It is the spat that threatens the ongoing achievement of just one of the nation’s most effective rags-to-riches tales.
Founded with only $24 cash in 1982, Jim’s Collection now turns over significantly more than $300 million annually.
With about 3000 franchisees in 29 departments, in the common Jim’s Cutting to computer services and financing, the history of the team second only to Australia Post in size has been among the feel good yarns of modern times.
The face of founder Jim Penman, filled with long gone beard, is among the most recognisable brands in Australia.
But that happy-go-lucky image has improved in recent months, being a discontent brewing quietly for several years has finally bubbled over into public view.
Leading the charge have now been the folks with most to get rid of from negative coverage – the coating of master franchisors under Penman who depend on recruiting and maintaining franchisees to protect their own investments.
These franchisors settled Penman big-money to run the John’s divisions, or have the effect of locations within those divisions. Most are annoyed by deficiencies in discussion over the way they run their organizations.
Penman stays defiant, saying his first priority is the passions of the franchisees who mow lawns, repair fences, clean pools and do a number of additional careers.
“They are, after all, a lot less well resourced than (divisional and local) franchisors, many of whom are riches, as a result of these involvement around,” he says.
But discontent with Penman’s management model, and statements of contractual breaches and steep fee increases, a year ago brought divisional and local franchisors to go to oust him from the business.
In a”referendum” with about 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 structure allows franchisees to”vote out” their franchisors, and Penman is the national franchisor for the divisionals and regionals, who are his direct franchisees.
Penman dismissed the credibility of the referendum, and believed he could not be voted out. Initially he admitted a majority of franchisors possibly did want him removed, but later he believed that merely nine greater than 200 divisional and local had voted against him.
Even so the effect of people stoush was instant.
Penman shelved the charge increases – which may have seen some franchisors renewing agreements spending double what they’d previously – while his trusted lieutenant Phil Maunder, who went the largest and best-known of the party’s departments, Jim’s Mowing, quit within days.
In a e-mail to franchisees, Maunder said he left on”excellent terms” but conceded the discontent within Jim’s Group had”probably brought my determination forward a little”.
A couple weeks later, at a meeting of the Jim’s Team advisory board – your body which is supposed to act as a link between head-office and the divisional and local franchisors – Penman decided to look at reworking the operations manual. Agreement was reached on the new cost structure.
Payment increases, an interior publication claims, will be solved”to fulfill franchisor problems and in order to avoid giving the advertising any ammunition”.
However in hot argument in the advisory board meeting, Penman flatly refused to stand-down – describing past disastrous experiences with hiring outside key executives – or provide the business, stating that he had rejected two offers of $20-million and that private-equity buyers would be a problem.
Penman believed he was the only individual who may manage Sean’s Collection, but agreed to carry a study this season, when he would get a”better result” that would prevent potentially damaging publicity.
Discontent within Jim’s Collection isn’t new. Penman lasted a similar vote to get rid of him in 2005. At that time he informed his franchisees he would offer the business when they wished him to, but remaining operator without handle wasn’t an option.
That has not ended franchisors and franchisees past and present stepping forward to tell their experiences.
By and large their states centre on Penman’s temperament. Words like”bully” and”dictator” come up frequently.
Chris Munday, divisional franchisor of Jim’s Artwork, is among the few willing to continue the file with about.
Based on the Sunshine Coast, Munday went asuccessful painting co operative with close to 100 stores nationally before he obtained the rights to Jim’s Artwork, sinking close to $1million to the business.
Munday says Penman has”no value or regard” for the large investments franchisees at all levels had put into the business.
“Whatis so strange is that he goes the entire business as though he possesses every part of it,” Munday says.
“All we hear is John speaing frankly about he’s to be there to stand up for the rights of franchisees. That is poppycock. We [divisionals and regionals] are his franchisees, also, and he forgets that.”
Munday says Penman attempted to push-through changes which could have destroyed substantial parts of the worthiness in their organizations without assessment.
“Look, he sets points by the cutting business. A cutting team is approximately investing in a work, however when you take painting, offering several franchisees that start $1million annually on their own, and painters can use a dozen people.
“Jim doesn’t realize that this can be a lot dissimilar to cutting, and he is generally treating everyone such as for instance a subservient staff. It’s ‘follow me blindly like I’m the messiah’.”
Keith Powell has twice been on the receiving end of Penman’s wrath. On the initial occasion he was voted out because the divisional franchisor for building preservation and pergolas.
Now he was fired because the western Victoria building preservation franchisor for”abandoning” his region.
After the first vote-out, which Powell suggests was orchestrated, he and his business partner were necessary to offer up.
In a e-mail to Powell, Penman took the unusual step of copying in the would-be customers for the section, and advised him the purchase would need to be settled within three days.
“There are three audience … make a deal with one. John’s Collection won’t be helping with phrases,” Penman wrote.
Powell suggests”if you’re compelled to market, you don’t want a potential customer informed that”.’
The result was that after investing $400,000 for your team and setting up 18 months’ work, Powell lost $130,000.
Penman admits”I did put pressure on him to accept an acceptable price” but says he had presented Powell more leeway than expected under his contract.
Michael Bonnici, a contractor, dedicated to two localized gazebo operations in Melbourne across the same time. He quickly had problems over what he assumed were fake franchisees illegally carrying out specific building careers.
Penman is determined he never ignored certification problems. “The [building preservation and pergolas] department continues to make every effort to ensure franchisees are registered, and I keep myself informed of these initiatives,” he says.
Within an e-mail exchange with Bonnici, Penman wrote:”I understand you have been approaching the specialists [regarding] certification issues, with the apparent aim of having the department shut-down. I have to congratulate you in your remarkable idealism, since this would eliminate your personal company expense.
“We will have a brand new divisional hired shortly whose first aim would be to be sure that no one works illegally.”
The spat went along to mediation. Bonnici was allowed to maintain his two locations and did not need certainly to pay any charges before the operations were sold.
“They’re not worth the paper they are written on but I don’t have the cash to sue Sean 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 generated today’s turmoil within Jim’s Collection. Carr, the former master franchisor in Britain, was fired by Penman a year ago.
Penman has mentioned he attempted to discover a method to get rid of Carr – who he identifies as”completely useless” – after franchisees complained about a lack of service. After being terminated for non payment of costs, Carr subsequently settled the $3400 due and must be reinstated.
Penman subsequently stated Carr in violation of his agreement for not delivering his franchisees with any assistance. Carr, who denies any wrongdoing, is seeking a lot more than $1million in damages, but has yet to offer documents on Penman.
Carr and Penman dislike eachother, though they only met face-to-face once, quickly.
Carr promises his lawsuit – by way of a company he established called Felicity Administration, provocatively named after Penman’s first wife – may go the exact distance.
Penman – who blames Carr for arranging the vote and websites intensely critical of him – says he is preparing a defamation case against Carr, and supporting two British franchisees in court actions against him.
In the meantime, the British department has been run from Australia.
While Penman hopes the storms may blow over the business, others, including Chris Munday, are not so positive.
“At the minute it is the John present,” he says. “Thatis the entire issue. However it shouldn’t be about him. It’s about the 1000s of mum-and-dad companies that are on the line here. With anything he chooses to improve by himself, we’re in times where we started playing Aussie rules and now we’re playing soccer. It’s ludicrous.”