Jim's Group CEO, Jim Penman takes on Redditors about Jim's franchises

I reckon. I reckon we've created more millionaires than any company in this country. Jim Lam was a joke. I cannot believe anybody took that seriously. It was the biggest fun we had all year. Hi, I'm Jim Penman, founder and CEO of Jim's Group. Been reading your responses on Reddit and here's my answers.

There's no such thing as guaranteed returns. You would either have to work excessive hours or there will be a bunch of clauses for them to avoid paying you. I would read the contract very carefully.

Yeah, I think that's very good advice. You should read the contract very carefully and watch. What you should do is also ring as many franchisees as possible and go out on the road with them and see what they're actually making. If you do that, you will find that $2,000 is a lot less than most of what they're making. But do your research. It's very good advice.

Get an ABN some work gear. It will cost far less. Use Facebook to advertise for free. You save thousands, I promise you.

Yeah, you're right. It does cost less to start a business of your own.

But.

But look at the statistics. Look it up online. You go into a service industry like cleaning or gardening or anything like that, your chance of being in business after 12 months is approximately between 5 and 10% our figures. Approximately 88% of our franchisees are still with us after 12 months. So, yes, you can save money doing it yourself. And those who do, I congratulate, because you've really, really done it hard. And if you're successful, I take my hat off to you. But you're far more likely to succeed with us. Good way to buy yourself a boss. The whole franchising system in Australia is cooked. Avoid at all cost. Imo. You're right, there is a lot of problems with franchising in Australia. There are a lot of very dodgy systems. What I would recommend to anybody interested in a franchise is that you do your research really, really carefully. And I include gyms, because even within gyms there's divisions and there's franchisors that are better than others. Do your research, ring as many people as possible, get a complete list of franchisees and spend time out on the road working with them. I'm very confident if you do that with gyms, you'll find out that you are not working for a boss, you're working for a soft contract. We work for you. The zoning system that we have with the gyms franchise is you have an absolute right of first refusal. For any lead that comes into your territory, however, you are not restricted in any way. It is quite unlike other systems. And if you talk to people who are in gyms, they'll tell you that you can actually take any leads you wish, anywhere you want. You can get referrals from anybody. If you know people you stop, people on the street, friends, neighbours, relatives, anybody. Completely up to you. The only thing is, if somebody rings the office and haven't previously contacted you, it'll go to Territory Island. Also, you are completely unlimited in how big you can grow. You can have as many employees as you wish. We have franchisees who have 10, 15, 20 workers working for them. There is nothing to stop you. It is the least restrictive system in terms of where you work and the jobs you take, but I have to say, it is one of the toughest in terms of the way we require you to look after customers when it comes to claimed earnings. One thing you should not do when you're looking at a business is look to what the franchisor says, and that would include even a gyms franchisor. You should do your own investigation. The best way to do that is to talk to existing franchisees, find out what they say, go out on the road with them, see what they earn, look at the money going into the pocket, look at all the transactions, count them up, find out how they're going. Go out with more than one, go with two or three, do some investigation. Now, the costs of business are what they are. If you're doing car cleaning, you're going to need to pay for petrol, vehicle maintenance, those kind of things. Yes. As far as fees are concerned, let me tell you, the average fee works out around about 6% of turnover. Now, again, talk to franchisees, ask them what their actual fees are, comparison to their turnover, and they'll tell you. We did the survey recently where my franchisees, on average Turnover just under $3,000 a week. Fees on average around about $170 per week.

Start up yourself and invest in some Facebook ads. Be honest with yourself. Is Jim's the first name you think of when it comes to detailing?

Actually, for most of the public, Jim's is the first name people think of. We did a little experiment in Adelaide some years ago where we asked clients, which glazing company would you go for? Now, there were a couple of local glazes. There was o' Brien's Glass, which is by far the biggest in the country. Huge company. And then there was Jim's Glass. Now, o' Brien's actually Got top of mind. They got a lot better response than the local glaziers. Jim's Glass was by far the best response. And what was interesting about that, Jim's Glass didn't even exist at the time. We were just looking at starting it. So the brand is strong. Now, whether you yourself would go for gyms first, maybe you wouldn't, but generally speaking, the public does. In car detailing, we are number one in Australia now, in fact, in a lot of industries, in mowing, in car detailing, in cleaning, in building inspections, in pool care, we are the biggest in the country. It's interesting, it's a very common idea that every new franchisee actually means less work. For existing franchisees, we actually find entirely the opposite. The people who struggle most to find work tend to be the pioneers, the ones that go into a new division, which isn't known as it gets bigger as more people come on, we find the actual volume of leads per franchisee rises dramatically. We also find with time that the number of unserviced leads rises dramatically. Over the past 12 months, we have knocked back over 200,000 leads. This was unheard of in the past. But as we've got bigger and better known as customer service has improved, because we do have very tough systems on that, we actually find we have a lot more work to find franchisees. We actually find that the first franchisees tend to be the ones that struggle the most. The ones who come in later, when it's established, tend to find it a lot easier. Not only do they have more work because their brand is so much more established, but what's very important is they travel a lot less. See, if you're the first franchisee from a division in a new city, you go all over the place. In our system, you actually define where you want leads. And what people do with time is they actually shrink their area so they travel less and less and less. If you come in later, you actually can come into an area with a lot more local work. So generally it's the opposite. Once again, though, I would suggest that you actually talk to franchisees, and it depends on the system, too. There are franchise systems that probably do work that way, but if you're investigating gyms, get a list of all the franchisees in the region. Ring as many as possible and ask them, when did you start? How long ago? What was it like? In new days? What's it like now? Talk to people who've just started off. What's your experience? In other words, do your homework. The thing that really amazes Me is that people will buy a business, they'll spend 25, $30,000, or they'll make a decision not to buy it without doing their research. Now, frankly, I'm not too badly off, but if I was going to spend $30,000, I'd spend a couple of hours doing some basic research to find out about it. I, I recommend you do the same. I think it's very easy to go on the Internet and just look at people who are talking about the business. But if I was actually looking for advice from somebody about a business, let's just say I wanted an advice about buying a car. Now who would I go to? Would I go to somebody who works with cars day in, day out, or would I go to somebody who has no idea about vehicles, has never driven a car, has never owned a car, doesn't know anything about whose advice would be the best? Now, if you're interested in a franchise, who are you going to ask? Somebody who's never had the franchise, doesn't know anybody who's got the franchise or somebody who is a franchisee is working as a franchisee. And that doesn't mean you automatically buy gyms. What it means is you do your research by talking to the most relevant people. Yes, it's a bit harder. You might just spend a couple of hours on the phone, but this is a decision that can actually change the whole of your life. It can make the difference, it can affect your income, it can affect your family. You make a good decision about buying or even not buying a business that will change your life for better or for worse, for years and even decades to come, it will change your family. So do your research, do it properly and ask the people who know what they're saying. Don't talk to random strangers who know nothing. We do not guarantee conversion rate. We find on average our franchisees convert about 3/4 of their leads to jobs, but it depends a lot on pricing. We actually encourage them not to have too high a conversion rate by charging too cheap. But as far as the guarantee is concerned, it's not an income guarantee at all. It's not a leave guarantee, it's a pay for work guarantee. What we say is that if you don't make the value, whatever it is, 1500, 2000, 2,500, you can do free services up to the level of the guarantee. That's not converting at all. That's going to friends, neighbors, relatives, people on Facebook. Doesn't have to be anybody who could have you ongoing, just anybody who's prepared to Accept a free service, provide a name, address and phone number so we can check. But the really good thing about this is, first of all, if you do it, you are guaranteed to get it. But you have to do it. If you do it, you will get it. But the really good thing about it is if you go out offering free services to everybody you could possibly find, then you start getting referrals, you start getting upsells, you start getting riggers, and you'll typically make a lot more money from those than you ever get paid by your franchisor, probably weekly.

Less franchise fees and equipment leasing and consumables that you will pay for at their asterisk prices. Tons of tricks that franchise companies use to screw franchisees over. I mean, maximize their revenue. Think about it. If they were paying people to $2,000 clear per week after, they would.

Elmo, this is a very good point. There are plenty of franchise systems around where they make you buy from the franchisor. You might have to buy to pay twice what you would to get the same thing from Coles. This is a very common rort, and it's really sensible to be aware of it and to check it out. But one thing I can absolutely promise and tell you, we do not do that. We do not do it. In fact, if any franchisor was found to be doing such a thing, to be patting the price, it would be a breachable offence. We don't do it at National. There is only one exception. There's one area where we take money and that is from insurance. We insist that our franchisees have public risk insurance. No other kind of insurance, just public risk from our own brokerage. What I can say is it is the best deal on the market. You cannot beat it in any way. But we insist that you have it from us because that's the only way we know that you're covered. So if you had an accident and you knocked a kid's eye out and you sued for $2 million, you've got public risk policy, otherwise you're bankrupt. So we're in trouble. But we do not add prices. And if people come to us, they do all the time. They come to us and say, here's a fantastic deal for you and here's a nice stream of income. If you recommend to our franchisees and we say, no, not interested, don't want it, we have many great deals. We have it with jb, we have it with Optus, we have so many with Bunnings. We have a lot of great deals and the deal Is always the same. The best deal for our franchisees, nothing for us. We don't want a cent. In fact, there was one situation where one company insisted on giving us 10%. It was a paint company. We actually said, look, we don't want it. They said, we have to give it to you. So we actually took that money, we declared it and we gave it back to the franchisees. Let me tell you, if you want to buy yourself a job, then don't get a franchise in the first place. You are buying into a business. Now, as far as leave is concerned, leave is up to you. But the great thing about having your own business is the flexibility. You can take a fortnight off, you arrange it with your client, you can take a day off, you can take an afternoon off, you can stay home with your kid from school because they're off you. You've got complete effectability. You can pick up your kid from school, you can take them to school, you can do what you need to because you are in control now. You don't get paid for the time when you're not working. So what's really important to know is that when you are working, you make a good hourly rate. Our recommendation is that you aim for at least 60 bucks per hour and every gyms division, our recommended pricing will get you that. With a bit of experience, there are some really lousy franchisors. We have had a number of reviews of the franchising code and they are pathetic, what the government does. There's so little to protect franchisees. There are some rotten actors. I'm in regular association with the Franchisees association, the fca, the franchise. They're a bunch of crooks. As far as I'm going to say, I have nothing to do with them. I don't respect what they do at all. I really go for the franchisees. In fact, we're launching, just launched a system called Jim's Legal. And one of the things we want to do is to represent franchisees been ripped off by unscrupulous franchisors. And there are a few around. So you're very wise to be careful, to be cautious, do proper homework. There's some very bad operators out there. There are also some good ones, too, and we're not the only one. I would say, for example, if you want a great franchisor, McDonald. McDonald is a really good franchisor. It's pathetic food. I won't eat it. I won't let my kids eat it. But as a franchisor, they're great. So you just got to do your research, find out who's good and who isn't.

As a customer, I choose not to use any of the gym businesses because of the owner's personal views. So you'd be paying fees to him and immediately alienating part of your potential customers by aligning with another.

I have very strong personal views on a number of different issues and I'm quite outspoken. I was very, very outspoken about the damage that was done by Daniel Andrews to my franchisees and to the industry in whole. I don't apologize for that. I have no respect for that guy. I think what he did was dreadful, unscrupulous. If you hold that against me, so what I'm recommending what I do. I have other very strong views too. I'm very strongly, people know, very strongly pro green. We do a lot of conservation work. We work hard to try and make our offers carbon neutral. For example, we allow staff free powering electric cars, electric panels. I've got a property which I'm actually planting an organic food forest. We do everything we can. We try and encourage people to use electric mowers and so forth. So we're very, very pro and bugged. If that upsets you, that I'm sorry, but that's my views and I believe it's important to do those kind of things. But I have a lot of views and I always pick them out. If you don't agree with me, fine. If you want to use somebody else, fine. I'm not going to shut. I suppose the response to that is I'm actually fairly difficult to pin down in terms of right versus left, for example, in terms of right wing. I am a Christian. I hold very strong personal moral views. I believe it's much better that people don't have sex outside marriage, for example. I also, I believe, I believe in family. I believe in looking after your children and spending time with your children. I don't take drugs, I don't drink alcohol. So in those ways I'm very conservative. In other ways I'm probably quite lefty. For example, I'm very pro green, pro environment, pro environmental deficiency. I'm also very concerned about the inequality within our society. I think far too much money goes to the rich. I think the whole of society is very heavily biased in favor of wealthy people. The whole system of property by wealthy people with property, and I include people like myself, are getting richer and richer by ever growing real estate prices. So people who lower income can't afford to buy a house and can't afford to buy, to rent. I think there's too much inequality in this country now. What does that mean? I don't know, but I don't think you could actually. Pig didn't hold me anywhere. Jim Nam was a joke. Gymnam was a joke. It was, it was a lot of fun. I went round with my, with my crown and my cape and everybody burst out laughing. It was, it was great fun. I, I cannot believe anybody took that seriously. It was the biggest fun we had all year.

I hired a skip in through gyms while renovating a bathroom three years ago in Geelong. The driver gave me his direct number when he dropped the bin off and said if I call and ask for him through the gym's number, they charge $350 to put the call through to him. I'm sure there's plenty more fees involved.

Understood that. Or whether the guy didn't know what he was talking about. I suspect the first no. If a franchisee gets a new lead from the office, they would pay a fee which could be anything from $10 up to about $35, depending on the division. If it's an existing client who rings through the office and asks to speak to a particular person, or if their address comes up, it goes back to the same franchisee. There's no charge at all. The lead fee is only introducing new clients. If you pick up a new job from yourself and you get that from and you put it into the system, then the system knows that that person rings in, they go to you and you don't pay a lead. Fe. Great. Most people who join us are successful, but it depends on them. We know, for example, that we have a very low attrition rate. But we also know that franchisees who give poor customer service have a much higher attrition rate. On average, only about 9% of our franchisees report poor income. But franchisees who have poor customer service are far more likely to report poor income and those who have good service are far less likely to report poor income. So look, it's a system that is powerful, that's effective, but it's up to you, it's up to the individual. And one of the things we do quite strongly at gyms and we really push hard, we try very hard to choose people who are going to be successful. We knock back hundreds of franchisees a year that we don't think are good enough. And if a person comes to training and there's anything about them in training that suggests to us that they are not going to be great franchisees, then we will knock them back because we do not want people coming in who are likely to fail. I reckon we've created more millionaires than any company in this country. Having said that, I would say that the most people who take a franchise probably don't make a lot of more money than in their previous job. What they benefit from is a much better lifestyle, flexibility, time with their family, time with their kids.