Battle of the Beauty Brands: When Small Businesses Take Legal Action against Corporate Goliaths

When entrepreneurs Wendi Levy and Kim Etheredge realized that one of the largest retailers in their category started selling a generic version of their popular hair care brand, Mixed Chicks,...

When entrepreneurs Wendi Levy and Kim Etheredge realized that one of the largest retailers in their category started selling a generic version of their popular hair care brand, Mixed Chicks, their hearts sank.

Learn how they launched a multimillion dollar brand, fell victim to trademark infringement by one of the world’s largest beauty companies and won an $8.5 million dollar settlement against all odds.

 

Mixed Chicks’ Founders Build Multi-Million Dollar Brand

Several years after being introduced at a family gathering, Wendi and Kim instantly hit it off. They both shared a common problem as women of mixed heritage: frustration with using a concoction of several different products to tame their curly locks.

Mixed Chicks founders Kim Etheredge, pictured left and Wendi Levy pictured right.

As their friendship developed they soon realized that their common problem could become a viable business. The two entrepreneurs then set out to start a curly revolution and develop specialized hair care products for women of mixed race.

Armed with a new business idea they contacted a lab to develop their new hair care product. “We made lots of samples and shared them with friends,” said co-founder Wendi Levy. “We knew that it was a hit based on the feedback from all of our friends.”

In 2004, Wendi and Kim debuted their new company Mixed Chicks, a hair care solution for women of mixed heritage. Using a grassroots advertising approach they built awareness of their e-commerce website and it soon took off.

“I’m sure at first we were happy with two sales, three sales a week,” said Wendi. “We would be like – ‘Oh my gosh! We got a sale!,’ she fondly remembered. Then our first retailer was a natural health food store [that became aware of our product due to our sampling efforts].

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Their savvy sampling strategy drove word-of-mouth and demand. “People started to ask retail outlets for the product and that made them come to us and ask us about the product. Fortunately the grassroots approach worked for us,” Wendi noted.

 

When Small Businesses Face Trademark Infringement

As their business grew, by 2005 both Wendi and Kim realized they needed to move more product and started exhibiting at trade shows. Two years later, in 2007 the founders were approached by Sally Beauty Supply, the world’s largest retailer of professional beauty supplies.

When Business Opportunity Knocks

“They were very interested in our product [at the time],” Wendi explained. “In 2009, they came to us again and said ‘it is a great day for Mixed Chicks.’ We were like really? Why?”

The beauty retailer was interested in carrying Mixed Chicks’ products in their retail outlets. For a small business, the prospect of partnering with a large retailer (boasting 4,000 stores) represented a big opportunity. Both Wendi and Kim were excited given they did not have a distributor and were selling directly to salons at the time.

However, after further discussions — learning more about the retailers buying policies — they realized the partnership was not feasible. “At that time we were working out of my garage,” Wendi explained. “And if they had a 60 thousand unit order, they [could] return it whenever they wanted. Trying to resell that product and just house it would have broken us as a small company.”

Also “because they were such a large distribution channel they wanted deep wholesale discounts. We were so small that we didn’t have enough margin to give them that kind of discount.”

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Over the next couple of years, Wendi and Kim continued to nurture the business relationship in hopes of one day doing business with the large retailer.

What they did not know is that during the same period, Sally Beauty Supply had developed their own product line for mixed race women which came in packaging that looked all too familiar. With a cheaper price tag, the retailers’ imitation brand threatened to ruin everything both entrepreneurs had built.

All is “Not” Fair in Beauty and Competition

In 2011, Wendi and Kim learned through other retailers that Sally Beauty Supply had infringed the trademarks of Mixed Chicks’ products. Their retail partners were unknowingly furious that the entrepreneurs were selling their products so cheaply — however, it wasn’t Mixed Chicks at all. The new brand, Mixed Silk, launched by the beauty retailer was eerily familiar to the general public and the co-founders.

“Our customers were questioning our integrity and everything else; people were so confused,” co-founder Kim Etheredge explained.

“We got the call immediately, because it was advertised in their circular that goes out to salon professionals and individuals that are our customers.”

 

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