Definition: Multilevel Marketing (MLM)

Multilevel Marketing, or MLM, is a system for selling goods or services through a network of distributors.

The typical Multilevel Marketing program works through recruitment. You are invited to become a distributor, sometimes through another distributor of the Multilevel Marketing company’s products and sometimes through a generally advertised meeting.

If you choose to become a distributor with the Multilevel Marketing company, you’ll earn money both through the sales of the MLM’s products and through recruiting other distributors, by receiving a portion of the income these distributors generate.

The distributors that you sign up with your Multilevel Marketing plan are called your downline. The distributor that originally recruited you is called your upline. Often he or she will give you some help getting started, including training.

Multilevel Marketing plans are legal in Canada, as long as they do not contravene the Competition Act. However, if you are considering becoming part of an MLM company, you need to investigate the opportunity thoroughly, just as you would with any other proposed business venture. Not all Multilevel Marketing plans are created equal, and some may not be MLM at all, but pyramid schemes, which are illegal.

Successful well-known MLM businesses include Mary Kay Cosmetics, Avon, and Tupperware.