It is the spat that threatens the ongoing success of 1 of the nation’s most prosperous rags-to-riches stories.
Established with only $24 money in 1982, Jim’s Collection now turns over a lot more than $300 million annually.
With about 3000 franchisees in 29 departments, in the common Jim’s Cutting to computer services and fund, the history of the operation second simply to Australia Post in size hasbeen among the feel-good yarns of contemporary times.
The facial skin of president Jim Penman, filled with long gone mustache, is among the most recognisable brands in Australia.
But that happy-go-lucky image has improved lately, like 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 damaging coverage – the level of master franchisors under Penman who rely on recruiting and maintaining franchisees to guard their very own investments.
These franchisors settled Penman big-money to operate the Sean’s divisions, or are responsible for locations within those divisions. Most are annoyed by a lack of discussion within the way they run their firms.
Penman stays defiant, saying his first-priority could be the interests of the franchisees who mow lawns, repair fences, clear pools and do a number of additional careers.
“They are, all things considered, way less well-resourced than (divisional and local) franchisors, lots of whom are riches, consequently of the participation around,” he says.
But discontent with Penman’s leadership model, and claims of contractual breaches and high price increases, a year ago directed divisional and local franchisors to move to oust him from your firm.
In a”referendum” with my site done 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 Team, and 76 per cent agreed to fund a class action against him for what they say were breaches of their contracts through unilateral changes to the operational manuals that underpin the Jim’s businesses.
The party’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 credibility of the referendum, and stated he couldn’t be voted out. At first he confessed a majority of franchisors likely did need him gone, but later he stated that just nine of more than 200 divisional and local had voted against him.
However the impact of the general public stoush was immediate.
Penman shelved the charge increases – which could have observed some franchisors restoring agreements paying double what they had previously – while his trusted lieutenant Phil Maunder, who went the biggest and best-known of the party’s departments, 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 Team had”probably brought my determination forward a little”.
2-3 weeks later, at a gathering of the Jim’s Team advisory panel – the body which will be likely to act as a bridge between head office and the divisional and local franchisors – Penman decided to appear at remodeling the procedures guide. Agreement was reached on the new fee structure.
Cost increases, an interior newsletter claims, will be stopped”to match franchisor considerations and to prevent providing the advertising any ammunition”.
However in heated discussion in the advisory panel meeting, Penman flatly refused to stand-down – describing past catastrophic encounters with hiring outside chief executives – or promote the company, saying that he’d rejected two offers of $20 million and that private equity buyers would be a disaster.
Penman stated he was the sole individual who can run Jim’s Collection, but offered to carry a review in 2013, when he’d obtain a”better result” that would avoid potentially damaging publicity.
Discontent within Jim’s Collection is not new. Penman survived the same vote to eliminate him in 2005. At the moment he advised his franchisees he’d provide the company when they wanted him to, but outstanding operator without control wasn’t an option.
That has not ended franchisors and franchisees prior and current going forward to share with their stories.
By and large their states center on Penman’s personality. Terms like”bully” and”dictator” come up frequently.
Chris Munday, divisional franchisor of Jim’s Painting, is among the few ready to carry on the report with my site.
Based on the Sunshine Coast, Munday went a-successful painting co operative with close to 100 stores nationally before he obtained the rights to Jim’s Painting, falling close to $1million in to the organization.
Munday says Penman has”no value or regard” for the huge investments franchisees at all levels had set into the business.
“Whatis so peculiar is that he works the entire business-as though he owns all of it,” Munday says.
“All we hear is Sean speaking about he has to be there to remain true for the rights of franchisees. That is poppycock. We [divisionals and regionals] are his franchisees, also, and he forgets that.”
Munday says Penman tried to push-through changes that could have damaged huge areas of the value in their firms without session.
“Look, he sets items by the mowing business. A mowing operation is about investing in a work, nevertheless when you take painting, we’ve got several franchisees that start $1million annually independently, and painters could employ a dozen persons.
“Jim does not realize that this can be a lot dissimilar to mowing, and he’s ostensibly treating everyone such as a subservient employee. 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 since the divisional franchisor for building preservation and pergolas.
Now he was fired since the western Victoria building preservation franchisor for”abandoning” his region.
After the first election-out, which Powell claims was orchestrated, he and his business partner were necessary to provide up.
In an e-mail to Powell, Penman took the unconventional step of copying in the would-be buyers for the section, and informed him the sale would have to be completed within three days.
“There are three audience … produce a cope with one of these. Sean’s Collection won’t be supporting with phrases,” Penman wrote.
Powell claims”if youare required to market, you do not want a possible buyer advised that”.’
The outcome was that after committing $400,000 for your operation and putting in 18 months’ work, Powell dropped $130,000.
Penman admits”I did put pressure on him to just accept a reasonable price” but says he’d provided Powell more leeway than expected under his contract.
Michael Bonnici, a designer, committed to two regional pergola franchises in Melbourne around the same period. He soon had problems over what he considered were unlicensed franchisees illegally performing specified building careers.
Penman is insistent he never dismissed licensing concerns. “The [building preservation and pergolas] division continues to produce every effort to ensure franchisees are registered, and I keep myself informed of the efforts,” he says.
Within an e-mail exchange with Bonnici, Penman wrote:”I realize you’ve been approaching the specialists [regarding] licensing problems, with the obvious goal of getting the division turn off. I have to congratulate you on your extraordinary idealism, since this could wipeout your own personal company investment.
“We can have a brand new divisional appointed briefly whose first objective is to make sure that no body works illegally.”
The spat went to mediation. Bonnici was permitted to keep his two locations and didn’t need to pay any charges until the franchises were offered.
“They’re not worth the paper they are written on-but I do not have the amount of money to sue Jim and he knows he could keep you tied up if you try,” says Bonnici, who now runs another business.
It was Paul Carr’s beef with Penman that led to the present crisis within Jim’s Collection. Carr, the former master franchisor in Britain, was fired by Penman a year ago.
Penman has mentioned he tried to discover a solution to do away with Carr – who he identifies as”completely useless” – after franchisees complained about a lack of service. After being terminated for non payment of charges, Carr subsequently settled the $3400 due and must be reinstated.
Penman subsequently reported Carr in violation of his contract for not providing his franchisees with any support. Carr, who denies any wrongdoing, is seeking a lot more than $1million in damages, but has yet to serve documents on Penman.
Carr and Penman loathe eachother, despite the fact that they only met face-to-face once, briefly.
Carr claims his lawsuit – by way of a company he established called Felicity Administration, provocatively named after Penman’s first partner – can go the length.
Penman – who blames Carr for organizing the election and websites seriously critical of him – says he’s planning a defamation case against Carr, and assisting two British franchisees in court actions against him.
In the meantime, the British division hasbeen run from Sydney.
Though Penman hopes the storms can blow over the company, others, including Chris Munday, are not so confident.
“At as soon as oahu is the Sean display,” he says. “Thatis the entire problem. Nonetheless it should not be about him. It’s about the tens of thousands of mummy-and-daddy firms which are on the point here. With anything he chooses to alter on his own, we’re in times where we started playing Aussie rules and now we’re playing baseball. It is ludicrous.”