Century 21 takes heat for National Advertising Fund

by Victor Lund on March 14, 2012

Century 21Century 21 is probably a bit hot under the collar in their corporate offices today. Not only are they in the news for the settlement of a lawsuit involving the alleged mis-handling of the franchise advertising fund, but now many franchises across the country are expecting a check that they may not be eligible to receive.

According to a story published in Inman News yesterday, Century 21 Real Estate Corp. settled a class-action lawsuit that the franchisor and its parent company misappropriated franchise feeds paid by brokers. It is a common practice for all franchise organizations to create a pool of advertising dollars from each transaction to promote the brand for mutual benefit. This case was brought by a franchise owner who claimed that the money raised from franchises for Century 21 was used to promote the smaller brands of Coldwell Banker and ERA. Century 21 did not admit to any wrong doing, but agreed to refund $250 for every $10,000 in royalty fees collected from August 1st, 1995 to April 17th, 2002.

The Inman article must have created some heat for Century 21. Their CEO sent a message to all franchise owners today clarifying that the suit is narrowly limited to the class of participant defined by the court. In other words, franchise owners who did not join the class are not eligible for any settlement proceeds. Apparently, many Century 21 franchises may have missed the memo and failed to file. I suspect that this will cause more challenges for those franchises who were excluded from the settlement.

Century 21 has great plans for the advertising fund in 2012. On the heals of their Super Bowl success, they are aiming at some premier horse racing events and the Olympics. Not sure if they are sticking with Smarter, Bolder, Faster. P.S. Century 21 is not a sponsor of the Rush Limbaugh Show.

There is no link to the Inman story here because it is behind the pay wall.

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