ZIEBART INTERNATIONAL CORP. MUST CHANGE BUSINESS PRACTICES AND PAY HEFTY ARBITRATION AWARD
Birgmingham, MI -- (ReleaseWire) -- 05/17/2006 --BIRMINGHAM, Mich., May XX, 2006 -- With a worldwide network of approximately 500 locations in 44 countries and as North America's largest installer of aftermarket accessories, Ziebart International is considered the world leader in car care solutions. But a 2004 Judgment against the Troy-based company forced Ziebart to change its business practices as well as pay a considerable Arbitration Award. Norman Yatooma & Associates (NYA) in Birmingham, MI, represented the 27 Ziebart franchisee owners covering nine states. This month, Ziebart honored its final payment of the award.
"Although the franchisees were quite happy with the seven figure award, they were even more pleased with the equitable relief and the various positive opportunities that it provides them," explained Yatooma. These opportunities include:
Changing Ziebart's current pricing policy. Ziebart must now dramatically lower their prices on the rustproofing chemicals sold to Ziebart franchisees. Franchisees are now also able to set their own prices for their retail products, requiring that Ziebart Corporate stores also observe such prices so that they may fairly compete on Ziebart's products.
Allowing all Ziebart franchisees who were terminated as a result of this lawsuit to be reinstated, if they wish.
Providing franchisees the freedom to terminate their license agreement with Ziebart without any penalty. In fact, they are able to take their business name, telephone number, customer list and compete directly with Ziebart.
Contracting directly with Rhino Linings, Inc., with an exemption from Ziebart's contractual prohibition with Rhino otherwise prohibiting such a business relationship. Rhino Linings is the worldwide leader in sprayed-on polyurethane linings for truck beds, trailers, boats and RV's.
After obtaining the $1.5 million dollar Arbitration Award, 27 of Ziebart's current and former franchisees entered a Judgment based on the Arbitration Award. In addition, the franchisees successfully fended off Ziebart's extraordinary efforts to avoid the binding effects of the Arbitration Award. This included Ziebart's attempt to exclude prior existing franchisee debts and their counsel's effort to vacate and appeal the Arbitration Award. But the Arbitrator and the Wayne County Circuit Court agreed with the franchises that all prior existing debt of the franchisees was to be included in the Arbitration Award, thereby eliminating such debt. This elimination of debt increased the value of the Arbitration Award by approximately $350,000 totaling a nearly $2 million victory for the franchisees, plus the equitable relief.
After initial failure to willingly pay off the Judgment, NYA secured a writ of execution against Ziebart and seized the company's property at its Troy, Mich. headquarters. Along with five court officers, three movers and two moving trucks, Yatooma entered Ziebart's headquarters to empty the facility. To stave off the closing of its headquarters, Ziebart's CEO Tom Wolfe remained over night with the court officers at the headquarters and accompanied them to his bank the next morning where he withdrew $200,000 of his funds.
Accordingly, Ziebart agreed to make monthly payments ranging between $50,000 to $70,000 plus interest, with such payment automatically doubling if Ziebart is one day late.
"The receipt of the final payment of this judgment and the judgment itself is a significant victory for the Ziebart franchisees as well as consumers who will enjoy lower prices," stated Yatooma. "
Birmingham, Michigan-based Norman Yatooma & Associates, P.C. (www.normanyatooma.com) is a full-service law firm offering expertise in civil and criminal cases in its Oakland, Macomb and Emmett County offices. While the Firm has a wide range of practice groups and areas, it specializes in commercial litigation sounding in complex theories of contract and tort liability including franchise, class action, business and real estate law.