Jim Penman on Resilient Business Strategies, COVID Lockdowns & Political Engagement

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Signal with Steve Vischer. Well, hi there. Welcome back to the Clear Signal. Great to have you back with us this week as we have what I hope will be another really engaging and interesting chat with this week. Actually a leader of Australian business and probably someone who I, I guess I'll probably ask him this one have to see what he thinks about it but he probably is humble enough that he probably doesn't like to be seen that way. I'm not really sure. We'll certainly see. If you live here in Australia, of course, you know, you might be familiar with the Jim's brand. I don't see how you couldn't be. We see Jim's mowing, Jim's Dog wash, Jim's everything else. There's, there's so many different parts of that franchise business that's around and it really is an Australian business success story. So I really have for a long time wanted to speak to Jim Penman and just see what it is that makes him tick and really see what he thinks about the business environment these days. He's been very outspoken on politics and many other issues as well. He's certainly a, a man who's very passionate about what he does and it certainly has paid dividends. There's, there's been a lot of success and as I say there's been so many Jim's franchises around the place over all these years. He must be doing something right so perhaps we can all learn from that. It's a really great privilege to have him with us. He joins us on the line now. Jim, welcome to the show. It's great to meet you.

Yeah, good to be here.

Now Jim, Jim's group, it started in 1989 and it's really been a success story I think primarily in franchising if nothing else. I wonder when you started into the franchising model here. I would have thought probably thinking back to that time that it was probably mostly the domain of fast food restaurants and the like. But going into something like mowing franchises and home services seemed to me to be a really departure from the norm at that time. That must have been a big decision to take.

Well, I wasn't the pioneer. A company called VIP was already doing it but they had 250 franchisees. When I signed my first one they started in Adelaide, they come across to Melbourne and to a large extent they inspired me. I said they can do it, maybe I can do it. But also slightly in self defense. I had a little business that was building up and selling lawn mowing rounds And I thought these franchising would kill me. So I raided their stand at the Expo in 1988 and found out what they were doing and decided to try and see if I could compete with them.

It's interesting. I remember interviewing Dick Smith many years ago and he was quite open about the fact that when he set up his very successful business then he was quite open about the idea that he didn't really try anything new. He just looked at what was working for other businesses and decided he'd go down the same path. And it certainly paid dividends for him, too.

Yeah, I didn't like what they did, actually. I could see the point to it, but there were certain aspects of their system that I didn't approve of. I had a look at their contract, I got a copy and I thought, this is too unfair. I don't think this is a fair thing for a franchisee to sign. So I actually have my contract written completely from scratch. Much more favorable to franchisees. They gave them all kinds of rights, like they could walk away in the beginning without paying anything. They wanted to go independent. They had an absolute right of refusal from any jobs to their territory. We were actually forbidden by contract for taking any leads off without the consent. They had the automatic right of renewal. There's a whole stack of stuff in there. They could grow to whatever the extent they liked and still pay the same base fee so their fees wouldn't increase. I put in all the stuff that I would like to have had if I was the prospective franchisee. So I had a different vision for it. And the other thing I was determined to, I. I didn't want franchisees to fail. So VIP had no selection system at all. They still don't, actually. But I. And I said, I'm not going to take anybody on that. I think it's going to fail. So I would interview them and I would troll them on the road. I go with perspective with good people. If they didn't do well, I wouldn't take them. So I did want to differently.

You know, it's interesting. I've actually been at points in my life and where I've considered actually perhaps looking at your franchise system and going into it, there was an interesting point. I just speak from personal experience here. I was looking at buying a franchise for my son, who's in the turf industry and was looking for new opportunities at the time. And one of the things I really appreciated about your representative that came to my house that day was he was really honest about the prospects of how that would work the way my son had his finances set up at that time. And he was honest enough to say, I don't think this is the right time for you. And I found that honesty really refreshing in business. I mean, he could just as easily have said, yeah, take our money and go, but that's not what happened. And I think that's something that really makes your business model stand out.

Yeah, yeah, quite proper. We had a case a few years back where a. A lady approached me about a problem with the contract that was being prepared. And I found out that she was buying a franchise on behalf of her son, who is in his early 20s. And she said, because he can't find a job. And I said, we're not going to sell you a franchise. That's outrageous because I didn't say it to her. I said, no, because that's a. That's a recipe for failure. You're providing the money. He can't find a job that is a guaranteed failure. And she said, I wish I'd never called you. And I said, it's a jolly good thing that you did. You said, what do I do? He's got no work. And I said, why don't I get him to go out on the road with a couple of my guys in the area who need workers, which is pretty common in our industry, and see how he goes. He went out a couple of guys, he was hopeless, absolutely hopeless. Now that was really bad thing for the franchise or to do. In fact, when he contract came up for renewal the following year, I said, we're not renewing sell. That was the final straw. That was an outrageous thing to do, to actually take somebody that he must have known would fail.

Yeah, it's. It's really interesting. I suppose if we look back at the time when you look to set this up and we look at the economic times that were sort of around at the end of the 1980s. I have a theory, Jim, that this sort of economic phenomenon is cyclical. We sort of saw it towards the end of the 2000s. Now we're seeing it in the 2000s where times are tough. How do you see the times now in the business environment compared to back at the time of Paul Keating's rather infamous recession? We had to have.

Well, we loved the recession you had to have, because our problem is not fighting clients, it's fighting franchisees. We grew from a thousand to fourteen hundred in a single year. We have never grown that fast before or since. And that was because times are bad. Like we do a Lot better in New Zealand than Australia because the Australian New Zealand economy is terrible. So even though I personally want my fellow Australians to be prosperous and I vote for the party I think will achieve that, which by hint, is not the Labor Party, from our point of view, it's probably best if the Greens came to power because then the economy would be so bad that everybody had to join a franc to make a living.

That certainly is pragmatism. That certainly is pragmatism. They were tough times at the end of the 1980s. We'd come through a boom time. Things were very prosperous. I think back to those times. I was in my late teens back then, and I remember my father was in the earth moving game at the time and business sort of dried up. And I remember anytime Paul Keating, the Prime minister at the time, would come on the television, my father would get very agitated because times were very tough. What that forced him to do, and I guess what it forced you to do is look for new opportunities. And I suppose tough times is when that sort of drive in a lot of people comes out.

Yeah, well, we actually find it a lot easier in recent years in terms of clients, even though the economy lately isn't that great because our complaint rate has dropped so dramatically over the years. Over the decade, various innovations like our survey system, as measurable complaints have gone down to a fraction of their formal level. So the leads have risen. So we, we've given back well over a million dollars to franchisees in unspendable advertising because the franchise is just so flat out that just. There's not just no reason to. To spend the money. They're flat out year out. We've actually, I've actually gone through just recently and slashed the fees for two of my franchisees, divisions of fencing and dogwash, because we just simply don't need the money.

That is amazing. Why do you think it is? We hear so much negativity from media and media commentators and certainly it's a lived experience for people in these tough times where things are tight, where money is tight, interest rates are high. The amount of money people have to borrow these days compounds that exponentially. Yet as you say, there are still people that are wanting to pay to have so many different home services done for them. Why do you think that is?

Yeah, there's a tremendous demand, but what clients want in particular is good service. The amount of difference in pricing isn't the real issue. It's whether a person turns up, whether they're reliable, whether they're trustworthy, whether they do a good job, those kinds of things. It's not a few dollars here or there that we find the difference. The big difference is the better your service becomes, the easier it is to find clients. My, my daughter and her partner have just gone into. Just started the last six months, six months ago, Jim's Removals. And they are absolutely flying and they've got, in our internal System, they've got 70 reviews, they're 5.0 stars and they're getting so many repeats and referrals. About to pick up their second truck this week and they'll have three or four by Christmas. They just, wow, they're just good at what they do and they're getting so many much repeat business. People are hungry for good service and.

People will pay for convenience. I know that's a principle that a lot of people work on. You know, there's value in convenience and people's lives are very busy these days. I suppose that's a really significant factor too. Yeah.

Well, if you want something done, you want it done well. It's no good having a service that's no good. They never turn up or the service is shoddy, or your place looks bad, or the cleaning isn't done correctly, or, you know, whatever, whatever your problem is, people want decent service. They don't want to pay outrageous money. But we actually target ourselves. We tell our franchisees to charge above the going rate, don't compete on price. In fact, with very rare exceptions, you'll never see gyms advertising on price. The only exception would be car detailing where they do have a price schedule. But in general we don't advertise price. We never certainly say cheap price. Just don't do it.

Jim, you talk there a lot about the way you like to support your franchisees. And one of the aspects of business that always that I'm quite passionate about is leadership and the way people lead businesses. What you're really talking about there was seeing people as people, as human beings, rather than just seeing people as a franchisee or a number. How important is that ethos in your business? Obviously it's a very significant factor. Is that something that you've studied or is it something that's just comes naturally to you? It's always been the case.

It's a core part of my belief system. I started from the idea I wanted my fractional ease to be successful. That's why I wasn't going to take anybody I thought might fail. Basically what we say is we only take people they're convinced will succeed. We've got a three part thing I had right from the beginning. Our first project is welfare of franchisees. We're also passionate about customer service. We sign only franchisees and franchisors. We are convinced we'll succeed. That's the idea behind it. I stay very close to my franchisees. I personally attend training. I give two talks. I try and greet everybody at least once during that training. I write to them after one month and ask them how they're going and really. And I also give my direct email and phone number to every franchisee, everyone and repeatedly invite them to contact me. And they do. Actually generally several a day will contact me about something.

Do you find that a lot of people? One of the things I find as a leader in my.