‘Misled’: Bombshell emails from popular chain

The well known chain has been under fire and now it is offering refunds after allegations franchisees were deceived.

Bombshell emails leaked from one of the country’s most well known chains has revealed that some participants were “misled” with refunds now being offered.

News.com.au exclusively revealed how a number of Australians said they had been left in a “great deal of distress” amid claims they have missed out on thousands of dollars as a bitter dispute emerged.

Upset franchisees of Jim’s Dog Wash – who pay fees of $49,000 to buy a franchise with$25,000 of that total paid for the trailer – discovered they would never own the trailer after a contract change in 2021.

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

Jim’s founder Jim Penman initially was adamant that franchisees that had signed after the changeover date were informed of the arrangement and chose to accept the deal. He said the group would own the trailers, adding he wouldn’t “gift” several millions of dollars.

But with a growing backlash among franchisees, Jim’s Group has now backflipped on the issue, emails leaked to news.com.au have revealed.

Franchisees received an email on September 19 from Jim’s Group that started with the subject: “Refunds for mislead (sic) franchisees”.

A dispute over Jim's Dog Wash trailers exposed by news.com.au has seen an extraordinary outcome. Picture: Supplied

The email went on to blame someone formerly involved in Jim’s Dog Wash division adding that it had become clear that they had “lied to prospects about the trailers becoming theirs” with Jim’s Group claiming they had also been lied to.

“To the extent that we have been paying upkeep and repairs for trailers that based on the person’s promises, were not to be ours,” the email said.

A number of offers have been made to franchisees in the “interest of fairness” including transfer of the ownership of trailer to allow people to go independent from Jim’s Dog Wash.

However, this offer was conditional on paying outstanding fees including vendor finance, repaying the costs of the trailer maintenance to date as Jim’s Group “covered this on the basis we thought we owned the trailer as we were mislead (sic) also”, paying the $5000 restraint of trade and removing all signage off the vehicle.

The email said for franchisees who wish to remain with Jim’s Group there would be no fees for six months, waiving commission on a resale and continuing ownership of the trailer including covering insurance, registration, servicing and trailer maintenance due to general wear and tear.

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Jim's Dog Wash dispute could cost millions. Picture: Supplied

Alternatively, franchisees choosing to stay but who wanted to own their $25,000 trailer would have to repay the costs of the trailer maintenance to date, pay the $5000 restraint of trade and

agree to take over costs associated with trailer including insurance, registration, servicing and trailer maintenance due to general wear and tear.

“If a franchisee can produce evidence that they were provided with the incorrect franchise agreement, without special conditions, we will assign the trailer ownership to them” based on the conditions, the email concluded.

But Evonne*, who purchased a Jim’s Dog Wash franchise on the east coast three years ago, said she was sceptical about the emails from the group.

“Every email that has been sent to Jim asking for their trailer to be transferred to them so far, he’s rejected so I don’t believe a word of what Jim’s Group says to be honest,” she said.

She suggested the emails were “very likely a response” to news.com.au articles and to an upcoming story to appear on The Project as a way to “try to save face for the brand”.

She added the person formerly involved in the business is “absolutely the scapegoat” who has been thrown “under the bus.” She added: “Otherwise they are liable for a lot of money.

“We’re likely going to send a counter proposal with adjusted terms because no one agrees with paying additional for a trailer we were already lied to about. The email is also only addressed to current franchisees and doesn’t address what they plan to do for the franchisees under these contracts that have already left, if at all.”

Jim's Dog Wash has sent an extraordinary email to franchisees. Picture: Supplied

However Jason*, who has owned a Jim’s Dog Wash for the past 18 months, said the situation was a “hell of a lot better” than not owning the trailer and made it worth staying.

Yet, he believes Jim’s Group had been forced into the decision.

“They realised so many people were getting together and they were going to have a class-action suit against them so they are taking their losses,” he claimed.

“It’s them covering themselves but its still a hell of a lot better for me … considering the fight I was possibly going to be going through.”

But he also didn’t agree with the proposed payment of various fees to Jim’s Group to secure the ownership of the $25,000 trailer.

“They haven’t paid for any maintenance fees, they haven’t paid for anything, so there is nothing to be paid back to them,” he added.

“The only thing they paid for is rego. I pay the insurance, maintenance and they force you to get the maintenance done every year.”

Jim's Dog Wash franchisees are cautions about the announcement. Picture: Supplied

Mr Penman had also reached out to franchisees in an earlier email.

“There have been rumours based on media stories that Jim’s Dog Wash is insolvent or not operating. This is not correct,” he started off the email.

He said four franchisees had the trailer ownership transferred to them after they provided clear written evidence that they had been made a false promise

The franchise founder also foreshadowed another change to the trailers.

“We will be installing tracking devices on all trailers, to avoid problems in the past where trailers went missing,” he noted. “The alternative is to charge all franchisees extra to cover the minority who do the wrong thing, which we do not believe is fair.”

Mr Penman told news.com.au that the group was “installing trackers on all trailers we own, to prevent them going astray and enable recovery if stolen, which is not uncommon”.

“The alternative is to charge each franchisee more ongoing to cover these losses. These are hardworking women mostly and I’d rather they kept the extra money for their families,” he said.

Jim's Dog Wash trailers will have tracking devices installed. Picture: Supplied

Addressing franchisee’ complaints about poor training in his email, Mr Penman said a “training facility at national office” had been established and “from early October all new franchisees will be trained by professional groomers in a supervised course”.

He also flagged a potential class action being funded by Jim’s Group against the former person associated with the division.

Mr Penman told news.com.au that the “entire cause of this problem is that” the person associated with the business “lied to prospects”.

He said the group was considering its own legal action against that person.

He ended his email to franchisees by saying: “I am truly sorry for any and all deficiencies in the division, and determined that we will do better in future”.

Mr Penman told news.com.au that Jim’s Group had complaints from franchisees about being told they would own the trailer, which were “vigorously denied” by the person formerly involved.

Jim Penman owner of Jim's Group. Picture: Jason Edwards

He added the group had “paid out quite a lot of money to fix trailers on the understanding” they owned the trailers.

“If the trailers belonged to franchisees then they should, of course, be looking after them. If you bought a car, would you expect the dealer to pay the ongoing maintenance? The $5000 is the fee to waive restraint of trade, which is in the contract, allowing the franchisees to go independent – which many wish to do,” he said.

Mr Penman admitted there were “serious divisions” within Jim’s Dog Wash.

“Franchisees were told they would own the trailers. We are working to fix that,” he said.

“For those who wish to stay on and accept that we own the trailers, we are offering six months’ fees and no commission on the resale normally 20 per cent. This is by way of recognition that they were lied to and misled. This will actually cost us the best part of a million dollars. If they accept this deal then we will pay for repairs, since the trailers remain ours.”

He added fees are necessary to provide proper advertising and support and the latest survey figures show that only 10 per cent report poor income, which is less than the average for other divisions.

However, former franchisees have complained that they were struggling to survive when they purchased a Jim’s Dog Wash franchise.

*Names changed

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Originally published as ‘Misled’: Bombshell emails from popular chain