JIM’S MOWING SEEKS PUBLIC LISTING
Written on the 17 January 2012
AUSTRALIA’S most recognised franchise company is seeking to raise up to $10 million via an IPO and a public listing on the Australian Securities Exchange (ASX) before the end of the year.
In a Gold Coast Business News exclusive, owner Jim Penman confirmed that 2012 would be the year to float Australia’s second largest franchising system Jim’s Group – owner of Jim’s Mowing and a plethora of other service-related companies.
The company achieved revenues of around $450 million in FY10-11 and services up to 100,000 customers each week.
Penman, who estimates the company’s value at plus $50 million, believes his iconic brand has vast potential and could be worth $1 billion in years to come.
“Jim’s could be a billion dollar company one day and the only barrier to growth is capital,” he says.
“We see a 30 to 40 per cent return on equity. I have a great business and have a lot of confidence in it.”
Penman franchised his mowing run in 1989 and went on to create the world's largest service franchise organisation, which now employs more than 6200 people. There are 455 franchisees in Queensland with 210 in Brisbane and 90 on the Gold Coast.
He says despite uncertainty in global markets and volatility in the capital markets, he is buoyed by the fact that his brand has a 95 per cent recognition rate.
“We own a goldmine but we are still farming potatoes,” says Penman.
“How many companies in Australia have listed that have the same brand recognition as Jim’s? We are up there with giants such as McDonalds, but when you compare size we are like a gnat to an elephant.”
More than 3200 people are now in business through the Jim's Group and with each intake of new franchisees growing, the number is increasing rapidly.
“On current trends we expect to have 3600 business owners by 2014,” says Penman.
He says 2010 saw demand rose 6 per cent while franchisee numbers grew by only 4 per cent.
"Our problem is that more and more franchisees are getting booked out and are unable to take more work. In some areas we've completely eliminated advertising, but there's still too much work coming in.
"Our call centre which services all of our 30 plus divisions took 414,831 leads in 2010, of which 65,457 were un-serviced. In 2011 we took 439,335 leads, of which 80,817 were un-serviced. This is a rise of 23 per cent.”
Jim's Dog Washing forgoes more than 1200 jobs each month because they don't have enough franchisees to keep up with the demand.
Penman says the picture is similar in other areas – lawn moving, car washing, pool cleaning and general cleaning.
"Most employed people are extremely time-poor. They often have to commute long distances and work long hours. They want to spend their weekends with their families enjoying themselves – they don't want to be doing chores, so it makes sense to employ service providers for those time-consuming jobs that they really don't like doing," he says.
"We had more than 250 new franchisees in our last training intake, but we still need more to meet the growing demand.”
Penman, who turns 60 this year, has been forced to stave off franchisor revolts against him, some calling for him to be removed from his own company.
In the UK, a $5 million legal battle was launched in 2009 over claims he had unlawfully conspired to get rid of the head of his UK operation, major franchisor Paul Carr.
Penman says the issue has never been about individual franchisees, but rather a franchisor who he claims to have been ‘loathed’ by franchisees.
“When we first terminated him (Carr) I offered to sell the business and give him 80 per cent of the proceeds. He refused and I counter-sued and also sued for libel over a website he set up. He abandoned the case with costs awarded against him.
“I offered to drop the libel suit if he simply removed his website. He did nothing, so late last year we were awarded $200,000 plus costs for libel. We're currently pursuing him into bankruptcy.
“I very rarely go to court with anyone, but what can you do when someone rejects the most generous and fair terms of settlement? I’m all about supporting the franchisees.”
Penman has an ‘obsessional nature for service’ and personally addresses any concerns customers may have if they cannot be worked out with the relevant franchisee.
“In most cases I will personally send an email out within two hours of the complaint, even on weekends,” he says.
Jim's Group has more than 3000 franchisees in 28 different businesses and also has branches in the UK, Canada and New Zealand.