Is chain operation a pyramid scheme?

Chain operations are not pyramid schemes.

Chain operation refers to a number of enterprises that operate similar goods or services, forming a consortium in a certain form, carrying out professional division of labor under the overall plan, and implementing centralized management on the basis of division of labor. It is a business model that combines independent business activities into an overall scale operation to achieve economies of scale.

Features

1. Chain operation is a contractual relationship between the franchisor and the authorized person, which means that the relationship between the licensor and the authorized person depends on the existence and maintenance of the contract between the two parties.

2． In chain operations, there is no tangible asset relationship between the franchisor and the authorized person. Instead, they are independent legal entities, and each independently bears external legal responsibilities.

3. The licensor has ownership and/or exclusive rights to the authorized matters involved in the contract between the two parties, and the authorized party obtains the right to use (or the right to exploit) and the income rights based on the right to use through the contract.

4. Authorization in chain operations refers to the right to use (or exploit) intangible assets including intellectual property rights. rather than tangible assets or the rights to use them.

5. The authorized party has the obligation to pay fees to the authorized party according to the contract between the two parties.

6． The licensee shall maintain the uniformity required by the franchisor in the contract.

Characteristics

1. Chain operations organize scattered business entities. Has the advantage of scale. (Unification: unified store name and store appearance; unified advertising and information; unified purchase; unified accounting; unified inventory and unified management.)

2. Chain operations must establish a unified distribution center to coordinate with production enterprises or Directly linked to non-staple food production bases. (Save circulation costs and reduce costs. Generally, the price can be 2 to 5 times lower than that of similar stores.)

3. Chain operations are easy to generate trust or dependence in targeted consumption.

4. Consumers can be guaranteed product quality. (Unified management, unified purchase channels, direct directional supply.)

MLM: Refers to the organizer or operator who develops people by targeting the people being developed based on the number of people they directly or indirectly develop or their sales performance. Calculation and payment of remuneration, or requiring the persons being developed to obtain membership qualifications on the condition of paying a certain fee to obtain illegal benefits, disrupt economic order, and affect social stability.

The characteristics of MLM are:

First, paying membership fees or agency fees to obtain membership qualifications, regardless of whether there are products; participants are required to pay fees or purchase goods to obtain membership qualifications.

Second, develop downlines to obtain commissions, which means that the source of participants’ wages is the commission from the money paid by downlines;

Third, first of all, Participants provide various services (pornography is no exception), and then force them to pay a fee to become members, otherwise they will call the police.

Fourth, there is a new kind of WeChat business pyramid scheme. The gang says that as long as it is forwarded through the agent’s WeChat, QQ, Weibo, etc., after the purchase is successful, a commission of 40% (its actual cost price will be given) Only 8, that is, something worth 8 yuan sells for 100 yuan. After giving 40 yuan to the reposter, you earn 52 yuan). Real micro-businesses generally rely on themselves to repost and place advertisements, without giving high commissions to others.

5. Form a superior-subordinate relationship and provide rebates at all levels.

The regulations prohibiting pyramid schemes were promulgated in 2005, and the crime of organizing and leading pyramid schemes was criminalized in 2009, as part of Section 224 of the Criminal Law.

The law stipulates that the following behaviors are pyramid schemes:

1. The organizer or operator, through the development personnel, requires the development personnel to develop other people to join, and the development personnel are treated as direct or indirect rolling development personnel. To seek illegal benefits by calculating and paying remuneration (including material rewards and other economic benefits, the same below) based on quantity;

2. The organizer or operator requires the developed person to pay fees or subscribe through the development personnel Paying fees in disguised form such as goods, etc., to obtain the qualifications to join or develop other people to join, and to seek illegal benefits;

3. The organizer or operator requires the person being developed to continue to develop others to join, through the development personnel, Forming an upline and downline relationship, and using the sales performance of the downline as a basis and paying remuneration to the upline to seek illegal benefits.

4. Buy and sell by yourself

The MLM sales target is mainly yourself. If you buy the company's products yourself (such as toothpaste worth 25 yuan in the store, the MLM seller will say that the original price is 100 yuan). Yuan toothpaste (33 yuan discount after paying the membership fee), and promote this sales method to the downline. In fact, the downline mainly targets their own relatives and friends. Requiring participants to pay fees or purchase goods and services to qualify for membership is a deception that harms others and makes huge profits for a few top online players.