How Jim's Mowing Very Nearly Got Put Out To Pasture
The Age
Saturday April 3, 1999
The founder of Jim's, Australia's biggest home services franchise, almost lost control of his empire because of a financial crisis triggered by discontent among many franchise holders.
``We were running very, very close to the wall," said Mr Jim Penman, the man behind an army of lawn mowers, (Jim's Mowing), dog washers, tree fellers and car cleaners.
Mr Penman said that late last year he had had to change banks and extend his overdraft to maintain his hold on the business, after being faced with franchisees withholding about $80,000 in fees and in need of capital to expand the business. He disclosed details of his financial difficulties when The Age put to him numerous complaints made by franchisees in his dog-wash division.
The complaints included:
* Dog-wash trailers collapsing mid-journey on mechanically suspect axles;
* A quota system under which franchisees pay $2.50 a dog each month on 50 per cent of the dogs notified to them by Jim's, whether they've washed them or not that month;
* Car engines failing as they struggled to tow heavy dog-wash trailers;
* Widespread billing errors and repeated failures to correct them.
* Big sale of franchise fees, including $72 each on clients not retained by the successive franchisee.
A number of franchisees have submitted their complaints to the Australian Competition and Consumer Commission, which refused to comment on the matter but is understood to have made inquiries.
Mr Penman, who said he was confident about his business future now, conceded that franchisee discontent was ``a very serious problem", particularly for his dog-wash and car-cleaning divisions, neither of which were making money.
In response to the complaints, he said Jim's was now reviewing its fee system across its divisions and had recalled all its dog-wash trailers for upgrading.
Under the fee system at the heart of the Jim's controversy, franchisees pay a monthly ``expected regular" fee on 50 per cent of all leads - the clients notified to them by Jim's, whether they go on to become regular clients or not.
Mr Penman said the fees were designed as an incentive to franchisees to maintain their clients and the better operators were converting more than 50 per cent of leads; the fees were competitive and necessary to meet big administrative and advertising costs.
But he accepted that the system had its critics, unhappy about paying monthly fees on dogs that they might have washed only once, had moved away or died, and said he was proposing a referendum to change it to one where franchisees paid a flat monthly fee of about $280 plus a once-off client fee.
Jim's Dog Wash was turning away clients because the fee system was so unpopular that franchisees were refusing to take more work, he said.
He said Jim's Mowing had ``evolved to a better system," and his fencing, tree felling and blind cleaning divisions were running smoothly.
Twenty current and past Jim's dog washers, and one car cleaner, have told The Age they found that being a Jim's franchisee had proved troublesome, stressful and costly. But eight more said they were making a go of it regardless of problems.
Several said that, unable to keep up with mounting fees despite working up to 72-hour weeks and worn down by wranglings with head office and by mechanical problems with their trailers, they had walked away from their investments empty handed. ``I walked away because the longer I stayed in the more debt I was accruing to pay Jim even though I had a healthy customer base," said Mr David Morris, of Preston, who dumped his dog-wash franchise, heavily in debt to Jim's, last year.
Mr Morris, who had been a successful Jim's Mowing franchisee years before his experience with Jim's Dog Wash, added, ``I wasn't a sloppy operator. It wasn't a matter of poor operating skills. The system didn't work."
By contrast, Ms Kerry Rollins, of Mooroolbark, said, ``I am doing it for 10 months and making more money than I ever have in my life."
Ms Sharyn Thomas, of Seaford, who is in dispute with Jim's over $9500 in unpaid fees, said she'd been invoiced for $1741 in fees, including client leads, advertising, insurance and trailer hire, in one month alone last year.
``It's impossible to stay alive under the Jim's system. We washed our last dog in November when the last car blew up," Ms Thomas said.
© 1999 The Age
