mlm distributor agreement meme

How to Evaluate a MLM Company

What are some good ways to evaluate a MLM Company, before you join?

I’ve found that most people never do their due diligence before they join a network marketing company. In most cases they join on hype or excitement.

They haven’t done their research to find out the good and bad about the company, so they can make an informed decision. As a result, they really don’t know what they are getting themselves into.

Let me ask you, if you were going to start a traditional business, or purchase a franchise, wouldn’t you do some research before you invested your time and money?

Wouldn’t you research the company, the market in your local area, the products, and your competition? And wouldn’t you read all the fine print before you signed your name to any type of contract?

I hope you would.

Network marketing is a real business. Unfortunately, most people who get involved don’t treat it that way.

My goal today is to educate you about how to evaluate a MLM Company, so you can make an informed decision right from the start. I’m going to teach you several things you should do before you join any MLM Company.

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How to Evaluate a MLM Company

1) Policies and Procedures

In my opinion, this is the most important criteria, when you are evaluating a MLM Company.

Before you join YOU MUST read the policies and procedures in the distributor agreement to find out what the rules are.

For instance, some MLM Companies won’t allow you to use their name in your online marketing campaigns. And other companies don’t want you promoting their business opportunity on the Internet at all.

mlm distributor agreement memeOther companies have crazy rules such as “high minimum monthly purchases” in order to qualify for your commissions.

Or they have minimum customer sales, just to get your bonus check.

And other companies have a no compete clause that prevent you from having ANY other income streams while you are a distributor with them.

The rules vary significantly from company to company so make sure you do your homework first.

I’ve always found that it’s better to know what you are getting yourself into BEFORE you get yourself into it.

Does that make sense? Do yourself a favor and read the company’s policies and procedures before you join.

Make a list of questions. And get answers to your questions before you sign anything. You might just find out the company you like isn’t all that it’s cracked up to be.

2) Track Record

In addition to evaluating the company’s policies and procedures, it’s imperative that you research the company’s online reputation and track record.

Personally, I believe it’s much wiser to partner up with a company that’s been around a few years, than it is to join a start-up company. Obviously, this is a personal decision.

Most companies fail. Few MLM Companies stick around for the long haul. Many go out of business in a year or two.

And if you are going to form a long-term commitment with a company, you need to be sure it will be around in another five, ten or twenty years from now.

When you join a company that is already established, you improve your chances of that happening.

More importantly, you need a company with a good reputation online.

If you do a search for your company online and you find thousands of negative pages and websites about it, run the other direction.

I understand all companies have some negative stuff online, but if your company has lots more negative stuff than positive stuff, stay away from them.

Remember, your prospect will research your company online. If all they can find is negative stuff, they won’t work with you.

3) Products

There are so many different types of MLM products.

My best advice for you is to pick a company with a product or service that people want and will buy, even at the suggested retail price.

if the products don't make sense memeIn other words, your products and services must have a good perceived value.

If it isn’t a good deal for your retail customer, at the suggested retail price, don’t join that company.

Remember, all companies need customers.

If you can’t sell the product to anyone, you won’t make any money.

Remember, the products must be in demand and priced competitively!

If your prospect can go to Wal-mart and buy the same product (or very similar) for 90% less, you’re going to have a tough time making sales.

You should also check to see how many distributors (or former distributors) are trying to sell their products on Amazon, Craigslist or eBay.

If everyone is selling their inventory online, this makes competition for you even harder.

It’s hard to convince someone to pay full price from you when they can buy it online at one of these websites for a fraction of that cost.

Finally, make sure your product or service has mass market demand. If it only appeals to a small segment of the population, you are really missing out.

4) Compensation Plan

When it comes to compensation plans, you need to learn everything you can about them.

Take some time to calculate how you get paid. Check to see how many customers or how many distributors you need to earn $1,000, $5,000 and $10,000 per month.

Find out what percentage of the total sales the company pays pack to the distributors via commissions. This information will be very powerful.

By the time you compare two to four different network marketing companies you will see some major differences and find something that works for you.

The bottom line is that you want a MLM Company that rewards you fairly for your results.

Ideally, you want a company that doesn’t require a team of thousands of people just to make a few thousand dollars per month!

You also want a balanced compensation plan that rewards the part-timer and the heavy hitter.

5) Number of Countries it Does Business In

To some people, this might not be a big deal, but I believe it is a wise move to join a company that does business in multiple markets. In fact, the more countries it does business in, the better off you will be.

Look for a company that is in at least 20 different markets, preferably 50 or more markets.

Do some research to see how much the company has expanded during the past five years and what its future growth plans consist of.

You need to realize that there are close to 7 billion people in the world.

The US only accounts for about 350 million people, so if your company only does business in America you are missing out on nearly 95% of the world’s population!

Remember, we live in a global economy.

I truly believe the international market for network marketing is stronger than the US market.

Final Thoughts

In conclusion, these are my five most important criterion for evaluating a MLM Company, before you join it.

due diligence memeObviously, there are other important things such as training tools, company websites, training systems, etc.

Please conduct your research and due diligence before you join a MLM Company.

Spend as much time researching the company as you would if you were buying a franchise for $1 million.

That way, you know what you are getting yourself into, and you won’t be unpleasantly surprised about an “unknown rule” later on.

What are your thoughts? What do you do to evaluate a MLM Company? Leave a comment below to share your thoughts. I look forward to hearing from you.

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16 thoughts on “How to Evaluate a MLM Company”

  1. Chuck:

    Great points! I like the order in which you have them, especially with the Policies and Procedures. You wouldn’t believe how many distributors that don not read the guidelines of the business that they are representing. And it is not even encouraged by the “leaders”! I agree that the products, number of countries in operation are a big deal as well because you might have to reach globally to people who have the drive and desire to partner with you in order to achieve their goals and dreams! Compensation plans are varied and some might work better than others, but you must believe in the comp plan as it relates to products and not fast starts on new distributors! Thanks again!!

    Michael Kane

  2. Before jumping onto anything that sounds good, it is best to see what other people are saying. I almost fell for a scam. This business was claiming MLM and they were a horrific pyramid scheme that ended up going under with lawsuits out the butt like 7 years ago. Great advice and tips!

  3. When I perform research on any company Chuck, the first place I usually will check is the internet. I will type the MLM in Google and other search engines and read the material. Now the first thing to remember is to not believe everything you read, but you can get some great ideas about a company both good and bad by searching it via the web. Like all of you, I believe those in multiple countries are the best.

  4. To me, the most important thing about a MLM Company is how many different countries does it do business in. Ideally, you want a company in 50 or more different countries so you can build a team internationally. If your company only does business in America you are leaving lots of money on the table.

    1. Good point, Jackson. I agree that it’s smart to team up with a MLM Company that does business in many different countries. Thanks for the comment.


      1. This article memorializes that I made the right decision. Truth be told, WorldVentures is not even MLM, but I was afraid it was. Plus, it has millions of members worldwide. After reading this article, MLM’s aren’t even that bad of a business. Especially when selling a product that everyone in the world wants; travel.

        thanx much,
        joey @

  5. The no compete clause might dissuade prospects from jumping on board with a network marketing company but it isn’t always a bad thing. Besides, none of those clauses last forever; you can typically find work doing the same thing within a year of quitting your previous company. Before signing anything, make sure the terms are favorable to you as well.

    1. To some extent, I can see why the network marketing companies have a no-compete clause, so they can protect their company. However, these same companies will galdly let people join their company who are already in another company. So it’s like a double edged sword. As a distributor, I would want nothing to do with a MLM Company that had this type of clause in it.


  6. Diamond Grant

    Taking the time to evaluate a MLM ahead of time before signing up to be on board is a necessary step to take. You can’t let the hype of the idea sway you into making a hasty decision that could go on to bite you in the butt later on. I would think that a thorough evaluation would take at least a few days so that all aspects can be analyzed. It may also be beneficial to get another person’s opinion on the matter. Other people can sometimes see risks and problems that we don’t and they could end up saving you from making a crucial mistake.

    1. Good point, Diamond. I tell people to never rush into a business. Don’t let a bunch of hype convince you of instance riches. No business is easy. The best thing you can do is do your due diligence and make an educated decision.


  7. From my experiences in the past with MLM seek out those who have done well in the business. Go to some of the seminars and local meetings, introduce yourself and plainly ask: Who is doing at least 500.00 per month in business over (give a time period) and ask if they will talk to you about their strategy.

    When you meet with them: get the low down on how they feel about the company. If they are making money consistently over a year, they are sure to have some opinions. Because they’ve been in it a while this may indicate they aren’t just a whiner and complainer, but someone who is serious about making money.

    I loved this article as all the ones I’ve read so far. Keep up the great work.

    1. Thanks, Sandy.

      It always amazes me how many people never do any of the research for their particular network marketing company. Once you find a good company, I suggest you find someone who is successful and pick their brain. I don’t see much benefit from counseling with people who aren’t doing well with the company. Sure, you can listen to them, but don’t take their advice. Always listen to people who are doing well. It will help you that much more.


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