Part of the guide: Network Marketing Lead Generation
If you’re working out how to choose an MLM, you’ve probably already noticed the problem. Every company on the list looks great from the outside. Slick videos, a charismatic top earner, a product that “sells itself.” After more than twenty years in this industry, I can tell you the brochure is the worst place to make this decision. The right question isn’t “which company is best.” It’s “which company is built so a normal person can actually win.” Those are not the same thing, and almost nobody tells you the difference.
Reviewed and updated June 2026.
Let me start where I usually start, with a number that cost me a few years to understand.
In this guide
- The lesson a five-to-one ratio taught me
- Start with the FTC test, not the comp plan
- Then look at who actually runs the company
- Judge the product by one brutal question
- Read the comp plan for what it rewards, not what it pays
- Last, and most important, look at the system you’ll be handed
- The quiet difference between a position and a system
The lesson a five-to-one ratio taught me
Back in 2006 I built a real distributorship with a company called Agel. Good products, sharp recruiting tools, a “suspension gel” angle that sounded like the future. I worked it hard and I did well. Then I started counting. For every actual customer who just wanted the product, I had roughly five distributors who had signed up to sell it. Five to one. I flagged it to corporate. The people there were genuinely nice about it. Nothing changed, because the field leadership liked the math exactly the way it was.
That ratio taught me the single most useful thing I know about how to choose an MLM. The product is almost never the variable. The way the comp plan is weighted is. Whether real customers buy the thing for its own sake, separate from any chance to earn, tells you nearly everything about whether you’re looking at a business or a recruiting treadmill wearing a business costume.
So before you fall in love with anyone’s product line, run every company you’re considering through the test below. It’s the same test I’d use today, and it’s the same one a regulator would use if they came knocking.
Start with the FTC test, not the comp plan
Most people evaluating an MLM start with “how much can I make.” That’s backwards. Start with the one question that decides whether the income is even legal to chase.
The FTC’s own guidance on multi-level marketing draws the line between a legitimate MLM and an illegal pyramid in one place: whether real sales are being made to real customers who are outside the business and buying because they want the product. Income driven mostly by recruiting, with thin sales to actual outside customers, is the warning sign. That’s it. That’s the whole test, written by the people who can shut a company down.
So here is the question to ask anyone pitching you, and watch their face when you do. “How many of your buyers are customers who never signed up as distributors?” If the honest answer is “almost none,” you have your answer no matter what the slide deck calls it. If they get defensive or change the subject to the “lifestyle,” that’s an answer too.
This is exactly what my five-to-one ratio at Agel was screaming at me in 2006. A plan that pays more for recruiting than for selling to customers will drift toward recruiting every single time, regardless of how sincere the people running it are. It isn’t a character flaw. It’s physics. Incentives win. I wrote more about the specific warning signs in this breakdown of MLM red flags if you want the full checklist.
Then look at who actually runs the company
The original version of this post told you to check the company’s track record. That advice still holds, but in 2026 I’d sharpen it. Track record alone gets gamed. A company can be “in business since 2019” and still rewrite its comp plan twice a year. What you actually want to know is who is behind it and whether you can find them.
Look for a real executive roster with real names. Look for a corporate address that isn’t a virtual mailbox. Look for whether the money trail is something you can inspect or something you’re asked to take on faith. When I review a company and the ownership is mysteriously thin for an outfit asking people to invest thousands, that’s a yellow flag every time. It doesn’t prove fraud. Plenty of legitimate firms are private and quiet. But when your money is passing through someone’s hands, you’re allowed to know exactly whose hands those are.
Cross-check against an independent source before you trust the company’s own page. Industry watchdogs like BehindMLM, plus regulator databases and a plain search for “[company name] lawsuit” or “[company name] FTC,” will tell you in ten minutes what a recruiter won’t tell you in ten meetings.
Judge the product by one brutal question
Would a stranger pay full price for this with zero interest in the business? Not your cousin who wants to support you. Not a teammate who needs the volume. A stranger.
Here’s the trap. A lot of MLM products are priced for the comp plan, not for the market. I’ve reviewed wellness devices that list for a thousand dollars on the affiliate site while a near-identical unit sells on Alibaba for a couple hundred. When that gap exists, the markup isn’t paying for the product. It’s paying for the recruiting. The only people who’ll pay full price are people buying a position, which loops you straight back to the FTC problem.
So pick a company whose product you would genuinely buy and use even if there were no check attached. Use it for ninety days first. You cannot honestly sell a result you’ve never felt, and your own testimony is the only marketing that survives a skeptic. If after ninety days you wouldn’t buy it again at full price with your own money, you’ve found your answer for the cost of a few weeks instead of a few thousand dollars.
Tired of evaluating comp plans you have to take on faith? I’ll show you one where every commission is settled on a public contract you can read yourself, in about twelve seconds, before you trust a word I say. Drop your name and I’ll send you the walkthrough.
See a comp plan you can actually verify →Most participants earn little to nothing. No income is guaranteed. You can verify every payout on the public smart contract.
Read the comp plan for what it rewards, not what it pays
Every comp plan will show you a screenshot of someone’s big check. Ignore it. What you want to know is what the plan pays you to do. Read it slowly and sort every bonus into two piles: money for selling product to customers, and money for enrolling and stacking people.
Binary plans, fast-start recruiting bonuses, and package levels that exist mainly to “raise your earning ceiling” all lean the same direction. They pay you to build legs of distributors, not to find customers. That’s not automatically disqualifying. But the heavier that recruiting pile is, the more the company is quietly steering you toward the pyramid side of the FTC line, and the more your income depends on a treadmill that never stops.
One more rule I’d add for 2026. A reader named Austin left a comment on the original version of this post years ago that stuck with me. His point was simple: the profitable future of this industry is in systems that make money from real outside sales of goods and services, not from their own members. He was right then and he’s more right now. If the plan only works when members keep buying to qualify, you don’t have customers. You have a closed loop, and closed loops run dry.
Last, and most important, look at the system you’ll be handed
The original post called this “support and training.” That’s the polite version. Here’s the real version.
Whether you make money in any company has almost nothing to do with the company. I’ve watched people get rich and go broke in the same company in the same month. A friend of mine, Aaron Rashkin, once had 5,000 active people in one of the largest juice companies in the world and was making four thousand dollars a month from them. The same effort under the right system can pay ten times that from a fifth of the people. The variable was never the juice. It was whether he had a system to generate leads, make sales, build a team, and create real influence, instead of just a product and a hope.
So when you evaluate the “support,” don’t ask whether they have training calls. Everyone has training calls. Ask whether they hand you an actual system. A way to generate leads that doesn’t depend on spamming forty people from your phone and ruining Thanksgiving. A way to make sales to strangers who came to you. A way to build a team that produces when you step away. If the only “system” is “talk to everyone you know and stay positive,” you’re not being given a business. You’re being given a hobby with a startup fee. This is the single biggest reason capable people fail, and I dug into it more in why most network marketers fail.
The quiet difference between a position and a system
Notice how this lands in your body, because the feeling is the whole point. The builder who can pull up the contract on their phone and show any prospect exactly where every dollar settles carries himself differently than the recruiter quietly praying the upline doesn’t change the rules next quarter. One of them is calm. The other is braced for the email that says the plan moved. You already know which one you’d rather be at the next dinner where someone asks what you actually do for money.
That calm isn’t a personality trait. It’s downstream of a system you never have to defend, because anyone can check it for themselves. You’re not stuck choosing between companies because you keep picking wrong. You’re stuck because you’ve been handed products and comp plans your whole career and never once handed a system you could actually trust and verify.
So before you commit to any company off a recruiter’s enthusiasm, look at what a system built for trust actually looks like. The one I use pays 100% of every commission on a public smart contract, settled in the same block as the sale, in about twelve seconds. You don’t take my income on faith. You read the contract yourself on a block explorer before you believe a word I say. No skim, no “the plan changed,” no comp you can’t audit. That’s the difference between buying a position and building a business, and it’s the whole reason one keeps paying when you step away and the other doesn’t.
You don’t need a better company. You need the system underneath it. This is how I generate leads, make sales, and build a team, with every commission settled on a public contract you can verify before you trust me. Enter your name and I’ll send you the walkthrough.
Show me the system I use →Most participants earn little to nothing. No income is guaranteed. You can verify every payout on the public smart contract.
Run every company you’re considering through those six filters: the FTC retail test, who runs it, the product a stranger would actually buy, what the comp plan truly rewards, real outside sales over a closed loop, and the system you’ll be handed. Choose the one that passes, build it the honest way, and you’ll never have to wonder which side of the line you’re standing on.
P.S. Tell me which company you’re weighing up and what’s giving you pause. Leave it in the comments and I’ll give you my honest read.
In prosperity,
David Wood
This is analysis and opinion, not legal or financial advice. As with any opportunity, most participants earn little to nothing and no income is guaranteed. Always verify a company’s live pages and current comp plan before you commit. See also: the systems and tools I actually recommend, and start here if you’re new.
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Sorry if this is a silly question, but the ninety day test, would you do that before or after paying to join? Because if it’s after, you’ve already found your answer the expensive way. And if it’s before, how do you even get the product without signing up first?
The ‘watch their face when you ask’ line assumes you’re standing in front of the recruiter. A lot of us are being pitched over a text thread by a relative three time zones away. There’s no face to watch, just a paragraph that took twenty minutes to sound casual. The test still works, you just ask it in writing and notice how long the reply takes to arrive.
Bonnie, in the bike trade we call that the ‘try before you buy in’ problem and it never fully resolves, someone always eats the cost of finding out. I stock a frame for a season on my own dime before I sell it, and that’s with an established supplier, not a coin subscription with a kit attached. Honest answer: buy it as a customer first, at customer price. If the company won’t sell it to you without the distributor kit, that tells you something before you’ve spent a thing.
Built a script that runs the FTC-action and BehindMLM check on a company name in about ten seconds. Kills the obvious ones fast.