Former franchise owners allege in lawsuit that by removing the websites, the company’s customer relationship management software was rendered useless.
United Real Estate, a major franchisor with more than 6,000 agents and $6.6 billion in sales volume, quietly removed more than 2,000 agent websites, causing untold damage to the company’s customer relationship management software, according to a lawsuit filed in U.S. District Court by former franchise owners.
United Real Estate disputes that they were ever mass-deleting websites, and instead, says that an attempt to migrate the sites to a proprietary tech platform went awry.
Lawsuit filed in part over agent website deletions
Former franchise owners Tristan Pan, based in North Carolina, and Elias Haddad, based in Kentucky, filed suit on May 1, accusing United Real Estate of mass-deleting the websites and removing them from the company’s customer relationship management tool – CoreLogic’s Peak Performance/Agent Achieve/Paperless Pipeline – and in turn, harming their businesses and top producers.
Data generated through agent websites often power CRMs, which act as the backend for agents to manage deals and client contact information.
“Some 2,200 agents out of 4,000 lost all of their information,” the complaint states. “Numerous offices, including Plaintiffs’ offices, were not able to properly re-establish the CRM Program, and had to abandon any further attempts to successfully use the CRM Program because of URE’s actions.”
United Real Estate operates on a 100 percent commission model for agents. But in order for the company to be profitable, it requires its franchises to pay a technology fee, which, according to the former executive, was supposed to be used to maintain agent websites that were connected to each agent’s marketing campaigns and CRM.
United Real Estate is accused of removing those agent websites beginning in January 2018, for the next five months, at which time the lawsuit alleges thousands of agents were without a website. Numerous offices had to abandon the use of the CRM that was contracted because of the loss of agent websites, and the franchise owners reported agents and brokers leaving when the deletion happened, according to the complaint.
A former executive, no longer with the company, alleges that the move to delete agent websites saved United Real Estate money – by paying CoreLogic less for fewer agent websites – so the company could, therefore, allocate the technology fee that franchisees paid elsewhere.
“As an attempt to save money, [CEO Dan Duffy] started taking down websites of the folks that were paying him,” a former executive, no longer with the company, told Inman.
Duffy (pictured above) acknowledged the deletion of agent websites, according to a statement included in the complaint, and hinted that the money could be better spent elsewhere. In the email, Duffy acknowledges it was a “good faith effort to preserve resources for investment in all areas of the business for the benefit of agents, all offices and [United Real Estate],” while specifically pointing to the “practice of deleting” websites.
Duffy claims that they also moved “disengaged” agents to inactive to encourage them to engage more with the tools the company was providing and they did not fully understand the impact that would have. Once they did, they changed the practices of deleting agent websites.
The franchise agreement does set rules for the creation of websites and the circumstances under which websites can be deleted.
“Franchisor may dismantle, turn off access or otherwise redirect content of the Agent Websites following the expiration or earlier termination of this Agreement or the Agent’s departure from Franchisee’s United Broker Office,” the agreement continues.
A spokesperson for United Real Estate disputed the account that agent websites were deleted, instead explaining that they were in the process of migrating agent websites and data from CoreLogic’s Agent Archive software – a platform they say is no longer supported by CoreLogic – to a proprietary tech platform.
“This migration began in 2018 and was completed in June of 2019 upon the completion of the integration with approximately 70 MLSs spanning the country,” the spokesperson said. “We were made aware that during this migration that a number of agents data was impacted by the migration.”
Upon direct inquiry, the company says it found only two of nearly 8,000 agents experienced a loss of data which required an effort to restore or rebuild data. In both of those cases, United Real Estate says they offered the impacted agents resources and dispensation for the cost of restoring the data.
Pan is currently the regional managing broker for Lifstyl Real Estate in North Carolina and Haddad is the regional managing broker for Kentucky, also with Lifstyl Real Estate.
The firing of Peter Giese
It was around the same time of the website removals that the company decided to sever ties with its president Peter Giese, a longtime veteran executive in the industry. Giese had previously served in executive roles at Move Inc., and Realogy, where he was senior vice president of franchise sales and development from 2002-2009.
According to the former executive, Giese was removed from the company by CEO Dan Duffy, in June 2018, over Giese’s objection to the deletion of the agent websites. Giese currently serves as president of his own company, Giese Consulting.
“[Duffy] got mad and fired Giese, who was very well known and very well respected,” the former executive said. “Nothing was written about his departure, which was kind of sad because everybody was on a hush-hush order to keep this quiet.”
Giese, who has a non-disclosure agreement as part of his firing, according to the source, did not respond to a request for comment for this story.
However, in an email sent on May 22, 2018, included in the lawsuit, Giese allegedly told Haddad that he had opposed the deletion of the agent websites.
“This is not something I would agree to ever do when it relates to harming our agent’s business and our office’s growth, intentionally breaching legal agreements in any manner, breaking trust, and violating our guidelines, which I approved before publishing them,” Giese wrote.
“At this point, I am at a loss on how to rectify the situation and am embarrassed by the actions taken by a few of the members of United Real Estate Group leadership team,” the email continued.
In an email obtained by Inman, sent a month later on June 25, 2018, it was announced that United Real Estate made the decision to sever ties with Giese, adding that the board and executive management team believed the decision was in the best interest of the company. United Real Estate told Inman it could not disclose the specific reasons Geise was fired.
“We can however definitively comment that no employee was terminated for differences of opinion on the approach to the migration from CoreLogic’s sunsetted AgentAchieve platform to our proprietary productivity platform,” a spokesperson said. “While our turnover of staff historically is very low, employees are severed for a variety of reasons as with any business. It is nonsensical to believe that differences of opinion, which are welcomed in the company, over something that while important is one of hundreds of initiatives, would result in any termination.”