Pyramid selling

Updated: Aug 20, 2021

A practice of selling goods which has fallen into much disrepute and invited direct legislation to prohibit its use. The basic system is tied up with the selling of franchises. The ‘promoter’ invites applications for the sole rights to sell certain products. These rights are in turn hived off to subsidiary franchisees at a predetermined price. Again, these franchisees sub-let their franchises at a price on a lower level. The process ends up in door-to-door selling by the last in the line. Generally speaking, the only person to profit is the original instigator of the system; the persons down the scale earn little but bad will and indebtedness to those above them.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.