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Entrepreneurship and Ethics: A Look into Jim Penman’s Business Principles

Jim Penman speaking at the 2023 Franchising Expo at the Melbourne Exhibition Centre


In 1988, Jim’s Group and Jim’s Mowing founder, Jim Penman attended his first expo at the old exhibition building, feeling intimidated by VIP, a franchising giant with 250 franchisees. At the time, they were running a lawn-mowing business without uniforms, signage, or logos. The introduction of VIP prompted them to consider joining the franchising industry, eventually developing their own franchise system with an unwavering focus on customer service. Jim’s obsession with quality services stemmed from their personal distaste for disappointing customers and their drive to expand their business with subcontractors, who sometimes came up short in delivering the same level of expertise.

As the business grew, various systems and procedures were implemented to ensure the highest quality of service and satisfaction to clients, resulting in a decline in complaints and an increase in work leads. A fee system was introduced for franchisees, who had more control over the jobs they wanted, a pay-for-work guarantee was established, and regular surveys were conducted to measure customer satisfaction. Although customer service is a key pillar in our franchise model, the franchisees’ well-being remainsJim’s top priority.

The following is taken from his 2023 Day 1, Keynote speech at the Melbourne, Franchising Expo & Business Opportunities Expo, filmed by yours truly!

Key Takeaways

  • Emphasis on customer service led to the development of a unique franchise system with a focus on quality.
  • Implementation of various systems and procedures contributed to a decline in complaints and an increase in work leads.
  • Jim’s primary concern is the well-being of his franchisees while maintaining a high level of customer satisfaction.
Jim Penman speaking at the Franchising Expo 2023

First Expo Experience for Jim Penman

Jim Penman, recalls visiting his first Expo back in 1988 when he wasn’t yet a franchisor. At that time, he had a business building up and selling lawn mowing rounds. It was nothing glamorous – they had no uniforms, signage, or logos. Then, VIP, a franchising giant entered the scene with 250 franchisees, putting Jim’s little business at risk. He thought VIP would crush him and even attempted to join them, but they were not interested in having him.

However, it was during this Expo that he saw the benefits of the franchising system and VIP’s business model. Even though VIP’s approach was impressive, he believed he could offer something better for his own potential franchisees, which later led him towards developing his own franchising system.

For Jim, customer satisfaction was vital, and he was constantly working to enhance his business’s service quality. Additionally, he realized he would need to grow and expand his business to face the competition from the ever-growing VIP franchise. Finally, he decided to venture into franchising as a form of self-defence.

Transition from Academic to Business Owner

Jim Penman shares his journey from being an aspiring academic to a successful business owner. He spent 10 years at the university, completing a PhD in history. However, with no clear career path after completing his PhD, he decided to enter the world of business, specifically in the lawn mowing industry.

Initially, he didn’t have any knowledge of business and made many mistakes along the way. But despite these challenges, he discovered that he had a deep-rooted obsession with customer service. He couldn’t stand the thought of letting customers down and consistently aimed to go above and beyond in meeting their expectations. This helped him develop a strong reputation for excellent service, and his business began to grow.

As his business expanded, Jim started bringing subcontractors on board to help handle the increasing workload. However, he found that not all of his subcontractors shared his commitment to exceptional customer service, which frustrated him. Around this time, he encountered a competitor that seemed poised to crush his small business. Instead of giving in to the competition, he decided to enter the world of franchising, using it as a form of self-defence.

His focus on customer service continued as he built his franchise system, but he soon realized that relying on customer service alone was not enough. To drive the success of his franchise, he needed to put equal emphasis on supporting and prioritizing the needs of his franchisees. As a result, he introduced various systems to ensure their success, including lead fee systems and regular client surveys.

Despite the potential discomfort that the pressure to provide excellent customer service might bring, Jim’s franchise system benefited from this continuous focus on improvement. The level of complaints went down, while lead generation increased, ultimately leading to higher income for the franchisees.

Jim acknowledged that his franchise’s growth is not limited by a lack of clients, but rather a lack of franchisees. This revelation underscores his belief that the franchisees are the backbone of his business, and their success is ultimately the success of the entire franchise system. With a tone of confidence and knowledge, he reflects on his transition from academic to business owner and the importance of balancing customer service with the needs of the franchisees.

Obsession with Customer Service

Jim has a strong obsession with providing excellent customer service, stemming from a desire to never let customers down. This obsession led him to invest in new equipment, such as one of the first brush cutters in Australia, to perfect the edges of customers’ lawns. Jim believed that every lawn job needed to be precise, with every edge trimmed and all grass picked up.

As the business grew and Jim began employing subcontractors, he found that many of them did not share his level of dedication to customer service. This frustration pushed him to develop a franchise system to encourage better service across the board. This system implemented various measures such as monitoring complaints and requiring franchisees to pay a fee for every lead provided, incentivizing them to take jobs they wanted and could compete at a high level of quality.

Over time, more rigorous systems were put in place to improve customer service further. These included customer surveys, with results used to rate franchisees, and a strict system for handling complaints. Too many complaints within a six-month period could result in a franchisee receiving a warning, and if the issue persisted, they could potentially lose their franchise.

As a result of continually refining the focus on customer service, levels of complaints have dropped dramatically over the years. The franchise found itself in the unique position of receiving so many leads that it often could not keep up with demand. In fact, in 2022, Jim’s franchise had to decline 287,000 leads, as they simply could not service all the potential customers. This heightened focus on customer service also led to a significant increase in the proportion of franchisees reporting good income.

While there remains a small percentage of franchisees who report poor income levels, the majority are kept consistently busy due to the high demand for services. The pay-for-work guarantee set up within the franchise ensures that those not receiving their target weekly income can offer free services and still be paid, promoting further customer satisfaction and business growth.

Despite the significant achievements in improving customer service, Jim holds a higher priority for his franchisees. There is a belief that the focus on customer service leads to growth primarily limited by the availability of franchisees rather than a lack of clients. Therefore, the franchise continues to adapt its systems to maintain its high standards for both franchisees and customers.

Growth of the Business

In the early days of the business, the main challenge was finding enough work for the franchisees. With teams of canvassers knocking on doors to secure work, and each contractor contributing approximately AUD 150 per month for advertising, it was crucial that the business invested in customer service to ensure long-term success. As the company’s customer service systems strengthened over time, the level of complaints drastically reduced, while the number of leads increased.

Interestingly, as customer service improved, the demand for the services provided by the franchisees skyrocketed. Last year, they knocked back an astounding 287,000 leads – an increase of approximately 32% compared to previous years. This surge in demand led to the franchisees enjoying better income rates, with over half of them reporting good income based on anonymous surveys.

To guarantee the financial well-being of their franchisees, the company established a pay-for-work guarantee that set an amount – currently around AUD 2,000 per week – for each franchisee to earn. If they did not achieve this target, the company would allow them to provide free services to anyone, with the franchise paying them the standard value.

This approach has not only contributed to the growth of the business but also ensured a strong focus on prioritising franchisees as the number one priority. This emphasis on the welfare of the franchisees played a significant role in overcoming the initial challenges faced in providing enough work for them, resulting in a thriving business that constantly aims to improve its customer service and meet the needs of its ever-growing clientele.

By maintaining this focus on franchisees and recognising their importance to the growth and success of the business, the company has managed to reap the rewards of its investment in customer service, leading to a vibrant and expanding business with an impressive track record of satisfied franchisees and loyal clientele.

Introduction of Franchising

The decision to venture into franchising was driven by the need for self-defence against a competitor. In the initial stages, Jim had a small business with no uniforms, no signage, and no logos. But upon seeing the benefits of the franchising system and how it might improve their franchisees’ experience, they decided to adopt this model for their business growth.

The main focus for Jim, as a franchisor, is to provide excellent service to two main groups: customers and franchisees. As part of their strategy to ensure customer satisfaction, they established a fee system specifically designed to incentivise franchisees to serve customers better. This system is based on a base fee combined with a smaller lead fee for every job the franchisee is assigned, which has proven to be effective over time.

Moreover, to maintain a high level of customer service, the franchisor implemented a series of measures such as monitoring complaints and sending out surveys to clients after receiving a service. This information has been used to rate the performance of franchisees and, when necessary, take appropriate steps to address underperforming franchisees, such as issuing warning letters, breach notices, or termination.

These efforts to improve customer service have had a noticeable impact on the business and have ultimately led to a significant reduction in the number of complaints recorded. Consequently, the demand for services provided by the franchise rapidly increased, resulting in more leads than the existing franchisees could handle.

This increase in workload for franchisees has had positive effects, such as a majority of franchisees reporting good income and fewer reporting poor income. The franchisor also offers a pay-for-work guarantee to ensure that franchisees have a consistent income even during slower periods.

By focusing on exceptional customer service and supporting their franchisees, the franchisor has achieved both substantial business growth and the capacity to deliver high-quality services without compromising on either customer or franchisee satisfaction.

Focus on Service and Customer Satisfaction

Jim places great emphasis on providing exceptional customer service. He believes that the success of a business largely depends on its ability to offer top-notch service to clients. Therefore, they implemented systems to ensure that their franchisees provide excellent services consistently.

One such system is tracking complaints and setting high standards. By closely monitoring complaints, they found that franchises with a minimal number of registered complaints tend to perform better, leading to a significantly lower complaint rate nowadays compared to the early days of the franchise. This decrease in complaints has positively impacted the overall performance and growth of the business.

Another system in place is surveying clients to gather feedback on the services rendered. Ten days after a job has been completed, a survey is sent to the client asking about their experience. This feedback allows for constant improvement of services provided by franchisees. Employing such strategies has resulted in an 80% decline in complaints over the years.

These efforts to improve customer satisfaction have also led to an increase in the number of leads, making it more difficult to find enough work to satisfy the demand. In 2022, they had to decline 287,000 leads, which represents 32% of all leads received during that time. Despite this challenge, the company remains committed to ensuring the best possible service for their clients.

A crucial aspect of customer service is understanding the franchisees’ wants and needs. By allowing franchisees to choose the type of work they prefer, the company is catering to individual preferences and ensuring that each franchisee is happy with the services they are offering. This level of customization leads to an overall better performance of the business.

Prioritizing excellent service and customer satisfaction remains at the core of Jim’s franchising model. He believes that the business’s steady growth, increase in leads, and decrease in complaints over the years serve as evidence that their commitment to these values has paid off. Commitment to customer service is what sets them apart in the industry, and they are continuously looking for ways to improve and maintain their high standards.

Systems and Procedures for Quality Service

In the pursuit of offering quality service, a system was developed that was oriented towards customer satisfaction. Over time, it evolved into a robust system that takes customer service to a new level. When catering to clients, two things were observed with utmost importance, service to customers and service to franchisees.

Adjustments were made to fee structures, not only addressing the problem of franchisees failing to follow up on leads but also incentivising them to take up the job they were interested in. This system allowed franchisees to choose the services they desired and enabled them to prioritise their work. As a result, they were more likely to be efficient.

To further improve customer service, there were systems put in place for monitoring and addressing complaints. A rigorous structure was established where franchisees who received frequent complaints were issued warnings and even termination if the issues persisted. The aim was to constantly apply pressure on franchises to provide excellent service.

To assess the quality of service provided, surveys were conducted for clients asking their feedback on the service received. This feedback was then used to rate the franchisees and to encourage them to deliver outstanding work. This might have seemed uncomfortable for some, but it enabled the system to become more efficient and customer-focused, leading to a continuous drop in the level of complaints over time.

Interestingly, as customer service quality increased, so did the demand for services. In the past, finding work often proved to be challenging. However, with the refined system in place, the level of leads began to rise sharply, resulting in many franchisees reporting higher incomes. The focus on quality service allowed businesses to grow and succeed in the competitive marketplace.

To ensure sustained growth and service quality, the ultimate priority was placed on franchisees. By prioritizing franchisees and working on improving customer service through effective systems and procedures, the business was able to achieve both its goals of satisfying the clientele and supporting franchisees in their growth.

Pressure on Franchisees

One of Jim’s key concerns when it comes to service quality is the pressure put on franchisees to deliver great customer service. Jim has implemented a very tough system, with strict monitoring of complaints and service ratings. Although this may seem uncomfortable and may even cause some franchisees stress, Jim believes the results speak for themselves.

Over the years, there has been a significant decrease in customer complaints, dropping to less than one percent of what they were in pre-franchise days. This decrease can be attributed to the strict service quality standards set in place by the franchisor. Not only did these standards lead to a decrease in complaints, but they also sparked an increase in the number of leads generated from satisfied customers.

Initially, the challenge was finding enough work for franchisees. Now, however, they face the opposite problem. Last year, the company had to turn down 287,000 leads or 32 percent of all leads received. This is not due to increased advertising, as there has actually been a reduction in spend on advertising for certain divisions. This has led to a greater proportion of franchisees reporting good income, and a drop in the percentage of those reporting poor income.

The company provides a “pay for work guarantee” scheme, where they set up an ideal income target for franchisees, usually around AUD 2,000 per week. If a franchisee fails to achieve this income, the franchisor allows them to do free services for clients and pays them the normal value, which in turn leads to more work and an increase in income.

Jim strongly believes that the priority of any franchisor should be their franchisees, even more so than customer service. They acknowledge that the primary limitation for growth is not a lack of clients, but rather a shortage of quality franchisees, making it all the more critical to ensure the satisfaction and success of current franchisees.

About the Author

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CMO for Australia's largest franchise, the Jim's Group. I share my knowledge that helped us grow to 5,000 franchisees with various content marketing and other digital strategies. I am also passionate about building online niche sites in order to build multiple revenue streams whilst learning SEO.

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