Master Distributors in MLM – Good or Bad?

Master Distributor

The Good

In this industry, a lot of startups try to seed their businesses with people known as “master distributors.” These are the professional networkers that command a large following and can deliver anywhere between 500 to 30,000 people depending on their scope of influence.

These master distributors offer a lot of value because they help young companies capitalize their businesses with excitement, momentum and, more importantly, people. While Company Z might have the best product in the world, they’ll fade into obscurity if they’re never able to attract a committed group of people.

Show me the money

Master distributors are provided a financial incentive to join a business via some sort of special bonus, which is always in addition to their payout via the compensation plan. These bonuses vary but they’re usually a small percentage of the gross revenue from the downline i.e. 1% of gross revenue, 2% of gross revenue, payout from a special position, etc.

The Bad

The master distributor subject is also very controversial. Some companies are choosing to stay away from these arrangements because they’re afraid that when they hire “mercenaries” (a term used by a client, not me), the leaders would be more loyal to the money instead of the company. Master distributors also have the reputation of being “opportunity jumpers” where they stick with a company for a couple of years, recruit a brand new base of followers, and transition them over to the next company.

This one particular client of mine had an interesting perspective. He said, “I want to grow an organic base of people that are loyal to our brand. If we start paying distributors to come over, they’re coming for the wrong reasons.” Interesting take and I respect it.


In my view, there’s nothing wrong with master distributors leveraging their talent for a fee. In fact, I’ve done this type of agreement for multiple clients. If the master distributor commands an audience, it’s clearly worth something for a fledgling business. The problem arises when these “special deals” go undisclosed. As a mentor once said, “If you do something, assume it’ll be written in the sky.” There’s no secrets in this industry and when there’s a special deal, usually people catch wind of it. We’re not in the 80s anymore.

Disclosure is important because when the master distributor is promoting the viability of the opportunity, the prospective members are not eligible for the same opportunity; thus, it might be perceived as misleading. Recently, the FTC has required that paid endorsers disclose the fact that they’re paid by their sponsors. As an example, Michael Jordan says, “Gatorade is awesome!”

If he was paid by Gatorade, he would now be required to disclose his affiliation with Gatorade. The rationale is simple: consumers should know that the testimonial might have been influenced by money. The same rule should apply with master distributor arrangements.

Free advice

Am I suggesting that the master distributor disclose this each time they present the plan? “Oh, and by the way, I make a lot more money per recruit than you ever will.” Nope, that won’t work. I would suggest that the company provide a page on their website that discloses which distributors are being compensated in addition to the traditional pay plan.

The details are not necessary, just the basic fact that there’s a deal. Therefore, it can never be said that a company was withholding material information from the public that would have been influential in their judgment.

Kevin Thompson - MLM Attorney

Reposted from Kevin Thompson – The MLM Attorney

Kevin Thompson is one of the most sought after MLM Attorneys in the country.  He owns and operates The Law Office of Kevin Thompson and specializes in providing legal services for network marketing and party plan businesses.  Kevin Thompson has extensive experience in the direct sales arena and helps entrepreneurs launch their businesses on secure legal footing.

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Comments (5)

  1. This is how my mentor — Steve Mitchell — said it (after I switched between countless opportunities myself):

     I was given a great bit of advice a long time ago by a good friend (who happens to be one of the top Herbalife distributors in the world making tens of millions) … he said adopt the attitude that all opportunities are great, and all opportunities are equal – then you are left with deciding on the company you like most, working with a company and management you respect, with other distributors you like, with products you feel offer great value and you can promote, then once you've found that … 

     … go to work!   His thinking (and it's completely correct) that all MLM opportunities require the same amount of effort over the long-term … they all require finding people, showing them product and opportunity, answering their questions, registering those that say 'yes', and then teach and duplicate these same actions  … ALL opportunities require these same daily actions …

    So his advice was "find a lawn you like playing on, with friends you enjoying playing with, then go to work and mow it!"  … the lawn is almost irrelevant as long as YOU are happy playing on it.  Then focus on YOUR lawn, because every time you change you have to learn all over again and start again to mow it …once you have your lawn starting to look good, don't jump the fence to find another otherwise you'll be starting all over again, which is exhausting. "

  2. Although a known industry 'name' will probably give a new company an initial growth advantage, unless the product or service offers quality benefit for the end user and a fair deal for the distributor, that initial advantage is soon lost.
    A number of well publicised defections from companies known to have bought in leaders and team simply serve to confirm the level of greed that exists within a small number of people ready to make a fast buck for as long as this crazy situation is allowed to continue.
    The often quoted advice still holds true.
    1. Find a quality product or service you love and would be happy to use as a customer yourself.
    2. Choose a small number of people you like, whoo think like you and you want to work with.
    3. Go to work and build an army
    John S

  3. My company of choice, TriVita, has never to the best of my knowledge, ever paid a cent to anyone to come build there, and many have tried. Michael Ellison, the owner of TriVita says "I am offering you something no other company in the world offers you. Our co-op advertising program allows you to purchase shares every month and acquire thousands of customers every year. I only want people in this company who are passionate about sharing our message of wellness and believe in our products and our company."
    I have used the co-op program to build an organization now of over 250,000 customers and so if every networker in my downline was to go somewhere else, the customers still stay with TriVita because they are there for the products and not the opportunity. What the company has been paying me in commissions and bonuses for rising to the top of the company has and will last for years and years, and even if another company offered me a million dollars to come build I would not have any interest at all.
    Following your passion, choosing a company which aligns with your belief system and has products you love are already a HUGE bonus to start building there. Any networker who truly believes in himself should not need more then this to create predictable, sustainable long term residual income. 
    If companies want to pay advance bonuses to people to come build there they are certainly free to do so, and if someone has the talents and abilities to deliver on that agreement and really loves the company and products,  then they should be paid accordingly. I would hope that other companies aren't hurt  without just cause by losing huge groups of people, because money earned through hurting others is not something I respect.
    For me, earning income through doing something because I really love it makes me far richer than an up front bonus that I have to deliver on. After all, isn't that kind of like returning to work for someone else? 

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