What is a Binary Compensation Plan?

A binary plan is a multilevel marketing compensation plan which allows distributors to have only two front-line distributors. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributor’s front-line. This “spillover” is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan. The primary limitation is that distributors must “balance” their two downline legs to receive commissions. Balancing legs typically requires that the number of sales from one downline leg constitute no more than a specified percentage of the distributor’s total sales.

Binary compensation plans have become the darling of startup multilevel marketing companies. In addition, several companies utilizing binary plans have recently entered the market and generated eye-popping sales and profits. Four principal areas of law governing the multilevel marketing industry are: 1) anti-pyramid laws; 2) business opportunity laws; 3) securities laws; and 4) lottery laws

Source(s):

http://www.mlmlaw.com/index.html…
“Legal Resource for Direct Selling, Multilevel,and Network Marketing Companies”

http://www.mlmconsultant.com/mlm_pay_pla…
“the home of the best mlm compensation experts”

http://www.mlmsoftware-resources.com/art…
“MLM Software Updates & News”

http://www.mlmreview.com/mlmreview/usana…
“Your Premiere Source For Objective
Reviews of Network Marketing Opportunities”

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