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Monday, July 22, 2024

Keller Williams Profit Share Program Controversy Sparks Major Lawsuit

Keller Williams Profit Share Lawsuit

Keller Williams Realty, one of the biggest real estate companies globally, is a pretty well-known company for their kinda unique profit-share program. This program is in place to, you know, align the interests of franchise owners and agents, and this program does that by ensuring everyone gets the benefits of the company’s success. But what does that have anything to do with the Keller Williams Profit Share Lawsuit? Trust us, it is the key to this lawsuit, and let’s understand it in a better way.

First Of All, How the Profit-Share Program Got Its Start?

Keller Williams’ co-founder Gary Keller first proposed the profit-share program in 1987. The basic premise was that agents who contribute to the growth of a market center (an office or cluster of offices) should share in its profits. About half of the profits made by a market center were split among the agents according to their contributions. This system was put in place to ensure that the franchise owners and agents would continue to work together for the benefit of both parties. To ensure the integrity of this program, representatives from Keller Williams’ associates and market centers made up the International Associate Leadership Council (IALC) down the line.

How Are Adaptations Shaking Things Up

Though, a change was made in the summer of 2023 by the IALC. They decided to reduce the profit share distribution for agents who left Keller Williams for rival businesses from 100% to just 5%. Agents who left or retired from the industry were unaffected by this, though. This decision caused a lot of controversy and led to a number of lawsuits from former agents who claimed that changes to the profit share program shouldn’t be retroactive.

Later on, the IALC went back on its word and maintained the previous profit-sharing system on May 16, 2024. Mark Willis, president and chief executive officer of Keller Williams, termed the meeting “unprecedented” and stressed the gravity of the vote. According to him, this move exemplifies the company’s dedication to honesty, cooperation, and achieving a mutually beneficial outcome.

Policy Shifts and More Controversy Regarding Keller Williams Profit Share Lawsuit

When Keller Williams tightened its profit-sharing program policy in February 2020, problems began. According to the new policy, agents who joined after April 1, 2020 and subsequently switched to a rival would no longer be eligible for profit share. While this did lengthen the time it took to become a vested member of the profit-share program, it had no effect on agents who joined prior to that date.

While attending Keller Williams’ Mega Agent Camp in Austin in August 2023, the IALC decided to make some more adjustments to the policy on profit sharing. For vested agents who competed with Keller Williams, the new policy reduced the profit share to 5% from 100%. While the cut was in effect, former agents may have their profit share back to 100% if they rejoined the firm within six months. The full profit-share distribution would be retained by agents who retired or left the industry totally.

Parul
Parul
Parul is an experienced blogger, author and lawyer who also works as an SEO content writer, copywriter and social media enthusiast. She creates compelling legal content that engages readers and improves website visibility. Linkedin

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