It is the spat that threatens the continued achievement of just one of the nation’s most successful rags-to-riches stories.
Launched with just $24 money in 1982, Jim’s Party currently turns over a lot more than $300 million annually.
With about 3000 franchisees in 29 divisions, from the ubiquitous Jim’s Mowing to computer services and fund, the history of a operation second simply to Australia Post in size has-been among the feelgood yarns of contemporary times.
The face of president 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 silently for many years has finally bubbled over into public view.
Leading the charge have now been the folks with most to get rid of from unfavorable publicity – the level of master franchisors under Penman who count on recruiting and retaining franchisees to safeguard their own investments.
Those franchisors settled Penman big money to perform the Rick’s divisions, or have the effect of areas within those divisions. Most are annoyed by a lack of discussion within the way they operate their organizations.
Penman stays defiant, saying his first-priority is the pursuits of the franchisees who mow lawns, repair fences, clear pools and do a host of additional jobs.
“They are, in the end, a lot less well resourced than (divisional and local) franchisors, many of whom are millionaires, consequently of these participation around,” he says.
But dissatisfaction with Penman’s management style, and claims of contractual breaches and sharp fee increases, last year directed divisional and local franchisors to move to oust him from your corporation.
In a”referendum” with Jim Penman of Jim’s Solar performed by a US-based online voting support, 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 modifications to the operational manuals that underpin the Jim’s businesses.
The team’s structure enables 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 quality of the referendum, and believed he couldn’t be voted out. In the beginning he mentioned most franchisors likely did need him removed, but later he believed that merely seven in excess of 200 divisional and local had voted against him.
Even so the influence of people stoush was immediate.
Penman shelved the cost increases – that could have observed some franchisors restoring contracts paying 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 a email to franchisees, Maunder said he left on”excellent terms” but conceded the discontent within Jim’s Team had”probably introduced my decision forward a little”.
A few weeks later, at a meeting of the Jim’s Party advisory committee – the body that will be supposed to become a bridge between hq and the divisional and local franchisors – Penman decided to look at reworking the operations guide. Agreement was reached on a new fee structure.
Payment increases, an interior newsletter claims, would be corrected”to fulfill franchisor worries and to avoid giving the advertising any ammunition”.
However in heated debate at the advisory committee meeting, Penman flatly refused to stand-down – explaining past disastrous encounters with hiring outside chief executives – or sell the company, stating that he had rejected two offers of $20-million and that private equity buyers would have been a disaster.
Penman believed he was the only individual who could work Jim’s Party, but offered to carry a survey in 2013, when he would get a”better result” that would prevent potentially damaging publicity.
Discontent within Jim’s Party is not fresh. Penman survived an identical vote to remove him in 2005. During those times he advised his franchisees he would offer the company should they wished him to, but remaining seller without handle was not a choice.
That’s not stopped franchisors and franchisees past and present going forward to inform their tales.
By and large their states center on Penman’s persona. Terms like”bully” and”dictator” come up frequently.
Chris Munday, divisional franchisor of Jim’s Artwork, is among the few ready to continue the record with Jim Penman of Jim’s Solar.
On the basis of the Sunshine Coast, Munday ran an effective painting co operative with close to 100 stores nationally before he obtained the rights to Jim’s Artwork, falling close to $1 million 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.
“What’s so weird is the fact that he runs the complete business as though he possesses all of it,” Munday says.
“All we hear is Rick discussing he’s to be there to operate for the rights of franchisees. That’s poppycock. We [divisionals and regionals] are his franchisees, also, and he forgets that.”
Munday says Penman attempted to push-through changes that could have destroyed large elements of the value of these organizations without appointment.
“Look, he sets points from the cutting company. A trimming operation is approximately purchasing a work, nevertheless when you get artwork, we’ve got a number of franchisees that turn over $1 million annually independently, and painters can employ a dozen individuals.
“Jim does not recognize that it is a lot different to cutting, and he’s basically treating everybody such as for instance a subservient worker. It really 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.
More recently he was terminated whilst the asian Victoria building preservation franchisor for”abandoning” his region.
After the first vote-out, which Powell says was orchestrated, he and his business partner were required to offer up.
In a email to Powell, Penman took the unconventional step of burning in the would-be customers for the division, and informed him the sales would have to be resolved within three days.
“There are three potential buyers … produce a deal with one of these. Rick’s Party won’t be helping with conditions,” Penman wrote.
Powell says”if youare forced to market, you do not need a prospective shopper advised that”.’
The result was that after investing $400,000 for the operation and putting in 18 months’ work, Powell lost $130,000.
Penman admits”I did put pressure on him to simply accept a reasonable price” but says he had provided Powell more leeway than required under his contract.
Michael Bonnici, a contractor, committed to two local gazebo businesses in Melbourne around the same time. He soon had problems over what he considered were unlicensed franchisees illegally carrying out specific building jobs.
Penman is insistent that he never dismissed certification problems. “The [building preservation and pergolas] department continues to produce every attempt to ensure franchisees are certified, and I keep myself informed of these efforts,” he says.
Within an email exchange with Bonnici, Penman wrote:”I understand you’ve been approaching the authorities [regarding] certification issues, with the apparent goal of getting the department shut-down. I have to congratulate you in your incredible idealism, since this would eliminate your own business expense.
“We may have a fresh divisional designated soon whose first goal would be to be sure that no-one operates illegally.”
The spat went to arbitration. Bonnici was allowed to retain his two areas and did not need to pay any fees until the businesses were distributed.
“They’re not worth the paper they’re written on-but I do not have the amount of money to sue Jim and he knows he can keep you tangled up if you try,” states Bonnici, who now runs another business.
It absolutely was Paul Carr’s beef with Penman that resulted in today’s situation within Jim’s Party. Carr, the former master franchisor in Britain, was terminated by Penman last year.
Penman has admitted he attempted to find a way to remove Carr – who he describes as”completely useless” – after franchisees complained about a lack of service. After being fired for non-payment of charges, Carr subsequently settled the $3400 due and must be reinstated.
Penman subsequently proclaimed Carr in breach of his contract for not giving his franchisees with any assistance. Carr, who denies any wrongdoing, is seeking more than $1 million in damages, but has yet to offer papers on Penman.
Carr and Penman loathe eachother, although they only met face-to-face once, shortly.
Carr promises his lawsuit – via a firm he founded called Felicity Administration, provocatively named after Penman’s first wife – will go the distance.
Penman – who blames Carr for planning the vote and websites seriously critical of him – says he is planning a defamation case against Carr, and supporting two English franchisees in court actions against him.
Meanwhile, the British department has-been run from Sydney.
While Penman hopes the storms will blow over the company, others, such as Chris Munday, are not so certain.
“At the minute it’s the Rick exhibit,” he says. “That’s the complete problem. However it shouldn’t be about him. It really is about the a large number of mom-and-daddy companies that are on the point here. With anything he decides to improve by himself, we’re in a situation where we started playing Aussie rules and now we’re playing basketball. It is ridiculous.”