Some franchise owners defended the practice of adjusting expenses to increase brokerage profits and reduce agent profit sharing for April.

Regional operations managers with Keller Williams in multiple company regions held Zoom calls with franchise owners last week to discuss how to adjust March expenses, according to internal emails obtained by Inman.

The move comes in the wake of exclusive reporting that some market centers are discussing the possibility of rolling future expenses into April’s budget to minimize profits, effectively lowering the amount they would have to pay into profit-sharing to keep more cash on hand, according to multiple franchise owners.

Keller Williams President Josh Team on Monday acknowledged the conversation is taking place on a regional level in the initial report, but insisted there had been no top-down directive from Keller Williams Realty International.

A spokesperson for Keller Williams maintained, when asked about the Zoom calls, that this was just certain regions helping local market centers with their own requests and, again, not part of a top-down directive.

According to internal numbers released by Keller Williams and obtained by Inman the company reported total profit share of $4.4 million in March, down from $13.3 million in March 2019. Even with the slowdown, Keller Williams’ associates closed more in sales volume in March 2020 than March 2019 and total closed transactions were about even.

In the comments on the original article, many franchise owners denied that there was any directive, or that this was taking place at their franchise. But others acknowledged and defended the practice while disputing the report that agents aren’t involved in decision-making.

Tammy Olson Lyne, a Keller Williams franchise owner said her company’s financials are an open book and the top 20 percent of the most productive agents know the plan. If you asked those agents, she explained, they would rather their profit share be lower or disappear for a few months to keep their office strong.

“The best thing I can do for the agents is save our reserves so we have a strong office and platform to conduct business,” Olson Lyne said. “Profit share is not the reason we joined KW, but it is the icing on the cake!”

Olson Lyne said, in the comment, that she was grateful for the advice of her regional leadership team.

“They care about my business, my family and each business and family in my office,” Olson Lyne said. “How can we help our agents if we blow through our reserves and have nothing left to help them when they need us most?!”

“A more accurate headline: KW leaders prepare their agents to survive and thrive through the pending storm!”

Herb Taylor, an operating principle with a Keller Williams franchise, wrote in the comments on the original report that he was involved in a call that discussed both managing expenses to increase profit — which would in turn increase profit share — and redistributing legitimate expenses from one month to another.

“That could result in slightly decreased profit share for some and increased profit share for others,” Taylor wrote.

Lowering the amount of profit-sharing revenue for associates would be a strategic move in many markets to weather a potential economic downturn, or at least a period of little to no transactions in some markets.

Other brokerages and companies have taken proactive measures, which have included cutting executive pay and enacting layoffs. Redfin on Tuesday announced it was furloughing 41 percent of its agents and laying off 7 percent of its staff.

In March, Compass announced it was laying off 15 percent of its staff.

UPDATE: Story updated to include profit sharing figures from March 2020. 

Email Patrick Kearns

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