23/07/2008 - 22:00

Jim’s, Jani-King top WA franchise list

23/07/2008 - 22:00

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Jani-King has emerged as one of the fastest growing franchises in Western Australia, measured by number of outlets.

Jim’s, Jani-King top WA franchise list
Taking up a franchise, like Jim\'s home services operators have done, is a boom business in WA.

Jani-King has emerged as one of the fastest growing franchises in Western Australia, measured by number of outlets.

In this year's WA Business News Book of Lists, the commercial cleaning service slots in at second position for the second consecutive year, growing by 85 franchises this year.

Global sandwich chain Subway is another rapidly expanding franchise in the state, taking third position on the list with 110 outlets, behind list leader Jim's WA and Jani-King.

Subway has opened 14 new outlets throughout the state since 2006.

Victorian-born franchise giant Jim's WA, which began as Jim's Mowing, has remained list leader for the past four years, despite only adding six new franchises to the group since 2005.

Jani-King's Australasian franchise, headquartered in Burswood, could soon surpass Jim's WA, growing from 100 in 2007 to 185 for the year to date.

The company's WA regional manager Geoff Samuels believes the key to growing a franchise is providing genuine, ongoing training and support for franchisees.

"Jim [Cavanaugh] started this thing and he just continues to drive what I would say is the perfect franchise system," Mr Samuels told WA Business News.

"You genuinely can't top it.

"We source the customers for franchisees, we provide a 24-hour phone service for them and our customers, we offer financial assistance, we do all their admin work for them, all their banking, debt follow-up and debt recovery, and we give ongoing training."

Mr Samuels said the model was designed to minimise mistakes made by franchisees.

"I don't want to be sitting here worrying about you as a franchisee, I want to be sitting here having a coffee discussing with you how we can grow the business," he said.

Jani-King is represented in 18 countries around the world, with Australia and New Zealand hosting most of the 11,000 franchise owners outside of the US, where the company was established by Mr Cavanaugh in 1969.

While Jani-King and Jim's WA continue to dominate, there has been some re-shuffling in the list from 2007.

Bakers Delight Holdings has stayed in the top five since 2005, despite having only added two franchises since last year. The bakery chain was overtaken by Subway, which has the third most franchise outlets throughout WA.

The continued growth of Baker's Delight, although minimal, allowed it to surpass Mortgage Choice, which despite growing by eight franchises this year, was displaced to fifth spot.

And despite uncertainty with its franchise licences following a dispute with owner Yum Restaurants International, KFC is a notable mention at ninth spot with 46 of its 600 franchises in WA.

Of the top 20 in this year's list, eight are new additions, with four of those in the top 10.

But the state's franchise leader, Jim's WA, is well ahead of the pack.

Founder Jim Penman said that knowing when to stop growing was just as important as knowing how to grow.

Jim's Group has undergone extensive growth since it was established in 1982. It has evolved from a single lawn mowing service to boast 2,322 franchisees in Australia, offering 22 different divisions of franchises ranging from mowing to painting, roofing, car cleaning, bookkeeping, cleaning, paving and pool care.

"We are no longer adding new divisions and haven't done so for quite a few years," he said. "You've got to assess the long-term benefits.

"After a while things can get a bit messy so you have to address whether it's worthwhile starting another one, what it's likely to do for you in terms of profitability and consider if it will encroach on your existing franchises."

Jani-King has experienced similar growth since its Australasian division was founded in Perth by Ben Stoltz and Brian Morris in 1993.

Although Jani-King now operates 950 franchises in Australia and New Zealand to service 3,600 clients, Mr Samuels agreed that an expanding franchise has its limits.

He said the relatively low entry cost of a Jani-King franchise, ranging from $14,000-$86,000, had enabled the company's global growth.

"However, it's important not to grow too quickly," Mr Samuels said. "If you've got too many franchises to try and control, if you grow too quickly in this business you'll fall over. Growing too quickly means you're not spending enough time with your franchisees and you'll forget about those ones lagging behind."

Mt Hawthorn-based The Franchise Alliance says it often finds that franchisors spend more money in trying, and not often succeeding, to recruit new people and yet spend nearly nothing to improve the performances of those that they already have.

Fundamentally, the Alliance says, a franchisor is a business coach and ultimately holds the responsibility to apply time and resources to that task.

"We would estimate that more than 50 per cent of all franchisees can improve the performance of their business and it is that much easier to do with the guidance and support of their franchisor or someone working with them," Alliance spokesperson Hayley Ralph said.

Mr Penman has used that philosophy to grow the Jim's group, but says allowing for autonomy is a key aspect of his franchise model.

"We make it very easy to have big operations," Mr Penman said.

"Under a lot of the franchise systems you'll come across you have to pay for everything.

"In Jim's Mowing, if you want to have a five, 10 or a 500-vehicle fleet you don't have to pay extra for them, whereas under a lot of other systems you'd have to have a separate franchise for every vehicle.

"In the Jim's system it is set up so franchises are run independently, so you could have a franchise that makes $25 million a year and they don't have to pay extra fees.

"Once they're in, franchisees are given a lot of independence."

Mr Penman said a lot of the franchise was modelled on Adelaide-based home services franchise VIP.

"I wanted to grow my business, in the long-term, as one that worked to be a genuine franchise. So I looked at things from the point-of-view as if I was on the other side of the desk, what would I want?

"With my original plan, I looked at what VIP did and I didn't like their contract, it was too one-sided, so I developed all the different strengths I could find on their weaknesses."

Historically, franchises with proven track records like Jim's, have flexible and simple franchise models.

Larger global franchises such as Subway, Domino's, McDonalds, Jani-King, Nando's and KFC have strong brand recognition through many outlets and, in some instances, operate in many different countries.

These, more often than not, require a large initial investment from prospective franchisees and franchisors are extremely diligent about who they select.

Smaller franchises with lesser-known brands are usually run by small business owners and generally do not require a substantial outlay to start, although the risks are much higher.

The Alliance believes you are most likely to come across rogue operators at the entry level, where a prospective franchisee needs from about $10,000 to $50,000 to invest.

Franchising is seen as a robust business model that provides an entry into business ownership for many Australians.

With an estimated 62,000 franchise businesses in the country and almost 1,000 franchised brands to choose from, franchising has become an important sector of the economy, contributing close to $130 billion.

Between 2004 and 2006, there was strong growth in the sector in both the number of franchise systems (up 12.9 per cent) and franchise units held (up 14.6 per cent).

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