If you think this wouldn’t be true, that an MLM company would have Policies and Procedures that would not qualify you for commissions or bonuses when you are not actively recruiting new members, think again.

Why would you ever think to ask this question when the point of MLM is to build a passive residual income, in other words, a royalty income? Most people don’t.

But, this is a growing trend in MLM company P&Ps, to add clauses that state you are only qualified to receive commission and bonuses when you are actively sponsoring a certain number of people per month, or at least showing on paper how you have helped motivate your downline to do so, including giving training sessions, holding conference calls, etc.

Some may require that you maintain a certain number of retail customers, and even new customers, per month. I just saw this with my own eyes in a P&P I was looking at last night!

This means you can’t retire! Or if you do, your income stops. What if you were to fall ill, or have extended times where you cannot be doing business?

After all, wouldn’t you think that having built a huge downline that you should be able to take some extended time off? Isn’t that the lifestyle you were after in the first place?

I heard a story recently about a woman who had built a huge business but fell ill. She was in the hospital for weeks. When she got her check after having been over a month in the hospital, she found that it had dwindled from a 5 figure check to just a few hundred dollars. She had failed to meet her leadership qualifications for the month.

Another story involved a woman who built it so big she passed her upline, which caused them to be extremely jealous, and they were also vindictive.

Before this lady built the program, she did tell the company that her fiance was promoting another MLM company.

But guess what? Her company’s Policies & Procedures state that you cannot make any money from another network marketing company – not even an affiliate program! If you violate this provision, you can be terminated. And these restrictions apply to everyone living in YOUR household!

She was about to receive a $7,000 bonus check and all of a sudden her website was turned off. Everything is shut down. Her check didn’t arrive. The company didn’t even send her a letter.

Her upline called and told her she was terminated because her fiance was in another program. But she had already told the company they weren’t married and that he was in another program.  So it had nothing to do with her or her network marketing strategy, but because they lived in the same household, the company used that lever to get her out of the line of compensation.

The company views 2 people living in the same household as if the two people are the same. And they can do that because it’s in the Policies & Procedures.

What are the chances the company would ever find out about this if not for the viperous upline? Because this lady just got terminated, her sponsor inherits her entire organization. It all rolls up.

Read Your Policies and Procedures!

Some P&Ps will also block you from making money in any other network marketing company, even doing any affiliate marketing on the side!

Well, you might say, they aren’t going to know, or why would they care? They won’t be checking on little ol’ me…. But let’s say you do really well, that you end up with a very sizable check every month. What happens when the company’s compensation plan, or the company itself is having trouble holding up? They will take the time to utilize those clauses. That’s why they put them there.

I heard another story just last night (these are far more frequent than you’d ever think) about someone whose house had burnt down, when just after that, the MLM company they had been working for happened to call up and ask for the retail receipts that he was obligated to keep per their P&Ps (interesting timing wouldn’t you say?).  Of course he had kept them, but they had burned in the fire and were gone. And so then was his paycheck.

There are many other phrases that you should be on the lookout for in your P&Ps as well. Including any line with the word ‘terminate’ or ‘termination’.  Or ‘without cause’, or ‘jury’ or ‘court’. Read carefully any statements containing these words. You may be signing away your rights.

Any time you have a yearly renewal, this should make you think as well. The company could have stated that they may opt not to renew you, and will not have to give any reason for this.

This would not lose the company any business as they perceive it. Your downline simply rolls up to the next distributor. Of course then you may say that you would just recruit those that you sponsored into your next company.

Think again. There are other phrases that would allow the company to take you to court for doing just that. And if you think you can take them to court, you’d better check your ‘Arbitration’ section very closely.

This is just to give you a heads up that those P&Ps are a lot more than just paperwork for you, something you check off when you sign up. If you are thinking of taking this business seriously then do take it seriously.

MLM company Policies and Procedures are truly worth your time in reading. And the longer the P&P document, the more legaleze you see in them, the more red flags should be going up. This also goes for the ‘Distributor Agreement’ and / or ‘Distributor Code of Conduct’ that you will be agreeing to.

You just want to be aware of what to look out or plan for, it pays to be educated!

Wishing You Brilliant Success!

This entry was posted on Monday, October 19th, 2009 at 4:36 PM and is filed under Social Media Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.