Penman says that initially, his main competitive advantage against a far bigger local competitor was the list of current franchisees which he happily handed out to all potential franchise enquiries (way before the law required it).
“I said if you want to check me out, call them. I just focussed on trying to keep my franchisees happy and, despite doing everything else wrong, it worked,” he says.
In today’s market, large franchise chains seem to be failing with increasing frequency. It’s an issue Penman feels strongly about.
“The whole system of franchisees is totally screwed up. I don’t think the law protects franchisees to any extent that really matters. I’m not a believer of big government, but the law should change, and some of the things we do [at Jim’s Group] should be automatic. If you’re not giving good service to a franchisee, why shouldn’t they have the right to take their signs down and walk away?” he says.
Penman has always seen franchising as a model where both parties should benefit.
“When one party is just being squeezed into the ground, why should they have to stay in a fundamentally unfair relationship?…These aren’t rich people, they are typically people who have mortgaged their house and their family’s future…These people deserve protection,” he says.
Penman says he aims to give his franchisees “extraordinary powers”.
“Our franchisees can effectively walk away for a few thousand dollars if they are not happy. They can move to a different franchisor, vote out their franchisor or veto changes to the manual. These things are unheard of, but they actually work quite well. At every stage of the business you have to treat your franchisees like incredibly valuable clients, not like serfs,” he says.
Powers aside, those who aren’t upholding Penman’s high standards will hear about it fairly quickly, particularly if the issue involves customer complaints.
“I go through every complaint for the whole organisation, every day. I take it seriously. Any client that rings the office with a complaint more than once gets put through to me automatically,” he says.
For Penman, it’s a matter of good service.
“When you give good service people will beat a path to your door. I’m not saying our service is as good as it should be: it most certainly isn’t, and I find that painful. But there’s a certain level of fanaticism we have about service,” he says.
Not everyone likes the approach, but Penman says it’s part of the reason the company’s leads are rising faster than its franchisee numbers.
“Franchisees get very angry with me [for coming down on them about complaints without evidence]. I say, ‘Can you prove that you did everything right? Did you call them – where’s the record? Did you text them? I want evidence,” he says.