Ziebart International Corporation History

Company Perspectives:

Ziebart has circled the globe with success for nearly four decades. We've launched and nourished hundreds of individual entrepreneurs and master franchise organizations. In more than 40 countries across six continents, people have recognized the Ziebart name for two generations. Vehicle owners know that Ziebart stores are the premier places on earth where, under one roof, they can find everything they need to help keep their cars and trucks beautiful, and exciting to drive.

Company History:

Ziebart International Corporation, which offers a wide range of services and products for cars and trucks, is perhaps best known for its rustproofing and auto protection services, its primary line of business for its first 30 years. In the 1990s, the company began focusing on expanding its products and services. As a result, its franchised and company-owned retail locations offer a range of professional detailing services, appearance protection services, window tinting, glass replacement and repair, car accessories (such as sunroofs and alarm systems), and truck and van accessories (including trailer hitches and spray-on bedliners) in addition to rust protection. In 1998, Ziebart entered into a co-branding agreement with Speedy Auto Glass and began offering auto glass replacement in many of its locations. Ziebart has also partnered to co-brand with Rhino Linings USA, which offers polyurethane spray-on liners for truck beds.

Beginnings and Expansion through Franchising: 1950s-80s

In 1954, Kurt Ziebart, a master mechanic from Germany, living in Detroit, Michigan, developed a scientific process called rustproofing, the first successful method of protecting an automobile from corrosion. Using Ziebart's chemical method, car owners could protect the metallic body of their vehicles from rust caused by rain, snow, and ice. The first store, bearing the proprietary Ziebart name, was opened on Harper Avenue in Detroit in 1959 to rustproof automobiles. The system proved popular, particularly in the Great Lakes states, where the salt mixture sprayed on the roads during the winters caused rusting, as well as in coastal areas where the salt air encouraged rust. The company was soon establishing franchised locations, primarily in the Midwest, throughout the 1960s.

In 1969, Ziebart opened its first international operation in Windsor, Ontario, across the border from Detroit. The following year, Ziebart was bought by Swedish immigrant E. Jan Hartmann, who developed Ziebart's operations through its master franchise system into the Pacific Rim, the Middle East, Australia, Europe, and Mexico. Ziebart expanded overseas by finding a corporation within each country that had the ability to become a master franchisee for the country. The master franchisee would then be responsible for establishing locations through subfranchising.

The Mexican master franchise was given to Praxis Corporation in 1993, and average sales for the first location in Monterrey were twice the U.S. average. The first German location was also opened in 1993. By this time, Ziebart manufactured its own rust protection chemicals, paint sealants, fabric protectors, and various cleaners and polishes. It distributed most of its products worldwide from its warehouse in Detroit. The company also operated a separate Canadian warehouse for its Canadian locations.

Product Diversification in the 1990s

In 1990, Ziebart had more than 1,000 locations in 40 countries and more than $100 million in worldwide dealer sales. The company had also acquired Tidy Car in 1989, which included about 200 detailing locations in the United States, Canada, Sweden, and Denmark. Detailing was a type of deep cleaning that restored a vehicle to like-new condition. Ziebart eventually expanded the Tidy Car locations to include accessories and Ziebart protection services.

The year 1991 was good for growth at Ziebart Tidy Car, with revenues increasing by 12.5 percent. Tidy Car was the largest franchise system of automotive detailing services in the United States. Ziebart began testing the possibility of combining the new Tidy Car franchises with the traditional Ziebart locations. It conducted market tests in six cities that combined detailing services with accessories and protection products. During the test, Ziebart and Tidy Car products were offered to owners of the separate franchises. The test proved successful, and toward the end of 1991 more than 400 franchises had the opportunity to convert to a joint Ziebart Tidy Car franchise. By October, nearly 60 percent had either made the change or were in the process of converting. Some 70 Canadian Ziebart-only franchises remained unchanged.

Ziebart recognized that consumers were spending more on their cars and trucks and keeping them longer. The company also noted that people were generally too busy to maintain their vehicles themselves, so they were willing to spend money on high-quality professional services such as those that Ziebart offered to protect their investment in their cars and trucks. In fact, new vehicle purchases in 1992 were down about 10 percent, and analysts observed that owners were keeping their vehicles for an average of more than seven years. With the trend of consumers driving older cars came the demand for services such as Ziebart's to keep cars looking like new.

In 1992, Ziebart introduced ChipFix, a detail service that restored paint surfaces that had been chipped or dinged, as part of its product diversification strategy. The ChipFix system could match more than 25,000 colors. ChipFix was priced at $89 and $100, making it much cheaper than a full paint job. Moreover, the process could be completed in a few hours. After being test marketed, the new service was launched in the late spring of 1992. At the time, Ziebart Tidy Car operated 700 locations in more than 40 countries.

By 1992, about two-thirds of Ziebart's revenues came from protection services, with detailing accounting for about 7 percent of sales. The company's marketing efforts stressed one-stop shopping for car care and the high quality and durability of its products and techniques that had been proven over the past 30 years.

When Mississippi River flooding paralyzed rail and truck traffic in 1993, Ziebart developed a special marketing campaign for its Tidy Car division in the Midwest. The program offered a 10 percent discount ($10 off the standard $100 price) to power-wash mud from car-engine compartments and remove mildew and odors from vehicle interiors.

In 1994, Ziebart's employees purchased the company through an employee stock ownership plan (ESOP). The franchise support system was expanded, and Ziebart's line of products and services broadened. The following year, Ziebart offered new Ziebart Tidy Car franchises that would focus on detailing and installing bolt-on accessories. The company planned to offer these franchises for less than the cost of the original rustproofing franchises. About 65 percent of the new franchises' business was projected to be detailing, cleaning, and protectants, with the remaining 35 percent being auto and truck accessories.

Sales of Ziebart's core service, rustproofing, fell by 25 percent during 1996 and 1997. During the 1980s, rustproofing had accounted for 80 percent of Ziebart's revenues, and by the mid-1990s it was accounting for less than 30 percent of the company's business, even though market research indicated that most customers associated Ziebart with rustproofing. The rise of auto leasing and better grades of metal being used in car production were among the factors contributing to a decline in the demand for rustproofing. Ziebart's business was also being affected by increased competition from the automotive aftermarket as well as from automakers themselves, who were starting to offer consumers such options as lighted running boards, an add-on that Ziebart had been offering as well. Franchise sales were flat for 1996-97, and the number of franchise locations was holding steady at around 600.

The company felt that detailing offered good prospects for growth. Detailing was estimated to be a $1 billion per year market and was highly fragmented. Ziebart estimated it was the largest detailing operation in the United States with about 2 percent of the market. In the auto accessories market, the challenge was to offer the newest, most popular accessories and to jettison them in favor of other accessories when the trends changed. In 1997, the hottest accessories were remote starters, which allowed drivers to warm up or cool off their vehicles before getting into them, and Ziebart promptly began offering these. Some franchisees supported Ziebart's diversification strategy, while others gave up their franchises because they felt that consumers associated Ziebart exclusively with rustproofing and that company efforts were going too far afield.

At the end of 1997, Ziebart introduced a new marketing slogan--"Survival Gear for Cars"--as part of an already-running ad campaign featuring Adam West, star of the 1960s television series Batman. A newly expanded line of products and services was marketed under the slogan, and Ziebart was offering such products and services as sunroofs, window tints, auxiliary lighting, sound barriers, keyless entry and electronic alarm systems, remote car starters, paint renewal, and fabric protection. "Survival Gear" also included a range of professional detailing services, appearance protection services, rust protection, accessories, and truck and van accessories such as trailer hitches and spray-on bedliners. Ziebart positioned itself to offer services and products for long-term car owners as well as individuals who kept their cars only for a couple of years. Services included cleaning, restoring, and renewing the paint finish; rust protection; installing underbody sound barriers to reduce noise levels; and spraying Ziebart's patented bed liners to protect truck beds and cargo areas. For a vehicle's interior, Ziebart locations could apply the company's own chemical formulations to restore interior fabric and protect it from permanent spills, dirt, and stains.

While Ziebart's primary market was the individual car and truck owner, the company also serviced wholesale accounts, mainly car dealerships and fleet owners such as municipalities, utility companies, and even floral shops. Favorable market forces included higher car prices, which prompted owners to treat their vehicles as valuable investments that required care and protection.

Co-Branding and Franchise Standards in the Late 1990s

In 1998, Ziebart initiated a co-branding arrangement with Speedy Auto Glass, whereby Ziebart would offer the installation of Speedy Auto Glass at its stores, and Speedy would offer Ziebart products in its outlets. The co-branding plan between Ziebart and Speedy called for the opening of 150 new Ziebart stores within Speedy facilities and 225 new Speedy stores within Ziebart's franchise and company-owned operations. Speedy Auto Glass was a Canadian-based company that entered the U.S. market in 1984 and was the leading supplier of replacement auto glass in Canada as well as a leader in the western United States. Speedy had an established position with insurance companies and an established relationship with North American glass distributors. It had a strong franchise that was geographically compatible with Ziebart's and operated some 300 corporate stores and 200 franchise outlets in North America. The co-branding arrangement was part of Ziebart's strategy to add "need" products and services to its line of "want" products and services. Auto glass was considered a "need" product, because people needed to replace a cracked windshield or broken glass, while many of Ziebart's other products were used to upgrade vehicles and were classified as "want" products or services.

Once the auto insurance networks were notified that Ziebart stores would be offering glass replacement, business began coming in without any advertising or marketing efforts. "It's an insurance-driven business," noted one franchisee whose business increased 20 percent after taking on Speedy Auto Glass replacements. Ziebart dealers were given extensive training in glass replacement at Speedy's Seattle headquarters. By 2004, Speedy Auto Glass was offered at 86 Ziebart locations. However, Ziebart and Speedy Auto Glass terminated their co-branding agreement in January 2001 due to trade area overlap in Canada between Speedy (a Canadian company) and Ziebart franchises. Ziebart and Speedy Auto Glass considered redrafting a co-branding agreement. In the event of unsuccessful renegotiation of the co-branding agreement, Ziebart franchises offering Speedy Auto Glass services were eligible to remain Speedy dealers for the next ten years. Ziebart also initiated a co-branding partnership with Rhino Linings USA, to offer polyurethane spray-on bed liners for trucks, eventually offering Rhino Lining services at over 100 Ziebart locations.

Over the years, Ziebart developed an excellent reputation for its franchise operations and franchise support, earning recognition from such publications as Entrepreneur, Success, Franchise Times, and Income Opportunities, as well as numerous awards from the International Franchise Association for outstanding performance. These awards honored Ziebart for its long-term financial stability, growth rate, number of operating unites, affordability of start-up costs, relationships between the franchiser and franchisees, and long-term potential. In 2004, the company had 400 locations across the world.

Ziebart's franchise support included sophisticated marketing programs as well as sales and technical support. The company's worldwide training team conducted detailed, hands-on technical and business training for franchise operators. Moreover, the company produced an extensive plan that set franchise standards; potential franchisees were required to work in an existing Ziebart store before being given their own franchise. Once in business, franchisees had access to a well-staffed support hotline. Ziebart also provided information services support and equipped its stores with point-of-sale computer applications.

Ziebart also valued its advertising program, seeking to create high visibility television, radio, and print advertisements. In the late 1990s, the ads were designed to increase awareness in, and drive sales for, Ziebart's "Survival Gear for Cars" marketing campaign. Franchisees were supplied with merchandising materials for their stores, including signs, brochures, and other promotional materials.

Each year, Ziebart held an International Dealer Conference to encourage communication among its widespread franchisees and to provide information about new products, services, and marketing plans. Celebrating 40 years in business as it approached a new century, Ziebart expected to continue anticipating and meeting the wants and needs of car owners and to grow its franchise operations in the process. Ziebart also redesigned its image by strategically remodeling all of its stores inside and out. In the beginning of the 21st century, Ziebart targeted western Europe (France, Spain, and Germany) and locations in North America for further franchise expansion.

Ziebart was sued by 29 of its current and former franchises in 2001. The franchises claimed that Ziebart violated franchise agreements by overcharging for products. The franchises also questioned the safety of a particular rustproofing chemical that franchises were required, via Ziebart, to use. Franchise employees complained of headaches and nausea when using the new rustproofing sealant. The suing franchises represented about one-fourth of Ziebart's U.S. stores at the time. In December 2003, the court ruled in favor of the franchisees, awarding them $1.4 million and requiring Ziebart to make changes in its relationship with its franchises. In the same month, Ziebart's COO and treasurer, John Lynch, resigned to take a position with another company.

Ziebart rolled out an advertising campaign in 2002 which differed from recent marketing--the company emphasized its rustproofing heritage. Ziebart's vice-president of worldwide marketing justified the advertising strategy, claiming that "we don't shy away from our heritage--we're proud of it." Opinion differed on the strategy. One competitor, David Hoot of Automotive Accessories Connection Inc., thought Ziebart should move away from its rustproofing image. Hoot also acknowledged the difficulty of breaking the association between Ziebart and rustproofing. However, a Ziebart franchisee, Bob Adams of Toledo, claimed that a significant portion of his sales continue to come from rustproofing and that Ziebart "can't scrub rust from their name."

Principal Competitors: FinishMaster Inc.; Earl Scheib Inc.

Further Reading:

• "Auto Finds Way to Add Space at Cobo," Crain's Detroit Business, December 15, 2003, p. 30.
• Cunningham, Dwight, "Flood's Impact Hitting Here, Even If You Can't See Water," Crain's Detroit Business, July 19, 1993, p. 3.
• Geisler, Jennie, "To Boldly Go Where No Other Specialty Retailer Has Gone Before," Aftermarket Business, October 1, 1993, p. 20.
• Roush, Matt, "Customers Picked Ziebart's New Slogan," Crain's Detroit Business, December 22, 1997, p. 13.
• Snavely, Brent, "In Rust They Trust," Crain's Detroit Business, March 25, 2002, p. 3.
• ------, "Product Partners Come to Defense of Ziebart Programs," Crain's Detroit Business, September 3, 2001, p. 25.
• ------, "Ziebart Franchisees Sue Company, Allege Overcharging," Crain's Detroit Business, August 13, 2001, p. 23.
• "Ziebart and Speedy Tie a Ribbon on Bigger Cut of Auto Aftermarket," Successful Franchising, February 1999.
• "Ziebart Debuts Detailing Franchises," Aftermarket Business, March 1, 1995, p. 31.
• "Ziebart Franchises Marry Accessories, Detailing into One," Aftermarket Business, October 1, 1991, p. 5.
• "Ziebart's Service Does Away with Dings," Aftermarket Business, May 1, 1992, p. 7.

Source: International Directory of Company Histories, Vol. 66. St. James Press, 2004.