Ziebart repairs sales with new products, franchises

By Chad Halcom

New products, new franchising markets and a strong spring season could bring Ziebart International Corp. to a record year of auto aftermarket accessory business — much of it overseas.

The Troy-based accessories, glass repair, rustproofing, remote starter and protection coating installment company reports April sales were 13 percent ahead of a year earlier, and the company is now in 32 countries after landing new master franchise agreements for Poland and Kazakhstan in the past year. A new auto paint protection film, called Z Shield, launched last fall after two years in development and has reached about 30 service locations, as Ziebart continues to train franchisees on the new product.

Its U.S. footprint, which has held steady at around 100 locations in 21 states since a Corpus Christi, Texas, franchise opened two years ago, is on the grow again with a new franchise opening last week in Spokane, Wash., and a new location for a current franchisee coming to Canandaigua, N.Y.

Daniel Baker, president of the parent company's U.S. franchisor, Ziebart Corp., said the Z Shield vinyl film fills a demand for clear coating to prevent rock chips and other projectiles from damaging a car's paint. The Ziebart product follows up on a Scotchgard paint protection film that Minnesota-based 3M Corp. rolled out several years ago, but Baker said Ziebart went for some improvements in its version.

"This is a similar idea, but we didn't want to change the appearance or the color of people's cars when it's applied. Customers can feel strongly about that," he said. "So unless you're about 4 feet away from it, you can't see the film."

Ziebart reports about 400 locations worldwide, and Baker said global systemwide sales were $135 million in 2013. With the strong April bump (winter months are typically slow for coatings sales), 2014 sales are up about 7 percent year-to-date — meaning they could top $140 million this year, a record since Baker became an officer of the company.

Ziebart Corp., including U.S. stores, reported just under $9 million revenue in 2011, including about $3.7 million of royalty income from nearly 90 U.S. franchise locations, according to a franchise disclosure document.

U.S. stores report an average of about $780,000 annually in single-store sales.

"As the car market has changed, we have frequently had to reposition ourselves within it," Baker said.

"But it's not so much that we need to rebrand as it is that we just need to reintroduce the brand."

Ziebart owns and operates 12 U.S. locations in the metro Detroit, Cleveland, Chicago, Pittsburgh, Minneapolis and Columbus, Ohio, areas, Baker said, for about 100 total corporate employees. All other locations are franchises, with sometimes-differing demand for its products.

Saudi Arabian service centers, for example, have seen aggressive sales in rustproofing due to sandstorms, while Baker estimates that rustproofing, along with treatments to reduce road noise inside vehicles and some detailing services, account for only about 20 percent of sales companywide.

Founded as a rustproofing shop in 1959 by the late Kurt Ziebart, the company adopted a franchising business model early on but expanded it after Ziebart sold the business in 1963 to Roger Waindle, a corrosion studies expert who renamed it Ziebart Process Corp.

The company signed its first international licensing agreement in 1965 for a franchise in Canada, then a Japan licensing deal in 1969. International service locations accounted for 30 percent of sales as recently as the mid-2000s, Baker said, but became a majority of revenue after North American product sales contracted in the last recession.

Ziebart International has been employee-owned through an employee stock ownership plan since the 1990s.

International markets remained the majority of sales even through the economic recovery, while domestic service was rebounding along with U.S. auto sales, mainly due to more new license agreements. Fast economic growth and increased car ownership in emerging international markets, along with differences in climate affecting product demand, have also contributed to growth overseas.

David Zoldowski, owner of Brighton-based aftermarket glass and accessories company Auto One Inc., said his company is still too small to target overseas growth like Ziebart. Auto One has 16 locations, 14 in Michigan and two in Indiana, of which 12 are franchises.

But he also said demand for certain products is a growth driver. The company is seeing high single-digit growth in aftermarket truck accessory sales, he said, and some strong demand for tonneau covers along with a spring season boost in glass repair service.

"As the vehicles become more computerized, getting into the electrical circuits of the vehicles is getting more challenging. So interface modules are becoming a demand item," Zoldowski said.

"It used to be a quick little job making a 4-pin connection to hook up trailer lights, but today with LED lighting and other changes, the wires going to the back of the vehicle are multitasking now. So we've had to have new modules that can connect to the factory equipment."

International locations are licensed through an individual Ziebart master franchise license holder in each country, and the service centers are required to buy their products from the parent company in Troy.

A franchise fee is $25,000, and the company estimates the total upfront investment in a Ziebart franchise ranges from $172,000 to $331,000. This includes more than $100,000 for inventory and other costs paid to the franchisor.

Over time, Ziebart has diversified from its rustproofing roots into several other aftermarket services — detailing, glass repair, diamond gloss paint protection, remote starters and other accessories.

Some of the changing product mix has been a reaction to the market. Baker said rust protection accounted for 80 percent of sales in the late 1980s, but it began falling off after the Detroit OEMs began offering new manufacturers' warranty protection against rust.

The demand has picked up again in recent years, Baker said, as automotive prices continued to climb and new longer-term financing packages became available, so original owners are more likely to keep their cars much longer than those warranties last.

Today, Ziebart offers 29 different products, including Z Shield paint protection, across its various stores and "processing centers" — car dealers, body shops and others that also offer its services.

The company has occasionally looked at branching out into retail product sales at auto parts stores, but Baker said that would clash with its strategy of business development through new franchises and processing centers.

"It can be very tempting to want to put our name on some glass cleaner or a truck cover for over-the-counter sales, and build our business," he said.

"But because we have been focused for so long on exclusivity agreements with our licensees ... and (on) equating the brand with a professional-quality installation, we didn't want to compete with that and with our own licensees in the over-the-counter market."


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