Keller Williams Retreats On Profit Sharing Cuts For Defecting Agents

The cuts, initially approved last summer, were set to go into effect this July. But as of this spring, Keller Williams was facing multiple class action lawsuits over the changes.

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Nearly nine months after announcing a plan to slash profit sharing for defecting agents, and with a legal battle looming on the horizon, Keller Williams this week revealed that it has backtracked and will instead scrap the plan in favor of the current status quo.

In an email to Inman, the company explained that on Thursday its International Associate Leadership Council (IALC) “voted to rescind changes to the profit sharing program, previously set to go into effect July 1, 2024.” The changes would have “reduced the amount of profit share that former vested KW agents who actively compete against our franchises receive.”

Mark Willis

Mark Willis, who recently reclaimed the CEO chair at Keller Williams, formally recommended to the IALC that the policy be rescinded. In the email, he said that the vote to rescind the changes “passed with an overwhelming majority.”

“The outcome serves as a reflection of our commitment to integrity, teamwork and finding a win-win for all involved,” Willis continued. “With today’s vote, the IALC chose to reinforce our profit-sharing model as a cornerstone of everyone’s collective success.”

The IALC represents Keller Williams associates, market centers and regions in the U.S. and Canada. Regional councils elect leadership and associate representatives to serve on the international council. In the email Friday, Willis described this week’s IALC gathering as “an unprecedented meeting” and said the vote “wasn’t taken lightly.”

“While members of the IALC typically meet at our annual events, this moment called for a special gathering to discuss the future of KW’s profit share program,” Willis continued.

Instead of the changes, Keller Williams will maintain its current policy, which lets agents who joined the company before April 1, 2020, collect 100 percent of their profit share amount even if they leave the firm to work for a competing brokerage.

Keller Williams first announced the now-scrapped profit-sharing changes last August at the company’s Mega Agent Camp event in Austin, Texas. The policy would have slashed profit share amounts from 100 percent to 5 percent for agents who joined Keller Williams before April 1, 2020, but who later left the company and joined a competing brokerage. The IALC approved the policy change last summer.

A previous policy change made early in 2020 ended life-long profit sharing for agents who joined Keller Williams after April 2020 but then defected to a competitor. That change still stands and is not impacted by this latest IALC vote.

The more recent changes announced last year prompted considerable debate in the industry, as well as consternation among former members of Keller Williams. By this spring, three former Keller Williams agents had filed class action lawsuits against the company. The suits all sought to halt the changes, with one of them also seeking $250 million in damages. The three agents behind the lawsuits alleged that the changes would have amounted to breach of contract and unjust enrichment on the part of Keller Williams.

Inman has asked Keller Williams if the move to rescind the changes was a response to the lawsuits and will update this story with any information the company provides.

Keller Williams first rolled out its profit share program in 1987. The objective, the company explained in an email, was to ensure that “the goals of franchise owners and agents remain permanently aligned.” The company further explained that a profitable brokerage franchisee shares about half of the office’s monthly profits “with associates who have helped the business grow during a given month.”

The program was among the many things that helped turn Keller Williams into a real estate juggernaut over the ensuing decades. It also provided something of an early model for later programs from rivals such as eXp Realty that also seek to distribute brokerage profits back to agents.

In his comments Friday, Willis reiterated the original agent-centric ethos that initially led to Keller Williams’ profit-sharing program.

“As a company built by agents, for agents, collaboration is core to our foundation and culture,” he concluded. “We extend our heartfelt thanks to today’s IALC participants, whose involvement ensured everyone’s voices were heard and respected on this issue.”

Update: This story was updated after publication with additional background and details about Keller Williams’ profit sharing program. 

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