greater rewards for doing so?
  9. Do they suggest using your credit cards — perhaps with an increased limit — to do so?
10. Are you comfortable about the prospect of working with these people long term?
11. Are you satisfied that their attitude towards you is genuine and that they will maintain contact with you regularly for training and advice, and to help where and when they are needed?
12. Are you satisfied that the people and the business generally will attract the kind of people you prefer to mix and work with?
13. Do they use fear of loss, or appeals to greed or laziness, in their prospecting activities and presentation of the business?
14. Do you feel valued for yourself — or for your usefulness?
15. Do they have an easily duplicated, automated prospecting, presentation and training system available to all new distributors at reasonable cost?
16. Do you get the feeling that their training and personal development system, or books and tapes, etc, are bigger money-spinners for your upline leaders than their bonus payments?

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E. Future Prospects

1. Are you confident you can make this business opportunity work, providing you receive practical help, training and support?
2. Are you confident that there is a definite, long-term market for the products, and that others will share your enthusiasm?
3. Are you confident that the company can sustain its growth and guarantee continuous product supplies at affordable prices?
4. Are you confident that the Reward Plan won't change regularly — or for the worse?
5. Are you confident that a change in circumstances will not unduly affect your prospects for success in this business?
6. Are you satisfied that all aspects of the business are entirely above board, ethical and legal?
7. Are you satisfied that you understand enough about this business opportunity to make an informed decision about your future?
8. Are you satisfied that you have the motivation necessary to see you through disappointment, discouragement and negative attitudes at times when you are particularly vulnerable? Can you stick it out in the face of competition and opposition — often from well-meaning (but misinformed) friends and family members?
9. Do you have the vision necessary to rise above the details and see the “big picture” that represents your future success — and keep your eyes locked on that inner vision until it becomes reality?
10. Do you believe that you can instill that same vision in your new people — and keep that vision alive for them in the face of doubts and disillusionment as they struggle to retain their original belief in the business you share?

A Final, Pertinent Question

Using this checklist will help you decide whether or not a particular Network Marketing opportunity is likely to suit you. But are you suited to Network Marketing? Can you make a success of this simple — yet highly sophisticated — system of business?
To see whether or not you’re suited to Network Marketing, try our Quick Quiz!

Company • Reward Plan • Products • People • Future Prospects

  

Don't be suckered by MLM fakes!
   
©1999 The Profit Clinic. All rights reserved. This page updated 6 June 2003.

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