Protect Your Venture from Needless Hazards

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Direct selling is a highly regulated industry. That needn’t hold you back, so long as you’re prepared to address the inevitable MLM legal issues.

If you’re not prepared, you run a high risk of violating a law or regulation you didn’t even know existed. This can have devastating consequences for your company.

The Sheffield Group has launched hundreds of companies, and we’re proud of our record in this respect: not one company that started with Sheffield has run into MLM legal trouble. That’s not because we offer legal advice — we don’t.

Sheffield’s contribution is to educate you on the questions you should be asking, and suggest the resources you will need to protect your company.

So let’s make a start here, and look at some of the factors you need to consider…

MLM Legal Issues: What You Need to Know

You’ll quickly discover that there are certain issues that are unique to direct selling, and other issues that many companies in our industry face because of the kinds of products commonly marketed.

Purely MLM legal concerns include:

  • Laws against pyramid schemes
  • Laws pertaining to business opportunities and franchises
  • Constraints on income claims
  • “Pay to play” regulations
  • Independent distributor contracts
  • Regulations distinguishing distributors from customers
  • MLM legal regulations unique to specific states
  • Product and income claims made by independent distributors

Other issues that often arise in our industry include:

  • Health-related product claims
  • The role of testimonials in making claims
  • Licensing requirements for finance or real estate services
  • Trademark and patent issues
  • Non-disclosure and non-compete agreements
  • Regulatory variance from state to state, and internationally

This list is not exhaustive! You may well face MLM legal concerns that are specific to your particular product line and marketing strategy. Be sure to get advice on this.

Questions to Ask

Here are some questions you can begin to ask as you master your MLM legal issues:

  • What can I safely promise about my company’s income opportunity?
  • How is the MLM legal status different from other business opportunities or franchises?
  • Will my company growth be driven primarily by product sales or recruitment?
  • What is the optimum balance of distributors and customers (those who are not distributors)?
  • How should I position the “personal use” of products by distributors?
  • How do I handle distributors who go dormant but still purchase products?
  • Can I require distributors to purchase products in order to qualify for payment?
  • What legal risks do I face if I terminate a distributor?
  • What constraints can I place on a distributor from poaching my people for another company?
  • Is my company responsible for what distributors post on social media?
  • Are testimonials exempt from limits placed on health or income claims?
  • What licenses might my distributors need?
  • How do variations in state (or international) regulations impact my plans for geographic growth?

When it comes to the MLM legal landscape, you face a stark choice. Address these questions, and others like them, at the earliest possible juncture. Or wait until you’re hit with a lawsuit, an FDA letter, or an FTC action that could close your company.

Making It Safe

You may be wondering: “With so many MLM legal hazards, is it worth the risk of entering this industry?” The answer is categorically “Yes!” You can make your direct selling business safe in three ways:

  1. Educate yourself on the fundamental issues (but don’t try to play attorney!)
  2. Get guidance from a consulting team with decades of experience in helping companies resource themselves correctly
  3. Hire an MLM legal expert

The last of these is critical. As well as a conventional corporate attorney, you need counsel from a lawyer who specializes in MLM legal issues. That’s because the laws and regulations governing direct selling are complex. They change over time and they vary between jurisdictions. Only a specialist can be trusted to guide you accurately.

Finding the Right Counsel

When it comes to finding the legal resources you need, there’s no way to bypass experience. Your best pathway is to get a referral from people with long decades in the industry. The Sheffield Group has built up an unrivalled network of experts in every aspect of direct selling — including MLM legal.

We can introduce you to specialist attorneys who can be fully trusted with the long-term security of your enterprise.

Play Safe and Aim High

With so much of your time, money, energy and heart pouring into your company, why put all that at risk? Make your enterprise safe from the start. MLM legal issues are not the most exciting aspect of launching or scaling a direct selling company — until things go wrong. Then they get far too exciting!

If you secure this important aspect of your business right from the start, you’ll be far better positioned to pursue your largest and most ambitious plans.

Ask The Sheffield Group how you can best educate yourself on the legal aspects of your enterprise, and where you can find the most expert and reliable counsel.

CALL US: 480-968-6199

Sheffield: Your Guide to MLM Legal Resources

Founder Mike Sheffield is renowned for his knowledge of the direct selling industry, and in particular for his acquaintance with the best MLM legal minds. For over 30 years, his team has been helping some of the most renowned companies in the direct selling industry resource themselves for the safest and most successful outcomes.

Importantly, the Sheffield Group is equipped to address every aspect of your future success — either with our in-house consulting team, or with the support of our world-class network of specialist experts.


  • Concept and Product Review
  • Compensation Strategy
  • Marketing Strategy
  • Sales Pathways
  • Product Positioning
  • Distributor Recruitment Strategies
  • Financial Modeling
  • Culture Development


  • MLM Software
  • Branding and Design
  • Website and App Development
  • Online Positioning and Marketing
  • Social Media
  • Executive Recruitment
  • MLM Law
  • Merchant Accounts

Your Next Step

Looking for MLM legal help? Your next step is clear. Contact the Sheffield Group for a free initial consultation on how you can best resource your company.

To make an appointment, simply call us, or click the Message link below.

Let’s Talk About Your Business