27th May 2024

Unveiling the Stealth Franchise Model: Big Chemical Giants and the Spin-Off Phenomenon in Finish Coating Industries

We are all familiar with franchises such as fast food chains, restaurant chains, hardware stores, smoothie shops and many more. However, there is another more stealth franchise model that consumers, craftsmen, and tradesmen should be aware of.

Franchise Model

In the vast landscape of chemical manufacturing, giants like BASF wield considerable influence, driving innovation and shaping market trends. Yet, behind the scenes, a lesser-known phenomenon is at play—one that involves the outsourcing of base formulations to spin-off companies that market their own brands with minor variations. Nowhere is this practice more apparent than in the wood and concrete finish coatings industries, where BASF and similar chemical behemoths hold sway over a network of spin-off entities. This article delves into the intricacies of this franchise-like model and its implications for consumers and the industry at large.

The Genesis of the Spin-Off Phenomenon:

From their roots in the early-mid and late 20th Century to today, finishes featuring acrylic, polyurethane, varnishes, nano-graphene coatings, PFOA, and Euro hard-wax oils (that are really wipe-on polyurethanes), and the companies that brand and market them continue the legacy of the “profits first and foremost” business culture (discussed in our previous blogs) into the 21st century. And that is really all to the detriment of the end-users and our environment. Slight-of-hand, obfuscation, trickery, and the propagation of group think support the grip that these finish paradigms hold on unsuspecting homeowners, craftsman, painters, furniture makers, flooring professionals and just about everyone.

At the heart of the spin-off phenomenon lies the intricate web of patents, proprietary formulations, and intellectual property rights that define the chemical industry. Companies like BASF invest significant resources in research and development to create profitable formulations for finish coating brands. However, rather than directly marketing these formulations under their own brand names, they often opt to license or sell them to spin-off companies.

In the stealth franchise model, ingredient decks and formulations are peddled to companies for the purpose of market ubiquity, assuring the long-term survival of the revenue stream that these most often toxic coating paradigms generate. They are offered across a field of industry competitors, sometimes with slight variations, and create a false sense of choice among consumers of the resultant products. 

chemical concoctionsThis is exemplified in the coatings industry whose deepest roots are in Germany, with many of the chemical companies originating and residing in Germany - American chemical giants are likewise implicated in such schemes. One such example is Dupont whose historical ties with Hitler’s regime are well documented and whose profits over environmental health is depicted quite dramatically in the 2019 film “Dark Waters”.

Dark Water, the movie

It is after all no coincidence that many finish brands are from Germany and neighboring countries and continue to promote and sell products utilizing the very same tactics described in our prior blog posts. Likewise it is no surprise that forever chemicals found in early versions of Dupont’s non-stick coatings are said to be found in every living thing on the planet. These companies yield tremendous power and have the ability to gain global market acceptance of their products and chemical concoctions no matter how dangerous they may actually be.

The Role of Spin-Off Companies:

Spin-off companies, often smaller and more agile than their parent corporations, specialize in marketing and distribution. Armed with base formulations from industry giants like BASF or Dupont, these spin-offs tweak and refine the formulations to create their own branded products with minor variations. This allows them to carve out niches in the market and cater to specific customer needs or preferences by creating an illusion of choice when in fact there is little difference between the brands, the “technology” behind the formulations, and the results of finishing applications.

The Benefits for BASF and Similar Giants:

For BASF and similar chemical giants, the spin-off model offers several strategic advantages. By outsourcing the marketing and distribution of finish coatings to spin-off companies, they can focus on their core competencies of research and development and more importantly generate a vast revenue stream by attaining ubiquity of their formulations across a wide range of brands, companies and markets. The burden of marketing expenses are shifted to their customers i.e., the brands that sell and promote the variants with little to no market risk exposure to the chemical giant. Additionally, this model allows them to reach a wider customer base without diluting their own brand identity as they remain the grandaddy or Wizard behind the curtain.

Implications for Consumers:

While the spin-off model may seem like a win-win for all parties involved, its implications for consumers are more nuanced. On the one hand, the proliferation of spin-off brands can lead to increased competition and innovation in the finish coatings market, driving down prices and expanding product options. However, the minor variations between formulations can also create confusion for consumers, who may struggle to discern differences in performance or quality between brands.

consumer confused by similar products

Moreover, the reliance on base formulations from a handful of chemical giants raises questions about transparency and accountability in the industry. Consumers may be unaware that the finish coatings they purchase from different brands are essentially derived from the same base formulation, potentially leading to misconceptions about product uniqueness or superiority.

Can anyone give a reason why they should blindly trust the fruit of a poison tree? In our view, all such products should be under extreme and careful scrutiny.

The Future of Finish Coating Industries:

As the spin-off phenomenon continues to shape the landscape of finish coating industries, stakeholders must grapple with its implications for innovation, competition, and consumer choice. While the stealthy franchise-like model offers opportunities for market expansion and specialization, it also underscores the need for greater transparency and regulation to ensure that consumers are fully informed about the products they purchase.

Ultimately, these companies should be exposed for the game they are playing and pressured into accountability, truth in advertising, truth in labeling, and an environment of openness, and ethical business practices. Only then can consumers make informed choices and trust that the coatings they apply to their wood and concrete surfaces meet the highest standards of performance, safety, and environmental responsibility.

Even more important, companies should be held accountable to marketing products with questionable safety, and consumers and tradesman alike should demand and choose safer, non-poisonous, truly sustainable, and more efficient alternatives such as Odie’s Oil.

                                               Odysseus and Polyphemus -conquering the giants

Buyer Beware:

On a final quick note - don’t be fooled by green certifications as more often then not they are not much more than pay-to-play sticker sales organizations where green-washing culture dominates the field. Consumers are led to believe many things that are not scientifically based but scientifically created and conjured up for the purpose of blatant profiteering.