We’ve written a few articles about how to read your MLM Policies and Procedures to make sure you and your family are safe.

Gotcha clauses are clauses the company can use against you if they need your check or decide they want to stop paying you.  Avoid policies and procedures over five to ten pages long, as there are too many places for the lawyers to hide the nasties.

Here is a summary of the gotcha clauses to watch out for …

  • Anything that mentions ‘ongoing responsibilities’ like sales, recruiting, or training.  If you have them, you can’t take a vacation, you can’t retire, and you can’t will your business to your family.
  • Anything that makes you responsible for the actions of your household and family members.  It’s not what you signed up for.
  • Anything that requires you to give up a business if you marry another distributor.
  • Anything that makes you responsible for training, motivating, or monitoring your downline.  It’s impossible.
  • Anything that allows the company to terminate you at any time without cause or in the company’s ‘sole discretion.’  If you have this clause, there’s no need to read anything else.
  • Any renewal fee combined with the company’s right to refuse any applicant.  The refused applicant could be you.
  • Any clause that restricts your legal rights.  You may have agreed not to sue your company.
  • Any clause that removes your freedom of speech, e.g. non-disparagement clauses.  Home of the brave, land of the free?  Maybe not.
  • Anything that allows the company to abandon the MLM business model without your permission.  Expect an empty mailbox.

Here is a real Table of Contents from a real MLM company.  To make reading your contract easier, we’ve highlighted the areas where gotchas lurk.

Gotcha Summary

To learn more about how to protect yourself, read this free report Big MLM Lies.

Bob and Anna Bassett
Skype bobbassett