Questions to Ask Before Joining an MLM
For anyone who has been pitched a multi-level marketing or direct sales opportunity by a friend or a recruiter and has not signed yet. The questions follow the order the decision usually takes: the pitch itself, what it costs, what sellers earn and where the money comes from, the contract and the way out, and the ones to ask yourself.
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The questions
Each question, and why to ask it
The pitch
What is the company called, and is it a multi-level marketing business?
Why ask it
Ask this before you agree to a call or a 'quick coffee'. A recruiter who names the company and says yes plainly has given you something to look up. One who says 'it's not like that' or holds the name back until the presentation is counting on you not checking first.
What would I be selling, and who buys it who is not also a seller?
Why ask it
The answer to hope for is a list of ordinary customers who reorder because they like the product. If most of the buyers turn out to be people on the team meeting their own monthly minimum, the product is moving because of the pay plan, and that demand ends the month those people quit.
How is this different from a pyramid scheme?
Why ask it
Expect a rehearsed reply, usually that pyramid schemes are illegal and this company sells a real product. A product alone does not answer it, because the difference people point to is whether sellers are paid for sales to customers or for signing others up. Read how the consumer authority in your country describes a pyramid scheme, then hold the pay plan up against that description yourself.
Do you earn more from selling to customers or from the people you have recruited?
Why ask it
Someone who lives on retail profit can describe their customers and how often they reorder. Someone who talks only about building a team is telling you the money comes from sign-ups like yours. Ask for a rough split of their last commission statement: so much from their own customers, so much from what the team ordered.
What did you clear last year after your own purchases and expenses, and can you show me?
Why ask it
Rank titles and bonus screenshots are not income. Ask to see a few months of commission statements, then take off what they spent on product, samples and events. A recruiter in their first year who admits the figure is small or below zero is more useful to you than one with a big number you cannot check.
What do you get if I sign up under you?
Why ask it
Many plans pay the recruiter a bonus or a cut of your first order and count you toward their next rank. That does not make your friend dishonest, but it does mean the advice is not neutral. Ask it without an edge and notice whether the answer is a figure or a change of subject.
How long have you been doing this, and how many hours a week does it take?
Why ask it
Someone six weeks in is passing on what they were told, not what they have seen. Take what they clear in a month and divide it by the hours, counting the posting, the messaging and the team calls, then set that hourly figure beside any part-time job you could get.
If I join, what would you do to help me in the first three months?
Why ask it
A sponsor with a plan can name it: sitting in on your first few sales conversations, a weekly call, teaching you the product. If the help on offer is a script for messaging your contacts and a group chat of motivational posts, the training is in recruiting. Find out whether any of it costs money, and who helps you if your sponsor quits.
Why did you think of me for this?
Why ask it
A real answer is about you: you already buy the product, or you have sold things before and liked it. 'You would be amazing at this' is what a script says to everybody on a contact list, and it is fair to ask how many people got the same message this week.
How long has the company been around, and has it ever been sued or investigated?
Why ask it
Take the answer home and search the company name with words like complaint, lawsuit and settlement, then look it up on the consumer authority's site for your country. One old case is not the whole story, and a company in its first year or two has no record to read either way. A recruiter who has never looked has skipped the checking they are now asking you to skip.
Can I be a customer for a month or two before I decide anything about selling?
Why ask it
A recruiter who trusts the product has every reason to say yes, since a customer who reorders is worth having whether or not you ever sell. If the only way to try it properly is the starter kit and a signature, the thing being sold is the membership, and you have learned that for the price of asking.
By when do you need an answer, and what changes if I take two weeks?
Why ask it
Listen for a deadline that exists only in the pitch: a bonus that ends Friday, a 'ground floor' that is closing, a spot being held for you. A business that will still be there in a year will still be there in two weeks, so a push to decide tonight is information about how the team recruits.
Costs
What does it cost to sign up, and what is the cheapest way in?
Why ask it
Recruiters tend to lead with the large bundle because their own bonus is often tied to it. Get the price of the smallest kit, what it leaves out and whether anyone on the team started with it. If the cheap option is discouraged as 'not serious', ask who benefits from the expensive one.
Is there a minimum I have to buy or sell each month to stay active?
Why ask it
The words to listen for are active, qualified, personal volume and autoship. A requirement you can meet by ordering for yourself works like a subscription, and in a slow month it comes off your own card. Multiply the figure by twelve before you compare it with anything you expect to earn.
What did you spend in your first three months, all in?
Why ask it
The recruiter's own number beats the brochure's. Write it beside the kit price: the difference is everything the sign-up page did not mention. If they have never added it up, offer to do it with them, since their order history will show most of it.
What would I pay for besides product: a website or app fee, samples, shipping, card processing?
Why ask it
Each one is small, which is why nobody mentions them. Go down the list item by item and write a monthly figure against each, including the product you would give away to get people to try it. Then ask which of these the company charges even in a month with no sales.
Is there a yearly renewal fee, and what do I lose if I let it lapse?
Why ask it
Find out whether a missed renewal only pauses your account or also hands your customers and your team to the person above you. Where lapsing costs you everything you built, the fee is less optional than it sounds, and you should count it as a fixed cost.
Would I have to hold stock, or does the company ship straight to my customers?
Why ask it
Boxes in your spare room mean the risk of unsold product has moved from the company to you. Direct shipping keeps that risk off you. Ask too whether anyone on the team has bought stock to reach a rank, because if it happens above you it will be suggested to you.
What do the conferences and trainings cost, and what happens to people who skip them?
Why ask it
Tickets, flights and hotel nights can come to more than a new seller earns in commission all year. You will probably be told the events are optional, so ask the second half carefully: whether people who stay home get less help, fewer leads or a talk about commitment.
How does the price compare with a similar product in a store or online?
Why ask it
Do this comparison yourself before the next conversation, looking at size and ingredients as well as price. If it costs far more than its store equivalent, expect a good share of your sales to be favors, and favors run out. Check resale sites as well: if former sellers are clearing stock at half price, that is your competition.
What will I have to sort out for taxes, registration or insurance as an independent seller?
Why ask it
Sellers in these companies are usually independent, not employees, and what that means for tax, registration and insurance depends on where you live. The company can tell you what it requires. For what the law requires, ask a local tax office or an accountant, and treat 'you can write it all off' from a recruiter as a sales line until someone qualified confirms it.
Earnings
Does the company publish an income disclosure statement, and can we read it together?
Why ask it
Some companies publish one by choice and some because the rules where they operate require it, so if there is none, ask why not. Read it with the recruiter beside you and go to the row where most sellers sit, not the one at the top. How they talk about that row tells you whether they have read it before.
What does the typical seller earn in a year, and is that before or after expenses?
Why ask it
An average is pulled up by a few people at the top of the plan, so ask for the median, meaning the seller exactly in the middle, or for the band that holds the most people. Then check the footnotes: these statements commonly report commissions paid, with nothing taken off for the seller's own orders, fees and travel.
How many of the people in these figures earned nothing, and who was left out of the count?
Why ask it
A statement can look healthier by counting only 'active' sellers, or only those who received a check. Ask how active is defined and how many people fall outside it. The ones left out are usually the newest and the ones who gave up, which is to say the group you would start in.
Of the people who joined around when you did, how many are still selling?
Why ask it
Turnover is rarely printed anywhere, so the recruiter's own memory is your best source. A long pause, or 'the ones who quit did not want it enough', is an answer about how the team treats people who struggle. Ask for the name of one person who left and whether you may call them.
Can you show me the compensation plan on one page, using your own last month as the example?
Why ask it
A plan that needs a forty-minute video and still cannot be reduced to 'I sold this much and was paid this much' is hard to check your pay against. If the recruiter cannot do the arithmetic for their own month, they do not know what they are offering you, however sincere they are.
What do I make on one sale to an ordinary customer?
Why ask it
Retail profit is the only income here that does not depend on recruiting anyone. Work out how many of those sales it takes to cover the monthly minimum, then how many to make an amount that would matter to you. Ask whether anyone on the team reaches that count from customers alone, and how.
How do I actually get paid: by bank transfer or a company card, and is there a minimum before money is released?
Why ask it
Get the schedule and the method, and find out whether small commissions sit unpaid until they pass a threshold. A pay card that charges to move money to your bank takes a slice of a check that is already small. The detail people miss is what happens to an unpaid balance when an account goes inactive or is closed.
Can I earn anything worth having without recruiting, and can I hold a rank without it?
Why ask it
Plenty of people join meaning only to sell a product they like. If the ranks, the bonuses and the car all require a team beneath you, the plan is telling you what the job is. Decide now whether recruiting friends is something you would do, because the pressure to start tends to come early.
Does the plan pay commission on what my recruits buy for themselves, or only on sales to outside customers?
Why ask it
A plan that pays on recruits' own orders rewards signing people up and encouraging them to buy, whether or not anyone outside the company wants the product. Have the recruiter find the line in the pay plan that defines the volume commission is paid on, and check whether an order a team member places for their own use counts toward it.
Once I have asked everyone I know, where do new customers come from?
Why ask it
Friends and family are a list that ends. A workable answer names something the recruiter does themselves: a market booth, reorders, referrals from customers who are not relatives. 'Keep adding people on social media' means messaging strangers, so ask how many of those messages turned into a sale for them last month.
How many sellers already cover my town and my circle of friends?
Why ask it
There is normally no limit on how many people can sell the same thing on the same street. Search the company name with your town on social media before you answer anyone. If three people you know are already posting about it, the customers you were counting on have been asked.
Fine print
Can I take the contract and the policies home before I pay anything?
Why ask it
The sign-up form is often a checkbox on a phone at the end of a party, which is the worst place to read terms. Ask for the agreement, the policies and procedures and the pay plan as files or links. Reluctance to send documents the company has already written is a reason to slow down.
If I quit, will the company buy back unsold product, at what percentage, and for how long after purchase?
Why ask it
Get the clause itself, not a summary: the percentage of what you paid, the time limit, whether opened, seasonal or discontinued items count, and who pays the shipping. Some trade bodies and some laws set a minimum buy-back, so ask which applies to this company where you live. Until you have read it, order nothing beyond the kit.
Is there a cooling-off period after I sign, and how do I cancel?
Why ask it
Many places give a new seller a set number of days to back out for a refund, and the length differs by country and state, so ask what applies to you and where the contract says it. Note the date you signed. Ask too how a cancellation has to be sent, because telling your recruiter may not count as telling the company.
How do I stop or change an automatic monthly order?
Why ask it
Have them show you the screen where it is done. An order you can pause in two taps is a convenience; one that needs a phone call during business hours and notice before a cutoff date will bill you at least once after you have decided to stop. Find out the cutoff day.
What is the refund policy for my customers, and who covers a return?
Why ask it
Your customers will mostly be people you know, so a return is a conversation at a family dinner as well as a transaction. Ask whether the company refunds the buyer directly and whether your commission is taken back when it does. A policy that leaves you to make it right personally is a cost.
Where am I allowed to sell: social media, online marketplaces, local markets, at a discount?
Why ask it
Company policies often bar marketplace listings and price cuts, which closes the obvious ways to clear stock you cannot move. Read the policy before you plan around a channel. A booth or a shop page you were picturing may not be permitted, and breaking the rule can end your account.
What am I allowed to say about what the product does and what sellers earn?
Why ask it
Look at the recruiter's own posts while you ask. Promises that a product treats a condition, or that the income replaces a salary, are the kind of statement advertising rules in many places restrict, and you would be the one making them to your friends. Ask the company for its written guidance and keep inside it.
Can the company change the pay plan or close my account, and what happens to my customers if it does?
Why ask it
Most agreements let the company do both, so the useful part is the history: when the plan last changed and who came out worse. A seller usually owns no customer list, no territory and no business that could be sold to someone else. Ask the recruiter what they would walk away with if their account ended tomorrow.
Does the agreement restrict me from selling anything else, or from contacting my team and customers after I leave?
Why ask it
Some contracts bar you from joining another direct sales company or approaching people you met through this one for a period after you go. Whether such a clause holds up depends on where you live. Read it anyway, especially if you already sell something or run a small business on the side.
Ask yourself
Would I buy this product at this price if no business came with it?
Why ask it
Answer it from your own bathroom shelf or kitchen cupboard, not from the presentation. If you would not pay full price yourself, you will be asking friends to do something you would not, and they will be able to tell.
Who are the first twenty people I would pitch, and how do I feel reading that list?
Why ask it
Write the names down. Recruits are often told to start with a list of everyone they know, so this is the first real task of the job. Dread at the sight of your sister's name or your oldest friend's is worth more attention than any income chart.
Can I hear no from a friend and leave it there?
Why ask it
Team trainings often teach that a no means 'not yet' and should be followed up. Decide your own rule before anyone hands you theirs: one ask, a clear answer accepted, and the subject closed. If that rule would make the business unworkable, you have your answer about the business.
Am I comfortable turning my own social media into a storefront?
Why ask it
Scroll the recruiter's feed for the last month and imagine it as yours: the product photos, the 'message me' posts, the hints about income. Some friends will mute an account like that without ever saying so. If you would want a separate page for selling, check that the company allows one and that the team would not expect your personal one anyway.
How would I feel if someone I recruited lost money?
Why ask it
Picture a specific person: a cousin with a new baby, a coworker short on rent. You would have earned something from the kit they bought. If that picture is hard to look at now, it will not get easier when it is a real name on your team report.
Am I interested in the business, or in not letting down the person who asked?
Why ask it
Both feelings are real, and only one of them is a reason to sign a contract. Try imagining the same offer from a stranger at a market booth. If the pull disappears, what you want is to support a friend, and you can do that by buying one product or just by saying so.
Could I lose the sign-up cost and six months of minimums without it hurting?
Why ask it
Add the two figures and look at the total as money already gone. If it is rent, a debt payment or anything borrowed, stop here. Be wary of any suggestion to put the kit on a credit card and 'earn it back', since nobody making it carries your balance.
What else could the same money and the same hours a week do?
Why ask it
Put a plain alternative beside it: a weekend job, a course, selling something you make, or leaving the money in savings. The comparison is dull on purpose. A pitch is built to be the only option in the room, and it looks different once a second one is sitting next to it.
What do people who left this company say, and have I gone looking for them?
Why ask it
Search the company name with 'former consultant' or 'why I quit', and read forums where ex-sellers post. Some of it will be bitter and some of it unfair. You are looking for the complaints that repeat, then for whether the recruiter's answers covered them.
What loss, and what date, would make me stop?
Why ask it
Pick both now and tell someone outside the company. On a team where quitting gets talked about as giving up on yourself, the pressure to keep going can be strong, and a figure and a month written down while you are calm are much harder to argue yourself out of later.
Has someone with nothing to gain looked at the numbers?
Why ask it
Show the kit price, the monthly minimum and the income disclosure to a partner, a parent or a friend who is good with money and is not in the company. If you notice you would prefer they did not see it, ask yourself what you expect them to say.
How do I say no and keep the friendship?
Why ask it
Keep it short and about you: 'I looked at it properly and it is not for me, but I hope it goes well for you.' You do not owe a list of reasons, and giving one invites a rebuttal. If you want to help, buy something once or share a post, and say that is the extent of it.
How to size up an MLM offer
Practical guidance for the conversation itself
Before the presentation
Look the company up first
Once you have the name, spend twenty minutes on it alone: the company's own income disclosure if it publishes one, your consumer authority's pages on multi-level marketing, and what former sellers have written. You will ask better questions, and you will know which of the recruiter's answers match what is on record.
Ask for the documents ahead of time
Request the agreement, the policies, the pay plan and the income figures by message before any call. Most of Costs and Fine print can be answered from those pages. That leaves the conversation for the questions only the recruiter can answer: what they earn, what they spend and who has left.
Set your limit before you hear the pitch
Decide the most you would be willing to lose and write it down. A presentation is designed to make the starter kit feel small next to the income on the slides. A number you chose beforehand is the one to trust.
Say at the start that you will not decide today
Tell the recruiter you are there to listen and will answer in a week or two. It removes the awkward moment at the end, and how they take it is useful: a friend says 'of course', and a script says the offer ends tonight.
In the conversation
Ask for their numbers, not the company's
'What can people earn' gets you the top of the pay plan. 'What did you earn in March, and what did you order' gets you one real month. Keep bringing it back to the person in front of you, because theirs is the experience you would most likely repeat.
Write the answers down
Take notes openly, with figures. It slows the pitch to a speed you can think at, and it gives you something to compare with the written documents later. Where the spoken answer and the contract disagree, assume the company will go by the contract.
Notice which questions get redirected
Every recruiter can talk about the product and the lifestyle. Watch what happens at 'how many people quit' or 'what share comes from recruiting'. An answer that turns into a story about mindset, or into 'my upline can explain that', is an answer you have not been given yet.
Stay kind to the person
The friend pitching you has usually paid in, been told this is how to help people and may be losing money themselves. You can ask hard questions without making it an accusation: 'I would ask this about any business' is true and keeps the friendship out of the firing line.
Running the numbers afterward
A one-year cost sheet
List the kit, twelve months of the minimum order, the renewal, the website or app fee, samples, shipping and one event with travel. Use the recruiter's real figures where you have them. The total is what the first year costs if you sell nothing, and it is the number to compare with your limit.
Break-even in customers
Divide a month of costs by the profit on one ordinary sale. That is how many paying customers you need every month just to stand still. Then count the people you could name who would buy at that price more than once, leaving out anyone who would only do it as a favor.
Read the income disclosure from the bottom
Start with the lowest band and work up, noting what share of sellers sits in each. Find where the middle seller falls, then subtract your one-year cost sheet from that band's figure. If the statement leaves out people who earned nothing, ask the company how many there were.
Call someone who left
One conversation with a former seller balances a room full of current ones. Ask what they spent, what they earned, why they stopped and how the team treated them when they did. If you cannot find anyone through the recruiter, look for people selling off old stock online and ask them.
Reasons to walk away
The money is in recruiting
If the recruiter's income, the ranks and the bonuses all depend on signing people up and on what those people buy, new sellers are the customers. However good the product is, you would be paid for finding the next person, and at some point there is no next person.
Pressure to buy big or decide now
A deadline, a larger package 'so you look serious' or a suggestion to borrow the money are all ways of getting your payment before your questions are answered. Treat any of them as the end of the conversation for that day.
Answers that will not go in writing
An income claim made out loud and missing from every document is hard to hold anyone to once you have signed. The same goes for a buy-back promise the recruiter cannot find in the policies. Ask for the page it is on, and if there is no page, act as though there is no promise.
You would not buy it yourself
If the product is too expensive for you without the seller discount, expect the people you would be selling to, who mostly live on budgets like yours, to feel the same. More posting does not fix a price the customer thinks is unfair.