Denver-based real estate brokerage franchisor Re/Max has sued a competitor that has lured away some of its agents.
Re/Max filed a lawsuit Thursday in Denver District Court against Washington-based eXp Realty, accusing the firm of “tortious interference with existing contracts.”
Re/Max’s franchise model is key to the dispute. The company, which says it has over 135,000 agents, notes that its offices are independently owned and operated. The franchise agreements “are not at-will contracts and contain specific provisions governing termination,” including specific end dates.
Re/Max says eXp has “induced” multiple Re/Max franchisees to “abandon” their franchise before the end of the agreed-upon term, and contacted numerous others about doing the same. It says the interference has happened for several years but “in recent weeks, eXp’s efforts have intensified.”
“We welcome fair competition within the industry, but this type of behavior is not that,” Re/Max CEO Adam Contos said in a letter to affiliates, which a company spokeswoman provided to BusinessDen. “Misleading agents and encouraging franchisees to default on their contracts are unlawful business practices. We will not stand idly by as they attempt to tarnish our brand.”
Calling itself the “world’s fastest growing cloud-based brokerage,” eXp says it has 50,000 agents around the world. It does not have a franchise model.
“The lawsuit filed and allegations made are without merit, and we plan a strong defense,” eXp said in a statement to BusinessDen.
Re/Max says eXp “improperly induced” an unspecified franchisee in South Carolina to abandon in late 2020 or early 2021, and that the company learned in March that eXp had lured 23 associates from an unspecified California franchisee that was considering abandonment as well.
But the company’s lawsuit focuses primarily on several franchisees in New Jersey.
Re/Max says it has a franchise agreement with McWernli Properties and its owners Christopher Walsh and Christian Giamanco to operate offices in Middletown and Holmdel through 2023 and 2025, respectively. But the company and its owners sent a “purported formal notice of abandonment” last month and joined eXp, according to the lawsuit.
The same thing happened with KFM LLC and owners Allison and Gene Krutyansky, who have an agreement to operate Re/Max offices in North Brunswick and Monroe Township until late 2021 and March 2022, respectively, according to the lawsuit. They sent their abandonment notice on May 3.
In addition to the lawsuit against eXp, Re/Max has also separately sued McWernli Properties and KFM LLC along with their owners.
Re/Max says it is aware of ongoing efforts by eXp to get franchisees in Texas and Florida to abandon as well. And it accuses the company of publishing misleading information about Re/Max’s compensation model.
Attorneys Kathryn Reilly, Thomas Olsen and Melissa Romero of Wheeler Trigg O’Donnell are representing Re/Max in the litigation. The company was founded in Denver in 1973, and is headquartered at 5075 S. Syracuse St.
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