Man says he spent $22k on nothing

The Aussie was excited to make money but claimed he was “rooted” from the start.

Australians who were excited to sign up to be a part of one of the nation’s most popular chains are speaking out about how they have been shocked by being asked to pay $1000 for their own mobile numbers and forking out $22,000 for customer lists.

News.com.au got an exclusive look into Jim’s Dog Wash after some franchisees said they were in a “great deal of distress” amid claims they have missed out on thousands of dollars after they paid $25,000 for a dog trailer they would never own.

Jim Penman, the owner of the company, countered the criticism by saying he went to great efforts to ensure his franchisees were well looked after.

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

Jim’s Dog Wash former franchisee Max* claims a form of corporate “paranoia” prompted the change to ensure Jim’s Group maintained ownership of trailers.

“Funnily enough to ensure compliance you had to send in photos of yourself holding a piece of paper with the year on it and take a photo of all four sides of the trailer to ensure it wasn’t tampered with,” he told news.com.au.

Jim's Dog Wash former franchisees are speaking out about how they got "stung" by the system. Picture: Suppiled

‘Ridiculous’

Max is highly critical of parts of the franchise system under Jim’s Dog Washing.

Max said he paid $22,000 to Jim’s Dog Wash for something called a split, which is when an existing franchisee sells off some of their customers. But he quickly realised it wasn’t worth it.

“I had 110 names on my split that I paid $22,000 for, which is ridiculous … but most were one-off customers,” he said.

“As soon as I signed the contract I was screwed. I was never going to be successful as I had bought a customer base that didn’t exist. They weren’t regular clients that I could call upon every four, six, eight or 12 weeks.

“But the thing is that if a person had a problem with the split they had to go to the franchisor and they received a direct financial benefit from it.

“Everyone you have to speak to up the chain receives a financial windfall. There is no one independent I could talk to and say ‘This was rooted’ as everyone takes a chunk as we go up. From hindsight my franchise was doomed from the start.”

Like other franchisees have revealed, Max was also told his business failure was because he wasn’t working hard enough. In the end, he was relieved to get out.

A split franchise has no value if there are no customers, Jim’s founder Jim Penman said.

“All the buyer gets is a very small territory that is almost certainly not the one they want. Buyers are just not interested. A proper split has a good customer base and is highly attractive,” he said.

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Jim's Dog Wash franchisees don’t own their trailers from 2021. Picture: Suppiled

Insurance shock to save millions

Max also revealed that public liability insurance could only be obtained from Jim’s Group but when he had a minor accident while driving his car with the trailer attached, he was shocked by what happened.

“Jim’s Group had included a clause in the franchisee contract that stated that any damage caused while the trailer was attached to a car would not be covered by public liability insurance but would need to be covered by the franchisee’s personal car insurance,” he said.

“The thing is I can’t do my job unless the car is attached to the trailer. So again another money making scheme … that would both earn and save … millions.”

Franchisees aren’t happy about their treatment. Picture: Suppiled

Mr Penman said the company was always up front with the requirements of its franchisees. He said franchisees must get public liability insurance from the group “because it’s the only way to know for sure they’re covered”.

“They could take out another policy, show us the evidence, and then cancel immediately and get a refund. We’d never know,” he said.

“It’s also by far the best policy around. Cheaper policies always have problems, such as covering a franchisee for lawn mowing but not gardening or gutter clearing.

“As to covering issues such as to do with towing the trailer, we could do this but it would massively increase the cost, and is better covered by the car insurance. Bear in mind that we’re brokers, not underwriters.”

Jim's Dog Wash franchisees have spoken about how little money they made. Picture: Suppiled

‘Sending me broke”

Then there is Jessie* who started off as a Jim’s Dog Wash franchisee.

She was then convinced to become a franchisor, bringing people on board to the business as franchisees and she would receive a cut of their earnings.

But Jessie said she was “struggling fairly early on in the role as it’s a lot of extra work that you have to do and you are essentially abandoned once you signed on the dotted line”.

The mum also raised concerns about the processes in place to sign up franchisees, from a failure to check if people had their full driver’s licence, which she said was later corrected, or if they had the right to work in Australia.

And the sales role was “sending me broke”.

“Because I was very honest in my sales pitches to potential franchisees – I told them all the fees and all related expenses – I was struggling to sell franchisees,” she said.

“Once I been a franchisor for 12 months and hadn’t grown by 12 months, the income from the franchisees wasn’t enough to cover all the fees. It was costing me money to be a franchisor.”

Someone who sold franchisees has also spoken out. Picture: Suppiled

She said she was paying almost $2000 a month with only half of that covered by the income from franchisees.

Many franchisees have also claimed there was a lack of support from Jim’s Group, with the onus often landing on the franchisor.

Mr Penman said that his company always acted fairly but acknowledged enormous pressure was put on franchisors to do better, including the breach notices for those who do poorly.

“After due warnings, a franchisor can be terminated – meaning, forced to sell – for something as basic as not running eight meetings a year or failing to call franchisees at least once a month,” he added.

Money for mobile numbers

Others like Jessie have also complained that Jim’s Dog Wash had tried to charge them $1000 to take their own mobile numbers with them.

Mr Penman said contracts do allow Jim’s Group to ask for phone numbers if a franchisee wishes to go independent, in an attempt to discourage that.

“But in practice, we never insist. Our contracts are unique in that we will waive restraint of trade in return for a $5000 fee, which in practice we often don’t demand,” he said.

He said no franchisee agreements make it easy for franchisees to go independent but noted “our system is one of the most lenient”.

Jim’s Group founder Jim Penman. Picture: Supplied

Jessie said she doesn’t “bad mouth” becoming a franchisee for Jim’s Dog Wash but does offer up simple advice to others.

“I tell them that they would be much better off paying to get their own training, buying themselves their own trailer and going independent to start with,” she said.

“There is no value in joining this particular franchise as they get nothing for it. You are supposed to get support and it’s marketed as being one big happy family and as soon as you sign on the dotted line they abandon you.”

Mr Penman rejceted these claims and said “some people feel bitter and abandoned” but he said Jim’s Group go to “immense efforts to look after them”.

“I also give my direct phone number and email address to every franchisee at training and repeatedly urge them to contact me, including after hour and at weekends,” he noted.

“We do everything possible to make sure they are not abandoned.”

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Originally published as Man says he spent $22k on nothing