Is it true that Colgate faced a big obstacle in marketing toothpaste in Spanish speaking countries because 'colgate' translates into the command, "Go hang yourself"?

"Go hang yourself" doesn't really translate to "colgate". The verb "colgar" (to hang) is a stem changer verb. So, when you conjugate it in this way the "o" changes to "ue". So, "go hang yourself" would really be "cuelgate." However, the act of hanging yourself is said "colgarte." So, it is very similar, but it doesn't quite mean "go hang yourself."

I'm not certain that Colgate faced problems marketing the toothpaste. I really don't think that's true though. Both "cuelgate" and "colgarte" are pronounced completely different than "Colgate."

No, it's not true. Colgate was a very popular toothpaste in Colombia when I lived there and seems to be yet.

"Colgate" CAN mean "hang yourself" in a colloquial form of Spanish, and would be pronounced the same as the toothpaste: "Col GA te," and does lend itself to making a joke of the product name. Standard Spanish would be "CUEL ga te." But that word for "hang" means to get hung up or delayed. "Ahorcarse" is to hang yourself by the neck until dead.

http://www.spanishdict.com/translate/hang