Product partners come to defense of Ziebart programs
Two companies that have co-branding relationships with Ziebart International Corp. say they are pleased with the way their programs are progressing.
The support from San Deigeo-based Rhino Linings Inc. and Toronto-based Speedy Auto and Window Glass, a division of TCG International Inc., comes as Zeibart faces litigation by 29 franchisees and a separate lawsuit by Redford Township-based Z-Technologies Corp. Both cases are pending in Wayne County Circuit Court.
Troy-based Ziebart International is a franchise corporation with about 500 stores worldwide that rustproof cars and trucks and sell automotive accessories.
Besides claiming that Ziebart charges high prices for proprietary products, the franchisees allege that the Rhino and Speedy arrangements are costly and unprofitable.
Ziebart signed a deal with Rhino Linings that became effective in March, 1999 to make Rhino Zeibart’s exclusive provider of spray-on truck-based liners. Russell Lewis, president and CEO of Rhino Linings, said more than 100 Ziebart franchisees have Rhino machines.
“I can tell you that Ziebart franchisees that were in the sprayed-liner program before have been substantial increases in the number of applications, plus their ability to be able to make a little more money based on the fact that they are selling a nationally recognized brand,” Lewis said.
The problem with Rhino Linings is the agreement between Ziebart and Rhino, Ron Dengler, owner of Ziebart stores in Davenport, Iowa, and Moline, Ill., said in a recent interview. Dengler is also the former president of the Ziebart Dealers Association.
Dengler said a Ziebart franchisee that begins using the Rhino Lining product isn’t allowed to advertise the brand if an existing Rhino dealer is in the same market. That’s exactly what happened to Jim Morris, a former Ziebart dealer in Hanover Park, Ill.
Morris said he spent nearly $40,000 on Rhino equipment for his store, only to be told later he could not use the name because of a Rhino dealer was already in his market.
Morris left Ziebart and renamed his store CarSmart$ last September. Last year he recorded about $300,000 in sales. This year he expects sales to be slightly higher.
Lewis acknowledged there were a few cases where a Ziebart franchisee’s market overlapped but said, “I think the vast majority of these people did get our equipment, did get our name and are satisfied with all aspects of the programs.”
A Speedy Auto executive said it is equally happy with Ziebart.
“Ziebart’s way ahead of where they need to be, and they are a good partner,” said Paul Schulte, general manager of Speedy Auto franchising. “They are probably into 2003 as far as the opening schedule.”
Schulte said about 85 Ziebart stores have added glass operations, and about 20 Speedy glass stores have added Ziebart franchises.
But running a profitable auto-glass repair operation requires a high volume of sales, Dengler said. Some franchisees have performed more than $100,000 in glass repairs without making a profit, Dengler said.
Ziebart’s executive vice president and COO, John Lynch, said Ziebart doesn’t track franchise profits.
“We track sales, and the glass industry is growing very rapidity for us,” Lynch said.
Lynch confirmed that franchisees are required to add Speedy and Rhino when they renew their licenses. But he said Ziebart often adds products and said it isn’t unusual for a franchise corporation to add requirements to franchise agreements.
“I fell very confident that we will be able to settle this out of court and resolve our issues,” Lynch said.
But Norman Yatooma, an attorney for the franchisees and president of Birmingham-based Norman Yatooma & Associates P.C., said “We have made, on five different occasions, overtures to Ziebart to initiate talks, and they were unsuccessful.”
