C&K Law Offices advised a business operating a sales organization on whether its commission structure for sales representatives would constitute multi-level marketing or sponsored door-to-door sales under the Korean Door-to-Door Sales, etc. Act.
 
Under the business model, sellers received commissions based on their own sales performance, and certain participants received separate compensation for performing additional tasks. The key issue was whether, in light of the recruitment relationships among sellers, the organizational tiers, and the method of paying commissions, the business could be regarded as a sales organization subject to a separate registration requirement.
 
C&K Law Offices examined the substance of the organization, focusing on whether a substantive upline-downline recruitment relationship existed among sellers, whether any seller received commissions linked to the sales performance of other sellers rather than their own, and whether the separate compensation for additional tasks functioned as an additional tier within the sales organization.
 
As a result, we advised that the current structure alone is unlikely to constitute multi-level marketing or sponsored door-to-door sales. We also explained that the applicability of the regulations may change if the recruitment relationships or the commission system are modified in the future.
 
C&K Law Offices provides legal advice on the applicability of the Door-to-Door Sales, etc. Act and related operational considerations, based on the actual recruitment relationships and compensation structure of a sales organization.