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Business Opportunity - What Do The Words Mean?

Jan 11, 2008
The words sound exciting. The generally accepted meanings imply commerce and "making money", or as least having the realistic hope of making money. I purposely did not use the word "chance" in the last sentence, because "chance" implies luck, like buying a lottery ticket. Also, the two words, "business" and "opportunity," when used together, have a generally accepted meaning of the opposite of a JOB. Jobs have places to report to, set hours, a regular pay check, sick days, (sometimes) and other benefits (sometimes.) Business opportunities usually have none of these things.

People with jobs receive wages or salaries, with the employer withholding taxes as required by law. At the end of the year, what was paid to you and what was sent to taxing authorities on your behalf is reported on a W-2 Form. Business Opportunities are most often structured as independent contractor relationships. Payments to you, without taxes withheld, and sometimes sales to you (over certain amounts) are reported to you and to taxing authorities at the end of the year on Form 1099.

What is written above is generally true, whether the business opportunity does or does not have a multi-level element in the way compensation is paid. A critical factor, and the point of this article, is that Business Opportunities (Capital B, Capital O, on purpose) are strictly regulated in 22 states. But at the same time, virtually all of the traditional MLM income opportunities currently available, are NOT Business Opportunities in this sense.

WHY NOT? All 22 states have a threshold dollar amount, BELOW WHICH their laws are not applicable. The threshold dollar amount varies between $200 and $500 and in its most common application, applies to the required purchases to participate in the opportunity. Now you know one of the reasons why the cost to get into an income opportunity is often zero, or a modest amount. The Direct Selling Association, through its own staff, and through the efforts of the Government Affairs staff of its member companies, monitors pending legislation in this and other areas affecting the industry. The "threshold exemption" in any proposed legislation is lobbied for, and the results benefit the entire industry. Direct selling companies at least one year old are urged to consider joining the DSA to support this and other worthy efforts benefiting the entire direct selling industry.

It has been my experience that 99% of the multi-level, direct selling industry positions their "income opportunity" offer to prospects below the thresholds of the "Business Opportunity" Statutes. If you are required to pay more than $200 to participate in the income opportunity, the Business Opportunity threshold has been exceeded in some states.

I have begun using the words "income opportunity" rather than "business opportunity" when describing a way to make money offered at a cost below the thresholds of the 22 states that have Business Opportunity Statutes. It is a small thing perhaps, but since so many states have defined what a Business Opportunity is to them, and I do not want to be caught by their definition, I will also avoid using their operative words where possible.
About the Author
Gerald P. Nehra is an MLM-specialist, private practice attorney. He is one of only a few attorneys nationwide whose practice is devoted exclusively to direct selling and multilevel marketing issues. His 33 years of legal experience includes nine years at Amway Corporation, where he was Director of the Legal Division. He can be reached at 1710 Beach Street, Muskegon, Michigan 49441-1008, 231-755-3800, 231-755-4700 fax. His e-mail address is GNehra@mlmatty.com.
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