In Rust They Trust: In a Change of Direction, Ziebart Touts its Rustbusting Past

Ziebart Corp. isn’t running from history any longer.

In fact, the company is now trumpeting its rustproofing past in a national advertising campaign that one franchisee said is long over due.

The initial six-week campaign began airing two weeks ago on ESPN, the Speed Channel and other sports-oriented channels, said John McClellan, Ziebart’s vice president of worldwide marketing. It is the first time in several years that the Troy-based franchise company has been on national television.

“It talks about our heritage and the fact that we were the leaders in the protection category for over 40 years, and those same professionals also bring you a variety of products and services for your automobile,” he said. “We don’t shy away from our heritage – we’re proud of it.”

Southfield-based Mars Advertising, Co. Inc. developed the commercials, which feature the tag line “Ziebart. That’s Smart.” McClellan declined to divulge the cost of the campaign.

Ziebart, founded in 1959, installs a range of automobile accessories and is best known for rustproofing. The company has redefined itself several times since the 1980s by adding products, services and competitors. But Ziebart’s image is still stuck on rust prevention, a product most people no longer need.

“They’re known as a rustrproofing company as far as I’m concerned,” said David Hoot, president of Garfield Heights, Ohio-based Automotive Accessories Connection Inc.

Automotive Accessories Connection sells most of its accessories online or to companies with fleets of vehicles rather than to individual retail customers, as Ziebart does.

Hoot said that if he were Ziebart, he would try to get away from the rustproofing image. But he said it’s extremely difficult for a company as old as Ziebart to move away from the product it relied on for years.

Still, Bob Adams, a franchisee with a Ziebart store in Toledo, said he continues to earn a significant portion of his more than $275,000 in annual sales from rust protection.

“They finally realize they can’t scrub rust from their name,” Adams said. “I think they lost an awful lot of ground by not having a good ad campaign on rust. Cars still rust today.”

Adams is also one of 29 franchisees suing Ziebart for allegedly selling overpriced, inferior and defective products to franchisees—all claims that Ziebart denies.

McClellan objects to the suggestion that the new advertising campaign is a reversal of strategy.

In 1999, Ziebart launched co-branding deals with two other franchise systems: San Diego based Rhino Linings Inc and Speedy Auto & Window Glass, a division of Toronto-based TCG International Inc.

“This advertising campaign incorporates both of those new products and services, and it shows Ziebart now with a full complement of products,” McClellan said.

Since 1999, more than 80 Ziebart franchisees have adopted the Speedy glass-repair services, and 105 Ziebart dealers have adopted Rhino Linings.

But Ziebart and Speedy ended their co-branding agreement on Jan. 1 of last year, said Paul Schulte, general manager of Speedy Auto Glass franchising.

All of the Ziebart franchisees who are Speedy dealers can remain Speedy dealers for 10 years, he said, but no other Ziebart franchisees can become dealers.

Schulte said the agreement with Ziebart was unworkable because in Canada, Speedy’s franchisees can become dealers.

Schulte said the agreement with Ziebart was unworkable because in Canada, Speedy’s franchises overlapped with the trade areas held by Ziebart franchises.

He said it was Ziebart’s decision to terminate rather than amend the co-branding agreement, but the two companies are in talks to draw up a new agreement. McClellan confirmed the negotiations.

Overall, Schulte said, the co-branding arrangement with Ziebart is working well.
“We had amazing success to be able to open up 80-plus stores in less than two years,” he said.

Still, said franchisee Adams, Speedy is the wrong direction for Ziebart. He said all of Ziebart’s other products – including Rhino Linings, a system for applying plastic bed liners in pickup trucks – are products and services designed to protect automobiles.

“So when you are in the protection business, where does glass come in? It’s way out in left field,” Adams said.

Two years ago, Adams and several other franchisees became frustrated when Ziebart began to urge them to adopt the Speedy and Rhino products. They were also angered by Ziebart’s decision to switch to a new supplier for a rust-protection formula that they thought was inferior and raised health concerns.

Twenty-nine franchisees filed a lawsuit against Ziebart last August in Wayne County Circuit Court. The lawsuit alleges that Ziebart is violating franchise agreement by overcharging for products.

Said McClellan: “Diversification is the lifeblood of the business. …The dealers that have diversified aggressively, they average $150,000 to $200,000 more than those who haven’t.”

Ziebart’s attorneys tried to get the lawsuit dismissed, but on Feb. 12, Wayne Circuit Judge John Gillis denied that request. However, Gillis did rule that several of the laws that the franchises wanted to use against Ziebart didn’t apply. Both sides declared victory in round one.

“These developments of the past few weeks go a long way to having the lawsuit successfully resolved in Ziebart’s favor,” said David Oermann, the chain’s attorney and shareholder at Detroit based Butzel Long P.C.

Said Norman Yatooms, an attorney for Ziebart’s franchisees and president of Norman Yatooma & Associates, P.C.: “You don’t need more than one cause of action to succeed. Send me to a jury limping if you like, but as long as you send me, we will succeed.”

The lawsuit is expected to go to trial this summer.

Ziebart operates 26 company-owned stores and 243 franchises in the Unites States and Canada, McClellan said. Ziebart Corp. is owned by Ziebart International Corp., which has 173 locations in 43 countries, according to the company’s most recent franchise offering circular for 2000.

Ziebart International reported systemwide sales of $165 million last year, compared with $150 million the previous year, McClellan said. Sales rose in the fourth quarter and continued to increase during the first three months of this year, he said. Ziebart is benefiting from zero percent financing deals that boosted automobile sales, McClellan said.

“A lot of people are out there buying cars and trucks,” he said, “and we aggressively marketed against those people, telling them to take the money they might have saved on financing and putting it on their cars.”

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