BONUS: Sunday feature interview with Jim Penman

Welcome to Fear and Greed Sunday feature. I'm Michael Thompson and hello. Adam Laing.

Good morning, Michael.

Now, Adam, for our Sunday feature, we like to every now and then dive into the archives and we've certainly taken a deep dive in for this one. We're going all the way back to 2021, which is two and a half.

Years ago and a very different time indeed it was.

And this was an interview recorded back then between Sean Aylmer, our colleague, and Jim Penman. Now, Jim is of course, the Jim behind Jim's Mowing and Jim's Cleaning and Jim's Handyman and Jim's Pool Cleaning. There are just so many franchises within this business and it's all built using Jim's name and Jim's face.

So Jim's Mowing started when he was doing his PhD in history and to pay his way through, he was mowing lawns. It's just a fascinating story along the way he started this business. I think it was in 1982. There are now 50. Well, that's Jim's Mowing. There's now 50 different brands under the Jim's Group franchise model. There's over 5,000 franchisees and over 500 million in turnover. And this is not just an Australian story. He's got brands that exist around the world, so. So Jim's Jumping Castles. But to add Jim's Beauty into the mix this week was just extraordinary. Now, would you believe there were over 300 inquiries to put orders and to start franchises. They've just started training new franchisees of Jim's Beauty this week. So before that even begun, they had people wanting to franchise and people wanted to book the services and that just shows the power of the brand. Who would have thought Jim's Beauty would kick off like this? Just a great story. And along the way, Michael, have a guess how many children he has? 3? 11.

Wow.

Talk about busy. So from a PhD in history to over 5,000 franchisees and now launching Jim's Beauty. A great story.

Yeah, it's a fantastic story. And obviously this interview between Sean and Jim from 2021 predates Jim Jim's Beauty, but we thought with the launch of Jim's Beauty. It's worth a listen to this chat because it really does go into that origin story and, and how he came up with the brand and how he built it. It is an amazing chat. I hope you enjoy the interview.

Welcome to the Fear and Greed Daily Interview. I'm Sean A Ulmer. Today we're taking a look at one of the most successful Franchises in Australia and certainly one of the most recognizable. Jim Penman started a mowing business. In 1982, Jim's Mowing became the largest franchise chain in Australia. And since then more divisions have been added to the company. Everything from Jim's Cleaning and Jim's Handyman to Jim's Fencing and Jim's Dog Wash. Jim's group now has over 4300 franchisees and a turnover of approximately 500 million. Jim, welcome to fear and greed.

Yeah, good morning.

So, so what an incredible story. How do you go from a mowing business to a global franchise across dozens of divisions?

Well, quite unexpected actually. Only reason I started mowing lawns because it was my student job. And then when I got myself a PhD in history, well what do you do with a phone? You have no lawn history?

Well, you mow lawns.

Clearly not without any much idea it would come to anything, just turned it to be unexpectedly successful.

So why do you think it was successful in those early days? What is it that gave it the momentum to keep growing?

I have a very intense emotional attitude towards customer service. As an individual contractor, I hated letting customers down. I just used to do everything possible to do an immaculate job, to be reliable, to delight my customers. So I found it very, very easy to find customers. And a simple idea. When I franchised, which is largely in self defense against a rival, I had the same attitude. I said, okay, my franchisees are my primary customers. How can I make them into raving fans?

In the late 80s, I can't quite remember, I was house sitting my brother's house and of course being very young and a student myself, got Jim Simone to come and do some work around the garden and a tree was accidentally cut down. And I actually rang and spoke to you back then and the incredible thing about that was that you were prepared to come out and say, well look, we can replace that tree. Now when I actually took a better look at it, I thought it's probably more weed than trees. So it didn't happen. But this was in your early days and I do remember this story. I mean that's why I've always thought of Jim's mowing is that you personally said we'll come and put a new tree in.

Yes, absolutely, we do that all the time. There's actually a rule in the office that if a client rings a second time without a complaint having been dealt with, it goes straight to me and I will deal with it and I will sit on it and I'll make it fixed no matter what it Costs.

Wow. So is that customer service, the base of why you have grown and created this incredible franchise model?

Yes, customer service, but particularly in relation to franchisees. If anything out my number one client is my franchisee, not even my customer. Making them successful is my main effort in life.

So why did you go down that model rather than using subcontractors?

Oh, quality issues. When I was mowing laws myself, I was good at it. I really was. My customers would, would look at what I'd done and say, I never knew.

My lawn could look this good, particularly for a historian.

Well, I just have this passion. I have a mission. It's not, it's not financial, it's just I hate letting customers down. If I pass one of my guys who's mowing a lawn and I can see a blade of grass coming out of the edge of the nature strip, I will stop and say, why can't you see that? I get to get very uptight about such things. I just hate letting customers out. I actually look through every low ranked survey that we run in our system. Everybody who gives us less than five stars with a comment, I have a look at that and I try to work out what we can do about that. I'm obsessional about it.

So how do you manage quality control? Because at the end of the day, that's everything. I will ring your guys if they've done a good job. I mean, repeat business must be everything. I appreciate what you're saying, but there must be some people who don't do a great job.

Well, yes, look, in the beginning, the fact that we actually had a franchise and they owned the business was an incentive for service. So the franchising gave a better, better service than we did as individual contract subcontractors. But over time, what I've done is put systems in place, first of all, starting to record complaints properly and then taking action if there's too many complaints. And secondly, and the big thing about five, six years ago, we put a survey system where we text our customers after the job. And based on the response to that, then we put a rating in and we monitor more complaints. Now what's actually happened is that just to give you some idea, before I started franchising, about half of the messages coming into my call center were complaints. It went down to eventually, after a few years, it was like 5%. Now it's only a fraction of 1%. And every time we push for better customer service, what we find is we get more customers.

What's interesting there is that you're Using technology in an industry which is very labor intensive.

Yes. Well, actually of my 70 odd people that I employed directly, most of them are actually in technology, mostly in software development. We're actually developing a system now, a new system of contract database, a system of running a business which I believe will cut our complaints down to a fraction of what they are now. It'll do things like it will actually warn people if they don't ring back. It will warn the franchisor if somebody hasn't called back. It will actually warn us if a quote isn't done properly. It would text clients with details of appointments. There's a whole stack of things we're doing right now which I expect to see our complaints go down more and more and more.

So stay with me, Jim. We'll be back in a minute. My guest this morning is Jim Penman, founder and CEO of Jim's Group. So how did you move into cleaning and handyman and Jim's Dog Wash? Was it just a natural progression from the lawn mowing business?

Well, you loved us. I had some far sighted vision, but I really didn't. When I thought of the idea of cleaning, I thought, well, you know, cleaning, our franchise and system might suit that, but nobody's going to want to get cleaning done by a guy in a beard and a hat who looks like a gardener, which is me, of course. So I started this thing called Sunlight S U N L I T with a little spray. So I put a different name on, sold a couple of franchises, couldn't find work, gave them their money back, shut it down and somebody came to me and said, what about doing gyms cleaning? And I said, no, that won't work because it's a, it's a gardening image. He said, it will work. I said, no, it won't. They said, okay, we'll do it ourselves, we'll give it a try. So I said, look, all right, okay, you give it a try. And it worked. So strange thing is you can have a woman actually washing dogs or doing bookkeeping or cleaning or whatever and the logo works just fine.

Yeah, right, okay. And onto the others, the fencing and dog wash and things like that, they're same sort of story or just progressions.

Well, most people came to us actually. I don't really. Not many divisions I actually started myself. Dog Wash was one of them, as a matter of fact. But what actually matters, we have a very internally entrepreneurial system. Divisions are actually run by individuals, developed by individuals, not by the head office normally, apart from mowing, of course. In the Beginning. And the franchisors who look after the franchisees, they've also got their own businesses. So we have a lot of people driving at different levels.

What about Jim's podcasting?

We like to stick to things we know about. I come barely unstuck doing things that I don't know. Like I tried to run a factory to build trailers. That was not a success. I wasn't very good at it. But other things too. So I like to stick to the service industry.

I think that's actually a really salient point, is that you are doing things that you understand and do yourself. Is that right?

Yeah, that's right. We don't even do site based franchises too. We're not trying to try and compete with the likes of Full Works in that area or McDonald's or whatever. They, they do it very well. We are basically a service franchise. So even though it looks like we do a lot of different things, they're all very, very, very similar.

Okay, and are you still adding more divisions?

Yes, we're always looking at divisions, but we also, when the division doesn't work, we close it down. We pass the franchises to another division. Like we had one on interior design, for example, didn't work out. So we added more cleaning franchises and one of them became very successful as a franchisor. So sometimes divisions don't work, sometimes you merge them with a different division.

So how do you decide where the demand is? Because services is such a growth sector in the Australian economy. What sort of information do you take in to think, ah, there could be demand for this new services area?

Well, it's pretty obvious actually. All you got to do is to put a search term in Google and see how many adwords there are. Everybody would know that pest control or dog washer, all those are pretty big areas of interest. But it's not so much the service itself. We find it relatively easy to find customers. It's the right person to drive the business. In divisions like dog wash and cleaning, for example, we have absolutely exceptional leaders, people who drive it and that sure fact these people are better at what they do than I am. I actually used to own the Dog watch division and I gave it to Sharon Connell, who was a successful franchisor. I said, I'll give it to you, you just make it work. Now we had 60 something franchisees when she took it over about three years ago. Now I've got about 160 because she's a great lady and she's got a great systems.

Wow. COVID 19 last year. How did that affect Jim's group?

Well, the lockdown was horrible. The Victorian lockdown was absolutely awful. It was traumatic in the extreme. I know two French because we're in touch with French, who's very close. It's like a family. I knew two franchisees who had suicide attempts within their own family. It was. It was awful. It was distressing. People would be ringing me up and say, how long is this going to go on for? So that was terrible. I got very, very angry about the whole thing, about the way that my people were being treated for no reason. But at the same time, I have to say it's been brilliant for us because in actual fact, we have work all the way through. In fact, our work increased. We've had the most incredible time ever. Like November, December, basically melted down the call center. So we've got the work and at time a lot of people were out of work. And that's one reason we've grown so much. The problem we've got actually is that the work is beyond what we can handle. Traditionally, we're about 1 in 10 jobs might be unserviced. Recently it's about 1 in 6. Last year is 1 in 3. This year, 35% of leads so far are unserviced. We just cannot cope with this incredible demand, no matter how fast we grow.

Why do you think that is? Why is the demand jump so much?

Well, it's because of customer service. See, one of the things I put in last year, for example, is a system which said that if you get a poor survey from a customer, you can go back to the customer and do whatever you want to to make the customer happy. And then I'll delete the survey personally or upgrade the rating or delete the complaint. So that's given a tremendous drive to give better service. And as we push for better service, every time we improve our service, the amount of work comes in. And the interesting thing about this is our advertising cost is actually going down. There's a certain amount in every contract that says this must be fellow advertising. We've been going back to our franchisees and saying, guys, we can't spend this here, have it back again. We've given away hundreds of thousands of dollars.

I've never heard that from a franchisor.

Given back to the franchisees hundreds of thousands of dollars of advertising, but we cannot spend the money.

You mentioned earlier on that your number one customer are your franchisees. And then famously last year you suggested that franchisees continue servicing customers and ignore lockdowns and you said you'd pay their fines. What sor reaction did you get to that?

Okay, well look, I was inexperienced with the media. What I actually said during the Ch Ser interview was the law of the land is the Department of Human Services regulations which clearly said that you could mow lawns and clean sole operator working alone. That was in the guidelines. That was the law. The Premier then goes on a press conference and says, you can't have your lawn mowed or your house is clean. That is not the law. The law is what the department said. So I said we will tell our franchisees to obey the law. And what happened? And they said, what happens if they don't? They said, well we will pay the fines. And that was because it was legal. Now as soon as the government then shut down the said, okay, the regulations have changed. In other words, let's change the regulations depending what the Premier said. Then I said, okay, stop working. So I never ever advised my franchisees to disobey the law. But the interview gave the impression that I did.

Okay, well that's good. We've got that sorted. Now tell me, you're also international with a presence in New Zealand, Canada and the UK. How are those businesses going? How do they handle COVID 19 and what's the future for them?

Well, actually not a great deal of effect. I mean New Zealand had their one month lockdown, which was the first one. So the same kind of story they've coped with very well. I mean overall it's been very good for business. One of the things people, when they can't go overseas and have holidays and stuff, they've got to spend their money on something and most people are employed and you get all this government money. So there's a lot of money sloshing around the economy. So it really has pretty good effect overall. I'm not saying I'm in favor of it. I think it's a horrible thing. It's terrible. So many people have died. But at the same time, for business point of view, it's been very good for us.

We'll be back with more in a moment. I'm talking to Gins Group founder and CEO Jim Penman. The other thing that you've done recently, which I think was really interesting was suggesting that people who aren't working at the moment or potentially retirees come out of retirement and take on a franchise. How's that gone?

Well, yeah, it's. It's been great. One of my people, I just rang him on my. I ring people on, on major Anniversaries. I rang him on his 10 year anniversary and this was a guy who was 78 and he said he made more money mowing lawns in his 70s than he ever did as a manager for Bunnings. Early in life.

Fantastic.

But the point of it is though, this, this idea that you got to retire at 65 and that you're a decrepit has been, you're going to shuffled around for the rest of your life is ridiculous. It's so outdated. I turn 69 next month and I am going full on. I'm just getting started. I run every day or I work for several hours hard work on my farm. I mean we're not old anymore. Yeah, 70 is the new 30 as far as I'm concerned. I'm full of energy and full of ideas and so many of my franchisees are actually in their 60s and even 70s and they're doing very, very well.

And I think, you know, if you're doing that business when you're in your 60s and 70s, you're very serious about what you're trying to do as well.

Yeah, it's also the kind of thing too, like you have this ridiculous situation where you, you work flat out to 65, then they give you a gold watch and you retire and you're a. Has been. That's not a natural, and that's not a natural way to live. What actually tends to happen as you get older, you just calm down a bit. Okay, in your 50s maybe you're working 50 hours a week and then in your 60s you're dropping back to 35 hours a week and then in your 70s you're down to 15 hours a week. And then in your 80s you may be down to 10 hours a week, but you're still working. They've actually done a study to show that unemployment is really, really, really bad for people psychologically, mentally, physically, every other way. But even working one day a week is actually really good for you. So why should you? And we have special contracts that actually allow our people to slow down. They pay less fees. We call them retirement contracts.

Wow. I mean it gives people a purpose. When you're 70, I mean, last thing I want to do is be watching TV at 70 or playing lawn bowls. I want to be working.

And particularly when you've got something like lawn mowing too. Because one of the things I'm very interested in is the science of health and happiness. And one of the things that's most associated with happiness, with health, with good mood, with everything, is exercise. And the other thing is being outside in green areas. Well, what better job than a lawn mowing? I mean, honestly, it's so much fun. I love being outside gardening. I really enjoy it.

40 years on or almost 40 years on, clearly you're not thinking about pulling up stumps. You've considered an IPO previously. Is that something that you'd go down? I mean, where do you think the business will go in the next decade or so?

I don't think we go that way at all. One of the problems with public companies, they tend to be very short term thinking. We never think that way. It's always long term. What is in the interests of franchisees? What is in the interest of clients? What's interests of staff? I don't think being a public company is great. I'd be happy to be, you know, a billion dollar company and still stay private. I've got actually 10 children and one or two of those have got very good potential heirs. So I'm hoping that the gyms will go on for another generation, at least 10 kids.

Jim, you're bearing the lead there. Really. How old are your kids?

The oldest ones are in their 30s. My youngest is just turning 12.

Oh, wow, that's fantastic. I live in a household with eight kids and I thought I was doing well, but you got 10, that's even better.

Children are great. I just. One of the greatest joys in life. There's one saying that I really believe in. No other success can compensate for failure in the home.

That is a beautiful saying. I'm going to stick with it. Jim, thanks for talking to fear and greed.

You're welcome anytime.

That was Jim Penman, founder and CEO of Jim's Group.