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A sucker deal

October 11, 2010
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Last year, there was a landmark lawsuit in the vehicle wash industry, as a major supplier was sued after a truck wash did not perform to expectations. Many industry experts openly cautioned that this lawsuit could pave the way for carwash investors to sue manufacturers any time a carwash did not make money, hit its volume projections, etc., whether it was the supplier's fault or not.

Sure enough, there are now reports of some law firms that are looking to recruit unhappy carwash operators to sue their vendors.

Carwash suppliers would likely agree that carwash operators should be able to pursue legal recourse when they clearly receive faulty products or service, and the manufacturer or distributor refuses to address the problem.

However, carwash operators who would let themselves be recruited into a lawsuit are getting involved in a sucker deal. The class-action lawsuit process has become an abused cottage industry over the past several years, and President Bush recently signed legislation that curbs some of the most abusive practices.

The U.S. Chamber of Commerce Institute for Legal Reform argues that the class-action process has become so abused that attorneys often reap millions in fees, while class members may receive a couple dollars or insignificant product coupons.

Three major carwash chemical suppliers were sued in 2000 in one of the more bizarre class-action suits to ever hit the carwash industry, which focused on whether carwash wax is really wax. Carwash consumers — who were allegedly driving this lawsuit — each received $1.34, provided they could find four-year-old receipts. The law firm pocketed around a quarter of a million dollars.

This is a very common scenario, and any carwash operator who would let himself or herself be recruited by a law firm into a class-action suit is probably not going to make out much better.

If you make your living in the carwash industry, why would you want to be part of a lawsuit that, once it is made public, would only undermine the public's trust of the carwash market?

Why would you want to participate in a process that would only drive up equipment costs and hurt service, as distributors and suppliers become fearful of working with new investors?

Imagine if all your customers could get together and sue your wash for not getting wheels 100 percent clean. In a market where that threat was very real, how would you continue operating?

There is a culture of fear being created among business communities in our society, and make no mistake about it — there are law firms right now looking to exploit the carwash market. No matter where you sit on the carwash supply chain, now is the time to circle the wagons and keep outside forces from leaving an indelible scar on our industry.

As an operator, you should really be certain you have exhausted all avenues of remediation before considering litigation. And before you take the ill-advised step of letting a law firm recruit you into any type of action, take a long, hard look at the big picture.