For eight long years, a group of Century 21 franchisees has soldiered on in litigation against Century 21 owner Cendant (now known as Realogy) over the proper use of more than $40 million in annual contributions to a trust for the benefit of franchisees and the withholding of services required in the franchise agreements. These individual Century 21 real estate offices point to franchise agreements that require revenue from a so-called National Advertising Fund to be used for marketing for the benefit of Century 21 franchisees. According to court documents, Cendant has instead diverted the funds for its own benefit and the benefit of Century 21’s competitors, including Coldwell Banker and ERA, both wholly owned by Cendant.

Newly released court transcripts indicate that Century 21 real estate franchisees might have clear cause to recoup some of their money via a class-action lawsuit against Cendant, which bought Century 21 back in 1995. In an August 17 ruling from the bench, New Jersey Superior Court Judge Robert Brennan indicated that the Century 21 franchises have an interest in ensuring that Cendant abides by the franchise agreement.

Importantly, the Plaintiffs in this case do not seek to change the franchise agreement, they simply want Cendant to abide by the terms of the agreement and to deliver the full panoply of benefits that it undertook to supply. No former franchisee has disavowed this goal.

Brennan added that the lawyers at Zwerling, Schachter & Zwerling LLP argued successfully for a class-action suit because they proved that all Century 21 franchisees were impacted by Cendant’s actions. The sheer number of potential plaintiffs – more than 1,000 – also helped qualify the matter for class-action status, he said.

Before it’s over, the class-action suit could include more than 4,000 individuals who held Century 21 franchises between 1995 and 2002.

"Class certification is a difficult hurdle to overcome," plaintiffs’ attorney Robert S. Schachter of Zwerling Schachter & Zwerling LLP told Law360. "You have to show why and how it's necessary, which we did. The judge found that we overcame that burden."

In 1995, former Century 21 CEO Richard J. Loughlin told the Orange County Register that Cendant’s purchase would have little impact on Century 21. The newspaper also quoted one franchisee saying that she hoped the purchase might mean more money to promulgate more sales.

But the lawsuit, which was filed in 2002, contends the opposite happened: that following the purchase, Cendant started using money from the National Advertising Fund to promote its other holdings, which included Century 21 competitors Coldwell Banker and ERA. Cendant also cut the Century 21 support staff from about 5,000 workers to fewer than 300 and trimmed Century 21’s salesperson training and recruiting programs as well, the suit maintains. At the time of the purchase, Cendant was known as Hospitality Franchise Systems Inc.