A dispute between real estate brokerages Keller Williams and eXp has become a call to arms with Keller Williams seemingly taking an unreasonable – even unjust – stance.
Real estate agents and onlookers populate Twitter with the hashtag “Free Mark Willis,” a reference to the former Keller Williams CEO who wants to join eXp but is blocked by a temporary restraining order.
Meanwhile, Keller Williams faces mounting charges of hypocrisy, given they announced one week ago that Stacey Onnen, outgoing president of operations at – you guessed it – eXp, joined the Keller Williams fold.
“Interesting to note that it’s okay for me to do it to you, but you not to do it to me,” said Don Gurney, a Century 21 agent in Pasadena, Maryland.
A closer look, though, reveals a more complex conflict, one that legal experts say could end favorably for Keller Williams.
On Monday, Texas state court judge Cleve Doty issued a temporary restraining order that prohibits Willis from not just working with eXp but doing business with any real estate brokerage in the United States or Canada that directly competes with Keller Williams.
Given that Keller Williams is the largest brokerage in North America by agent count, Willis – who worked with Gary Keller to make the brokerage what it is today before exiting management in 2016 – is, for now at least, shut out of working in the industry he is most familiar with.
But, as lawyers who specialize in non-compete clauses and trade secrets disputes point out, the judge’s order had nothing to do with Willis’s time in Keller Williams’ executive suite.
“It is clear that KW bases their request for a temporary restraining order not on Willis’s former role as the CEO, but on his current role as an owner of some of KW’s franchises,” said Leiza Dolghih, a lawyer at Lewis Brisbois in Dallas, who reviewed the filings in Keller Williams’s motion for an injunction. (She is not involved in the case.)
Indeed, Keller Williams’ filings make scant mention of Willis’s former time as CEO. What’s important to the brokerage is that he holds a stake in three different Keller Williams affiliated firms and is the controlling principal of one licensee.
This position, Keller Williams points out in its filings, enables Willis to have complete access to information provided to Keller Williams franchise owners, from granular financial metrics to client leads to overall business strategy.
Doty ruled that given such carte blanche access Keller Williams “has shown a likelihood of success” in its injunction and demonstrating that Willis joining eXp would cause the rival “imminent and irreparable” harm and injury to Keller Williams.
Added Dolghih, the lawyer who reviewed the cases, “This is not a standard former employee non-compete action. It’s more than that because [Willis] is a current owner of a franchise and has access to KW’s confidential information.”
However, there is a wrinkle to the wrinkle. Reached for this story, an eXp spokesperson claimed that Willis wants to divest from these franchises, but Keller Williams will not let him.
“During the course of eXp Realty’s discussions with Mark Willis, we came to understand that he has been a passive investor in one or more Keller Williams franchises or regions, with no management responsibility for several years,” the eXp spokesperson said. “We also learned that Mark Willis was attempting to divest his interests in these Keller Williams entities and is still attempting to do so if Keller Williams will allow it.”
Asked if the brokerage prevented Willis from divesting in order to keep him from joining eXp, a Keller Williams spokesperson responded with a written statement:
“Mark Willis is a current co-owner of two Keller Williams regions and a market center. Due to his current ownership interests, Mr. Willis has non-competition obligations in place with Keller Williams.”
“As a result,” the statement continued, “The company filed this lawsuit to enforce the agreements and protect the interests of his franchise partners and Keller Williams.”
The idea that Willis wants to divest but cannot is not as farfetched as it sounds, Dolghih said.
“A lot of franchise agreements have requirements for a franchisee to exit,” the lawyer explained. “They may be required to find a person to whom to transfer their interest in the franchise or they may be required to sign an updated version of a franchise agreement in order to be allowed to exit. The bottom line is that exiting a franchise is not as easy as divesting one’s shares in a company.”
The saga will perhaps wind down once Willis explains what is going on. Numerous messages left with Willis himself on Friday and throughout the past week have not been returned.
Willis’s perspective may emerge next Friday when Doty holds a hearing on extending the preliminary injunction.