Keller WilliamsJust a little bit of legal worry was alleviated: On Friday, real estate franchisees and lawyers for the plaintiffs in the McFarlane lawsuit reached a settlement agreement in a lawsuit related to changes to the company’s recently discontinued profit-sharing program.
Keller Williams confirmed in an email that the agreement resolves all breach-of-contract lawsuits filed against the company by the firm’s lawyers. Humphrey, Farrington & McClain LLPThese include lawsuits filed by plaintiffs and former KW agents Eric Mendoza, Jerry Mulder, Jana Caudill, Dennis Caudill, Penny Alper, Paul Davis, Kevin Ortiz and Edward Fordyce.
The parties have until mid-October to submit a proposed settlement agreement, according to court records.
In an emailed statement Housing WireKeller Williams spokesman Darryl Frost said the matter has been “amicably resolved and settled.”
The McFarlane lawsuit, filed in early May by James McFarlane, a broker with Keller Williams from 2004 to 2018, is just one of more than a dozen filed by former KW agents.
The lawsuits began piling up after the company announced in August 2023 that it would reduce profit sharing from 100% to 5% for “former” KW agents who joined the company before April 1, 2020 and moved to other brokerages. Prior to this change, entitled “former” agents enjoyed the benefit of 100% profit sharing after leaving the company.
The changes were set to take effect in July 2024. But in May, the brokerage announced that the International Association Leadership Council (IALC) had decided to reverse the changes.
Agents join the Profit Sharing Program by designating a Sponsor when joining a Market Center, who then becomes part of the Agent’s “Profit Sharing Tree.”
As agents close deals and begin contributing to the market center’s business, “they receive a share of the market center’s profits, which then belong to the associates in their tree.”Keller Williams also allows associates to designate beneficiaries to receive profit distributions upon death.
The company announced in July that its market centers have shared more than $2 billion in profits with affiliated agents through its profit-sharing program, which was first implemented in 1987. From early 2023 to mid-2024 alone, Keller Williams said its market centers have shared more than $148 million in profits with affiliated agents.
