Argentine’s ban due to illegal behaviour has cost Remax Argentina at least $ 8 million.
The licensee of the American real estate franchise argues that the ban is not a legal but a commercial dispute. As they had publicly anticipated, they targeted the City’s College of Real Estate Brokers, CUCIBA.
It calculated at least $ 8 million the damage caused by the resolution that declared it “illegal” in the country due to the loss of potential franchisees and operations that were stopped. It says will defiantly continue operating until the Justice resolves the case.
The future of Remax Argentina , the licensee of the American real estate franchise in the country, it is already settled in Courts . Last week, a couple of days after the deadline, the General Inspection of Justice (IGJ) raised to the Commercial Chamber the appeal of the company to the resolution of the body that, a month ago, established that the firm operates in an “illegal” manner in the local market.
Thus, a trial is opened, until its resolution – which, due to the complexity of the case, is estimated in no less than three years – the network , of over 150 offices in 42 cities , will continue to operate .
For now, the company already calculated the damage that produced the decision of the IGJ: USD 100,000, more than $ 8 million, at the official exchange rate, and about $ 16 million , according to the parallel prices of last Friday.
This would have been the loss between the loss of operations and the loss of potential franchisees with whom there were advanced negotiations and they fell back, when the resolution was known making them illegal.
Founded in 1973, in the United States, Re / Max is the largest real estate network in the world. In Argentina, it has been present since 2005 , when Sebastian Sosa and his wife, Dorothy “Dotti” Peñate , started the operation of the master franchise for the local market and, later, Uruguay . Currently, some 5,000 people work on the network, through which 60,000 properties are sold.
On September 8, the IGJ decided that it operates in Argentina in an “illegal” way . It started after a complaint to the College of Real Estate Brokers of the City of Buenos Aires (CUCIBA) , which groups more than 7,000 professionals , and its holder, Armando Pepe , in a personal capacity. This organization insists on licensees being university trained before being involved in real estate.
According to the IGJ, the body that regulates commercial activity in the country, Remax violates Argentine law by benefiting from real estate activity without being correctly licensed .
Among other arguments, it alleged that Sosa and Peñate formed Remax Argentina SRL to have the main franchise of Re / Max International and sub-franchised it to real estate agents and brokers many of whom were unlicensed. and In consequence, the IGJ understands that the US company “indirectly exercises real estate brokerage by avoiding local legislation” and “benefits through Remax Argentina SRL, participating in the commissions of real estate transactions brokered by the numerous sub-franchisees, beyond the fact that these participation’s could appear fictitiously classified as royalties or similar concepts, contributory to the use of the ‘Remax’ trademark ”.
Added that the use of the mark is “misleading advertising” because “it creates the false appearance of belonging to an economic group.” And he remarked that it allows the franchisor “to participate indirectly in an operation that it could not carry out by itself, directly.”
The resolution, 23 pages long and signed by the head of the IGJ, Ricardo Nissen , highlights that Sosa and Peñate are not real estate agents and that the object of Remax Argentina is not the exercise of this activity either.
Also, he observed that the company uses the franchise system “to circumvent the mandatory rules on the practice of real estate brokerage.” Also, it would be a “clear fraud to the law ”, since, according to the resolution, Remax Argentina“ appears as a simple mask that conceals the illegal action of Remax International in the Argentine market ”.
“ What is being discussed here is the market . In many cases, the Remax offices are making the brokers who opted for this alternative do better than the rest, ”they explain at the firm.
From the legal point of view, His defense starts from that premise: it is not a legal dispute, but a commercial one . It aims to demolish one of the pillars of the CUCIBA and Pepe complaint: “Professions are not franchised.”
“Law 2340, which created the CUCIBA, has a goal: that, when any of us makes a real estate transaction, there is a suitable person in charge, who carries it out satisfactorily,” they explain.
In this sense, They emphasize that it is not Remax Argentina who, in fact, carries out the activity, but the nearly 500 brokers and auctioneers that make up its network .
They point out that the purchase, sale and rental of properties is a eminently commercial activity , to the point that it was regulated by the previous Commercial Code and, today, it is also regulated by the Civil and Commercial Code. They even remember the Remax preexistence , founded in 2005, to the law of the City that created CUCIBA (2340), sanctioned in 2007.
In addition to reviewing the hostility that the school has expressed since then with the students who adhered to Remax, its legal advisors – from the study Tanoira Cassagne – emphasize that the use of trademarks is a widespread practice in the profession .
“All the big real estate companies in the country are brands. No one who enters an office expects that it is specifically the registered broker of the cartel who attends operates under . They all work with different teams in each place; they all do it, even with other real estate agents ”, they point out.
They do not refer only to companies with the first and last name of their current owner. Or its founder, in some cases. Also, to franchises, above all, some local, which were even awarded by the CUCIBA. Or even the existence of networks between different real estate agencies, such as SOM, in whose foundation Pepe himself participated .
“Until recently, the CUCIBA admitted that a professional used a fancy brand if, before, he already had the license to use it ”, They point out.
The legal strategy also aims to refute another argument of the IGJ resolution: that Remax – both the international network and its master local franchise – they benefit from an activity, real estate brokerage, for which they are not qualified. “It is like ensuring that the owner of a building exercises the right because a law firm pays the rent, which arises from the exercise of their profession ”, They illustrate.
“Remax, neither Sosa, nor Peñate sign, collect the properties, do title studies, or sign the ticket, appraise or serve a client. Nothing. To say that they practice the brokerage because they receive from the brokers a license for the use of the brand or the provision of services is a slight of hand . It does not make logical sense: those who carry out the brokerage in a personal capacity are the brokers, not Remax Argentina ”, they emphasize.
In this point, they do not hesitate to call Nissen’s resolution “conjecture.” “If you do not practice real estate brokerage, obviously, it is not part of your corporate purpose. Therefore, there is no obligation for this company to be authorized to carry out the brokerage. The IGJ relies on a conjecture: it did not see what a contract between Remax and its franchisees looks like. And he assumed that, since it is a franchise contract and a royalty is charged, then, the brokerage is indirectly exercised ”, they expand.
They deny that their franchisees have an undue advantage by belonging to their network . “All professionals are free to join. Not just us. Also, to other networks that work in the local market ”, they reply. And they defend the use of a brand: “They are distinctive elements that help communicate to potential clients that services will be provided to them with certain standards. The common use of a brand, in this case, means that we are all going to serve the customer well ; that we are going to take care of him before we take care of the property ”.
In Remax, it is surprising that the IGJ has issued its resolution 16 years after its company name was created. This, you understand, reinforces its position that it is not a legal but a commercial fight . “If the problem was legal, the IGJ could have issued this same resolution a long time ago, when Remax was not known to anyone. Obviously, it was done when the brand reached an important presence ”, they maintain.
In its resolution, Nissen ordered that Remax Argentina stop operating and begin the judicial process for its dissolution and subsequent liquidation . A point on which the company had to come out to give explanations. “There was a lot of concern from the franchisees or brokers They asked us if Remax was leaving Argentina because of this. As the IGJ cannot dissolve a company by itself, that must be decided by the Justice. This is what this judgment is for. In consequence, Remax Argentina is not dissolved. It’s still working, until the Commercial Chamber defines something else ”, they explain.
This, they calculate, will be in a period of at least three years. “ It is a long process, requiring many tests . And that is precisely what Remax could not do before the IGJ ”, they describe.
One of the things that the company was able to prove in its appeal was the existence of a “current grievance ”, One of the requirements to legally question the resolution of the IGJ. Remax Argentina recorded an economic loss already suffered. “There were potential franchisees in the process of incorporation that got out. And clients of existing franchisees, who withdrew their properties from the network ”, they describe. “Of those that already were, they all follow ”, They clarify.
Source: La Cronista (Original in Spanish)