CENTURY 21: Franchise Lawsuit Granted Class Action Status

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

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