its perfectly legal. just tat it encourages pp to look for other
pp to recruit other pp to...(tend to infinity). while recruiting,
the new fella pays a sum of money (say 1.4k to purchase 3 mths
supply of health food (for 1 person/ i.e. 1 person spends 400+bucks
on health food per month!) when this happens, a portion of this sum
goes to the person who recommends...basically everyone on top gets
a cut.
this way, it encourages a person to keep recruiting till the ladder
is established before he lays back and do nothing and expect an
income... such, although gives passive income, is actually rather
unhealthy mentality. the presence of a product is the only thing
tat prevents the collapse of this business practice during
saturation; and after establishment, the unfair distribution will
exist forever, benefiting the top and to the detriment of the
bottom. how to achieve equity? start another ladder, hopefully with
the bottom pp on top this time. but chances are this will hardly
happen as those on top will be tempted to start another chain with
their spare cash and time.
one major weakness in this marketing strategy is that it seems
(personal opinion) that the company is not interested in selling
the product but more interested in recruitment of pp to recruit...
(tend to infinity-saturation). their repeat sales in fact come from
this distribution chain (as a distributor is a consumer himself)
the repeat sales figures of 80% etc are misleading as they are not
from pure consumers. to quote them; an establish and saturated mlm
business has 20% distributors and 80%pure consumers; at the rate
(esp in the beginning) its more like 0% consumers and 100%
distributors; this is a dangerous situation as they are not testing
the real consumer market. moreover the enthusiasm of distributors
towards the product probably has a bias component as they have to
"like" the product before recommending to someone else... its their
own business/career at stake after all.
the products are usually very expensive so that the pp on top of
the ladder get better cuts. but this also means during actual sales
it will be hard to workout. (distributors aside, as they are
supposed to profit from selling, not lose)
im not sure if u will understand this, but its my opinion.