Keller Williams violated franchise agreement, lawsuit alleges

An Illinois-based franchise is seeking damages from the Texas brokerage

Keller Williams' Gary Keller
Keller Williams' Gary Keller (Keller Williams CC BY-SA 4.0 via Wikimedia Commons, Getty)

Keller Williams and the brokerage’s cofounder Gary Keller are facing another lawsuit from an Illinois realtor and franchise owner alleging the company interfered with her business and cost her millions of dollars in income for being an ally of ousted CEO John Davis.

Colleen and Bart Basinski, owners of multiple Keller Williams Realty Inc. “market centers” in Oak Lawn, Illinois; Schererville, Indiana; and Costa Mesa, California under the name BAZ Investment Group, initiated the litigation. The suit was filed in Travis County, Texas, where Keller Williams is headquartered. These market centers are effectively local brokerage offices for franchises of the brand.

The crux of the dispute involves what the company calls the market cap — the fee that brokers and agents pay to the ownership group of the market center to use its offices, amenities and consulting services.

“KWRI and Keller were determined to ruin the Basinskis for Colleen’s refusal to initially or voluntarily embrace Keller’s directive to lower market center caps,” the lawsuit said. “In fact, Colleen was told by another individual that Keller wanted to make her destitute.”

Gary Keller, who is currently executive chairman of the company’s board, was previously its CEO before stepping down in 2020 amid a broader corporate restructuring.

When Keller took over in 2019, he mandated a cut to the market cap fee, meaning each franchise location was earning less money, but still had to pay the same amount in franchising fees to Keller Williams.

The Basinskis resisted the move, and Colleen was fired from various training programs without explanation, and Keller Williams recruited top agents from her market centers to others, amounting to a violation of the franchise agreement, according to the suit.

Colleen Basinski was then pushed out as the leader for the three market centers the couple had owned, or Keller Williams terminated the licensing agreement for those centers, closed them down, and then re-established them under new leadership, the suit says.

“Unlike Mr. Davis and the Basinskis, we are not interested in litigating our disputes in the press,” Darryl Frost, spokesperson for Keller Williams, said in a statement. “Rather, we intend to continue to conduct our business in a professional and lawful manner. The facts will be revealed in the appropriate forum.”

Keller, who co-founded the national franchise firm in 1983 with Joe Williams, had been the CEO since 2019, when he took over from Davis, former president and CEO. At that point Keller had been out of the C-suite for more than two decades, and was serving as chairman of Keller Williams’ board of directors.

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Davis is also suing Keller and the company for $300 million — and is alleging fraudulent business practices in the suit, which is pending in Fort Worth court. Keller Williams and Davis are also facing a suit from another franchise owner alleging that she was sexually harassed by Davis.

The Basinskis said in their lawsuit that agents and investors who had previously been aligned with Davis were then punished under Keller. 

“Immediately following Davis’ resignation, it seemed to Colleen that anyone with a positive association to Davis was demoted or fired,” the suit said. “Conversely, individuals with a negative impression of Davis were apparently promoted and given other opportunities throughout the company.”

Paul Omodt, a spokesperson for the BAZ Investment Group, said the suit was certified on Wednesday and said that since the suit has been filed, they’ve heard from other franchise owners that experienced similar situations when they resisted the market cap.

The couple is currently living off savings, due to what they estimate is a loss of $375,000 in earnings per year. The couple is also seeking damages.

In January, Keller Williams Realty had to pay $40 million to settle a class action lawsuit alleging its agents made unwanted, pre-recorded phone calls to consumers, some of whom are on the National Do Not Call Registry.

In the June 2022 complaint reported by Inman, plaintiff Beverly DeShay claimed the cold-calling violated the Telephone Consumers Protection Act (TCPA) — a 1991 law designed to protect consumers against unsolicited telemarketing calls.

In the Basinskis’ suit, the couple is seeking unspecified damages. Omodt said it took courage for the couple to file the suit.

“It’s a scary thing to go against someone as big as Gary Keller,” he said.

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