Lesson Fifty-Four: The Australian Gardener

The lowest point for Jim was two weeks before the Christmas of 1982. He was thirty years old, $30,000 in debt and a failure.

He'd just lost his house and been swindled out of the meagre business he'd managed to scrape together. He could of given up. He almost did, but then he said the same thing he'd said to himself a thousand times, while pushing a lawnmower on a green stretch of grass in the Australian suburbs, "Put one foot in front of another, keep on taking the next small step and the job gets done."

It's a good thing he did, or what would the 1,600 current "Jim's Mowing" franchises have done?

So he started again, with $24, a new bride, and the first of many hard lessons under his belt.

Maybe you've never heard of Jim Penman, but I'll bet you've seen his face. He's the bearded man in the "Jims Mowing" logo and he's in the classified section of newspapers all over the world.

Last week, I promised you the story of a business that escaped the box. Jim is that example. He was right in there with us. Elbowing inside his box, fighting for a bigger piece of turf, trying to build a business and finding "success" elusive.

Then he discovered his opportunity.

It was a few years later, he'd learned how to attract customers, and sell them off to independent operators. So instead of mowing lawns, he'd create and sell small lawn mowing businesses. But it wasn't his real goal. He needed to build a franchise. But not just any franchise, one that gave franchisee's "an offer too good to refuse."

The box opened up, he stepped out and reinvented the franchise.

Instead of making the franchise agreement benefit the company, he made it heavily favour the operator, surmising that to get quality people, you needed to give them a quality offer. He guaranteed franchisee's an income. If they didn't make a minimum weekly wage from the business, he would cover the difference. He treated his franchisees like customers.

They could leave the franchise and go independent at any time, taking the customers with them. He ensured they had a proper advertising budget and created a system that virtually guaranteed success. He designed an agreement that was unfair to him, but was too good to refuse for franchisees.

He charged nothing for the franchises except a modest ongoing fee for advertising and office support. How did he make money? He didn't and he didn't intend to. He wanted the new franchisees to make the money and lots of it. Once the system was proven, people would be eager to buy in.That would provide the capital for further expansion.That's when he'd make money.

Jim learned this lesson from Ray Kroc, who had done the same thing when he came upon the McDonald brothers' hamburger stand in 1954. Ray was selling milkshake mixers for a living. Years later, when some of his franchisees had become millionaires, the mixers were still his only income. The franchise fees did not cover the cost. But success begets success.Once he proved the franchise worked, it drew more demand allowing him to eventually charge over a million dollars per single franchise.

It worked for Jim too. Almost twenty years after stepping out of his box, Jim single-handedly created the largest lawn mowing franchise in the world.