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on Feb 4, 2014 in JimPenman
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It is the spat that threatens the continuing success of just one of the nation’s most prosperous rags-to-riches tales.
Started with just $24 capital in 1982, Jim’s Collection now turns over significantly more than $300 million annually.
With about 3000 franchisees in 29 divisions, from the common Jim’s Mowing to computer services and financing, the account of a franchise second simply to Australia Post in proportions has been among the feel-good yarns of modern times.
The face area of creator Jim Penman, detailed with long gone mustache, is among the most recognisable brands in Australia.
But that happy-go-lucky image has changed recently, as a discontent brewing quietly for quite some time has finally bubbled over into public view.
Leading the charge have been individuals with most to reduce from adverse publicity – the level of master franchisors under Penman who depend on recruiting and keeping franchisees to guard their particular assets.
These franchisors paid Penman big money to perform the John’s divisions, or have the effect of areas within those divisions. Most are annoyed by a lack of consultation within the way they operate their organizations.
Penman remains defiant, declaring his first-priority may be the passions of the franchisees who mow lawns, repair fences, clear pools and execute a number of different jobs.
“They are, after all, way less well resourced than (divisional and regional) franchisors, lots of whom are millionaires, consequently of their involvement with us,” he says.
But dissatisfaction with Penman’s management model, and claims of contractual breaches and steep price increases, a year ago led divisional and regional franchisors to go to oust him in the corporation.
In a”referendum” with for more details conducted by a US-based on-line voting company, 84 per cent of franchisors voted for a resolution calling on Penman to stand down as chief executive of Jim’s Group, and 76 per cent agreed to fund a class action against him for what they say were breaches of their contracts through unilateral modifications to the operational manuals that underpin the Jim’s businesses.
The group’s constitution allows franchisees to”vote out” their franchisors, and Penman is the national franchisor for the divisionals and regionals, who are his direct franchisees.
Penman ignored the quality of the referendum, and claimed he couldn’t be voted out. In the beginning he accepted a lot of franchisors likely did want him removed, but later he claimed that merely eight greater than 200 divisional and regional had voted against him.
However the influence of people stoush was quick.
Penman shelved the payment increases – which could have observed some franchisors restoring agreements spending double what they’d before – while his trusted lieutenant Phil Maunder, who ran the biggest and best-known of the party’s divisions, Jim’s Mowing, quit within days.
In an e-mail to franchisees, Maunder said he left on”excellent terms” but conceded the discontent within Jim’s Group had”probably brought my selection forward a little”.
A few weeks later, at a gathering of the Jim’s Team advisory committee – the human body which can be supposed to behave as a bridge between hq and the divisional and regional franchisors – Penman decided to look at reworking the procedures manual. Agreement was achieved on a new price structure.
Fee increases, an inside publication claims, would-be changed”to satisfy franchisor concerns and to avoid providing the press any ammunition”.
But in hot debate in the advisory committee meeting, Penman flatly refused to stand-down – describing past disastrous encounters with hiring outside key executives – or sell the company, indicating that he had rejected two offers of $20 million and that private-equity consumers will be a disaster.
Penman claimed he was the sole individual who may operate Jim’s Collection, but wanted to maintain a review this season, when he’d get yourself a”better result” that would avoid potentially damaging publicity.
Discontent within Jim’s Collection isn’t new. Penman lasted an identical vote to get rid of him in 2005. At that time he told his franchisees he’d offer the company should they wanted him to, but remaining owner without control was not an alternative.
That has not stopped franchisors and franchisees prior and present stepping forward to tell their stories.
By and large their claims center on Penman’s personality. Phrases like”bully” and”dictator” come up frequently.
Chris Munday, divisional franchisor of Jim’s Artwork, is among the few ready to go on the report with for more details.
On the basis of the Sunshine Coast, Munday ran a-successful painting co operative with close to 100 stores nationally before he obtained the rights to Jim’s Artwork, going close to $1 million in to the organization.
Munday says Penman has”no respect or regard” for the massive investments franchisees at all levels had set into the business.
“What’s so unusual is the fact that he works the entire business as though he owns every part of it,” Munday says.
“All we hear is John discussing he has to be there to standup for the rights of franchisees. That’s poppycock. We [divisionals and regionals] are his franchisees, too, and he forgets that.”
Munday says Penman attempted to push through changes that may have destroyed large parts of the worth of the organizations without session.
“Look, he sets points from the mowing business. A trimming franchise is approximately investing in a job, but when you take artwork, we have numerous franchisees that start $1 million a year independently, and painters can hire a dozen persons.
“Jim does not realize that this can be a lot different to mowing, and he is essentially treating everybody like a subservient worker. It is ‘follow me blindly like I’m the messiah’.”
Keith Powell has twice been on the receiving end-of Penman’s wrath. On the first occasion he was voted out whilst the divisional franchisor for building preservation and pergolas.
Recently he was fired whilst the eastern Victoria building preservation franchisor for”abandoning” his region.
After the first election-out, which Powell suggests was orchestrated, he and his business partner were necessary to offer up.
In an e-mail to Powell, Penman took the unusual step of burning in the would-be customers for the department, and informed him the sale would need to be completed within three days.
“There are three audience … make a cope with one. John’s Collection won’t be assisting with conditions,” Penman wrote.
Powell suggests”if youare required to offer, you don’t need a prospective consumer told that”.’
The outcome was that after committing $400,000 for the franchise and putting in 18 months’ work, Powell dropped $130,000.
Penman admits”I did put pressure on him to accept a reasonable price” but says he had presented Powell more leeway than expected under his contract.
Michael Bonnici, a contractor, committed to two local gazebo operations in Melbourne across the same time. He quickly had issues over what he believed were unlicensed franchisees illegally undertaking particular building jobs.
Penman is adamant that he never ignored accreditation problems. “The [building preservation and pergolas] split continues to make every effort to ensure franchisees are certified, and I keep myself informed of their efforts,” he says.
In an e-mail exchange with Bonnici, Penman wrote:”I realize you have been approaching the regulators [regarding] accreditation problems, with the apparent goal of having the split power down. I have to congratulate you in your outstanding idealism, because this might get rid of your personal company investment.
“We can have a brand new divisional hired briefly whose first aim is to make certain that no one performs illegally.”
The spat visited mediation. Bonnici was permitted to keep his two areas and did not need to pay any fees until the operations were distributed.
“They’re not worth the paper they are written on-but I don’t have the money to sue Jim and he knows he can keep you tied up if you try,” says Bonnici, who now runs another business.
It had been Paul Carr’s meat with Penman that led to the current crisis within Jim’s Collection. Carr, the former master franchisor in Britain, was fired by Penman a year ago.
Penman has mentioned he attempted to locate a method to remove Carr – who he identifies as”completely useless” – after franchisees complained about a lack of service. After being terminated for non-payment of expenses, Carr subsequently paid the $3400 due and must be reinstated.
Penman subsequently reported Carr in breach of his contract for not delivering his franchisees with any assistance. Carr, who denies any wrongdoing, is seeking significantly more than $1 million in damages, but has yet to provide papers on Penman.
Carr and Penman hate eachother, although they only met face-to-face once, quickly.
Carr assures his litigation – via a firm he founded called Felicity Supervision, provocatively named after Penman’s first partner – can go the exact distance.
Penman – who blames Carr for arranging the election and sites intensely critical of him – says he is organizing a defamation case against Carr, and promoting two English franchisees in court actions against him.
In the meantime, the British split has been run from Sydney.
Although Penman hopes the storms can blow over the company, others, such as for example Chris Munday, are not so positive.
“At the moment it is the John exhibit,” he says. “That’s the entire problem. Nonetheless it should not be about him. It is in regards to the thousands of mum-and-father companies which are on the point below. With everything he chooses to alter by himself, we’re in times where we started playing Aussie rules and now we’re playing soccer. It is foolish.”