C&K Law Offices advised a business operating a sales organization on whether its commission structure for salespersons constitutes multi-level marketing or sponsored door-to-door sales under the Act on Door-to-Door Sales, Etc.
 
Under the business model, sellers received commissions based on their own sales performance, and certain participants who performed separate tasks received compensation for those tasks. The key issue was whether, in light of the recruitment relationships among salespersons, the organizational tiers, and the method of paying allowances, the business could be regarded as a sales organization requiring separate registration.
 
C&K Law Offices examined the substance of the organization, focusing on whether a substantive upline–downline recruitment relationship existed among salespersons, whether each salesperson received allowances linked to the performance of other salespersons beyond their own, and whether the separate task-based compensation functioned as an additional tier within the sales organization.
 
Based on this review, C&K Law Offices advised that the current structure alone is unlikely to constitute multi-level marketing or sponsored door-to-door sales. It also explained that the applicability of the regulations may change if the recruitment relationships or the allowance system are modified in the future.
 
C&K Law Offices provides legal advice on whether regulations under the Act on Door-to-Door Sales, Etc. apply, and on related operational considerations, based on actual recruitment relationships and compensation structures.