Network Marketing (aka Multi-level Marketing) is essentially a type of business model that combines direct marketing with franchising. In Network Marketing many companies use business models to represent various aspects of business, such as operational processes, organizational structures, and financial forecasts.

The business model operates by signing up commission based salespersons to earn commissions by both selling products and by enrolling people into their downline, an organisation of recruits, recruits recruits and so on.

Royalties are paid in a manner similar to franchises where a sale generates payment to the seller as well as a commission to an area or regional manager.

The Royalties from one person’s sales can be distributed at multiple levels. Persons who are new to this type of marketing may be required to pay for their own training and marketing materials, as well as purchase a significant amount of inventory to start their career. Although it is not uncommon for a business to have a fee to become a representative you must consider the amount of money that is being asked of you before you can start selling their product or service. You must also clearly understand what you will get in return for your investment.

Unfortunately over the last few years Network Marketing has received some bad press mostly due to efforts by the promoters of illegal pyramid or other similar schemes. Whilst it is a legal business and operates almost all over the world, many pyramid schemes try to present themselves as legitimate MLM in order to part unsuspecting people of their money.
In Network Marketing, commissions are earned only on sales of the company’s products and/or services. Unlike illegal pyramid or other similar schemes no money may be earned from recruiting alone through sign-up fees, though money earned from the sales of members recruited is one attraction of Network Marketing arrangements.

Kelly Walker is a successful internet marketer and the owner of reklaws.com. Kelly writes on a variety of topics on internet marketing. To learn more about this topic Kelly recommends you subscribe to her free newsletter at: http://www.reklaws.com