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Published 09 August 2012 03:50, Updated 09 August 2012 05:01
Jim Penman sold his first three franchised rounds to people who called him by “not selling them”, as he describes in his book Selling by Not Selling.
“I told them not only how to buy a mowing business but also how to run one properly. I gave advice on advertising, collecting payment and such technical hints as how to cut wet grass and fill the catcher.
“All my hard-earned knowledge was passed on without strings. It was not: ‘Buy from me and I will help you’ but ‘Here’s how you can succeed, regardless of who you buy from. Or even if you choose to build your own business.’ At the end I would simply show the round on offer and briefly state some of the advantages of dealing with me.
“I was feeling quite virtuous but a little discouraged. I had adopted this new approach with the aim of selling more runs and it also felt good to be giving fair, unbiased advice. But it wasn’t doing much for me and business.
“But then something astonishing happened. All three came back and bought from me!”
JIM ON HIS ‘HAPHAZARD MANAGEMENT STYLE’
“My first and greatest challenge was our interstate growth. At first, all the franchisors were happy. They were making money, the system was growing at a dizzy rate and new regions were starting up in short order. It was also clear I had grossly underestimated (as usual) the potential of the business. To give one example, I sold the rights to Queensland for $75,000 with a $25,000 deposit. The franchisor started selling off smaller regions outside Brisbane, such as the Gold Coast. Within a couple of years, the Gold Coast alone resold for $90,000 and just recently the northern third changed hands for considerably more!”
JIM ON FLAWS IN THE FRANCHISE BUSINESS
“It is strange how many would-be franchisors neglect the issue of how much franchisees could earn. A young man came to see me about his fledgling business in home-based security. He had gained a lot of publicity and believed he could provide a socially valuable service. His franchise was going to be a runaway success.
‘How much money are you making?’ I asked.
‘Around $400 per week.’
‘Make yourself a thousand,’ I told him. ‘Then you might have a concept worth selling.’
“We teach our franchisees to quote so that they will make at least $35 per hour and preferably more. Less than this and it is impossible to attract the kind of people we need. In fact, a recent survey showed mowing franchisees making over $1600 per week, and the better ones work on a minimum of $80 or even $100 per hour.”