Multi level marketing (MLM) has been around for many years and has been successful through the years. Selling Avon products is a current example of MLM. Avon as you know has been in the business for years and successful for many years.

Multi level marketing is also known as network marketing. It is a kind of business where franchising and direct selling are combined. This business makes a person associated with a company an independent person representing the company. It is an approach where the company creates a contractor relationship to the person who wants to expand his business.

The members make their earnings based on the sales they have reached in that particular product or service. It also includes a part of the sales of the person that they have recruited to join the business. Most of the time the individual who has recruited more members and provided a good sales output on the product compensate higher because of the effort to transact in two different levels.

There are “pyramid schemes” or Ponzi schemes, which are illegal. Most people associate multi level marketing to these kind of schemes because they also recognize themselves to be a legitimate networking business. Because of the bad image brought up by these schemes, many prefer to use their names for their businesses as “home based business franchising” or “affiliate marketing”.

Commissions or profits are earned in the process of selling a particular product or service in a legitimate multi level marketing. There can be no earnings in what they call as a “sign up fee” or for just recruiting yourself alone.

This kind of marketing has been criticized because of the questionable recruitment process where they get their revenue and profit. They get their sales from members and new members, which are considered the end users of the product and as the distributors.

These criticisms led to the major changes in the multi level marketing in the early 1980s when many companies have started to allow their members to concentrate only on marketing and not on distributing or stocking the product. Most multi level marketing firms nowadays perform as fulfillment firms by taking the tasks of shipping the product, paying the commissions and taking orders from their clients.

There have been victims of the illegal schemes in multi level marketing are required to buy expensive products, but most of these schemes do not last long because most of the sales are not easily resold.

If you start a MLM business you need to be ethical in both the recruitment of sales persons as well as the actual selling to customers. When you do this your business with grow and you will have repeat customers. This is where you can really reap a profit.