Understanding the “Not For Resale” Rule: A Guide for MLMs in Canada

Many direct selling companies look to Canada as a natural next step for expansion and growth. Many companies choose to start this process by selling their products using a strategy known as “Not For Resale”. With the right guidance this may be a good temporary strategy for the right company. Unfortunately, there are many pitfalls and traps when using NFR. Read below to learn more about what NFR may mean for your company.

What does NFR mean?

If you are considering expanding your MLM business into Canada, it is important to consider specific import and export considerations within Canada. Firstly, it is important to consider the “Not For Resale” rule. Technically speaking, the Not For Resale rule is an export rule which states that without proper governmental authorizations, it is illegal to import certain goods from a country outside Canada and then resell said products to another country. In simpler terms, it may be illegal for an MLM business to import a wellness product from the US to Canada and then exported it to China without of the proper licensing. This is important for MLM business in the wellness space, as some products will always require licensing before they are allowed to be shipped outside of Canada.

What does Personal use only mean?

Another important consideration is the importation rule known as the “Personal Use Exemption”. The Personal Use Exemption permits businesses to ship specific products to Canada without having to follow the typical licensing process. It is important to note however, that the Personal Use Exemption does have several limitations to its applicability. Personal Use only is a very narrow exception, and like above, some products always illegal to ship to Canada. For example, certain skin cleaners, artificial colours and CBD oil may be otherwise barred.

DOes this mean mlm laws do not apply to me?

Lastly, it is important to remember that MLM businesses may still be required to comply with MLM laws regardless of if they follow the NFR or Personal Use Model. If you are found to be operating a business as an MLM in Canada without complying with the applicable laws, you may not receive regulatory approval from the Competition Bureau. If you are found to be operating a MLM as a pyramid scheme and therefore operating the MLM improperly, there are several significant penalties, including fines within the six-figure range and criminal sanctions.

If you think you need guidance when it comes to Personal Use Only and Not For Resale rules, contact us today for a free consultation.