Popular Aussie chain faces $2.9m dispute

One of Australia’s best known chains has come under further fire as a bitter dispute emerges.

One of Australia’s best known chains has become embroiled in another dispute which could be worth millions with a bitter war of words being exchanged and allegations of ”intimidation”, which have been strenuously denied.

News.com.au had previously revealed another 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 – with a claim worth $2.94 million having now dropped against Jim’s Group.

The latest stoush comes 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 the man behind Jim’s Construction in Victoria is speaking out revealing another dispute is at play.

Morris Terzo is the franchisee and the franchisor for Jim’s Construction in Victoria. Picture: Supplied

Morris Terzo, who is the franchisor of Jim’s Construction in Victoria, said the “massive dispute” has emerged over Jim’s Group lead system – where potential jobs are supplied to franchisees – which has already attracted some controversy in other divisions.

“In construction, we are not talking about a $120 dog wash lead. The lead is worth up to $500,000, so do the maths on that if you are not getting leads,” he told news.com.au.

Mr Terzo said he has also worked on large projects through Jim’s Construction worth as much as $2 million dollars in recent times.

The dispute centres around Jim’s Construction leads allegedly going to Jim’s Handyman division, yet some do not hold a building licence to complete the work, Mr Terzo claimed.

He said when he raised the issue with the company he was told over email the division was only entitled to new dwelling construction.

“That would be new homes and means I would have to compete against the (building giant) Metricons of this world,” Mr Terzo said.

“But the Building Act says construction is additions, alterations, renovations.”

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

Dispute deepens

But Jim’s founder, Jim Penman, hit back on behalf of the company and said it was “hardly a massive dispute”.

“There are three people involved: a franchisor and two franchisees. That is the entire Construction division. The franchisees haven’t a clue what’s going on and are not even asking for work,” he said.

“Essentially his claim is that handyman leads should be going to construction rather than handyman franchisees, on the grounds that they might cost more than $10,000 and thus require a building license.

“In reality, of course, 99 per cent plus of handyman jobs are below that level and some handyman franchisees do have a builders’ license.”

But since news.com.au asked questions for this story, one of the franchisees has dropped out of the dispute and terminated his involvement with the division.

Mr Terzo claimed the franchisee felt “intimidated” by a phone call from Mr Penman.

But Mr Penman strenuously denied the claims. He said he rang the franchisee “who told me the only reason he’d joined the action was that we were supposedly stopping him from getting Handyman leads”.

“I explained to him that the only reason he was not getting Handyman leads was that Morris had not put him down for them, and that we would be very happy for him to take them,” he said.

“At present he’s not taking leads at all, not even construction leads, because he’s too busy. He offered to drop the action.”

Jim Penman is in a bitter dispute with his one of his construction franchisors. Picture: Aaron Francis / The Australian

Legal avenues

Mr Terzo said he also had the marketing notes for the call centre revised to ensure the right jobs were fed through to the construction division but they were later changed back.

“If you ring call centre it has been trained that anything other than a new construction goes to handyman, which is incorrect,” he alleged.

But Mr Penman said the notes were changed to reflect “this idiotic idea” and “we changed them back”.

The dispute has become so bitter that Mr Terzo has engaged lawyers and the matter is set to go before the Australian Small Business and Family Enterprise Ombudsman for mediation on October 21.

A claim for $2.9 million has been made against Jim’s Group – who fiercely deny the allegations – with Mr Terzo’s lawyers flagging the figure is set to go even higher.

Jim's Handyman leads are at the centre of the dispute. Picture: Instagram

‘Dismissive tone’

Mr Terzo said another franchisee and himself had tested the call centre with inquiries about renovations which weren’t sent to their division.

“I’ve been successful but without my leads, which is the whole reason you go to Jim’s which is to get leads. I think his problem is if Handymen are used to getting leads and leads are switched off and Jim’s Group are used to selling leads externally through Bizza, it’s created a revenue steam,” he said.

Mr Terzo’s lawyers have claimed that there are various breaches of Jim’s Agreement and the Franchisee Manual, adding that attempts by Mr Terzo to resolve the dispute has been met by “general evasive and dismissive tone of recent communications from Jim’s Group”.

Mr Penman said Jim’s Group would attend the mediation, as required under the Code, “but it’s a ridiculous claim and no handyman franchisee will lose any work”.

“Our response can be regarded as dismissive but hardly evasive. We’ve told him exactly what we think and what the law will say,” he added.

Jim's Handyman has 4000 unserviced leads, according to Mr Penman. Picture: Instagram

There were 4000 unserviced leads in the Handymen division in Victoria and when an inquiry comes in they do not know how much a job will cost when it is sent out, he noted.

“We simply require franchisees who are not licensed builders to reject any job that they are not licensed to do. If they took it on and we found out, they could be breached and even terminated. But some of them, of course, are licensed builders and can legally take on such jobs,” he said.

“Franchisees who are qualified can take leads from other divisions.”

He said Handyman leads taken by the Construction franchisees totalled 26 in all, which is just over one per cent of the unserviced handyman leads in Victoria.

“Morris is making an argument that any sort of handyman work that builds anything is ‘construction’, regardless of value,” he said.

“We consider construction to be something like a new home or home extension or granny flat, all of which go to the construction division … I hardly think painting or repairing a wall would meet most people’s idea of construction.”

Mr Terzo claimed new builds would put him in competition with some of Australia’s biggest builders. Picture: iStock

$2700 a month in fees

Mr Terzo said he pays $2700 a month in fees to Jim’s Group.

He also claimed “all divisions absolutely loathe Bizza”, where leads are offered externally.

“As Jim’s Group said they have so many unserviced leads, so they have come up with this idea of selling leads that go unserviced but it’s built on the reputation of the franchise divisions,” he said.

But Mr Penman said leads are sold to independent contractors through Bizza but only those that no franchisee wants, including franchisees from other divisions.

He denied that Bizza was loathed but said it was a system that sells unwanted leads to independent operators, with the agreement that all profits go back to franchisees.

“We’ve spent it so far on such bonuses as free tickets to the football, $1000 TV’s provided for $250, boosted advertising. This year we’ll likely give out close to a million dollars in benefits. So as far as franchisees are aware of the system, they love it,” he said.

Mr Terzo believes the entire size of the Jim’s Group could grow if the division got traction via a different placement of leads.

“I could make a monster and a really successful franchise division,” he added.

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 with the company.

The man said the financial stress pushed him to the brink but Mr Pensman said the “great majority” of franchisees make enough money to live and cover their fees.

Another Jim's Dog Wash franchisee was highly critical he forked out $22,000 for customer lists, but Mr Penman said a proper list would have a good customer base and is highly attractive.

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Originally published as Popular Aussie chain faces $2.9m dispute