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Keller Williams has put another nail in the coffin of its profit share program when it comes to defecting agents.
More than three years ago, KW announced that associates who joined the real estate franchisor on or after April 1, 2020 and subsequently jumped ship to a competitor would no longer be able to receive profit shares from the company’s lifelong revenue program. That policy was not retroactive and so did not apply to agents who joined before that date.
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That has now changed. On Aug. 16, at KW’s Mega Agent Camp event in Austin, Texas, the company’s International Associate Leadership Council (IALC) voted to change its profit share distribution policy so that vested agents who joined KW before April 1, 2020 and who “actively compete” with KW brokerages have their profit share amount cut from 100 percent to 5 percent.
In a letter to company leaders, KW President Marc King said the change was made to foster “continuous growth” within the company.
Marc King
“This decision emerged from thoughtful deliberations, echoing the collective sentiment of our agents, franchise owners and team members who contribute to our shared prosperity,” King said.
“This change to Profit Share highlights our commitment to supporting those who continue to grow and journey with us,” he added, noting that “Profit Share will increase for agents that continue to partner in our growth.”
According to a KW spokesperson, the new policy is effective going forward, though the company has given itself until July 1, 2024 to fully implement it. The company will update its stakeholders on any changes to the effective date, the spokesperson said.
KW will send a letter to vested agents affected by the policy that will state the agents have six months to return to KW and not have their profit share cut, according to the spokesperson.
Vested agents are those who join KW and remain affiliated for seven consecutive years, according to the spokesperson. Such agents who don’t actively compete with KW will not be affected. The company defines “actively compete” as when an agent disassociates from a Keller Williams brokerage and joins a non-KW brokerage or induces an associate to affiliate with a non-KW brokerage, the spokesperson said.
“During IALC meetings, we invite and expect high-minded, vigorous discussions about proposed changes,” KW spokesperson Darryl Frost told Inman in an emailed statement.
“These discussions are critical to maintaining transparency for our company. We will not be addressing the additional specifics of the implementation at this time.”
In 2019, a group of top KW earners pushed to change the profit share program to limit it to associates that remain with Keller Williams, resulting in the franchisor’s initial trimming of the program regarding defectors in 2020. Both that change and the current one appear geared to reward company loyalists and prevent competitors from raking in company money.
The current change also appears to be the latest move in a very public feud between Keller Williams and eXp Realty. At Inman Connect in San Francisco in July 2018, Keller Williams CEO Gary Keller challenged all eXp Realty agents formerly with Keller Williams – and eXp World Holdings CEO Glenn Sanford – to give back the $1 million in profit sharing they’d received from the company.
Asked whether the new policy was intended to target KW agents who had left for eXp and specifically Sanford, Frost said the company is choosing “not to comment on rumors and speculation.”
“The new policy changes are in our agents’ best interests, which is why our IALC voted in favor,” Frost added. “Our IALC is the direct voice of our franchisees and agents.”
Sanford declined to comment on how much in total its agents are currently earning through KW’s profit share program, how much Sanford specifically was currently earning through the program, what the company thought of KW’s provision to restore profit share if agents return to KW, whether eXp had mentioned the KW change to its agents, and whether eXp believes the change is specifically targeting eXp and Sanford.
Glenn Sanford
“While we don’t have a comment on KW’s decision, we believe that in the lifespan of an agent, a critical component of long-term success is the ability to build a retirement or exit strategy,” Sanford told Inman in an emailed statement.
“This is a founding principle of the eXp Realty model and the reason why we designed the opportunity for multiple streams of income through competitive commission splits, revenue share and equity programs. To this day, we continue to be relentlessly focused on delivering a model that puts agents first.”
Asked whether Sanford had received a letter from KW notifying him that his profit share will be cut, the company did not respond.
As of June 30, KW had 169,423 agents in the U.S. and Canada, according to the company. Its International Associate Leadership Council (IALC) is made up of more than 120 associates, half of whom are regional franchise leaders and half of whom are agents. Only associates are part of the IALC, according to the company.
The IALC represents Keller Williams associates, market centers and regions in the U.S. and Canada, the company said. Regional councils elect leadership and associate representatives to serve on the international council. Regional directors or operating principals from each regional council also serve on the IALC.
Both Frost and King indicated the IALC’s decision had been made with KW’s “core principles” in mind, which the company said were:
- Win-Win: or no deal
- Integrity: do the right thing
- Customers: always come first
- Commitment: in all things
- Communication: seek first to understand
- Creativity: ideas before results
- Teamwork: together everyone achieves more
- Trust: starts with honesty
- Equity: opportunities for all
- Success: results through people
Through Keller Williams’ current profit sharing model, associates who are with the company for more than seven years receive a portion of their former market center’s profit for life. Market centers take slightly more than 50 percent of their profit, then sponsored associates split up the rest.
The model works like a pyramid, with each associate taking 50 percent of that profit, then the rest being split among their sponsoring associate, and that associate’s sponsoring associate and so on, up to seven levels.
“Each of these programs are set in motion when an associate joins a Keller Williams office and names one person as the individual primarily responsible for bringing them to the company,” a white paper from Keller Williams describing the model states. “It may not have been the first person or the last person they talked to about Keller Williams.
“It may be someone from their Market Center, or it could be someone from another region, province, or country,” the paper continues. “It is the person who was most impactful on their decision to join the company.”
KW co-founder Gary Keller and KW’s first Associate Leadership Council (ALC) created the profit share system in 1986, according to the company. From 1987 (when an early version of the profit share program launched) through July 31, 2023, Keller Williams has dispensed more than $1.58 billion in profit share, the company said.
Read the full letter:
KW Leaders,
On Aug. 16, the International Associate Leadership Council (IALC) — the voice of our franchisees and agents — delivered a significant update to our Profit Share distribution policy. The IALC voted to refine the Profit Share Program, aligning it more closely with our core principles and fostering continuous growth within our Keller Williams (KW) family.
What changed?
Under the new policy, the Profit Share distribution for vested KW agents who actively compete with our brokerages will transition from 100 percent to 5 percent. As a result, Profit Share will increase for agents that continue to partner in our growth.
This decision emerged from thoughtful deliberations, echoing the collective sentiment of our agents, franchise owners and team members who contribute to our shared prosperity.
The effective date for implementing the new policy is on or before July 1, 2024.
What about returning agents?
Approved by our IALC, the policy introduces a provision for agents to restore their Profit Share to 100 percent by returning to KW within six months of the effective reduction date.
This change to Profit Share highlights our commitment to supporting those who continue to grow and journey with us.
We were built By Agents, For Agents. And remaining on that path requires we ensure Profit Share continues to be vital to our strong and growing culture. Thank you for your partnership in fueling our growth and success.
Sincerely,
Marc King, KWRI President
