Final answer:
Multilevel marketing companies legally increase their distribution by recruiting salespeople, with income from both sales and recruits. This model requires considerable effort and is legal as long as it focuses on product sales over mere recruitment.
Step-by-step explanation:
The correct answer to the question about multilevel marketing companies is B. They increase their distribution process by recruiting additional company sales representatives. Multilevel marketing, also known as network marketing or pyramid selling, involves a hierarchy of salespeople who earn money not only from their own sales but also from the sales of those they recruit. This is a legal business model, although it can sometimes border on or cross into illegal pyramid scheme territory, depending on how it's structured and the emphasis on actual sales to customers versus recruitment.
As for the legality of multilevel marketing practices, it is essential to differentiate between earning commissions from genuine product sales to recruits, which is legal, and receiving payments solely for recruitment without a focus on product sales, which can be seen as an illegal pyramid scheme. Despite the challenges and controversies that may surround multilevel marketing companies, they are not inherently illegal. However, they often require a significant time and effort investment to grow and nurture the network to be successful, contradicting choice D.
It should be noted that while some practices within business dealings, such as price fixing or exclusive dealing agreements, may be illegal or lead to anti-competitive behavior, this does not apply to the entirety of a business model such as multilevel marketing, which can operate within legal bounds under fair competition laws.