The Franchise Memorandum

Real estate brokerage franchisor Keller Williams has agreed to a settle claims related to the ongoing broker commission antitrust litigation. Burnett v. National Ass’n of Realtors, Case No. 4:19-CV-00332 (W.D. Mo.), which has previously been covered in the Franchise Memorandum,  involves claims by home sellers who allege that the National Association of Realtors and several real estate brokerage franchisors had conspired to inflate commissions paid to buyers’ agents through mandatory rules for the operation of the multiple listing service. In December, a jury found defendants liable for the alleged conspiracy and awarded plaintiffs more than $1.7 billion. While other post-trial motions and appeals are pending, the court granted preliminary approval of the Keller Williams settlement on February 1, 2024, which provisionally covers claims nationwide and not just the Missouri plaintiffs in Burnett.

 The settlement agreement provides for a $70 million common fund as well as injunctive relief intended to address the conduct that allegedly violated antitrust laws. Although Keller Williams admitted no wrongdoing in the settlement, it agreed that it would make it clear to franchisees that offers of compensation are not required; it would increase transparency to consumers including recommending that franchisees inform consumers that commissions are negotiable; it would advise franchisees that agents must show properties regardless of the existence or amount of offered cooperative compensation; it would not express or imply that there is a minimum commission requirement; it would develop training materials consistent with these terms; and finally it would not require its agents become members of the National Association of Realtors. These terms are similar to those agreed by two other defendants that settled prior to trial, while the remaining defendants continue to challenge the jury verdict in the case.