Mowing One Lawn to a $500m franchise – Founder of Jim’s Mowing & Jim’s Group, Jim Penman, Tells All.

Welcome to let's Talk Business. I'm your host, James Price. This podcast has been designed to address business pain points often neglected, but if dealt with correctly, can really enhance business value and performance. I've had over 30 years experience in business and I currently own JPO Business Proprietary Limited a business valuation, advisory and transaction firm. We help private business clients across Australia and internationally grow, change and enhance the value of their businesses. Welcome back to episode nine of let's Talk Business. I'm your host, James Price and I'm delighted to be at the corporate office of Jim's Group. You'll know Jim's Group from Jim's Mowing and a range of about 50 other services that Jim's Group franchises in Australia and in other international destinations. They're actually the largest services franchise group in the southern hemisphere. And I'm delighted to have as our guest, Jim Penman, Jim's CEO and founder of Jim's Group. Thank you, Jim for having us here and for joining us on let's Talk Business.

Thank you for coming.

Oh, I really appreciate it. I'm so excited to, to get to know you and talk about business and life and some of the insights that you've had along the way in building a very strong brand in the franchise world. To start off, did you ever think that you'd be here today with, I think, what do you have 5,000 franchisees close to. Yeah.

No. No, not part of my life plan. Did you? I started off, I wanted to be an academic. My aim was to go to university and try to undiscover the reason for the rise and fall of civilisations. And So I spent 10 years getting myself a PhD in history and ended up mowing lawns for a living because I had no prospect of an academic career.

And I guess that lawn mowing exercise was your first taste of what was to come. Was it?

Yes, it was my part time student job. It paid pretty well, paid for my car, good hourly rate. I liked being outside and I liked gardens. So it was pretty obvious. And when I ended up without any obvious career of any other kind, it just was the obvious thing to do because that's the only thing I knew how to do.

Yeah, yeah, yeah. And so how did that morph? And I'd like to go Back to the PhD bit, but, but before we do, how did that morph into. Into Jim's Group or Jim's Mowing at the time? I mean, I guess it was a, it was a single business at the time. I don't know. Did you Call it Jim's Mowing.

Yes, it was. Jim's Mowing was originally Jim Mowing. That's all it was. I used to put my picture on my leaflets.

Yes.

So yeah, it was just me. Look, what I wanted to do when I finished my PhD, I wanted to continue with the research for my PhD which was involving. Even though it was about history, it actually had implications in biology. And I didn't have any scientific qualifications and I had no money. So what I needed to do was to build up enough wealth so. So that I could afford to set up my own research institute. So I knew I had to get rich somehow. Now I didn't think that law mowing would be it. I was looking around for just what would be the thing, but it was just what I did because it was the only thing I knew. And what I did is I just gradually looked at what I did and tried to improve it. So I actually figured out ways to find clients better. I was very good at looking after clients myself. Then I started putting on subcontractors. Then I started building up and selling lawn mowing rounds. And I had to work out how to do that. And then in the late 1980s, because I started full time in 1982, I was faced with a very effective, powerful competitor. Came from Interstate, which was VIP in those days. I just thought they'd crush me because they had 250 franchisees then and they had offices and they had logos and all this stuff that I didn't have. Now I had this little business with a few subbies building up and selling lawn mowing rounds. I thought these guys destroy me, tried to join them. I tried to actually become part of them, to help them to grow. And they didn't want it. So I just decided to franchise in self defense. And somebody asked me when I first started, I said, Jim, if it works out well, how many do you think you might have? How many franchises could you have? And I said, well, look, I don't know it's going to work, but if it does, maybe one day I could have as many as 100.

You got 5,000 today or thereabouts. Yeah, well, not just in mowing. Those franchisees are in a range of.

Services which would have been totally beyond my imagination in those days. I think the whole thing surprised me dramatically. It just did. I just didn't think it would work that well. I was still, even in the early days of the franchise, I was still looking around for the thing that would actually be the thing that I'd really get my Business built. I knew I wanted to build a great business, but it just hadn't occurred to me that lawn mowing would be the basis of it.

No, no. But in looking at vip, did that give you the idea that franchising might have been the model for you or not necessarily.

Well, the fundamental problem with franchising was that I had to. I couldn't understand in those days, in the early days in the 80s, it's not as though it wasn't an obvious idea, but I thought, why would a person keep on paying franchise fees? Because my model in those days was building up and selling a law man. You have regular clients, you look after them well, on the whole, you'll pick up as much as you lose, so you don't need anybody. So I think, why would anybody continue paying franchise fees? And when I looked at the VIP model, I thought, well, there were some benefits. There was ongoing support of various kinds. And the fact that if you were sick, for example, because if you're a lawn contractor, you break your leg, your business is gone.

Yeah, yeah, that's right.

So in the franchise, other franchises look after you, which, of course, we do to this day. So I could see benefits and I could see why a person would keep on paying fees. But when I looked at what they did, I thought, okay, there are good things about it. But I reckon I could make a system that would be more beneficial to.

Franchisees, add more value to franchisees.

I could do better. That was what I could do. Something the franchise would find more attractive. That was the key idea.

Is that sort of an internal drive in you that's about continuous improvement, because you were talking about when you were running it as an individual business. And I got the sense that, I mean, you obviously needed funds to fund your own life at that time, so a better business hopefully drove those funds. But it seemed to be a bit of an internal driver to continue to improve and change.

That is the one thing, James, that makes the difference. People often think that success is a matter of, hey, I'm suddenly mowing laws. And I think, what if I franchise and suddenly I'm multimillionaire? It's not like that. It's thousands and thousands of little experiments, little ways to do things different every day. When I was mowing lawns, I would spend a lot of my time thinking, how can I save one piece to put the grass in my grass bag? How can I save two seconds? Here I had a word that I used to describe the way you drive amongst suburban streets. It was called a zoodle. So it was a short hand wave, remembering. You go to the end of the road, then you do a full left. Zootle. And that means I go the road, I turn left, I turn right. To the end of the road, I turn right again. That's an example of little time. Now why? Because if I did that, I wouldn't have to stop and look at my street directory in those days. So thousands of little and every day of my life, every day since then, I'm including Christmas Day, Easter, every day, Sundays, weekends, I'm always thinking one thing. How can I make this better? Whatever I do, at whatever level, that is the one crucial thing behind success. It's not being brilliant, it's not being good looking. Obviously I don't have that. It's not having.

It's okay, I don't either.

It's not having massive education, it's not having the right connections. It's the one thing is looking at what you do every day and saying, how can I improve? And I am pretty obsessional. No matter what it is, whether it's customer service or even more these days, service to franchisees always want to do better.

Yeah, I mean, I think that's interesting. Service to franchisees and trying to make it better for the franchisee. I mean, I run a valuation and advisory business and I guess I see both the best and the worst of franchising in terms of different systems and how franchisees particularly end up in a positive or negative sense in terms of the value they're building in their business. And for me, the really strong franchises are the ones where there seems to be a great balance between the franchisor and the franchisee or the franchise system and the franchisee. And, you know, I look at certain franchises and their franchisees have been around for years and they're not there just because they love it. They love it, but they're getting value out of it ongoing. So I'm interested to hear how you've built that value system for your franchisees.

Well, a lot of it's in the contract. One of the things I did, I looked at the VIP contract and I thought it was unfair. I thought it was too biased towards the franchisor. I actually spent nine months arguing with lawyers about getting a contract that I was happy with. It gave my franchisees rights, that I looked at the things that people might not like and I changed them. For example, one of the things I knew franchisees didn't like is the idea you've got regular clients, somebody comes into an area, a new Franchisee and they take your clients and give them to them. Now, franchisees don't like that. If they want to sell them, that's different. So I actually put in my contract. I'm not able by contract to take regular clients off my franchisees without their consent, unless the customer complains, of course. Other things. For example, I wanted my franchisees to come in and be able to fill their ambition. So we set up a system of fees that allowed them to put an unlimited number of trailers on in those days, limited number of workers. There's no limit to what they can do in terms of the. They're also not restricted by territory. Territory guides us. So we can only give a job to a franchisee. If a job comes into a franchisee territory and they want it, they must get it. But they are not restricted, except they can't door knock somebody else's territory. So I set up a system that was very favorable to franchisees, gave them a lot of right, even against myself, because I figured I want a system that I want to join. Now, the lawyers said, this is crazy stuff. The way they put it, you're being too nice. I said. And they said, you want to take some of this control back with time. But I did the opposite. I gave my franchise extra rights. For example, they can move to a different franchise franchisor. If they're not happy their own franchise has no say. They can vote out their franchisor, and that includes me as a regional franchisor. They can also veto changes to their own manual. So with time, we actually gave franchisees more and more rights. So that was the start of it. The thing about it is, when I started, I did everything I possibly could to make my franchisees happy. And I was up against a much bigger competitor, much better finance, more money, more success, more franchisees, more everything, better office. I was renting it from my basement. I had one secret weapon with a list of my franchisees. So I had a list of my franchisees with their phone numbers. And when somebody came to me and said, why would you buy from you when you're running it from your basement? Here's this established company. And I said, listen, there's some differences. I explained what they are. But here is a list of my franchisees with their contact numbers. I want you to go and ring as many of them as you can to talk to them about the experience and ask them. And when you've done that, go and get VIPs list and bring theirs, which I knew they wouldn't provide because they Couldn't, because I knew that the great majority of my franchises were happy and that's what made it work. And it just exploded. I had 60 after my first year. People were coming from interstate. I was amazed at what happened. But the one simple, simple idea. How can I make my franchisees delighted?

In hindsight, looking at those early years, do you think you benefited from having that bigger franchisee group there? Oh, yeah, because it showed the point of difference.

Oh, I feel I owe full credit to Bill Viss. I think he was the pioneer. And, you know, in those days, 250 was a lot of franchise, a lot of franchisees. It was huge.

It was.

To us, it's a sort of a moderate sized division, but it was really, really big and it wasn't known in Australia at that time. So, yeah, it's good. He's always a very friendly guy. Bill. We've met on a couple of occasions and he's always very pleasant.

That's fascinating, Jim. And just go back to the continuous improvement piece and the little improvements. As an individual, are you a detailed person in that sense? And you know, I think you mentioned if I got you wrong, obsessive on detail or improvements, or are you a strategic person that notices the opportunities for change or how do you, how are you wired in that sense? Or are you both.

I don't know how you describe me, actually. I'd say one thing is that I am pathetic at doing almost everything. Okay. I'm no good at finance, I'm no good with it. I'm no good at management in general. One of the very few things I'm good at is ideas. I keep in very close contact with my franchisees and franchisors and clients. I have multiple relationships a day with people approaching me. Just as an example, today somebody approached me. This just happened about two hours ago. One of my franchisees approached me. And this is the guy who's a fencing franchisee and very unusual fencing. He didn't have enough work and he was asking why jobs were coming into his suburb and he wasn't getting them. And I looked at it and I found that the territory size was unreasonably small because it was like a mowing sized territory. So what I immediately said is, okay, let's expand your territory to the size of your suburb, which is about 6,000 households, which I thought was more reasonable for fencing, mowing, maybe anything down to 500. But fencing, you know, it's not the frequency of jobs.

It's a different.

Yeah, so it's a different business. So I just discovered that arranged for his territory to be increased which has been done. It's been more or less trebled in size. And then I said to documents, from now on with fencing, set your territory sizes larger because that's fair for this kind of division. Now I just mentioned that because this happened about two hours ago. Franchisee approached me with an issue I looked at and I said it's not reasonable this Sugar guy could get all the jobs in that suburb rather than just in this area of it. So I changed it and we're going to change it for the future. And that kind of thing happens all the time.

So are you a problem solver? Yeah, pretty much. I mean is that, you know, I said that very quickly but is that the essence of the value GMads day to day to the group, you identify issues and so and help solve problems?

Yes. I don't actually do the work though. I didn't go to, I didn't actually change the territory. I actually got the documents, I sent them an email. The whole thing took me about, you know, 20 minutes to figure it out to see why these jobs weren't going to him and all the rest of it. And there was other problems too that I was looking at. So it was about a 20 minute job. So I put it at somebody else to fix it in the end. But I worked out what the problem was. So yeah, I don't do, I don't do a lot but I'm always looking at what we can do in general sense that are blocking things perhaps how can we improve?

Yeah, yeah.

I got an email from some would give about approving a particular kind of expense. So I'm in contact with my, basically my new finance head and I said to him we need a process by which we can actually have a system that allows certain kinds of costs to be actually identified and covered and put in the budget. So we need an improvement of process that just happened maybe about three hours ago. That's my everyday look at everything that goes on. Clients get in contact with me. There's a problem. Why isn't the franchise all getting back to them? What's going wrong? What can we change? How can we do things differently to make sure clients get a better response to a particular complaint?

When did the group, when did Jim's group become. Was there a time at which it became more than. Not putting it the right way? Right. But during the growing pains and the growth of the group, is there a time when you thought God, this has got bigger than me? It's Way bigger than me. How am I going to manage this beast? Do you know what I mean? Was there ever that feeling as you went through the growth stage? You're still going through the growth stage, I guess, but it happens all the time. Yeah.

You get to a stage where you just, things aren't working so well, you need somebody else, you need to get better expertise on what the hardest thing is to find good people to help me to grow. And we've really struggled a lot, made some mistakes in the past. It's been extremely difficult because I'm not a very hands on person myself. I'm not a terrific manager, I'm not a very good finance person. I'm not good with, I'm not good at all these things. So I need to find people that I can trust to carry on with it and then say, yeah, you handle it.

Yeah.

And I've got people like Rocky and I've got people like John and I've got people like me. And there's all people in different areas who are good at doing things far better than I can. So finding good people, identifying them, working with them, communicating with them. See, every day I walk around the office, I actually work about 5,000 paces a day. Mostly it's going back and forth around the office and things I talk to people, say, what's going on, what's happening, how did this go? This happened here, what can we do about this? How can we improve that? Just every day, all the time, this constant process of communicating but not telling who, what, how to do their job, but just saying, okay, we need to do more of this.

Yeah. So you've, it sounds like you're as connected today as you were right at the beginning with.

Oh, yeah.

For the people in the business. Yeah.

Oh, I'm, I'm very connected.

Yeah.

I'm connected at every level. I'm connected with my staff.

Yeah.

Not only senior staff, but also a lot of junior staff. I chat to them. Now, what's going on? I'm connected with my franchisees, I'm connected with my franchisors, I'm connected with my clients. I'm always trying to get information about what's going on and how can I improve it. Look, you wouldn't. My wife calls me a workaholic, but I don't think I am. Actually. I do take time off. I have other things that interest me, but I find it very difficult to take a holiday. For me to take a week off over Christmas is very, very difficult because it's so interesting. It's so absorbing the whole thing.

Do you have other interests that are not Jim's group though? If you're relaxing for a day off for a weekend, apart from family, what do you spend your time on?

Well, there's obviously my research project that I'm looking into.

Yes.

So I meet up with the guy in charge of that so next week I can have lunch with him. We're going to talk about the different project, how we can do it and I meet up with the team. We're having a later in the month, we're having a half day workshop. So I do that kind of thing. Well, that's still work, I suppose. I have a farm.

Yes.

I go out there at the weekends. Basically I'm planting nuts through the forest. I've got a matic and dig a big hole and put the nuts in. So we're growing nut trees all over this place. About 250 acres and turning into an organic food forest. That's a big hobby for me. It's great fun.

Yeah. How do you. Is it therapeutic to be out there?

Oh yeah, I love it.

Yeah.

I love being outside. Yes. I'm still a gardener at heart, you see. That's why.

Yeah. You haven't moved far from the garden.

I've not always for a living, but I still love gardening and I've got a veggie garden there and I'm growing all sorts of things. My peas are coming up nicely and stuff. So silver beets and rhubarb and plant kale, plant a whole lot of stuff which we're going to eat. Potatoes, all kinds of things. So I just loved it. I love growing some of my own food. I don't live off it, but I enjoy it.

You enjoy it.

And I read a lot and I listen to talking books a lot. I probably read or listen to on average two or three books a week. Really. But a lot of it's the same thing. So I'm exercising. I run half an hour every morning and while I'm doing that, I'm listening or watching or learning something. And if I drive to the farm, I'm talking book and I'm working on the farm. I've usually got a talking book going at the same time. So it's kind of. Yeah, you can do more than one thing at once.

So you mentioned a few physical things there and also some mental things. Right. So you're reading and listening, but planning of the. The trees, the gardening, the exercising. Do you think that's important? Is that important for you to be effective yes, absolutely.

It's very, very satisfying. I find doing hard physical work outside in the elements, year round, middle of winter, everything is very, very therapeutic.

Do you make better decisions as a result of that, or it's not connected to that?

Oh, no, quite often that's what I'm thinking. See, I'm listening to a talking book, which is often about business. The moment I'm listening to one about invasion of Ukraine and what was behind Putin's mind. But before that, I was looking to one about the art of conversation, how you relate to people.

Yes.

And before that, I was reading the one about business. So. But then when I'm doing this and when I'm working and when I'm thinking, listening to these books, I'm actually getting ideas. So actually, I might write down a whole lot of ideas and they come up with a blizzard of ideas, which I'm like this.

You said you were good at ideas, right? That was one of the. Yes, you told me you were not good at a whole bunch of things. But you said ideas were good. Right.

It's one of the very few things I'm actually good at. I'm very creative. I can look at things that go on and I can work out how to improve them. I just get ideas all the time about how to do things better.

But they're not necessarily, excuse the language, harebrained ideas. You've synthesized them to an idea that you think you could implement.

No, no, most of my ideas are complete crap.

Oh, they are, all right. But they've got to start somewhere, right?

You gotta try. You've got to try different things. And we do things all the time. It's just like the Gym Land stunt.

Okay, yes, I've heard about the Gym Land stunt.

Well, how does that arise? It's because I'm out in the evening. We're talking about our annual April Fool's Day joke, which we do every year. Two of us were chatting about it, and we came up with this notion of declaring independence. So that was.

So why not?

Why not? So we just laughed about it. We thought it was a bit fun, and so we did it. That happened a couple of weeks later. It was just.

Well, I. I mean, I know, you know, it might seem a bit deep, but where did this, you know, I get a sense of an internal fire around the ideas. Right. Where did that come from, Jim? Like, was it in your family upbringing? Was it, you know, part of, you know, what happened at school? Is it just your makeup? You know, where did it come from, do you think? And what keeps it stoked?

I'm described by different people as a force of nature. I have this extreme drive to succeed and to do things and it just ignores anything that goes wrong. It just keeps on going. I don't get discouraged. I don't stop. Look, I'm very. I'm quite puritanic in a lot of ways, you might say. For example, I don't drink, I don't smoke, I maintain a proper weight, I exercise very rigorously. I'm a very strong Christian, which is a lot part of my ideological basis. A very strong sense of morality, a sense of what's right and what's wrong doesn't mean I say I don't do a lot of bad things. I do. I'm known as being very impatient and bad tempered at times. For example, I have many weaknesses, but I do have this extreme intense drive and I keep myself very physically and mentally fit in a whole lot of ways. So that, that all helps. I think exposure to cold helps too.

Sorry.

Exposure to cold showers.

Cold showers, yeah, that kind of thing too.

I think you've got to discipline your body. You've got to always be looking at the things. What's the right thing to do now rather than the easy thing? It's easy to sit down and just veg out on the couch and eat pizza, but getting up and going for a run and having a cold shower and eating vegetables is not quite so easy in the short term, but much, much better in the long term. So you always got to think long term.

So both in terms of benefits for business and also just for life? Yes.

Well, there's no, there's no great distinction. I think business is about life.

I'm interested in that because, you know, there's all this work, life balance, business. But is it just one continuum? Like, you know, is it all mixed? Is it all integrated?

From my point of view, it's very difficult to know where one begins and one ends. For example, let me say I'm working on my farm and I'm listening to a talking book. I'm getting ideas about how to improve my business. Is that recreation or is that work?

Exactly.

So there's no clear distinction or I might be just chatting with somebody in the office. And often we talk about things, sometimes quite often talk about things that aren't business at all. And then we just chat about other things and business comes into it. So it's very difficult to actually draw the line in my life. Look, I drive my son to school every day and pick him up almost every day and he's 30 years old. We have a great chat on the way. That's a great privilege to be able to do that.

It is.

Now, I might work weekends. The weekend I'm going to be at the franchise Expo. So I'll be. I'll be away for several hours. But that's just kind of.

That's just how it is.

Yeah, But I enjoy it. It's a very fun life. I don't think there's a happier person on the face of the earth than me right now, honestly.

I'm delighted to hear that. But also, it's great to have ideas, but it's even better to be able to implement some of those. Right. And, you know, there's no doubt you've. You've spent some time doing that. It's very clear. I mean, you've moved from mowing to add on a whole bunch of other services and obviously large numbers both in Australia, but New Zealand, Canada.

Yeah, mostly Australia, New Zealand. There's about 60 in Canada.

Yeah, yeah. So strategically, what major branch beyond our shores? When did you know you were ready for that or did it just creep up on you?

To be honest, most changes that you think were driven by me were actually driven by somebody else. For example, cleaning. Why do we go beyond mowing? How did I go into anything else but mowing? Now, this is a gardening image. This is a guy with a beard and a hat, which is me. That's what I look like. They just did a graphical image of me. Okay. So that's how that was. Now, then we came up with the idea of cleaning because it's similar franchise setup, it's a similar service regular, and it's about the same alley rate, this kind of thing. So we thought, okay, let's do cleaning now. But for a cleaning franchisee, you don't want a guy with a beard and the hat who looks like a gardener you want because it might be a woman. So let's try. So I set up this thing called Sunlight S U N U N L I T Did a logo with sprays and stuff and sold a couple of franchises and we couldn't find them work. Right. So eventually I gave them the money back and said, sorry, it's not working. And then somebody come to me and said, what about doing Jim's Cleaning? And I said, well, no, because it's a mowing. Obviously it's a mowing image. It won't work. And they said, yes, it will work. We think it won't. I said, no, it won't. And they said, well, we'll give it a try ourselves. So I said, all right. If you want to do a kind of joint venture, sure, use our brand.

And systems and see what happens.

And see what happens. And it worked. So it was surprising to me. And the same thing happened with overseas. How do we go into New Zealand? Because some of our franchisee in South Australia, with support from the franchisor all there, actually said, we'd like to go to New Zealand and start up gyms in New Zealand. So it was kind of their initiative. And I said, okay, you can have the regional franchise rights for the country over there and, you know, we'll have an arrangement for royalties and so forth. Sadly, actually, they failed.

Did they?

They put on four franchisees and they ran out of money and they. Because they weren't mowing lawns, which was a mistake, they couldn't support themselves, so they gave up and went back home. But eventually we got back into it and we looked after the franchisees because we couldn't abandon people who were there. And now there's 300 franchisees over there. And by the way, the regional rights that these people walked away from would now be worth multiple millions.

Yeah, fascinating. And you know, in that short talk, you mentioned a number of sort of trials, I guess. Is that the nature of how the business has developed? You've. You've tried some things out and refined or changed as a result of what's happened and then moved to the next stage.

There's one ironclad law that I've discovered. Nothing ever works out the way you expect. Most things work out a lot worse than you expect. Some things work out far better than you expect. Nothing goes what you expect. I've had so many ridiculously bad ideas and things that have lost me money. Like I tried to get a holiday resort going. I had no idea what I was doing. It was a complete fiasco. I tried trade exchange a couple of times. Really bad idea. I tried opening a factory. That was a dreadful loss. I could keep on going. There's divisions that we've got that don't run anymore, that have failed.

But you're not afraid of failure by the sound of it?

No, because you've got to try things. What you've got to do is to set things up in a way, try and minimize the cost and then just have a go, have a go and see what it does. And yeah, no, I'm not afraid of failing. I think it's just. I mean, business is fun. It really is. You just got to Try new stuff all the time.

Now you're a PhD student at History.

Yes.

What have you picked up in that process of learning that you use today?

My theory actually taught me more about living a good personal life. These things, ideas about self discipline, about being reasonably chaste in your marital behavior, those kind of things. And alcohol and those kinds of areas too. So actually it taught me that basic character is the basis of civilization, individual character. And there are certain kinds of practices that build character. Things like limiting food exercise, those kind of self discipline type of things. So in a sense it helped in that way. I couldn't say there's a lot of direct. The big connection between the two is that my ideas that I developed in my PhD are really, really, really radical. They actually, if you look, open up any history book and you open it in terms of biology, look, it's wrong. This is not what happened. Why did the second World War take place? There's a totally different reason. So the first World War is what I call the same thing as a lending cycle, population migration. It's totally different ideas about history. Why did we develop to do with the effects of religion and stuff. And it's totally, totally radical. In fact, I basically failed my PhD the first time I put it together. Yeah, I heard that because it was so wildly. Normally a PhD examiner will give us several pages. Two of the three gave a single paragraph, basically fairly non committal, not knocking it back. And the third one says something like if this was a magnum opposite the end of a distinguished career, then maybe we paid. But who is this guy? But I eventually rewrote it, rewrote some of the methodology section. And they did get it through. And I'm legally Dr. Pen. I want to call myself that, which I don't in normal terms, Dr. Jim, but the point of it is the commonality. Both is. Both my business and my research are based on the fact that I'm extremely unconventional. I don't mind, I don't care what anybody else thinks. Like I always say, if you had a room full of professors or business gurus telling me that I'm wrong, I don't care because they don't have a good reason for it. But if a 12 year old kid was to say to me, this is the reason why you're wrong. Here's the evidence that you're wrong, that I listen to them. It's not the person, it's the ideas that matter.

So in that mind of yours, the unconventional aspect is that because you're constantly questioning things, it sounds like you're not one to just take an assumption and accept things on face value.

I'll decide everything on my own basis. I'm very, very. Compared with most people, I'm extremely resistant to peer pressure. I just don't care what other people think unless they can show me why they've got a better idea. I don't care how many people tell me I'm wrong. If I think I'm right, I'm right.

And is that part of the success of Jim's correct?

Obviously it's the same pattern.

Yeah.

The difference is that in academic terms, if you're too. If you're too unorthodox, that you're out of a career in business terms, nobody minds that. As long as what you give is great service to your clients, great service to your franchisee, even if the idea behind them are really wacky and strange, if they work in the commercial sense.

Then it will be accepted and used. Yeah, yeah.

Look, it's a very simple operation of franchising. What you've got to do is to make your franchisees happy and successful. There's nothing else beyond that. Everything, even customer service to franchisees, depends on the same thing. So the thing I quote is a very simple statistic of what franchising is about. If you go into an independent cleaning or gardening business, your chance of being in business within 12 months is between 5 and 10%. You can look this up on Google. This is well recognized figures. So you're 90 to 95% of people who go into independent business will fail in their first 12 months. Okay, watch the figure with us. 12% will fail or 12% will be gone within 12 months. And we've got figures going back years now. None of them failed. Some of them had other offered other.

Jobs and so forth or they kind of worked out. It wasn't quite for them.

Yeah, it wasn't quite for them. Or. But sometimes they do fail too. That does happen. But that figure, that 12% is what you focus on. Or we do a survey every year. We ask every franchisee, how do you rate your income? Now, we don't ask what they're making. We said your income good, satisfactory, poor. Okay, average, 8% poor, but usually a bit over half good, risk, satisfactory, about 8% poor. That figure there is the really important one. How can you reduce that figure? How can that go down? Some divisions as low as like 4%, others, one division is actually significantly higher. So you've got to look at that and say, why is that happening? Why so many people? We had one division which was actually 50%, which was our IT division, 50% poor, which is terrible. Now we did some things, I talked to the people running it, it's now gone down to 30%, still not good enough. But you look at that all the time, you see how can you measure franchisee success? And the thing we found too is that the biggest single factor that determines franchisee being successful is the level of customer service they give. So franchisees, for example, who are very, very good at customer service, very, very few report poor income. But are those who give poorer customer service much larger proportion will poor income?

So on the one side I'm hearing sometimes you've just got to try it and have a go. But on the other side I'm hearing the key to success is being is sort of data driven decision making in a way. Yeah, look, look at the evidence.

But you try all sorts of different things. Like for example, in the early days of gyms, we were looking at different ways to try and use the fee system to drive customer service. And we tried a number of different things, methods to do it. And then we hit upon the idea of let's have lead fees. Now basically, service franchises try to work on fixed rate fees. For the most part you have a certain amount because you don't know what a person's making. So it's very difficult to do it percentage wise, like you do at McDonald's. So there's a set fee. And then we were using something like that with some adjustments and then we actually had a try. We said, okay, why don't we have a set fee, make it lower than the standard fit fee, but on top of it, you pay a small fee for every lead provided because that gives the franchisee a strong incentive only to take the work they want. And when they take the work, then they follow it up. So we did this as a trial. No idea. It's one of a number of trials. Then we actually had some franchisees on this new fangled lead fee system and some on the traditional fixed fee system. And we rang the clients and there was a dramatic difference in the client response. Where there was a fixed fee, 25% of clients had no response. Where there was a lead fee, 3%. We looked at the actual number of jobs done. Where there was a lead fee, 75% of the leads turned into work. Where there was a fixed fee, just under half turned into work. Now what we've done by making one small change to the fee system, we increased the number of actual jobs being done out of the total number of leads by 50%.

That's huge.

But that was only one of many experiments. But as soon as we saw that, as soon as we saw the figures.

That opened up an opportunity, too.

That's right. Another example. Okay. In the early days of humans, we thought, okay, what's the best form of support? Now, obviously, if franchisees ring us, that's important. We've got to respond. That's always been the case from the beginning. But we thought of the idea. We'd have a business review. So every year, franchisor sits down with the franchisees, goes through their whole business, spends a half day, four hours going through their business. Every. How can I improve my. Okay, we tried this. We measured the effect. Would you like to guess what the effect was?

0.

0. No effect at all now. But in the course of doing all this stuff, we were looking at different franchiseors because we have regional franchiseors. Who's successful, who's got the happiest franchisees, who's growing their numbers best. And we started to look at what they were doing. And what we discovered was there were some franchiseors who weren't doing these reviews, like six monthly.