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Detail Garage 'Shine Shops’ in 500 Walmarts Anger Plaintiffs Suing Brand


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A Rides & Coffee event at a Detail Garage in store in Swansea, Massachusetts, in which customers ogle cars and talk shop.

An alert sent to Detail Garage franchisees last Saturday announced a deal to pilot "Shine Shops" in 500 Walmart stores that will sell popular Chemical Guys car-detailing products. John Mansfield, a Detail Garage/Chemical Guys executive, pronounced the deal a "testament to the momentum of the Chemical Guys brand" and "an exciting opportunity."

Lynn Gangamella, on the other hand, calls the plan "complete madness." A Detail Garage franchisee in Arizona with three stores, she's a plaintiff with Wendy Jones in a lawsuit seeking class-action status against Detail Garage and Chemical Guys and its related entities, all owned by David Knotek and Paul Schneider. 

"Detail Garage/Chemical Guys is putting 46 plus products into over 500 Walmarts (500 not a typo) across the country," she said via email. "A vast majority of the Walmart locations are within a few minutes of existing DG franchise locations. 90% of the 46 SKUs make up our top-selling items, items the stores order on a nearly weekly basis. Complete madness. Only validates the claims we alleged in our class action complaint."

Filed January 21, that complaint claims Detail Garage is a "shell-franchise operation" and "anticompetitive scheme" whose actual purpose is to boost revenue for the founders’ affiliate companies at the expense of the franchisees.

Detail Garage franchisees must buy products only from Chemical Guys and its affiliates, and sell them only in their physical stores, while Chemical Guys sells products online and in corporate stores, often at undercut prices the lawsuit says, and now in the Walmart Shine Shops test.

She was "absolutely flabbergasted" when she saw the email February 28. "We were so taken aback. The most concerning part to me is they’re putting these Shine Shops literally near Detail Garage stores. My Avondale store" in Arizona, "there are three Walmarts within 10 minutes of my store.

"There are 4,769 Walmarts in the U.S.," she said, so the Shine Shop test in 500 stores is in "almost 10 to 11 percent of the Walmarts in the country. So if you wanted to do a test market, do it on your brand stores in Southern California."

Mansfield touted the deal in his email sent February 28 to "DG Nation," and said the test would be carefully monitored. He did not respond to a request for comment. His email to franchisees said: "As testament to the momentum of the Chemical Guys brand Walmart has requested the opportunity to give CG an enhanced presence in their stores. While this is an exciting opportunity for the brand, we want to approach this carefully to understand any impact to OUR retail business.

"The plan is to start with a test of the attached Shine Shop concept in 500 locations starting this Sunday. Once the test is live we will actively track the revenue trends of Detail Garage locations in shared markets to assess what, if any, cannibalization materialized."

He wrote the brand will "openly share" the tracking of markets that have both a Detail Garage and a Shine Shop during the test period. "We encourage everyone with a test location in their market to check out the concept" and "of course" report any issues.

 

 

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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