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26.08.2013 - Direct selling and sales representatives

There are two parties involved into the direct selling business:

  • the direct selling company (ex. Avon, Eismann, Amway, Just and others)
  • the sales representative and, in a significant way, the customer

In this article we will describe in general terms direct selling companies. The figure of a sales representative will be discussed in a separate article.

REGULATIONS

According to the Law 173/2015, Article 1, direct selling is a particular form of retail sales or services, in which orders are made and collected at the customer's domicile or at the place where he or she is currently staying, also temporarily, for personal, business, scientific or pleasure reasons. However, it is the article 19 of the Legislative Decree n 114 of 31 March 1998 that regulates certain basic principles of direct selling.

  • Retail sales or gathering customers' orders at their domiciles is subject to prior notification of this type of activity to the municipal office (comune) adequate to the retailer's home address, if a natural person or business address, if a legal entity
  • The activity can be started immediately after presenting such a notification to the municipal office
  • The notification must comply with the requirements presented in the Article 5 as well as contain the name of the production sector
  • The subject referred to in paragraph 1, who is willing to recruit sales representatives is obliged to provide the register of their names to the local authorities according to his or her place of residence or business address. He or she is also responsible for legal consequences of their activity. Sales representatives must meet the requirements referred to in Article 5, paragraph 2
  • The company referred to in paragraph 1 shall be obliged to issue an ID to each employed sales representative. The ID must be returned immediately if the sales representative does not meet the requirements referred to in Article 5, paragraph 2
  • The ID referred to in paragraph 5 must have an identification number assigned and be subject to annual upgrade. Furthermore, it must include the sales representative's personal data, his or her photograph, the business address of the company and the names of the products being subject to sale written in capital letters as well as the name of the company's manager together with his/her signature and be displayed prominently during the sales operations.
  • The rules that the sales representatives are subject to must be observed also in the case of direct selling being performed in a public place in the form of itinerant trade.
  • The ID of a sales representative referred to in paragraphs 5 and 6 is mandatory also for the entrepreneur himself if the activities presented in this article are conducted personally by him or her.
  • Terms of sale referred to in this article are regulated by the article 18, paragraph 7 as well.

Law 173/2005 provides also the definitions of the following terms:

  • "sales representative" - a dependent or independent person who collects customers' orders in a direct or indirect way on behalf of a direct selling company
  • "company" or "companies" - a company or companies performing direct selling activities referred to in clause a)

It determines also that the rules set out therein, except for the cases provided in the Articles 5, 6 and 7 do not apply to offers, subscriptions and commercial advertising for:

  • financial products and services
  • insurance products and services
  • contracts for the construction, sale and leasing of real estate

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