Home » Law

Business Opportunity - The Six Months Issue

Feb 8, 2008
Business Opportunities are strictly regulated in 23 states; but at the same time, the majority of the traditional MLM income opportunities currently available are NOT Business Opportunities, either by definition, or by exemption.

WHY NOT? All 23 states have a threshold dollar amount, BELOW WHICH their laws are not applicable. The legislative intent was not aimed at the Avon Lady or the Amway Distributor, but rather at the vending machine routes and the chinchilla farms. 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 reason why the cost to join most direct selling income opportunities is often zero, or a modest amount.

It has been my experience that 95% of direct sellers using a multi-level form of compensation, position their "income opportunity" offer to prospects so that the cost to join is below the thresholds of the "Business Opportunity" Statutes. If distributors are required to pay more than $200 to participate in the income opportunity, the Business Opportunity threshold has been exceeded in some states.

BUT - I have had occasion to look deeper into the meaning of "cost to join" and have found some "Gotchas." In 12 of the 23 states the money required to be paid at the onset is the measure. HOWEVER, in the other 11 states the measure is the amount paid at the onset AND the amount paid over the first six months. So knowing the threshold amounts in the 23 states is not enough. In the following states, CA, GA, IA, LA, ME, MI, MD, SD, OK, TX & UT, various forms of the following quotes are used: . . . obligated to pay prior to or within six months . . . . . . obligated to pay within six months . . . . . . obligated to pay before, at the time of, or within six months . . . . . . or during the following one hundred eighty days . . . . . . single payment, or consecutive six month period . . . . . . anytime before the date of sale to anytime within 6 months after the date of sale . . . . . . commencing or ending six months . . . . . . requiring payment commencing operations to within six months . . .

So what is the lesson or the point here? Simply knowing the threshold amounts by state is not enough. Are you also subject to a six month "Gotcha?" Ask your legal advisor. The repercussions can vary from a warning phone call or letter to a "Cease & Desist" notice.
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.
Rating:
Please Rate:
(Average: Not rated)
Views: 171
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Accounting
    • Credit
    • Currency Trading
    • Debt Consolidation
    • Insurance
    • Investing
    • Leasing
    • Loans
    • Mortgage
    • Mutual Funds
    • Personal Finance
    • Stock Market
    • Structured Settlements
    • Taxes
    • Wealth Building
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources