What's REALLY Behind Jim's Group's Success?

So today I'm lucky enough to be joined by Jim's Group CEO and founder Jim Penman, who is a well known entrepreneur and franchising icon in Australia. And we're going to run through a whole bunch of questions today about the Jim's Group, him as a business owner and also his personal life as well. So let's start the Jim's Group side of the story. Jim. And the first question is what is the story behind starting Jim's? How and why did you start it?

Well, I never intended to be in business at all. I went to University in 1971 intending to uncover the reasons for the rise and fall of civilizations and gardening. And then lawn mowing was my part time student job. And when I got to the end of my PhD in 1982, I realised I had no prospect of an academic career. So I turned my part time mowing business into a full time job.

And how did the name Jim's Group come about?

Well, it was me, it was Jim's Mowing. So I used to, when I was putting leaflets around in the neighborhood, I would put Jim's Mowing on it because it was Jim Mowing. And I used to put a picture of myself on the leaflet.

And how did, and how and when did you branch into the other services beyond Jim's Mowing happened?

We had a good franchising system that worked for mowing and we thought the same kind of system would work for other divisions like cleaning, same structure, the same fee system and so forth. But we thought the gym's mowing would be that's a man, you know, it's a guy with a beard and a hat. That's my gardening hat that I'm wearing. So I thought that that's not really going to work for cleaning. So we decided to use a different name which was Sunlight S U N L I T E And we did a little logo with sprays and stuff and tried it, sold a couple of franchises, couldn't find the work. Eventually I gave them the money back and then somebody came to me and said what about Jim's Cleaning? And I said well no, that's obvious, that's a gardening image. What if it's a woman? She wouldn't want to have a guy with a beard and a hat wear that logo. And he said I think it'll work. And I said well I don't think so. And he said well I'll give it a try, I'll go in with you. So we gave it a try and it worked. The Actual name somehow went from mowing to cleaning and people recognized the brand and they liked it. So after that we started other ones like Dogwash, which is now got about 250 franchisees. We tried Handyman and a whole lot of other divisions, eventually more than 40.

And how is the Jim's Group structured for people who don't know?

Well, I'm the national franchisor, Jim's Group, my company, which I completely own. We also have regional franchises and we also have franchisors look after divisions. So in some cases that's actually us, that's Jim's Group. Other case, most of the time they're.

Individual people and tell the story behind how the first franchisee contract came about. What did the attorneys think? What was the initial feedback did you get from the potential franchisees?

What inspired me to franchise was that another company which was based in Adelaide came to Melbourne and they really quite terrified me. I thought these guys would crush me. They had 250 franchisees and I had a few subbies at that stage. So I wasn't very advanced. I actually tried to join them initially and so try to help them to grow, but they wouldn't have that. So I decided to try and do it independently. So I actually crashed their expo. They had a standard expo. So I went in and went up to the stand and asked them what I was about. They told me about and stuff. And then they kicked me off the stand when the manager discovered who I was. But I thought, hang on, I could compete with these guys, maybe not beat them, but at least survive. And I needed to franchise. So how do we get a contract? That was pretty hard. I didn't know anything about contracts. I got hold of a copy of their contract and I thought I didn't like it because it was too biased towards the franchisor and I wanted a system that would be very favorable to franchisees, something that I want to sign myself. So I went to see some lawyers and I said, can you draft me a contract with these things in it? And they really just didn't know what to do. They kept on complaining that I was trying to give too much to the franchisees, too much power, too many rights. Eventually, it took me two lawyers and nine months to get a contract I was satisfied with. And then I signed my first franchisee in June 1989.

And I was going to say, now how do you feel about overtime for yourself and your employees?

I'm not a real ferociously hard worker. I work strange hours, but I take time off. I Drive my son to school, pick him up. I have a very flexible lifetime, so I don't exactly know how many hours a week I work, probably about 40 overall. But as far as employee is concerned, look, it's great if people care about their jobs, but quite frankly, quite often I'll say go home. Dear family, I read about these companies, these startups where people were ridiculous like 80, 100 hours and they don't see their families. That's wrong to me. I don't want my staff doing that. So if I find somebody working excessive hours, I'll tell them to cut it out, go home. And if I write an email, which I often do after hours, they don't have to respond till the next working day.

And how is Jim's different from other Australian franchise chains and systems?

Our system is based on giving franchisees very strong rights that exist in no other franchise in the world, anywhere. For example, our franchisees are guaranteed any leads to come into their territory, but they can work wherever they wish. The only thing they can't do is door knock someone else's territory. They can build their business as big as they like. They can have as many employees as they wish. There's no limit. We've got franchisees turning over in the millions of dollars a year. They pay the same base fee as anyone else. We give our franchise a right. They own the right to their goodwill. Now, if they want to sell the rights to somebody else, I do what we call a split. They can do that. That's entirely up to them. But they own the right client. Any client that's dealt with one franchisee ever belongs to that client. The rights belong to that client. Our franchisees can do extraordinary things too. They can. For example, they can move to a different franchisor. If there's a different franchisor in the same city, they can move, or even different division, they can just move across. That's their right. Their own franchisor has no say, which is a real powerful incentive to get franchisors to look after franchisees. They can vote out their own franchisor. This has just happened in the last couple of months. We're one of the franchisors. The franchisees didn't. They were doing a good job. We run a referendum, confidential franchisors moving on. They have to sell their business. Also, we give our franchisees the right to veto change to their own manuals. So if we've got a change to the manual we want to do, we put it out in the newsletter and there's a clause that says this is the vote, this is what we want to do. If they object, they need to write back in and say usually they're happy with that but there's been two occasions when they actually didn't like it so they knocked it back so we couldn't do it.

Because I just want to point out for people as well, you were one of the initial hall of Fame members in the Franchising Council of Australia hall of Fame. And I would say the system you've got is the complete opposite to every other person that would be in the hall of Fame or any other system that that exists in Australia. Now why do you. Where does this franchisee focus just urge come from? Because it goes in the face of what typical people would understand about franchising in terms of the percentage of revenue, all that sort of thing. So where does that come from?

A lot of it's got to do with Christian ethics. The idea from John's Gospel of Jesus washing his disciples feet. It's servant leadership. To me my biggest focus in business is the success of my franchisees. That always takes precedence. One of the interesting things is though we're extremely well known, we've got 5,000 plus franchisees in Australia, New Zealand and Canada. The actual profit's nothing like what you'd expect from a normal franchise. So we make good money. I mean I'm not poor, but nothing like somebody could come in with a financial goal. They could probably double or triple the income fairly shortly if they wanted to. But for me I'm very comfortable with income. It does the things I want and I really want my franchisees to be successful. One of the things that most concerns me is after I've gone I've probably got lived another 20 years and I certainly don't tend to retire. I want to make sure as far as possible that franchisees are protected against somebody coming in and ripping them off.

And what do you look for then in a franchisee? What makes a good Jim's franchisee?

We can help most people to run their own business successfully. We have a fairly good success rate. Figures show that if you go into a service business like cleaning or gardening, your chance of being in business after the first year, 5 and 10%. With us it's about 88% most recent figures. So about 12% will leave for one reason or another. So we're quite successful, but not universally so. So first of all what we do is we screen fairly carefully in terms of putting somebody out on the road. We get an established franchisee to look at them and to say is this person successful? Do they have a good sense of customer service? We look at certain, there's certain red flags. For example, if you've got somebody who's young, say early 20s, parents buying the business, that's an absolute no. Any franchisor who would put on a person like that would be faced with non renewal of their contract. It's an appalling thing because there's virtually no chance they succeed. We also look for things like curiosity. We look for somebody who asks questions, who comes with a list of questions is ideal. Who's done their research, who's checked us out on social media, who's talked to other franchisees. And then we put franchisees through a training process too. So we look at them and they come to our head office and I ask the staff, the staff who look after the meals and so forth, anybody behaving badly, anybody, anything they're doing. So most people that we help can be successful, but we really try hard to look for that minority who just haven't got what it takes.

And how has your role in the Jims group evolved over the years?

I take a very hands on attitude. One of my major job is actually keeping in touch with individual franchisees. I have very competent managers to handle things like pr, social media, marketing, general management of the company, finance, hr. My biggest single role is probably just individually be in contact with franchisees. So every franchisee in Jim's group, every single one has my direct phone number, direct email address. If they contact me, I respond to them within, usually within a very few hours, always same day, always available to talk to anybody about anything, any concerns, any issues not being treated right, change the system, I want to know about it. I get very closely involved with complaints. I'm actually the only person that can actually delete complaints, which is a very important part of our system. So if a franchisee has got a reason why the complaint is unfair and they can prove they did everything right, like the client said, they didn't ring and they said yes, I rang within two hours and I texted the client, did everything reasonable, I would delete it or if I did the wrong thing, if they satisfy the client in the end. So I deal with those kinds of issues. If a client has a significant problem, something gone really badly with the job and the franchisor hasn't fixed it, then I'll get involved and I'll sit on it until the client is satisfied. So it doesn't matter what happens, doesn't matter how big the problem is how bad it is. We've had problems over $100,000. I will make sure that client is.

Looked after, just to make it clear for people watching. So just to confirm, every single franchisee who comes through our training, which is more than 1,000 every year, including the existing ones and finished ones, has your personal mobile number, they have your personal email address. And you, as the business owner, will get involved in customer complaints every single day.

Absolutely right. Every single day. I deal with franchisees directly, I deal with customers directly and I find that incredibly useful. First time, I'm not particularly great as a manager. I have people much better at me doing all these other areas, but I have a passion for my franchisees and for their business. And one of the great things about hearing from a franchise is directly I can know what's going wrong. You know, why is this person not being looked after? What's wrong with the system? How can we improve the it? And that's the best way to find out.

The great thing about it might go on the face of what people might be reading in management books and stuff and have all that middle management type of teeth. But having that direct source of feedback, you make changes. I think we should ask you this. How many changes have you made to the gym script which have come directly straight from a franchisee phoning you up or emailed directly to you as the CEO?

Thousands. You couldn't count them. There's very rarely a month go by that I wouldn't change at least something in the system and probably more often like once a week. We just keep on changing things. Every feedback that I get, I look at it now. Sometimes the feedback's unreasonable. Franchisees will complain about complaints and they should. We shouldn't be doing it. Upsetting me. We stick to that. But so often there's a real reason behind it. You know, just as an example, we have a system in Australia where the we have a franchising code which means that you have to hold the contract for two weeks. Now you have a situation where somebody's held the contract for two weeks and they're ready to start and. And then we find out there's something wrong with their contract, like they need a different entity. Now they're faced with the prospect of being two more weeks without an income. So what I would simply say put them on a system, get them started, get them some work and in two weeks time we'll sign the contract. That's the kind of thing I do all the time.

And can you also share with people your management style, because I think it goes. It'd be complete opposite to what maybe people might think a traditional CEO does of a normal. Of a massive company. Right, so do you want to just maybe tell people, how do you manage the actual business?

Well, at the head office, we only have about 100 people working direct. That's including the call centre. What I do is I just walk around. So every day I'll go into the call centre, I'll have a look at the figures, I'll look at the delay. We're very concerned about delay. The absolute most we should be delaying is 30 seconds on average during the day. If it goes beyond that, what's happening? How can we change it? Chat to the girls there, talk to them. How are they going to. And then I just go into different departments, just talk to people. Like, for example, with yourself, when you came in a certain role, you went to work in insurance and I used to go around to insurance and I'd chat with you about how it was going and you had ideas about websites and stuff. As a result of that, you actually reported to a much higher level in the company and the same thing happened.