Jay Westbury interviews Jim Penman, CEO and founder of Jim's Group
In this interview at the National Franchising Convention, Jay Westbury talks with Jim Penman, founder and CEO of Jim’s Group, about the origins, principles, and future of the franchise network. Penman explains that the decision to franchise was driven by fear of competition, leading him to develop a franchise‑first system that puts franchisee welfare at the core. He details the extensive contractual protections offered to franchisees – first‑refusal rights, unrestricted territory work, automatic renewal, and the ability to move divisions or vote out franchisors – describing these as the "secret sauce" of Jim’s success. Penman criticises the current Franchise Code of Conduct and the FCA, calling them ineffective, lawyer‑driven, and a “Trojan document”, and argues for an industry‑wide, independent, anonymous poll of franchisee satisfaction to replace the code’s disclosures. He proposes a co‑regulatory model and accreditation rather than licensing, urging the government to back such measures. The conversation moves to how Jim’s expands into new service lines: ideas are sourced from franchisees, evaluated against criteria such as a minimum $70‑hour earnings potential, volume (20‑25+ franchisees), non‑conflict with existing divisions, and market size (evidenced by online ad volume). Penman describes the internal lead‑allocation system that prioritises territory holders and avoids intra‑franchisee competition, and notes that the group does not own any franchises itself. He discusses multi‑unit franchisee growth, diversification across divisions like mowing, cleaning, laundry, and driving school, and the importance of supporting franchisees with training, guarantees, and a pay‑for‑work scheme. Finally, Penman laments the growing regulatory burden on franchising and broader labour laws, arguing they raise costs for consumers and stifle entrepreneurship, especially for older workers, and calls for better standards and vetting of franchisors.
Chapters
So, welcome to the National Franchising Convention here in Melbourne and I'm delighted to be sitting down having a conversation with Jim Penman, the founder of the Jims Group. I've got a few questions here, Jim, but I thought we might just have a bit of a conversation, if that's okay. Yeah, sure, I guess. I mean, I look at the audience that's sitting here with us today at this convention and I'm sure there's 400 odd people here. If they all got to ask you a question, there'd be a range of things people would want to know. You've written a few books, so it's not. Though you hold things close to your chest. What prompted you to take a successful lawn mowing business and franchise?
Fear, basically.
Fear.
Because what happened is I had a business that was building up and selling lawn mowing rounds and then VIP came from Adelaide as a franchise and I thought they'd crush me if I didn't franchise basically in self defence.
Is that right?
Nothing glorified about it.
And so no massive big strategic plan. That was just fear.
Yeah. I had a good little business and I thought they would eat my lunch if I, if I didn't do something. So I set out to learn what I could from what they were doing and said, okay, let me devise my own system and took it from there.
And here you are. Wow. And so, you know, what do you think? What do you think really has been the most biggest factor in the success of the Gyms group? I mean, you've gone into so many different lines and different areas. What do you think's been the sort of secret?
We have a number one principle is our first priority is the welfare of franchisees. So everything we do looks at it in terms of what would make a franchisee successful. So in the original contract we put a whole lot of clauses in. For example, we gave franchisees rights to first refusal to any job coming from their territory, but allow them to work wherever they wish. They can build their business to any extent they wish. They own their clients, they can sell the rights to them, they can't have it taken off them, they've got an automatic right of renewal. And later on we put clauses in like you can move to a different franchisor or even a different division if you wish. You can vote out your franchisor, you can veto changes to your own manual. We put all these systems in place to see what can we do to make the franchise maximally attractive to franchisees. That is the one key principle that's the secret sauce. Yeah. And you keep on trying to do better. Right.
And so do you think, I mean, you've obviously been in franchising for a very long time. Do you see others copying you in that formula or do you have particular views on the way some of the franchise systems are operating?
I think there's some appalling systems around. It makes me quite angry to the way franchisees are ripped off by some franchisors. I don't want to name names in particular, but you'd know about them.
Sure, sure. No, no. Well, publicised some of those stories.
I'm sure there is stories. There are many decent franchise. One I know is McDonald's for example. They're a great franchisor, I'm very proud to say. My 16 year old son's working for McDonald's. Great training as well. So I have enormous respect for them. Not for the food, but, but for the systems of business. And as franchisors, they are great. So there's some very good franchisors around who genuinely care about their franchisees and there are some that don't.
Right. And you think that's something that the industry should lean in on a bit more?
Yes, I think the industry should self regulate. Look, what we do every year is we poll our franchisees confidentially and we ask them questions about the support they're getting. How often does their franchisor ring them, how helpful are they, how quickly did they get back to them? And that's put into a score, a rating.
Right.
And we then put that amassed with the franchisor and we publish that and we give them awards based on how well they do. So if you came in today, you'd have seen a sign on the wall. It's called the diamond wall.
Right.
And that's franchisors who, according to their own franchisees, say ring me weekly, get back to me straight away, I take the call and are very helpful. You have to have virtually all of them say that to be a diamond. That's the top award in Jim's group. Now, what I think we should be doing, the franchising industry should be doing, and I said this to the government too, we should do the same thing across the entire industry. We should have an independent pollster contact every franchisee in every franchise group, anonymously, confidentially polled them and publish the results online. And if we did that, that would do more for ethics of franchising than 100 disclosure documents, which is basically garbage.
Yeah. And do you think that your colleagues in the franchising sector would be up for that. I mean, have you had conversations about that with many?
No, I've approached a few people without much success. It's really something the government ought to do if the FCA would get behind it. Look, the problem I've had with the FCA is I haven't had much of an involvement for years and my issue is that they FCA has no standards. Now the FCA got together and said, okay, we are going to do something like this. Public polling revelation. What do franchisees think about their franchisors? If the FCA was going to do that, I would be 100% in favour and I get involved right at the moment. I don't like when you accept everybody simply because they pay fees.
Right. And of course, as you, as you know, we've talked about this before, we propose to the government a co regulatory model.
Yes.
And some of the things you're talking about are forming part of the thinking that's going on. And you'd said to me before that that's something you'd be, you'd be in favour of.
Yes.
Mainly to get the government out of the way or to put things that are fit for purpose in place.
Well, because I want to see franchisees protected. The problem with the disclosure document is this. I have asked my franchisees. I have never yet anybody who's ever read the disclosure document. In fact, you need a fairly experienced franchising lawyer to understand it. So if you are a crooked mercenary ripoff franchisor, you're going to love it. Because what you do is you hide the crucial stuff in there, knowing they'll never read it and say yes, we told you we got an excuse to do what we like.
Right.
That is the garbage Trojan document is completely useless. The only useful thing about the whole thing is the requirement to give a list of all current franchisees with their contact number, which we at Jims has done for 36 years.
Right.
That is a good system. The rest is absolute rubbish. It doesn't help ethical franchising at all. What the FCA should do is get behind a system of asking franchisees directly. Because whenever I talk to prospective franchisees, I say one thing. You want to buy a franchise? Do one thing. Get hold of that list. Ring as many franchisees as you can and ask them what it's like. Don't listen to what you're told by the franchisor. Ask the franchisees. Right. And if they come back to you and say yes, ethical, look after me. Do what they Say keep their promises. Right on. Now whether it's Jim's or somebody else, that's what you do. If they come back and say no, broke promises, rip me off, made me buy stuff twice expensive, I get them from Coles, that kind of stuff.
Right, right.
Then don't go near it. But the government should get behind it. The government should protect people against people making very rational, foolish decisions.
I guess the, I mean one of the challenges with the way the whole thing structured around this code of conduct is it's all very red tape orientated and theoretical. It's no practical notion to it. I mean the ACCC is casting fines of 16 and a half thousand dollars to franchisors because they haven't filled out a website that no one uses.
Yes.
I mean you've obviously seen this code go from, you were obviously around when it was first introduced. Do you think it's served its time? Do you think it's done its job or.
I think it's, I don't think it's achieved anything. It's a feeding frenzy for lawyers. I've yet to meet any prospective franchisee and we take on about 1,000 a year. Who's ever been helped by anything in the code except that list of franchisees? There's nothing in it. It's so arbitrary and bureaucratic and impossible to understand. If you were going to get franchisees to have their contracts checked out, why get the franchisees to pay for it by going to a lawyer who doesn't know anything about franchising anyway? For the most part.
Right.
And don't even read the contracts most of the time? Why don't you, if you want to protect it, why don't you get the franchisors to put their franchise documents in to an experienced qualified franchising law who then gives an opinion to every franchisee which they don't have to pay for.
Right. And what approach, I mean with that many coming on, how are you approaching that with, and still complying with the requirements?
Oh, we do. Look, one of the things I suppose you'd say is that it's actually, it's actually a benefit to establish systems like ours because we have an internal documents. I've got an in house lawyer. We've got all kinds of resources to do this. So when we do a scroture document it's all part of a template now, which is why we only charge $700 for a contract whereas other people would have to charge several thousand dollars simply because the requirements are so extreme. Because we do so many of them. So in a sense it is one way of protecting the big players in the industry against upstarts. But that's not a healthy thing in itself. I mean you shouldn't be trying to squelch competition and keep the new people out, you should be encouraging new forces to rise. So I think anything that protects the incumbents and hurts the newcomers is a bad thing. It's anti competitive. The government in so many ways is acting against the interests of franchisees and against the interest of the industry.
Yeah, right. And well I think that's very relevant in terms of the way people come to these expos that are on. And I've been talking to many, talking about, oh, I've got this great idea and I want to franchise it. And by the time they leave the expo they've changed their mind because they've decided that the barriers to entry are, are too heavy. Yes. Do you think, do you think there'd be more entrepreneurship if we got that out of the way?
Yes. Yeah. We're becoming an increasingly bureaucratic country. We've got more and more regulations at every stage. Franchising is really, really bad. Other areas like building like, like, like suppliers, like all kinds of things, there's more and more rules and regulations and the more rules and regulations you have, look, there are sensible things governments have to do, like for example public health and sanitation and so forth and food safety. I mean there tough government do, but the immense weight of ever growing weight of rules that come on and the people who make these rules are convinced there's no cost to them. But there is a cost. And guess who pays? It's the end consumer or the franchisee or the public who has to pay more than they should for the, for the service. They're the ones that actually end up paying for it. It's crippling our standard living. And franchising is just one area where it's gone completely wild. There is no sense of, of the cost, there's no sense of the efficacy of anything that's been done. It's just say we think it's a good idea, let's put another regulation and another and another and another and another.
That's true. I mean the code's been through 11 reviews. It's layer upon layer. You know, I call it the other day, I call it the croftant of franchising because it is layer upon layer. So if a young entrepreneur came up to you and said I've got this really great idea and I'm thinking of franchising it.
I'd say do it through gyms.
Great answer.
Which is what happened? Yeah.
Right.
We have a very good. We have a very good track record of exactly that. You've got a great idea or you've run a great business, come to us and we'll help you franchise you. Some people do come to us.
Is that how you've expanded into all these very. I looked at your Diamond Awards and, I mean, there's pretty much nothing in the services space you don't have now. It seems like.
Well, we could do with more. There's a lot of things we'd love to do currently have. We'd like to do personal training, for example. That's a wonderful one. We'd love to have. It's a great.
Everybody in the room has just shuddered at you saying. Because obviously that's a space that is really expanding, but good on you, but. And so is that how some of these various lines, or what divisions that you might call them, have come about? Someone's approached you and said, I'm good on this bit. And you've said in virtually every case,
like last year, for example, one of our mowing franchisees in South Australia, Lance at the party came up with that. He said, I'd like to do Jim's driving school. Now, Lance is a great franchisee. He's got a 5.0 perfect customer service record. He's making very good income, which is important. He's also somebody who's trained, training and helping local people. So he's got a good attitude towards it. So he said, right on.
Right.
So now he's booming with driving school.
Is that right? And is that just. Did you say in South Australia?
No, no, it's all over the country.
Is that right? Wow. Jim's driving school. Right. And obviously there'd be company secretaries to talk about what's next, but people. You're open to people approaching you about ideas.
Yeah, they do all the time. I probably get a new inquiry once a week. Just yesterday, somebody inquired me about Jim's Shipping and I did some inquiries about it and I said, no, it probably wouldn't suit us because it's the kind of market it is. It's too big.
Right.
It's more suited to established companies. We do gyms, couriers, for example. That's more like our level. We're more on the domestic brand.
Yeah, right, right, right. And has there been, you know, a strategy to that or. It's really a good idea comes your way and you think, I'm going.
We look At a number of things. First of all, we have to look at a franchisee being able to make at least 70 bucks an hour and talk about an average franchisee, 70 bucks an hour. We need to see something doesn't conflict with a current division. Like we couldn't do Jim's gardening because that's included in mowing. And we have to look at a volume business.
Right.
There's no good having five franchisees because it doesn't pay. Our fees are only about 6% of turnover. So we need to make it something viable. You need to have at least 20, 25 franchisees.
Right.
So we look at volume. You go actually go into Google and you see how many. How many sponsored ads are there. That's a good sign. There's a lot of sponsored ads. That's a good business. Good size. Now, given all that's right. Then we look at the person running it. What's their business background? Do they know this industry? What other businesses have they run? What are they like? If they're a successful franchisee from gyms, that's already an advantage. Like for example, one of our cleaning franchisors, Bill Cobanaglu, came up to me with the idea of Jim's Laundry. Now Bill's great guy. He's a franchisor within cleaning already. Very successful started Tim is Laundry. In three years we had 120 franchisees and still growing.
In laundry.
In laundry, yeah. Very successful.
So he's actually diversified himself.
Yes, he's now a franchise or in more than one division, which is not that uncommon. A lot of franchisees who get successful in one division, like mowing, for example, they might have, you know, half dozen workers in mowing, then they buy the cleaning franchise and they put people in cleaning and then they have handyman. So they have multiple franchises.
Right.
We've worked at least 20 franchisees that I know of are turning over more than a million dollars a year and
it's growing all the time across different silos or.
Yeah, mostly it's in divisions like mowing and cleaning and those kinds of ones where it's easy to put regular workers on.
Right, right, right. And they obviously can get up amongst it. I mean, one of the terms that was introduced to me in the US last year is this term of mumbo, multi unit, multi business owner. So you obviously would encourage that in the Jim's group.
They're not normally. You don't normally have more than one within the division because there's no limit to the size. You can have a single franchise in say mowing and turn over $2 million a year. That's quite possible and allowable. You don't normally need multiple franchises unless you want to go different states, for example.
Right, right.
But so you're more likely to go mowing and have a lot of people there and then different divisions. So you get different ranges of clients. In most of our divisions we've got surplus work. We had more than 200,000 unserviced leads in the last year. So it's easy to look at it and somebody say, hey, there's all these unserviced handyman jobs in my area. So I'm going by a handyman franchise and put people on to work on that one.
And is that something that you're doing? You're fishing out the leads, the leads come in through the website or whatever and then you dish them out? Or is it a system for that?
There's a system, actually. It's a matter of priority. When a league comes in, you look, is there a territory holder? They get it. If not them any from the same region, then anybody from the same division than anybody from any other division. Right.
Wow. Okay. And I guess that's an important part for the franchisee to know that those leads, because you're not in competition with them, obviously. And that's the big difference here. And often that's the case with some franchise groups. There's company owned and operated stores or whatever it might be, and then there's franchise. And it happens a lot in the travel space, which is the space I'm from, where there used to be these competing interests. But that's clearly.
We don't own any franchises ourselves. It's not part of our way of doing things. We want franchisees.
Yeah, right. What do you think? What do you think the number one thing that you'd like to see? I mean, we talked about industry regulation, but is there something else that you think we could we do in franchising to really get franchising back from where it is now?
I just think you need a better standard of franchisors. There's some really bad eggs in the industry and they should be outed and they should be destroyed.
I think they should be vetted more. The franchise or should be vetted?
Yes. And I think we should ask the franchisees. Look, you see things. What's the best franchise system? But they don't do anything. They don't ask the people that really count is the franchisees. The real test of any franchise system is what do the franchisees Think about it. It's not the bottom line. It's not the profit, it's not the public perception, it's not the lawyers, it's not the government, it's the franchisees. They're the ones that really matter. If you ask what they want and how they're being looked after and you publicize that, there's the one thing that we should do. The government should do it, the FCA should do it. And if you guys want to get onto that, I will support you 100%. And we'll be the first in line to put all of our information through. I'll tell you something, if we don't get a good response from that, well, that's our responsibility and our fault, and I'm quite prepared to wear that. And then we have to work harder, as we do, to make sure people are looked after.
Right? Right. Now, I hear you loud and clear on it. And in fact, it forms a big part of the suggestion that we've made to government about bringing in the word accreditation. It's not licensing, it's accreditation, which runs to the concept that you're talking about.
But as long as you do it in the right way, accreditation can't be a matter of checking. Contracts like our contracts are spectacularly fair and balanced, there's no doubt about it. But what matters far is how we operate those contracts. Do we do what we say? Are they effective in helping people to work? If you give somebody a guarantee of some kind, how meaningful is it?
Right?
We have a system called pay for work guarantee where they can go out and do free services. Now, we show them how to do it, we teach them how to do it, we encourage them to do it. You can have it in the contract, but if you don't actually make it work, it's meaningless. But it does work, Actually, most of the time. Some franchises are. They can't do it very well, but the great majority of time, if they don't have enough work, they go do freebies. We pay them, we encourage them, we train them, and they build their cash business that way. So it's not just what you say, it's how you operate that matters.
And I think again, going back to that expo that I was at recently, a lot of people were shopping around for a franchise as an alternative to finding a job, because for that reason, they want to get into their own business.
It's harder and harder. And people who are, say, a bit older, for example, often have trouble getting employment these days. And it's going to get worse. Because as the government becomes more and more restrictive, look, you can have as much unemployment as you want. All you got to do is to make it impossible to fire people and then they won't hire. That's what they do. In Italy, for example, they got sky high unemployment because the government says once you've employed them effectively, you can't get rid of them ever.
Right.
And that's just an invitation to say, don't hire anybody. You know, there's actual government penalty against employing older workers. They actually penalize you, you know that.
Go on.
The penalty is this. If you let a person go if they're over the age of, I think 50, you've got to give them two weeks notice instead of one. So they say, okay, we want you to only employ young people, we're going to penalise you. Make it more difficult and expensive to employ older ones. Why does the government have a policy against employing older people? They don't understand the incentives on business as such that if you make it expensive and difficult to deal with people with employees, you're not going to employ as many.
True. I mean, we are in a sort of a new golden age of industrial relations reform with this labor government that we have. And it's very evident by the fact that they've now put into law the right for penalty rates. There's obviously a big discussion going on down here in Victoria around this work from home. Not quite sure how a person who runs a lawnmower can work from home.
So I know we have the same issue here, though. I mean, look, we find that it depends on the division. Actually, when you're talking about people in the call centre, for example, working from home works very, very well. Some of them prefer to come to the office, some like to work from home, some of them want to do a mix. So we're fine with that. Other kinds of jobs apart from home part in the office, some jobs really require you to be here. Now the thing that annoys me about this particular thing is that it should be up to the employer to decide. And what I find really appalling is you get some government minister, particular party who has never in their life ever run a business of any kind, ever. All they've ever done is work for the government. And they say, listen, we are so much more superior than you that we can tell you business owner how to operate, job is most effectively. We know better than you. You're the one sitting there running the business. But we are so incredibly more intelligent than you that we can. Ted you how to run your business better and more effectively and they say this is good for you. When it's garbage, they have no idea what they're doing.
Yeah, no. I love the passion and I feel it and breathe it every day that I'm down in Canberra. There's a lot of aggro going on at the moment around the way in which industrial relations are being dealt with, but it is what it is that the Australian people voted them in and they've got their policies and I suppose we'll just have to roll with it. Look, I really want to thank you for your time today. It's been really great to have a little chat with you here. I'm sure everyone that's at the conference is going to really relish the moment and we just want to say a big thank you to Jim and for giving us the time and for all that you've done and you're doing for franchising. So thank you very much.
Good to talk to you.
Good on you. Thanks.
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