QNETPRO Talks: QNET Director Of Legal Affairs On The Legalities of Network Marketing

Through QNETPRO Talks, we aim to emphasise how QNET advocates responsibility and integrity as strong and basic foundations of a successful network marketing business.

Previously, our Founder, Mr Joseph Bismark gave us light on the Network Marketing business model. In this article, our Director of Legal Affairs, Mr Zaheer Merchant will help us understand how legal Network Marketing is and how distributors can help the industry receive the proper amount of trust and respect that it deserves.

Is Network Marketing a legal business?

The simple answer is yes, provided that they function within a certain scope of what they’re supposed to function in. Strong and clear Policies and Procedures should be in place, Code of Ethics must be strictly enforced and most importantly, the Compensation Plan should be a business model that only pays commissions based on successful sales of products and services to consumers and not just simply for recruiting people.

So we can say that Network Marketing is not a recruitment business like what many others perceive direct selling or network marketing is?

It is absolutely not a recruitment business. It is a business where a person earns from sales of products or services mainly by word-of-mouth marketing.

Since we are in a word-of mouth business, the distributors words, right or wrong, spread like wildfire and may eventually affect the reputation of the company. How do we keep this under control?

Education and enforcement are two things that go hand in hand.

On EDUCATION: Behavioural patterns starts from the top. As a responsible upline, I would start my business in a professional manner and do whatever is required of me ethically to propagate a good behavioural pattern that I would always work on to be repeated. Obviously, from the top itself, the behaviour should be correct and in line with guidelines, with professional ethics, with what is the law of the land. All of these things come into play. That’s the first thing.

On ENFORCEMENT: Enforcement is incumbent on the company to conduct. The company must have an effective set of rules, laws, and regulations between the company and the distributor. This means that if you find out that there is something that has not been done properly, you find out that somebody has misrepresented the company through its products or the compensation plan, swift action needs to be taken. An action should be equivalent to what the wrong is, so if someone has done something which is severe, then you terminate the representative. Education and enforcement very much go hand in hand.

All other aspects come into play, such as compliance and following certain industry standards. If you look at the Direct Selling Associations for instance, they have rules and regulations. They tell you about not disparaging other companies and other people’s products, not misrepresenting things and income opportunities – all these factors come into play. Abide by them – no problems at all.

There is a certain stigma attached to the Network Marketing Profession that is affecting how the industry is viewed today. When do you think direct selling will be given the proper amount of trust and respect?

As the world grows smaller with globalisation and with the breaking down of trade barriers and practices, it’s only a question of time before the industry begins to be seen in a better light.

Watch out for the next QNETPRO Talks article!

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