Multi-Level Marketing Is Shaped Like a Pyramid…
MLM’s triangle shape makes it a pyramid, so MLM is a scam, right?
Sometimes uninformed people think the shape (polygonal base or triangle) of an MLM company makes it an illegal pyramid scheme. This is false.
Many organizations are pyramid-shaped without being a pyramid scheme.
- Your family tree is shaped like a pyramid.
- The US government’s organizational chart is also in the shape of a pyramid – it is called the chain of command.
- Even traditional business organization is pyramid-shaped – it’s called management.
The reason almost ALL organizations are organized in a pyramid shape is that a single person can only manage a finite number of people before they become overwhelmed and need other people to do some of the work.
Picture this: if you run a daycare center, how many kids can you keep track of before you become overwhelmed and need to hire an assistant? If you hire two assistants, that becomes the shape of a pyramid (triangle). In MLM, a person enrolls a handful of people and trains them to sell products and to enroll others. This is because a single person can only handle so much activity before they require another person to lessen their workload.
The pyramid shape of an MLM compensation plan does not mean it’s an illegal pyramid or scam.
Multi-level pay plan
Sometimes uninformed people think that if a company pays “multiple levels” then it’s an illegal pyramid. Not true: many franchise companies pay multiple levels. In typical sales organizations, managers get a percentage of what the sales reps sell. This is multi-level marketing, whether it’s called that or not.Ã‚Â The fact that an organization pays on multiple levels does not make it an illegal pyramid scheme.
Recommended next page: Are people at the top of an MLM company making all the money?
About the Author
Tim’s experience in building his own downline of 56,000 network marketers helped him develop his signature training series. A public relations ambassador for the network marketing industry, Tim has also dedicated his time to debunking the false information spread about the network marketing industry.