Jim’s Mowing founder David “Jim” Penman has described a set of new franchising recommendations that were submitted to the Australian government as “feeble,” adding that he believes franchisees currently get “incredibly stuffed” by franchisors.
Recommendations from the parliamentary inquiry into the $170 billion franchising sector don’t go far enough, according to Penman, who founded his gardening franchise in the 1980s.
Although a franchisor himself, Penman thinks Jim’s Mowing has done a good job of empowering the franchisees that it works with.
The Senate committee into the franchise industry handed down 71 recommendations to make the industry fairer, including the establishment of a taskforce to better protect franchisees.
“The extent of poor corporate governance in some areas of franchising is comparable to that in the financial services sector,” the committee said. “There are deeply rooted cultural problems that will not be resolved by a franchisor replacing a few senior executives.”
Penman set up his lawnmowing business Jim’s Mowing in 1982. It’s now a franchise empire with over 3,000 franchisees across multiple business units, and over $400 million in revenue, according to a spokesperson.
Despite the tough talk from the committee, Australia’s well-known franchisor told The Venture Podcast with Lambros Photios the report doesn’t go far enough because the deck is stacked in favour of the franchisor.
“The biggest problem in franchising, is you have this massive in-balance of power between the franchisor and the franchisees,” said Penman.
“The franchisor’s got everything on their side, they write the contract, they have all the legal resources, they’ve got everything, and the franchisees get incredibly stuffed.”
Penman said many of the problems come from the fact that the whole industry doesn’t understand the basic disclosure document, which governs much of the relationship between franchisee and franchisor.
“It’s unreadable, basically. My own franchising lawyer said she’d struggle to know what on earth it meant, and what protections were there,” said Penman.
“It’s a dense, legalistic contract sent, even the lawyers who give advice don’t understand these things. It doesn’t help in any significant way.”
In the interview, Penman also revisited his ruthlessness as a business owner, specifically the instance where he fired his own sister, which has gotten some press lately.
“Nothing is more demoralising for a staff member than nepotism. ‘Hey I’m busting my gut, I really care about the organisation, and somebody’s there because he’s the bosses son, or the bosses sister, and doesn’t have to do the work that we have to do.’ Can you imagine how they would feel about that?”
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