Licenses
Argentina
There are no registration/licensing requirements for direct sellers.
Australia
There are no licensing requirements for individual direct sales people or for companies in Australia with the exception that in the State of Victoria those salespeople who used to be known as hawkers and peddlers (that Act was rescinded in 1991) are now required to obtain a permit from the local municipal council area in which they are selling. A peddler was defined as a seller of goods who carried product from place to place for immediate sale.
Austria
Everybody doing business in Austria must apply for a trade licence. Sellers of consumer goods are required to have commercial schooling and two years experience in commerce. Promoters of commercial goods who give consumers information about the goods and where they can be bought are also required to obtain a trading licence. Everybody who is of age may qualify for this licence. The regulations on trade licensing enact that door-to-door solicitations are not allowed outside the borders of the municipality where the caller has his registered place of business without prior written invitation by the resident.
Belgium
Persons working as resellers or sales people on commission need to register with the Registre de Commerce. For ambulant activities, other than home parties, sales people must obtain an ambulant trader
>card from the Ministry of Middle Classes, via the Administration of the commune where they live. The ambulant activity can only begin once this card is obtained. No particular authorisation is necessary for party selling.
Brazil
There are no laws regulating the direct sales in Federal, State or Municipal basis.
There is no law, which forbids the door-to-door sales without the resident’s previous invitation.
However, the moving merchant is subject to the legislation which disciplines his activity and sales operation, and also to the rules of Consumer’s Protection Code.
Canada
All the provinces, except British Columbia and Ontario, have legislation requiring the registration or licensing of direct sellers. Licensing is aimed at not only maintaining the standards of the direct selling industry but also at protecting the consumer. Most of the provinces require that the fee for the licence or registration must be accompanied by the posting of a security bond, which may be forfeited in favour of disadvantaged consumers.
In each province, direct sellers should examine the legislation and regulations to see if any of the exemptions from licensing apply to the class of goods or services that they are selling. They should also check municipality licensing requirements in addition to provincial requirements. Most provinces require both the vendor and the salesperson to be licensed. In addition some provinces require a salesperson to carry an identification card. There are some exceptions based on average retail sales of goods in some of the provinces.
When applying for a license, the applicant must pay the prescribed fee, fill in the requisite application form and post the bond if requested to do so. Failure to comply with these requirements can lead to fines and other penalties. The license continues in effect for one or two years depending on the province.
Municipal licensing may also be necessary. Municipalities that do require licenses often have detailed and lengthy by-laws. Municipalities have different terms for direct sellers. The direct seller may be known as a hawker, peddler, canvasser, itinerant trader or transient trader. Additionally, there may be exemptions from licensing requirements for certain groups.
Chile
No specific licenses are required for direct selling companies’ distributors and/or sellers.
Columbia
There are no registration/licensing requirements for direct sellers. Although, there are certain general registration requirements they must comply as professional merchants (when it is the case) and tax declarer.
Czech Republic
Every entrepreneur has to have a ‘business’ license. For direct sellers, a license permitting ‘purchase of products for further sale’ or ‘mediation in the field of product sale’ are applicable.
The status of each entrepreneur (including Direct Sellers) is defined by Act No. 455/1991 Coll., Small Trade Act.
Key criteria for the categorization of direct sellers:
The most common form of independent economic activity of natural persons / individuals is an activity carried out on the basis of a trade/business license. In such cases, these individuals are referred to – in general terms – as the Entrepreneurs (podnikatel) or the Economically independent active persons (osoba samostatnÄ› výdÄ›leÄ?nÄ› Ä?inná); the former being used generally while the latter being used mainly in the social security and health insurance fields. Actual descriptive name used for such entrepreneurs (such as “distributor” or “direct seller”) has no impact on their status.
- systematic activities,
- carried out independently,
- under the entrepreneur’s own name and his responsibility,
- for the purpose of gaining profits.
Denmark
No license is required for direct selling.
European Union
Consult national laws.
Finland
There is no specific requirement for licensing.
France
No legislation.
Germany
Direct selling is governed by the Industrial Code in the revised text of 1 January 1987. This requires that itinerant traders, including direct sellers, must hold an itinerant trader’s card. The Act regulates the conditions under which the grant and withdrawal of such cards are made.
The card may only be withheld in certain circumstances, such as failure to show good character.
A person wishing to run a business must inform the appropriate administrative / regulatory bodies (Gewerbeämter). The licence fee differs from town to town, ranging from about DM50 to more that DM1000. A licence may be granted for a limited number of years at a lower fee than one for life at a correspondingly higher fee.
Each trader must obtain his own individual license.
Guatemala
- Commercial patent
- Society and business patent
- Tax identification registration
Hungary
Act IV of 2006 on business associations lays down the legal framework for the functioning of business associations. As the majority of direct sellers run their own businesses, their status is governed by the said act.
Hungarian legislation permits the payment of compensation for any work performed in the framework of either an employment contract or a temporary assignment contract (“megbÃzási szerzodés”), therefore direct sellers are required to have some form of business licence so as to enable them to invoice companies for their bonuses & commissions.
Direct sellers are accepted by local legislation as independent business partners.
Under a new ministerial decree on the compulsory training of those exercising industrial and commercial activities, direct sellers are obliged to obtain commercial diplomas until December 31, 2011. However, it is currently uncertain what diploma(s) direct sellers are to obtain under the current decree, furthermore many direct sellers are to obtain two diplomas even.
India
Although in practically all states in India there are Municipal Laws providing for obtaining a license by peddlers / hawkers of goods in the Municipal area, there is no provision for obtaining a license by the salespeople selling company’s goods door to door.
Indonesia
No legislation.
Ireland
Licenses are not required by direct sellers other than Consumer Credit Licences for those offering credit on products sold.
Italy
Licensing laws are the most prevalent form of legislation regulating the sales activity outside commercial premises in Italy. They apply to both the direct selling companies and the direct sales people (see also Status of Salespeople).
Depending on the nature of the particular business transaction a licensing requirement applies to the seller.
The three most common types of covered activities are:
- Transient Merchant – usually a person conducting business where goods are displayed for sale at any place within jurisdiction. These enactments most often are designed to deal with those who operate out of the back of a car or truck or set up shop on a street corner.
- Peddler – a seller of goods or services who carries his products from house to house for immediate sale.
- Direct Selling Companies – usually a corporate entity soliciting orders or offers to sell goods or services, for future delivery, by means of independent salespeople.
The direct selling companies established in Italy, in order to operate, must be enrolled with the Chamber of Commerce and must obtain approval from the City Council where the legal seat is established. Approval is obtained provided that the applicant can prove professional and moral qualifications.
Direct selling companies established in any other Country of the EU are not required to have a legal site but only a fiscal office nor are required to obtain any authorization or enrolment in any Public Register.
Japan
In general, special licenses for door-to-door sales are not required. Everyone has the right of direct selling of goods and services in Japan as long as they abide by the law.
The Japanese DSA issues a registration certificate to all those salespersons who have completed the training course authorised by the association. The purpose of this education and registration is to enhance the quality of salespeople and the number of registrees now stands at about one million. Although this registration certificate is not an official license, it serves as a standard by which the consumer can judge the salesperson.
Any company wishing to sell insurance plans, securities and commodity exchange programs by home visits must obtain a government license.
Lithuania
Lithuanian laws establish list of economical activities that are licensed and can be executed only upon receiving it. As an example such activities are pharmaceutical activity, financial activities, insurance, gun trade, security services, beauty salons and etc.
Issuance of license for each activity is governed by a separate law.
Malaysia
A company intending to operate a direct selling business must apply for a direct sales license before it can commence operations as provided under Section 4 of the DSA 1993.
Section 4 states that:
‘ no person shall carry on any direct sales business unless it is a company incorporated under the Companies Act 1965 and holds a valid licence granted under Section 6.’
Mexico
There is no licensing legislation for direct sellers. Notwithstanding, the Federal Law of Industrial Property (“Ley de Propiedad Industrial”) is applicable.
http://www.ordenjuridico.gob.mx/ http://www.ordenjuridico.gob.mx/leyes.php
Netherlands
No licensing for direct salespeople on the basis of Direct Selling legislation. However, when doing retail-selling “in a professional way” (direct selling is retail selling), a license from the Chamber of Commerce is required in the same way as every retailer (Vestigingswet Bedrijven 1954).
New Zealand
There are no Direct Selling Licences required for operation in New Zealand.
Some products may need approval (see product prohibitions).
Norway
No regulations.
Peru
There are no registration/licensing requirements for direct sellers.
Philippines
There is no law which requires registration and licensing of direct sales people as such. Licenses and permits are, however, generally required depending on the activity, product or service in matters of public health and welfare.
Direct selling companies who intend to conduct home solicitation sales must first obtain a permit from the Department of Trade and Industry.
Municipal and city governments throughout the country generally require the payment of license fees and permit fees for doing business within their territories.
Poland
No legislation.
Portugal
No special license is compulsory for the direct sales companies, however some products require notification procedures and should respect some restrictions on publicity, such as medical effects.
Singapore
There is no law or legislation requiring a direct salesperson to register with the authorities.
However, under the Environmental Public Health Act, the operation of a food establishment requires a license from the Commissioner of Public Health. Further, hawkers of food or goods of any kind, operating from stalls and itinerant hawkers (ie, any person who, with or without a vehicle, goes from place to place or house to house carrying for sale or exposing for sale any food or goods of any kind) must first obtain a license from the Commissioner.
Companies selling health supplements, Chinese proprietary medicine and cosmetic products are advised to follow guidelines laid out by the Health Sciences Authority of Singapore.
Slovak Republic
Every entrepreneur has to have a ‘business’ license. For direct sellers, a license permitting ‘purchase of products for further sale’ or ‘mediation in the field of product sale’ are applicable.
The mostly used form of independent economic activity of an individual person is an activity carried out on the basis of a trade license.
Key criteria for a holder of trade license (entrepreneur – individual person) are the following:
– systematic activities,
– carried out independently,
– under the entrepreneur’s own name and his responsibility,
– for the purpose of gaining profits.
Slovenia
Consumer Credit Act
No legislation
South Africa
Independent contractors do not require to be licensed.
South Korea
Door to door sales : Every door-to-door sales business operator shall report his/her firm name, address, telephone number, e-mail address (including the name, resident registration number and address of the representative in cases of a corporation) and other matters prescribed by Presidential Decree to the Fair Trade Commission or the head of a Si/Gun/Gu (referring to an autonomous Gu), as prescribed by Presidential Decree.
MLM sales : The Multilevel Sales Company shall register with the Fair Trade Commission or the mayor of the major city or governor by preparing the following documents.
- Application describing the trade name and address, telephone number and e-mail
- Documents evidencing that the capital of the Multilevel Sale Company exceeds the ceiling determined by the Presidential Decree, which is 500,000,000 Won or more
- Documents evidencing that consumer’s compensatory damage insurance contract, etc. are executed pursuant to Article 37
- Documents with regard to method of calculating the Sponsoring Bonus and standard for payment thereof;
- Documents describing matters relating to sales methods, such as inventory management, payment of the Sponsoring Bonus, etc.; and
- Other documents required for the verification of the identity of a Multilevel Seller as prescribed by the Prime Ministerial Decree.
Sponsoring Door-to-Door sales : The SDDS Company shall register with the Fair Trade Commission or the mayor of the major city or governor by preparing the following documents.
- Application describing the trade name and address, telephone number and e-mail
- Documents evidencing that consumer’s compensatory damage insurance contract, etc. are executed pursuant to Article 37
- Documents with regard to method of calculating the Sponsoring Bonus and standard for payment thereof;
- Documents describing matters relating to sales methods, such as inventory management, payment of the Sponsoring Bonus, etc.; and
- Other documents required for the verification of the identity of a Multilevel Seller as prescribed by the Prime Ministerial Decree.
* If SDDS Company can verify 70% of end user sales rate (Omnitrition Exemption Rule), then SDDS Company shall be exempted 3 major regulations(consumer’s compensatory damage insurance contract, limitation of 38% Commission payout rate, limitation of price of single product exceeding 1.6 Million Won)
Spain
All companies, independent entrepreneurs and direct sellers have to register with the tax authorities.
Sweden
There are no laws or regulations restricting direct sellers.
Taiwan
Article 6 of MLMSA states
Prior to engaging in multi-level marketing operations, a multi-level marketing enterprise, should prepare a report containing the following items, and apply for record by the competent authority:
- the basic information and business places of the multi-level marketing enterprise;
- the multi-level marketing plans, and conditions of participation;
- the content of contracts that will be executed with participants;
- the itemized products or services, prices, and source;
- the evidence of marketing practice in compliance with laws or regulations other than this Act, or having ex-ante approval issued by other authorities, where the compliance or the ex-ante approval is imposed by such laws or regulations;
- the calculation methods, criterion, and reasons, when multi-levels sale enterprises deduct the devaluation amount from the price in repurchasing the goods or services pursuant to the later sentence of Article 21.3 or 24 of the Act;
- such other matters as may be required by the competent authority.
When multi-level marketing enterprises fail to provide documents and materials according to the requirements of the preceding paragraph, the competent authority may order them to provide within specific deadlines additional supplemental amendments. If multi-level marketing enterprises fail to provide within specific deadlines additional supplemental amendments, it shall be deemed to not have applied at all, and the competent authority may return their report, and order them to resubmit a complete one for record.
Article 7 of MLMSA states
Except for the following situations, when there is any change in the content of submitted documents and materials, the multi-level marketing enterprise shall report in advance:
1. For changes of enterprises’ basic information as referred in subparagraph 1, paragraph 1of preceding article, a report is not required except for the change of enterprise’s names.
2. For changes of enterprise’s names, it should be reported within 15 days after the change is in effect.
If multi-level marketing enterprises fail to report the change according to the preceding paragraph, when the competent authority considers it to be appropriate, it may order the enterprises to provide within specific deadlines additional supplemental amendments. If multi-level marketing enterprises fail to provide within specific deadlines such additional supplemental amendments, it shall be deemed to not have reported the changes at all, and the competent authority may return their report, and order them to resubmit a complete one for record.
Article 8 of MLMSA states
The format and process of report referred in the preceding two articles will be prescribed by the competent authority.
Article 9 of MLMSA states
Multi-level marketing enterprises which intend to cease their multi-level marketing operations, shall file a written report with the competent authority prior to cessation, and shall have announcement in each business place to notify participants about their rights and interests to return goods to multi-level marketing enterprises according to participation contracts.
Thailand
Thai Direct sales and Direct Marketing Act has stated that :-
Section 20 No person shall operate the business of direct sales unless registered to conduct the business of direct sales under this Act.
Section 21 The direct sales operator shall operate its business in accordance with its remuneration payment plan submitted to the Registrar under Section 38.
The remuneration payment plan shall be in the following manner:
(1) It shall not confer benefit upon the independent distributor or self-employed direct sales representative which is received as its main income by means of recruiting any person or recommending any independent distributor or self-employed direct sales representative to join the direct sales network.
(2) The main income of the independent distributor or self-employed direct sales representative depends on the sales of goods or services to the consumer, including the purchase for personal consumption.
(3) It shall not require the independent distributor to purchase goods.
(4) It shall not encourage the independent distributor to purchase goods in unreasonably large amounts.
(5) It shall clearly demonstrate the actual or possible calculation of the payment of remuneration.
(6) Any other manners as specified by the Commission.
Any terms related to the remuneration payment plan other than those indicated in second paragraph shall be enforceable only to the extent that they are fair to the independent distributor or the self-employed direct sales representative.
Section 38 Any person who wishes to operate the business of direct sales or direct marketing shall apply for registration with the Registrar under the terms and procedures as may be imposed by the Commission.
In case of the direct sales operator, remuneration payment plan shall be submitted together with application stated in the foregoing.
In case of an amendment to the remuneration payment plan, the direct sales operator shall notify such amendment to the Registrar prior to its execution.
Section 39 The application for registration of direct sales and direct marketing shall comply with the conditions prescribed by the Commission. Which shall consist of at least the following:
(1) Name of the direct sales operator or the direct marketing operator;
(2) Domicile of the direct sales operator or the direct marketing operator;
(3) Category or type of the goods or services;
(4) Method of offering the goods or services;
Turkey
A company intending to operate a direct selling business must apply for a direct sales license . The details are explained in the Law 4077.
United Kingdom
Licenses
For those who offer credit to their customers (or direct sellers) or who introduce them to a source of credit, see “credit� above.
No licence is required in the UK to operate as a direct selling company or as a direct seller, except that under the Pedlars Act 1871 a certificate from the local police is required to operate in any given area as a pedlar (a seller of goods who carries his goods from house to house for immediate sale). This legal requirement will disappear if, as is expected, the Pedlars Act is repealed sometime in the next two years.
United States
Although no federal licensing of direct salespeople exists, different forms of registration, disclosure and bonding are mandated in many municipalities and localities and sometimes even by states.
Depending on the nature of a particular business transaction, a licensing requirement may apply to certain direct sellers.
The three most common types of activities covered are:
- Transient merchant – usually defined as an entity, whether corporate or individual, conducting temporary business where goods are displayed for sale at any place within the jurisdiction. These enactments target those who operate out of the back of a vehicle or set up shop on a street corner and, in the process, pay no sales taxes. The language is frequently very broad and has been known to encompass certain direct sellers.
- Peddler – a seller of personal property or services who carries his product from house-to-house for immediate sale.
- Solicitor – a person who goes from house-to-house soliciting orders or offers to sell personal property for future delivery.
For these activities, coverage generally requires the filing of an application, posting of a cash or surety bond, payment of a licensing fee (of varying amounts) or other informational disclosures. Failure to obtain a license and post bond, where required, can result in fines and criminal penalties.
Some municipalities throughout the country have enacted ordinances which ban door-to-door solicitations without a prior invitation by the resident. These are called ‘Green River Ordinances’ after the Wyoming town which was first able to withstand a constitutional challenge to this type of law.
Uruguay
No legislation.