Most of us dream of winning the lottery, of getting a call out of the blue to say we're the sole beneficiary of a long-lost rich relative's estate. What wouldn't we do if only we had financial freedom?
Multi-level marketing (MLM) companies promote such dreams -take charge of your life, work the hours you choose and earn unlimited amounts. Products or services are sold direct to customers via a network of sales representatives, who may also be encouraged to recruit more people, who recruit more people and so on. With a solid team under you and group commissions passing through your "business centre", MLM companies promise a path to financial freedom.
While MLMs are legal in New Zealand, pyramid schemes are not. In a pyramid, earning money relies solely on recruiting new people into the scheme; those on higher levels earn more than those below, but ultimately it becomes impossible to recruit enough people for newcomers to make money. MLMs, on the other hand, offer a commercially viable product and the opportunity to earn a living through repeat sales.
Diet supplements company Usana uses the MLM model. Founded in 1992, it listed on the Nasdaq stock market in 1993. Reported net earnings for the first quarter of 2006 were $US9.6 million - a nice earner for majority shareholder and company founder Dr Myron Wentz.
