Cleaner ‘terminated’ after $25k gamble, iconic Aussie brand under fire

An Aussie who poured his life savings into a gamble with an iconic Aussie brand has revealed how it all went so terribly wrong.

One of Australia’s most well known chains is under fire with people coming forward to claim how some of them have been left with nothing after buying into what they thought would be a dream.

News.com.au had previously revealed a bitter dispute where people said they were distressed amid claims they have missed out on thousands of dollars after they became franchisees of Jim's Dog Wash – but it’s not the only division that is the target of complaints.

New claims have been made which come after bombshell emails revealed Jim’s Dog Wash backflipping as it conceded some participants were “misled” in the past.

Refunds potentially costing the company more than $1 million have been offered to affected franchisees. The company blamed the error on a person formerly connected to the business.

Jim’s Group, which is best known for its lawn mowing division, is Australia’s largest franchising outfit with more than 5000 franchisees across 52 divisions and a turnover of approximately $500 million.

Now, Australians who bought into its cleaning, laundry and mobile mechanics division are speaking out about the problems they faced.

Tom* said he quit a job that paid $65,000 a year to buy a Jim’s Cleaning franchise.

“I was working in a warehouse. It was a very easy job, it was a secure job and I didn’t give them notice as I thought I would go into this freedom and then I ruined my job and my savings and had nothing,” he told news.com.au.

A Jim’s Cleaning franchise paid $25,000 he had been saving for years to buy into the group. Picture: Supplied

The 31-year-old said he paid $25,000 outright to buy the franchise.

Leads generated from the call centre cost him $17.50 each on top of the franchisee fees. But he said most of the leads didn’t result in a job and were people simply looking for a quote.

“When I complained about this, they said its very rare that people come into system and go without booking a job,” he said.

Instead Tom claims he was told he needed to work harder.

“I went Melbourne for training come back my first month and made nothing,” he said.

“The first month I couldn’t pay the fees. I didn’t have the money, they said just pay anything.

“The second month no leads came through as they have so many franchisees they couldn’t get jobs for them, the second month I didn’t pay the fee. The third month I didn’t pay the fee and they terminated me.

“It was a disaster. Still now I’m unemployed – it has destroyed me.”

Tom said it had taken him nine years to save the $25,000 working in a physically intensive job.

“I thought it would give me the freedom to be my own boss and then Jim’s Cleaning came through and took my money and nothing changed,” he said.

Jims group founder, Jim Penman. Picture: Aaron Francis / The Australian

Jim’s founder Jim Penman said if new franchisees don’t get enough leads, they can do free services and claim pay for work guarantee.

“For this reason, franchisors need to be careful who they put on. No other service franchise system in Australia has the system, that I know of,” he said.

But Tom was also critical of the pay for work guarantee of $2000, which Jim’s Cleaning would pay, saying it was impossible to get.

Then there is Catherine. She paid $16,000 for a Jim’s Laundry just a few short months ago and is already trying to get out.
“I regret buying it. It was very stupid thing, I made a wrong decision,” she said.

Franchisees from other Jim's divisions are speaking out. Picture: Instagram

She has made a loss ever since starting and has had to go to extraordinary lengths to cover the franchise fees, which are between $1000 and $1200 a month.

“I’ve made nothing. It’s always minus for the past four months,” she revealed.

“My husband had to give me extra money to pay the fees and I’m still working in the Uber to cover the fees.”

Catherine is also highly critical of the pay for work guarantee, where franchisees are promised $1300 a week from Jim's Cleaning if they don’t make the money on their own.

The conditions attached to the pay for work guarantee make it impossible to get, she claimed. These include working at least five days a week for eight hours and providing 22 customers with a free wash, she said.

“The worst thing is every month they are not willing to pay for the guarantee but they aren’t guaranteeing anything,” she said. “We don’t have the power.”

Mr Penman said the great majority of people who buy a franchise succeed.

“A minority fail. That’s the case for any business, except that far less fail than if they went in as independents or with any rival organisation,” he said.

Franchisees from other Jim's divisions are speaking out. Picture: Instagram

Sam paid $8000 for a Jim's Mobile Mechanics thinking it would be a “safe bet and there would be constant work” after being drawn in by a Facebook advertisement.

But he was left “very angry” as he had been told when buying the business that there were 300 unserviced leads a month for mobile mechanics.

He said he later created a WhatsApp group with other franchisees and claimed no one was making money in the division, he said.

Leads for jobs cost $23 each, he added, and initially he was given 15 leads in 20 days.

“Not everyone answered my calls or messages so of the 15 leads I got two jobs,” he said.

“The reality was probably you would win about 30 per cent of the calls you would get, but it was very quiet. There wasn’t many leads at times and the reality is you have to pay for every lead that comes in even if they don’t answer their phone or call you back.

“Even if someone their put name down as Abc Xyz, you have to pay that for lead as supposedly that’s a legitimate lead.”

“I started a private chat with the guys and none of the guys in Victoria or NSW make any money out of it. Everyone is losing money and everyone else was too scared to pull the pin as thought they would have to pay fee to get out of it.”

Jim’s Mobile Mechanics said it had 300 unserviced leads but that wasn’t the experience of a franchisee. Picture: Instagram

But Mr Penman disputed the claim and said they do have a lot of unserviced leads across the group’s 50 divisions”, though clearly not in the areas we’d most like them”.

He said Jim’s Groups documents showed last year there were over 250,000 unserviced leads, he said.

“Clearly, some franchisees don’t like the system and everybody would prefer lower fees, but the great majority of franchisees do make good or satisfactory income,” he added.

Sam paid up to $1600 a month in fees and realised paying it out didn’t “make sense” given the lack of work or money being made.

“I thought I might as well pull the pin and do my own work instead of paying $1600 a month especially when they expected you to do the advertising and were charging me $350 a month to do the advertising. I felt it was pretty unfair,” he said.

”They expected me to pay them monthly advertising fees and for me to run around and leave flyers in people’s letterboxes and that didn’t make sense to me if I’m running around with flyers and doing all my social media why am I paying advertising?”

Mr Penman said all advertising funds are audited yearly, unless the franchisees ask for this not to happen.

“If there are any funds left over, because all franchisees are busy, we get the franchisees to vote on how to use them,” he said.

“They can choose to get the money back or have them pay for a conference or extra training. These are all basic requirements of the Franchising Code. Franchisees can choose to do their own advertising if they wish, but this is not common.”

Jim Penman said the majority of franchisees succeed. Picture: Supplied

Sam said he found it particularly insulting that he was told to pick up handyman work and cut grass to make more money when he was a qualified mechanic.

The 43-year-old was also told he didn’t have enough training, he should work at night, his quotes were too expensive and he wasn’t travelling far enough for jobs which was “ridiculous”, he claimed.

“No one is asking for service in middle of night. People want done during the day, on weekend, while they are at work or gone away and their car is sitting at home,” he said.

Mr Penman said if a franchisee is doing poorly they might be challenged to raise their prices but it was “not difficult because most are flat out”, work longer hours or upsell to more lucrative services or attend meetings to gain new skills.

A Jim’s Mobile Mechanics set up. Picture: Instagram

But the money made was the biggest issue in the end for Sam and he decided to walk away, cut his losses and go solo.

“If I’m going to make $50 per job I might as well work for someone else,” he said.

“On a good day I made about $500 a day, which was at least enough to pay the bills and survive per week, that’s all I care about. I don’t want to be rich.

‘But I just can’t justify they give you $1000 of work and sting you with a $1600 bill. The reason my fees were only $1600 was two weeks of month I had switched myself off as I switched off leads.”

He believes four other franchisees from Jim’s Mechanics also walked.

Mr Penman added it was correct that some franchisees are making “very little money”.

He said an annual survey of franchisees last year showed nine per cent reported a poor income.

The well known franchise group has been dealing with a bitter dispute in its Dog Wash division. Picture: Supplied

Jim’s Group also conducted an independent survey, which recorded 14 per cent of people saying they had poor income, but Mr Penman said it only had a 30 per cent response rate.

“Am I unhappy about the nine per cent? Absolutely, and we need to do better,” he said.

Meanwhile, a franchisee from Jim's Groups most popular divisions, Jim’s Mowing, also spoke out about the mental toll and financial struggles he faced.

The man said the financial stress pushed him to the brink adding any “support you are promised comes with a price tag” when joining the group.

Former franchisees from Jim’s Dog Wash also raised the alarm over how little they were making as they struggled to survive and poured a large part of their earnings into fees and loans.

Another Jim's Dog Wash franchisee was highly critical he forked out $22,000 for customer lists

*Names have been changed

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Originally published as Cleaner ‘terminated’ after $25k gamble, iconic Aussie brand under fire