The following is part 8 in our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!
The eighth of ten business segments that should compete for your attention is MLM LEGAL. The world of MLM Law is always evolving, but never dull. The best MLM attorneys will guide you through the critical issues as outlined below.
- Legal Review of Compensation Plan, Literature and Publications
- Design an MLM Distributor / Home Party Consultant Agreement
- Create the Home Party / MLM Distributor Policies and Procedures
- Determine the Proper Sales Tax Processes and Policies for Your Company
- Protect Your MLM Company’s Intellectual Property
- Set up the MLM Compliance Training and MLM Compliance Administration Systems
- File the MLM State Registrations
- Select the Entity that is Right for Your New MLM Business
- Develop an MLM Library of Essential Forms and Documents
- Gather an Effective MLM Legal Team That You Feel Good working With
Here are examples of descriptions that you might write for your MLM Launch Best Practice:
- Distributor / Consultant Agreement – We have a distributor / consultant agreement (online and/or paper) containing the most recent terms and provisions for complying with state and federal laws and regulations, produced or reviewed and approved by a licensed legal professional.
- Compliance – Our compliance system is set up to include online training and certification of new distributors / consultants, compliance research system, compliance administration system, and staff training for handling policy questions.
MLM Legal is an important part of the launch puzzle. With the right planning and recommendations, you will save a great deal of time, money, and worry as you select and work with the best MLM Lawyers.
For more information, contact Terrel Transtrum email@example.com
When it comes to the best MLM Legal Guide with advice and guidance, much is written by MLM lawyers and law firms. Practitioners range from single-office MLM attorneys to full-service, multi-lawyer firms.
As MLM Consultants with broad experience, including MLM legal, we are able to provide objective advice on selecting and working with a reputable MLM legal team. This MLM blog provides a starting point as an MLM Legal Guide, and we are always pleased to provide a more comprehensive checklist. We present here the basic elements of our MLM legal guide for starting and running a successful MLM company.
MLM Legal Requirements
Always start by considering the legal requirements for your MLM or party plan company. Our MLM legal guide will help you navigate important decisions and questions that have legal implications. Consider these two crucial aspects: First, a proper guide will help you to prioritize the legal issues that need your attention. Second, it will help you to define the MLM legal needs in ways that will be billed on a project or hourly basis. You may be able to save time and money, and you should gain peace of mind knowing that you have a general familiarity with the legal issues and the exposures that you face. In our firm, we have designed the guide as a questionnaire that will guide you through these two main aspects.
MLM Legal Guide
Whether you work with the LaunchSmart MLM legal guide or with a specialized MLM law firm or MLM attorney, the general categories you will examine are these:
- MLM Distributor Agreement
- Party Plan Consultant Agreement
- Distributor / Consultant Terms & Conditions
- Autoship Terms and Provisions
- MLM State Registrations, Anti-pyramid registrations, Business Opportunity Registrations
- MLM Distributor Policies & Procedures
- Home Party Plan Consultant Policies & Procedures
- MLM Distributor Compliance Management, including Policy and Procedure Administration
- MLM Forms and Legal Documents
- Change-of-Sponsorship Forms, Registration of Entity Forms for Distributors, and many others
- MLM Product registrations, labeling, and compliance
- MLM Sales Tax Compliance
Contact us for a more comprehensive review of the MLM legal requirements and to see which aspects of our MLM Legal Guide can be supplied to you for no cost. We are eager to guide your planning and would be glad to become your MLM consultant.
As a licensed attorney, I’m tuned into the best ways for selecting the MLM lawyer and law firm. My work is not as much in MLM Legal as it is in MLM consulting. But I cannot overstate the importance of securing sound legal guidance.
The loss of cash, resources, and momentum from senseless oversights is staggering. We do all we can to request that our clients work with the best MLM Lawyers and law firms. Our motives are actually selfish because we want our clients to be around for a long time. Only then will we have work and get paid, and it all begins with selecting a quality MLM law firm to represent our clients who start and run successful MLM companies.
The building blocks of successful MLM companies consist of compensation plan, MLM business rules and best practices, products, MLM software, marketing, recruiting, training, and branding, and also the sensible handling of MLM legal issues. Unknowns that lurk are the issues that a proven, battle-hardened MLM Lawyer, MLM Consultant, and MLM Software Provider can work together to identify. They will help you to ask the right questions while guiding you through the decisions that pay dividends in coming years.
Often, our clients say, “I don’t know what I don’t know.” Working with an experienced MLM lawyer and legal team will make all the difference.
It’s been our sad experience that most new MLM startup companies begin by selecting an MLM software to track sales and compute commissions, resolving that they will look into the legal aspect of their business once they are launched. Days quickly turn into weeks and months, while the legal environment in the United States, Canada, and worldwide constantly evolves and changes. New laws, rulings, and regulations (from FTC to SEC, from FDA to Attorney General, and from ministries to agencies) are constantly woven into the direct selling fabric.
MLM Law Firms and MLM Legal
The MLM Legal Firms, MLM Lawyers, and MLM Attorneys we work with are the best on the planet. They are called on by state and national governments and legislatures to advise in drafting laws that protect citizens while still allowing direct selling and MLM companies to operate within their borders. They have connections in the state and federal offices that help to keep legal “mole hills” from becoming mountains that can destroy companies. They devote time and talents to clients who look to them for expert legal guidance.
We guide you through selecting the best MLM law firm, attorney, or legal team. We keep your information highly confidential, and we honor the attorney-client privilege as we refer you for legal assistance from lawyers that contribute to a legally sound MLM business. Even if you are not our client, we will gladly refer you to the best MLM lawyers who will provide the best legal service for your situation. Since we do not accept referral fees, we are able to assure you of our highest commitment to being objective as we provide you with straight talk, help you to sort out which issues to discuss with your MLM lawyer, and help you to set budgets and choose the MLM legal team that will work hard and smart for you.
For a free MLM Startup Manual, contact our offices. We are eager to provide free MLM consulting services, and our MLM Startup Manual is a great place to start. As a leading MLM Consultant specializing in MLM Best Practices, MLM Attorney and leading MLM consultant Terrel Transtrum combines his MLM legal experience and skills with decades of real-life MLM best practices and corporate experience from the trenches to provide a more comprehensive MLM Consulting experience. Recognized by the Direct Selling Association (DSA) who presented Transtrum with the 2009 DSA Partnership Award for his work in MLM Distributor Service, Transtrum is the recognized world authority on MLM distributor service and customer service best practices.
Transtrum and his team of MLM consultants provide clients with support at every stage of success, from MLM startup and launch to full growth and production. Terrel Transtrum and his unique MLM startup consulting firm will guide you through all aspects of starting and running a successful MLM company. Although some MLM consultants specialize in MLM startups, and other MLM consulting teams focus on established companies, Terrel Transtrum and his MLM consultant team specialize in both. Building on the best practices followed by established MLM companies, Transtrum’s MLM startup clients benefit in every way. From MLM software selection to MLM best practices, this firm has been quietly working behind the scenes since 1988. “We’ve been so busy working with MLM companies, that we haven’t taken a lot of time to market ourselves,” admits Transtrum who works from his modest offices just down the street from the Melaleuca corporate headquarters.
Take a close look and you will like what you see. When you are considering MLM Consultants, MLM Software, MLM attorneys, and MLM best practices, please check with us. We enjoy the free half-hour consult because it is our investment in your success. We believe that you want to know the best options, and we are eager to answer your questions not only about what we do, but more importantly, the questions that YOU want to ask. And it won’t hurt a thing to get your hands on our Free Startup Manual for MLM companies.
This article is about MLM legal: Network marketing and party plan. It’s a fact of life that business is regulated. And with the important basics in place, an MLM business can confidently launch. Successful start-ups keep abreast of MLM legal issues and regulatory demands as they navigate the early years in business.
The law can actually be a protective wall for your business, and you should diligently close holes and gaps in the wall as they appear. By its nature, MLM law both protects your company, its distributors and customers, and at the same time it protects consumers by defining and enforcing unsavory and illegal practices.
Taking the right steps at the right time in your new MLM company’s development, you can feel confident that the protections will work in your favor. At the earliest stages of a new party plan business, be sure to set in place the important fundamentals listed below:
- Distributor Policies & Procedures
- Distributor Agreement
- State Registrations
- Legal Review of Labels, Literature, and Promotional Materials
- Legal Advice on Product Formulations and Ingredients
- Legal Review of Your Company’s Compensation Plan
Several law firms specialize in the unique areas of direct selling. Start early to develop a relationship with your legal team. Your attorney can help you to get through the complex issues related to regulatory actions, compliance with start and federal law, and distributor litigation.
When it comes to legal reviews of compensation plans, ingredients, labels, and literature, we strongly encourage the involvement of an MLM legal services team even if you are launching with a limited budget. Discuss your payment options so that you can take full advantage of the legal resources available to you.
To help you better understand some of the important MLM legal elements, consider the following MLM legal checklist for planning your company’s legal needs:
- Define MLM Legal Needs
- Start-up Services
- Product Packaging & Labeling Review
- Entity Selection and Formation
- Literature / Copy Review
- Starter Kit Review
- Intellectual Property Protections
- MLM Legal Filings, Reviews & Registrations
- General Business, Local, Warehousing, Zoning
- State Tax ID Number(s)
- Federal Tax ID Number(s)
- Non-Prescription Drug Applications
- Hazardous Product Submittals
- Surety Bonds
- Sales Tax & Voluntary Compliance
- Intellectual Property Filings & Registrations
- Corporate Registrations
- Business Opportunity Registrations
- Anti-Pyramid Registrations
- Direct Selling Registrations
- Employment Planning and Compliance
- Distributor Forms & Agreements
- Application & Field Rep Agreement
- Autoship Authorization Provision / Form
- FTC “Cooling Off” Documentation
- Compensation Plan Review
- Policies & Procedures
- Contracts and Lease Requirements
- Parcel Delivery Services
- Customs Brokerage Services
- Equipment & Facility Leases / Purchases
In this article we cover the following MLM legal planning elements in more detail:
- Distributor Policies & Procedures
- Distributor Agreement
- State Registrations
Distributor Policies & Procedures
Distributor policies & procedures provide the rules for distributors. Some feel that a “cut & paste” approach to policies & procedures is sufficient, particularly if they borrow from well-established companies. Without question, the great companies have invested much by way of legal fees and experience in crafting policies and procedures that support and protect both business and distributors, and much can be learned by evaluating their MLM legal forms.
The start-up company faces three options for creating policies and procedures:
- Hire an MLM legal services firm to draft policies & procedures
- Write their own, using a “cut & paste” approach
- Use forms that have been specially prepared to guide the process
This section will give you the checklist for guiding the design of your company’s network marketing and party plan field policies & procedures.
Policies & Procedures Checklist & Key Considerations
- Definition of Terms
- Distributor ID Number
- Development of Customers
- Development of Distributors
- Product and Income Claims
- Products / Services
- Multiple Distributorships
- Trademarks and Copyrights
- Transfer / Sale / Assignment / Succession
- Countries of Operation
- Methods for Enrolling
- Benefits for Distributors
- Advertising and Internet
- Literature, Sales Aids, Promotional Materials, Internet web pages
- Media and Media Inquiries
- Business Entities
- Commercial Sales
- Conflicts of Interest
- Excess Inventory
- International Marketing / Sponsoring
- Bonuses & Commissions
- Product Guarantees / Returns / Inventory Repurchase
- Dispute Resolution
- Payment & Shipping
- Inactivity / Cancellation
MLM Distributor Agreement
The pivotal document in the relationship between an MLM company and its field rep is the distributor agreement. Whether your plan calls for a signed original in your files or an electronic signature that supports the web-based enrollment, the terms of the party plan or network marketing agreement are essential to your company’s safety and long-term viability. This essential tool must survive scrutiny in all the states in which your company conducts business; it must withstand the attacks of disgruntled or wayward field reps; and it must still invite individuals who would come and be leaders in your company, without scaring them away.
This section will give you the checklist and basic outline for designing and analyzing your company’s agreement with independent field representatives in a network marketing company or party plan company.
MLM Distributor Agreement Checklist & Key Considerations
- Application Information
- Co-Applicant Information
- Sponsor / Enroller Information
- Application Clause and triggers / Web-based enrollment considerations
- Acknowledgment Clause
- Rights & Obligations of Distributor
- Independent Contractor Relationship
- Assignment / Transfer
- Ability to Amend
- Continuation of Distributor Agreement
- Breach of Agreement / Policies
- Anti-Waiver Clause
- Integration Clause
- Enforceability Clause
- Dispute Resolution
Terrel Transtrum is the founder of ServiceQuest® and co-founder of LaunchSmart™. As a network marketing consultant he also specializes in startup consulting for party plan companies, multilevel marketing, MLM and network marketing. He is an experienced advisor in MLM software, network marketing legal, party plan business, distributor recruiting and retention, operations and fulfillment and MLM legal.
What legal protections should I put in place as I prepare to launch my new MLM company? Thanks, KH
A company’s trade secrets are it lifeblood. If this information is not protected, the MLM company’s livelihood is at risk of attack. Various methods (ranging from copyrights and trademarks to patents and other Intellectual Property (IP) strategies) will help you to protect your valuable assets. Most MLM and Home Party companies sell consumer products and services, making it a highly competitive and very crowded field. It is therefore crucial to protect names, marks, symbols, and slogans that help create the unique brand and image that set the company apart from its competition.
The surest way to protect your new MLM start-up is to study the free MLM resources at the LaunchSmart website, and to seek guidance from a leading MLM attorney or MLM law firm that provides MLM legal services. It’s also common for your intellectual property / trademark attorney to work with the MLM legal services team.