Friday, December 28, 2012

What Do You Own From Joining MLM?

Robert T. Kiyosaki
Cover of Robert T. Kiyosaki
People who follow MLM know that Robert "Rich Dad" Kiyosaki were often quoted as "I support network marketing", and there's a lot of "sagely" advice on why. One of the most often used explanations is from Kiyosaki's book "Cashflow Quadrant", where he divided people into four kinds: Employees (you work), Self-Employed (you own your work), Business Owners (you own a system, and people work for you), and Investors (money work for you). 

However, the explanation becomes very vague from there. Most people quickly claim that MLM is a way for you to move from E (employee) to "B" (business owner). And the term "employee" is considered a pejorative. 

Sidenote: There's a lot of weird advice from Kiyosaki, one where he divided people into 4 wants: want to be liked, want to be comfortable, want to be right, and want to win, and network marketers are supposedly "want to win".  That doesn't explain WHY Kiyosaki like network marketing... other than he likes to hang out with... winners? But he defined it, so is he using circular logic? But enough about that later. 

But how much *do* you really own from MLM? 

With modern MLM, you don't keep inventory other than samples. Everything's drop-shipped from the company direct to the buyer. So the ONLY THING you actually own is your customer list, and your downlines, and that, the MLM company keep for you in their computer system. 

So do you really own a piece of the system at all, as Kiyosaki said? If you do, it's a mighty thin slice, if at all. 

Furthermore, most MLMs have clause written in the affiliate or associate manual, which you agree to when you join, that has ALL SORTS of restrictions, like non-compete, no cross-recruit, no transplanting your downlines to another MLM, and so on and so forth. So what you got in downlines and customers is basically... WORTHLESS as you can't take it with you. 

You own NOTHING. 

So WTF was Kiyosaki talking about "owning the system"? 

The MLM company owns the system. They own the inventory. The own the manufacturing. They own your customer list. They own your upline and downline genealogy. 

You own nothing. 


There are occasional exceptions. Amway recently lost a lawsuit against bHIP, but that's mainly due to their bad timing and bad disclosure... old Amway agreement did not have a non-compete clause. It was slipped in later and apparently not publicized sufficiently to satisfy the court. As their entire lawsuit is pretty much based on this, they lost. 

But other companies, you can bet, will not make the same mistake. 

So you STILL own nothing. 

Was MLM a big lie? You decide. 
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