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CENTURY 21: Franchise Lawsuit Granted Class Action Status

August 19, 2010

Former Century 21 franchisees suing their franchisor, Century 21 Real Estate Corp., and its parent company, Cendant Corp. have won class-action status for their lawsuit.

[Read the Realogy / Century 21 response:  CENTURY 21 Claims Franchise Lawsuit is “Without Merit”]

The former Century 21 franchise owners allege that after purchasing Century 21 in 1995, Cendant misused franchisee proceeds and resources.

Here is the press release issued by the plaintiff’s law firm, Zwerling, Schachter & Zwerling, LLP.  Comments and opinions are invited below.

Century 21 Real Estate Franchisees Win Nationwide Class Certification in Cendant Lawsuit

Franchisees Say Parent Company Misappropriated Millions
MORRISTOWN, N.J., Aug. 18 /PRNewswire/ — A New Jersey Superior Court judge has certified a class of current and former Century 21 real estate franchisees in a lawsuit alleging breach of contract and other claims against their franchisor, Century 21 Real Estate Corp., as well as its parent company, consumer and business services provider, Cendant Corp.

The lawsuit, filed in 2002 by attorneys from New York’s Zwerling, Schachter & Zwerling, LLP, details how Cendant misused franchisee proceeds and resources after purchasing Century 21 in 1995. Century 21 is currently owned by Cendant spin-off Realogy Corp.

On Aug. 17, New Jersey Superior Court Judge Robert J. Brennan issued the ruling certifying a nationwide class of current and former Century 21 franchisees during the period from August 1995 to April 2002, whose franchise agreements contain a New Jersey jurisdiction clause. The class is estimated to include no fewer than 1,000 franchisees, but could exceed 4,000 franchisees.

Under a Master Franchise Agreement, Century 21 franchisees were required to contribute 2 percent of their gross revenue to the central National Advertising Fund (NAF) in addition to a 6 percent franchise service fee.

According to the lawsuit, Cendant failed to provide the level of services to Century 21 franchisees required by their agreements. Additionally, the lawsuit claims that NAF proceeds, which topped more than $40 million annually, were misappropriated and diverted to uses other than the benefit of Century 21, including the promotion of Century 21’s Cendant-owned real estate competitors. Shortly after the purchase of Century 21, Cendant also acquired Coldwell Banker and ERA.

“When Cendant purchased Century 21, they were the unquestioned leader of the real estate industry, however, by 2002 the ranking dropped to sixth in the country,” says Dan Drachler of Zwerling, Schachter & Zwerling, one of the attorneys who represents the plaintiffs. “As a result of Cendant’s actions, Century 21 franchisees have suffered damages which may total in the hundreds of millions of dollars,” adds Robert S. Schachter, also of Zwerling, Schachter & Zwerling.

Plaintiffs are also represented by New Jersey-based Keefe Bartels LLC and the Ft. Lauderdale, Fla., office of Adorno & Yoss.

Zwerling, Schachter & Zwerling, LLP represents clients nationwide in financial-related class action lawsuits.  With offices in New York City; Garden City, N.Y.; and Seattle, the firm currently plays a leading role in numerous major securities and complex commercial litigations pending in federal and state courts.

SOURCE Zwerling, Schachter & Zwerling, LLP

ARE YOU FAMILIAR WITH THE CENTURY 21 FRANCHISE, CENDANT CORP. OR REALOGY CORP.?  SHARE A COMMENT BELOW.

Comments

6 Responses to “CENTURY 21: Franchise Lawsuit Granted Class Action Status”

  1. Century 21 The Beach Company says:

    Purchased a Franchise in 2007 and was lied to by the sales rep about the amount of internet leads – my office would receive immediately – I divorced Century 21 March 2010 –
    I found out after I took down my sign… that 4 other local c21 new franchees – we were all told the same thing…
    How can a company that is in the industry that stresses.. Disclosure .. Disclosure.
    and they are allowed to lie to small businesses owners companies to entice the small businesses buy a franchise..

    The second you impact – You become just a number…
    In three years – We received 40 leads – small number to the 1000 leads a month we were promised..
    The sales rep was fired.. wonder why ?

  2. I have very similar issues with C-21 and more!! Their attitude in dealing with my attempt to discuss issues with them was arrrogant, dishonest and insulting. I think they are promoting ColdwellBanker in this area in direct competion to our company. I believe they are using our NAF fees to promote their other companies. the level of service is very poor at best. They use stall and intimidation tactics and will not address the real concerns.

    I am in the process of extracting myself from these people. Any suggestions from other C-21 owners or former owners would be greatly appreciated.

    Tom Schlesser

  3. c21 uk says:

    this stuff is happening in the uk as well go figure

  4. I tried to mention this action to the “business rep” and he put his hands to his ears and said he cannot hear anything I say. We were in a resturant having a business lunch.

    Where can we go to learn more if C-21 won’t assist the owners who are paying them. Last year I paid more in franchise fees than many of my agents made in commissions.

  5. James Wood says:

    My experience is almost exactly like the other owners listed above. We were lied to about the number of leads we would receive, the rep began speaking more about Coldwell Banker than he did about us after we signed up. Not 1 but 2 reps have left the company very shortly after we got the franchise in 2007. I have not seen 1 advertisement local or national for Century 21 since our commitment to them. I am tired of paying them for nothing and when I ask a simple question the newest rep has no idea how or what to answer and when I tell him we are upset he comes back with “you signed the contract”.

  6. louise lunch says:

    I have been wondering why there are no more Century 21 offices on the westside of LA??.. there used to be….
    there are 3 Century 21 offices around Burbank, California-
    ?

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