Sarah Sharples has written five articles in a short time about Jim’s Group, and our CEO, Jim Penman, has always provided a very extensive and honest reply, even providing copies of agreements, manuals, surveys and an independent survey!
However, the answers provided are not being used in full as it wouldn’t suit the story’s purpose.
For full transparency, below are the journalist’s questions with Jim’s full reply.
As always, when looking at any franchise, Jim says the best thing to do is to call and get a list of all current and former franchisees and ring each one.
Sarah’s email to us (as pictured below) on Sept 10 at 12:16PM
Jim’s Full Response Below with Attachments
Sarah, my answers as follows:
- What’s Jim’s Groups response to claims that any support offered by the organisation comes with a price tag? For example, franchisees have to pay for leads and any work for pay guarantee taken is subtracted from the sale price if a franchise is sold?
Yes, it is correct that ongoing support comes with the price tag of paying ongoing fees, as with every other franchise system. The only difference is in how the fee is calculated. Retail franchises take a percentage of turnover, other service franchises take a flat rate per month, we charge a (generally lower) flat rate with a small fee for each lead provided, typically around $20. This encourages franchisees to take only leads they really want and to follow them up. It also means that franchisees who take more leads to feed multiple employees, pay slightly more fees. We believe this is fair.
Pay for work guarantee payments are not taken from the sale price of a franchise. If a franchisee sells a business with regular customers, they normally get 80% of the sale price. But if not enough customers pass through to get the buyer past pay for work guarantee, then some of the money is held back to pay for advertising to rebuild the business. We also hold back money if more than 10% of the clients fail to transfer. Otherwise, the buyer may have paid a lot of money for non-existent good will. Buyers have 45 days to determine if clients are genuine. I’ve attached a draft franchise agreement.
- What’s the response to claims support stops from the administration team of Jim’s Group after three months?
Support by franchisors is ongoing, including responding promptly to franchisee calls, regular meetings and at least one pro-active call a month. We carefully monitor this through franchisee surveys and in other ways. See page 4-5 of the manual, attached.
- What’s the response to claims that franchisors are extremely difficult to get a hold of and offer very little support? For example, in cases where clients do not pay the franchisee they offer no help? That a franchisor has threatened franchisees with debt collectors if they don’t pay their Jim’s fees? Or that franchisees’ business failure is on them and as a result of their customer service, that they were too expensive, not travelling far enough or working enough hours?
Our surveys show that most franchisors are very easy to get hold of. See last year’s survey, also attached. These surveys are strictly confidential. If a franchisee is doing poorly, which is the case for about 9% (as you can see) the franchisee is responsible for providing coaching to help them improve. Possible reasons may include poor customer service, charging too much and those losing most quotes, and not working enough hours. A franchisor who failed to provide proper coaching and advice in such circumstances would be considered grossly negligent, and the franchisee would be more likely to fail.
- What’s the response to claims that the scheme where Jim’s Group chases clients for money isn’t fair as it takes a 15 per cent cut of the invoice?
Jim’s Group has a contracts division (not us) that organizes large-scale contracts and takes a fee, around 10-15% of turnover being normal. Franchisees can choose to take or refuse such jobs. This gives franchisees tens of millions of dollars a year worth of revenue, which they would otherwise miss out on.
- What’s the response to claims Jim’s Group doesn’t have a realistic grasp of the demand for services in an area? Particularly in country regions?
If new franchisees don’t get enough leads, they can do free services and claim pay for work guarantee. For this reason, franchisors need to be careful who they put on.
No other service franchise system in Australia has the system, that I know of.
- What’s the response to claims franchisees pay for advertising and that it doesn’t happen? That they are told to do the advertising themself?
All advertising funds are audited yearly, unless the franchisees ask for this not to happen. If there are any funds left over, because all franchisees are busy, we get the franchisees to vote on how to use them. They can choose to get the money back or have them pay for a conference or extra training, etc. These are all basic requirements of the franchising Code. Franchisees can choose to do their own advertising if they wish, but this is not common.
- What’s the response to claims that the leads are being supplied to franchisees that are not in their area? That franchisees are competing with each other as territories are too close? What is the response to claims that the lead system doesn’t work and is very expensive? That in some cases franchisees have been told there are 300 unanswered leads a month but when they joined they found this wasn’t the reality?
Franchisees initially travel over a wide area to take leads, and then choose only closer areas as they get busy. We do have a lot of unserviced leads, though clearly not in the areas we’d most like them. Summary for the last year attached, over 250,000. Clearly, some franchisees don’t like the system and everybody would prefer lower fees, but the great majority of franchisees do make good or satisfactory income.
- What’s the response to claims that if a customer complains that Jim’s Group refunds the money without any investigation?
We do a careful investigation, often involving an inspection. If the franchisee is not at fault, we back them. If at fault, then they either fix the issue or get someone else to fix it and bill them.
- What’s the response to claims the franchisees could never make enough money to live and cover their fees?
The surveys show the great majority do
- What is the response to claims the 20% cut to sell a franchisee and in some cases paying for the new franchisees training is unreasonable?
Finding new franchisees takes time and money. Franchisors have to be compensated for their efforts. The money is so little that our contracts oblige franchisors to tell buyers about existing businesses, rather than make a more lucrative new sale. If they make a new sale without doing this, they can be forced to give up the proceeds to a franchisee whose business was on the market but not promoted to a potential buyer.
Sarah, if you want to find people to say bad things about a franchise, you can.
I would challenge you to find any service franchise system in the country that does even as good a job as we do. You could try Fox, Jani-King, VIP, etc.
By not recognising our efforts and holding us to the standard that every franchisee must be completely satisfied with their income, you are not helping franchisees. You are doing nothing to attack the real problems with so much of the franchising industry in this country.
Why not publicise my suggestion that an independent company poll EVERY franchisee in the country every year and publish the results online?
Why not try to make a real difference?
Jim
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