Viernes, 20 Abril 2012 09:57

OLG Frankfurt decided on 12th May, 2011 on the legality of a MLM-Compensation Plan



For the consideration of the legality of a compensation plan of a MLM Company, the Court took into account the whole compensation plan as a unity, instead of checking its individual components.

The Court’s opinion is especially interesting regarding the monthly minimum purchase amounting to 114 €, required by the company to its distributors to receive two specific bonuses. According to the Court’s opinion a minimum monthly purchase, does not indicate a pyramid system if the distributor can receive other attractive commissions and if the active status of the distributor does not depend on the minimum purchase requirement. Furthermore, the Court states that one-time commissions received by the sponsor from the first purchase executed by those distributors recruited by him, do not lead to pyramidal scheme.

Moreover, the Court specifies some criteria characteristic of a legal Multilevel Structure:

-          No admission fee

-          No inventory requirements

-          Inventory repurchase (Buy Back Guarantee) by the Company

-          The compensation plan considers the limited earning opportunity for the most part of the distributors.