Income Guarantee Explained: How We Support New Franchisees at James Home Services The Real Franchise Episode 26

Rhiannon Hello and welcome back to another episode of The Real Franchise. This is a video series that is designed to deliver real information, real answers, and real insights into franchising. The series is brought to you by James Home Services Australia. I’m the CEO and Justin is one of our owners and our head of new businesses. Together in this series, we tackle all of the big topics completely unscripted, completely unplanned, and totally unfiltered.

No sales, no fluff. We just give you information straight out. Today’s topic is a really interesting one, and it’s one that if you’re thinking about a franchise, then you’re probably definitely going to be interested in this one. We’re talking about an income guarantee. Now, there’s a million ways that franchise networks offer an income guarantee. Sometimes it’s termed an income guarantee.

Sometimes it’s guaranteed work. There’s a difference. We’re going to dive into that a little bit later on. But ours is an income guarantee. And today we’re talking all about it. So hopefully by the end of this video you’ll have a very clear understanding on what it is, why it exists. How do you get eligible for it and why it would support you in your business, and how actually we use it as a tool to help you build a really strong business in our network.

So, Justin, let’s start with the basics in our network. What is an income guarantee? As in how much is it and how do you qualify?

Justin We’ve recently just increased it. So, our income guarantee starts in the third week of your business. So that’s the third week of training. It starts with a payments pot start. If you if you, qualify I’m going to talk about that. That’s $1,500 a week from week three for the next 12 weeks. So to the end of week 15 of trading in your business, you know, you have at least $1,500 guaranteed.

So if you earn less and you qualify, we top up your income to that 1500. So in a nutshell, that’s what our income guarantee is.

Rhiannon Yeah. So how do you qualify in our network for the income guarantee. Is it is it a case that every week we just assess what income you’ve made and we top you up irrespective of anything else? Or are there certain things that you need to do in order to qualify in our network for the income guarantee.

Justin So, there’s there’s a few key things, and all of the things. So before people decide to join us, I get a copy of the income guarantee. You and I have to sign it before they sign up. So there’s nothing hidden or anything like that. But what I personally love about the income guarantee is all the the things that are the conditions, right.

Even if you didn’t have a guarantee, if you did those things, you will build a successful business. They they they’re the fundamental principles of the business system that helps you generate income. So to me, the key one is the business needs to be worked at least 40 hours a week. Right. And and people say, well, what’s that?

And so that’s, you know, doing jobs obviously doing quotes. But in your training, when you go through your training, we’re going to teach you 51 ways to generate leads for your business. And so, you know, let’s just say in the first week you didn’t have any jobs, will you? 40 hours is going to be spent doing those sorts of things, you know?

And the most important to me are the online stuff, Google and social media, all that sort of stuff. But, you know, it’s dropping brochures, it’s talking to local businesses and people in your area. So there’s those sorts of things that make up the income guarantee, all things you should be doing. Even if there wasn’t a guarantee. The other thing I do like to say to people is look, and that 40 hours, you know, if your business doesn’t just have to be you, you know, like if you and your wife, for example, go for a walk in the morning, dropping brochures down each side of the street, her time counts as well.

Because, you know, you and I both saying if people put in at least that commitment, they’re going to very quickly build a really good business. And to me, you know, in the starting of a business, 40 hours, that should be like, that’s the minimum. You know, like people in the particularly the first 12 weeks, as we’ve talked about in previous episodes, the first 12 weeks, you’ve just got to really go for it.

Get the ball rolling.

Rhiannon Yeah, yeah, we’ve definitely seen over the last few years, especially that, that the bigger the commitment that you give your business in those first few months, the faster you’ll start, the more confidence you feel in your business sooner. And ultimately turnover and results follows on from that commitment that you’re giving. Yes, I, I often have the opportunity to deliver our eight steps training.

And part of our eight steps training is to walk people through the income guarantee and make sure that they fully understand it. And so the way that I explain the income guarantee in eight Steps training is if you implement your eight steps training that we’ve just taught, that I’ve just taught you, I’ve just taken you through your business management training, your eight steps training if you implement to the best of your abilities what I’ve just taught you to do in your business, you will qualify for the Income Guarantee.

Because the beauty of the conditions of the income guarantee is just that. You follow our system and you follow your training, and you do the things and the tasks in your business that we recommend that you do and that we train you to do. And we train you to do those things because it’s those things that will build a successful business.

So our income guarantee isn’t some fluffy document where we put a whole stack of conditions that are completely unreadable. You know, the bar is set up here. It’s like Everest. You’re never going to get there. It’s not that at all. It’s actually ridiculously simple to qualify for our income guarantee, because all you have to do is implement the training and the systems that we give you to the absolute best of your abilities.

Justin Yeah. Yeah, exactly. And we have no problems. You know, there’s one of the honestly, I have no problem paying anyone under that guarantee if they’re doing well. I often say when I’m talking to people looking at joining us, you know, looking at pay someone $1,500 a week to sit at home, watch Netflix.

Rhiannon No, no.

Justin It’s you’ve got to be active in your business. And, and I’ll be honest, I think for a lot of people, when they first start a business, you know, a lot of us have only ever been employees. And so it’s it’s a different mindset when you have your own business and, you know, you wake up Monday morning and, oh, I don’t have to go to work, you know, I don’t have a boss that’s going to tell me what to do.

I can do what I want to do. And it’s sort of easy, particularly if you’ve just resigned your job and jumped into your own business. It’s so easy to take the foot off the pedal because, yeah, I’m free when the reality is, yes, you can do that down the track, but you’re starting a new business. That’s when you need to put your foot down and actually go the other way.

Go a bit, work a bit harder. To get the momentum to make business. Success in business is all about momentum. You know, it’s it’s either going for you or going against you. And so you want it going for you. That means you’ve got to push that snowball and get it rolling. And that’s such a the other thing I love about the income guarantee, too, is, you know, I meet with people every day who are looking at and walk them through this journey of looking at joining a franchise and joining our franchise.

And I totally get that. People are scared of quitting a job. You know, I want a good salary, Justin. And, I’ve got a mortgage, I’ve got kids. So I’ve got, you know, responsibilities. I you know what happens if I have a slow start? That’s the other reason we have the income guarantee there, just to give you that security that high.

But I do the right things, which I should be doing anyway, I now I’m going to be earning at least $1,500 a week. And and you and I have both saying that it’s make or break the first 12 weeks, you know, and our income guarantee covers, that period of time. So, you know, your business, if you’re doing the right things, will be often smiling.

You know, I say to people, we do it starting in week three, because by week three, if you’re doing the right stuff, most of the time you’re earning over that. We should be earning out of that. So it just is a great way of just giving you that security, that safety net. Yeah.

Rhiannon I wouldn’t mind sharing a couple of stats, because I think that they’re really interesting and they demonstrate a really interesting point. So, you know, an income guarantee at $1,500 a week and we start a lot of new business owners, most financial years, we’re starting anywhere from 30 to 40 new business owners. So if you think about us offering a 12 week income guarantee to 30 to 40 new business owners every year, you can probably do some maths in your head.

The possible amount that we might need to pay out is huge. Hundreds of thousands of dollars right. And so somebody watching this video might go, whoa, if you guys are offering to pay out that amount, that would break you, surely like, why would you do that? And I did some sums on this recently, last financial year, we paid out on our income guarantee 1% of the time, not because we’re harsh and we try not to pay it, but because it was only needed 1% of the time.

The financial year before that, we paid out 2% of the time because it was only needed 2% of the time. This current financial year that we’re in, we’re sitting at about 0.2% of the time we are actually paying out on it. So we’ve gone from 2% to 1% to 0.2%. Now, the reason that we’re saying this is because we’re getting an awful lot better at helping you to start a business really, really fast in our network.

And so when you’re doing all of the things that we’re coaching and we’re training you to do and you’re implementing all of that in your business, you’re qualifying for the income guarantee. But because you’re doing all those things you’re marketing, you’re following up your clients. You’re quoting how we quote to our system because you’re doing all of this, you’re qualifying, but you’re also building a strong business from a very early stage in your business start up, which means that you don’t actually need the income guarantee.

And so we find that we we only ever pay out on it maybe for the first couple of weeks every now and then. But most of the time, what we’re finding is that on average this calendar year for our new starters, most of our new starters this year have been up over $1,000 per week in turnover by week 3 or 4 in their business, on average.

So the income guarantee is totally achievable. But the very beauty of it, and the reason that it’s in place is because when you’re doing the things that make you eligible for it, you’re actually building your business. And that’s actually why we have an income guarantee. It is absolutely there. As you mentioned before, Justin, just as that security net, because it’s such a big leap going from an employee to starting your own business.

And we want to give you something to say, hey, we understand how scary this can be. We know that if you do the right things that you can make it work. So here’s an income guarantee to give you that confidence. But we also give it because we know that if you do the things that you need to do to qualify, you’re actually building your business.

And you don’t you you’re less and less likely to need it.

Justin That’s it. Exactly.

Rhiannon Beautiful model it is. I find that there is a few different ways that different franchise networks offer income guarantees. Right. And so I wouldn’t mind spending a few minutes just talking about the differences between ours and what others might offer. Because if if you’re listening and you are doing your due diligence and you’re looking at a few different networks, you’re probably hearing some different language.

And so I want to make sure that we’re giving information that’s really clear around the difference between what we offer and what other offers. We offer an income guarantee. Most other networks offer guaranteed work.

The fundamental difference is that our income guarantee is an income guarantee, not a work guarantee. So if you don’t make the income of $1,500 a week, we will top you up. But it’s not that we’re sending you work. We’re chopping up income, but we’re not guaranteeing you work. There’s a lot of reasons why we don’t guarantee work.

And I might sort of throw to you, Justin, on this one in a second. You know, some of the reasons. And just to sort of go into this in a little bit more detail, some of the reasons that we don’t guarantee work is because we’re just not an enormous network. And we’ve got, you know, the budget that we do have for marketing, we want to spend on marketing that will generate leads for our actual business owners, not generate leads in areas that we don’t yet have business owners.

So therefore, if you’re starting in a new area, we’re not marketing there already because we can’t service that work. So we’re not generating leads that we can just send to you because that’s not our model. Our model is only to market where we can actually feed that work to a real business owner in our network. Another reason that we don’t guarantee work is that our philosophy is more around building your skills as a business owner, rather than just handing everything to you on a silver platter.

And I wouldn’t mind throwing to you at this point, Justin, just to walk us through a little bit more like and, and perhaps this is also that something that we go into in, in a lot more detail in another video, but just at a high level. What is that difference between our philosophies, building skills and, you know, and our thoughts around why that’s really valuable rather than just handing something to you on a silver platter?

Justin Yeah. I talk to people almost every day who have been guaranteed work. Like, it sounds great. And it’s a great, bit of bite on a hook. So in my opinion, and I have observed for 15 years the negative impacts of guaranteed work because often it’s not what people think or expect. For example, you know, let’s just say we start someone new in some suburb in Melbourne and, and we were a company that guaranteed work.

So we get one of our stuff from head office. This is what happens. They get on the phone, they bring a few businesses and say, hey, we’ve got a new guy starting. We we’ve guaranteed him some work. We can offer you a half price or quarter price clean. Right? And so they pick up a job for you that is worth.

And you’ve got to go in there and work for next to nothing. But hey, they guaranteed work. And I gave you work and you learned something from it, right. That customer is you know, I’ve talked before was the business that had someone coming to claim for a court, unhappy. But once that’s over, you know. Thanks very much.

Now, you know, part of the guarantee work is then you give a quote for what the normal price of the job would be. And I’m going to go, well, most of the time the customer goes, well, no, I just took you because it was so cheap. And so you do a lot of work for nothing. And you haven’t developed any skill other than doing the job.

Right. But that’s not what builds your business. What I love about our income guarantee, as you mentioned, we’re building the skills to put you in control of generating work. You know? Yes, we do all the paid advertising, but that’s a heck of a lot more to building a customer base than just us spending a lot of money on advertising.

And so the guarantee that it’s a great bait on a hook, you know, it make it a lot easier for me to sell franchises if I guaranteed work to everybody. Because so many people, that’s all they want. And when they hear we don’t guarantee work, they’re like, oh, that. But it’s only for a short period. It’s not ongoing.

And if it is ongoing, that’s a whole nother, discussion there because, I had a couple just yesterday that I spoke to that took on a business that guaranteed work and, that the company that they were doing this with acquired the job cheap and to get the contracts for them because I provided all the contracts to them and the fee was 50%.

So they ended up that working for next and that the contract was very cheap. And then they get to keep 50% of it. So it was unsustainable. And I shut the business down. And now they’re looking at joining us, because our fee structure is totally the reverse. Yes. To that answer, that sort of question a bit.

Rhiannon Yeah, it really does. It really does. And I think that, you know, at a high level summary of the answer you’ve given is it more or less what we’re trying to do is build a sustainability into your business. And, and and sure, we could we could do what the others do. Right. We could have somebody in our head office team who’s a great salesperson, who’s got all of the discounts up their sleeves, possible.

And they could get on the phone before we start a new business owner and guarantee a whole stack of work at really low prices and send that to the business owner. Sure, we could do that, right? We choose actively not to, and we choose not to because our focus is on building your business sustainably with you. Our focus is on building your skills and your confidence as a business owner so that you’re actually in control because no one, no one starts a business to essentially just act as a glorified subcontractor, no one start to business to essentially be just receiving a wage payment from a company.

That’s not the reason why you would take the risk and go out on a limb and start a business. You know, the the goal you’re chasing is so much bigger. If you’re watching this video, you’re wanting freedom of your time. You’re wanting time with your family. You’re wanting the ability to work the hours that you want to work.

You’re wanting to ditch the commute and get out of the trenches of the corporate job. Or you’re wanting a job where actually, if you’re working your tushie off, you’re actually being rewarded for that rather than your boss being rewarded. What you want is so much bigger. And if we were to just silver platter work to you, we’re not really changing your situation all that much.

And we’re not really giving you the control that you’re looking for. So an income guarantee that we offer it is a backstop, and it does give you a sense of security that you’re not totally jumping off a cliff and leaving a great salary. It’s giving you that bridging time. And if you’re following our training and our guidance, and you’re doing all of the things that you need to do in order to qualify for that income guarantee, then by doing it, you’re actually building your business anyway.

So the value of our system is it’s a long term approach. It’s an approach to a sustainable business, and it’s an approach that actually has you investing in yourself by building your skills. And that’s our philosophy. We don’t we.

Justin How to put you in there, puts you in control of your income. Yeah, I like the other thing we just thinking about, the guaranteed work. You’re at the beck and call of, then your income is set by the amount of work that they give you for. Right. And I’ve seen so often, there’s another franchise on the market that does exactly this.

And you have to pay for contracts. You have to pay to if you want more work. I had a guy from that franchise called me last week. He wants to take on a franchise with us, which you can’t do because of the conflict, but because he wants more work. They want to be able to generate more work without having to pay for it.

And, you know, you can find it sounds good up front, but it’s if I’m in business, I want to be in control of my income. I want to know how to generate that income, and I want to be able to go out there and do it when I want to do it. And that’s what our income guarantee does.

You know, it’s the carrot that helps you just follow the system that generates the income. Yeah, yeah. And give you that security.

Rhiannon I, I did a podcast maybe 18 months ago with a man called Jackson Millan. He’s known as the wealth mentor. He has a very well listened to podcast on all things business and wealth creation. For Australia and, Jackson’s background was actually he was a franchisee in a network that did all the marketing for his business and sent all of the work to him.

And then the franchisor went through a tight budgeting period, and they cut the marketing just off at the knees. Almost overnight, the marketing budget went from enormous to zero, and that was that. And what the franchise or had and also done was build Jackson’s skills to market his own business. So any and so he hadn’t been he just and all this work was coming to him.

So he was just kicking back thinking, this is great. I’m not doing too much at all. I’ve just got to run the business. They’re sending all the work. This is fantastic. And look, it sounds like the dream and it is the dream until it’s not, until something changes and you realize just how vulnerable you were. Because that’s what happened to him.

Something changed. At that head office level, marketing budget was cut, and all of a sudden his work dried up overnight. And he had he had two choices get out there and market his business or fail. And so he chose the first. He got out there and he taught himself to fish. And he was explaining this to me in, in our podcast episode, because we were chatting about our model and our philosophy of teaching skills and, and genuinely empowering people to be business owners.

And he sat back while I was explaining what we do, and he was like, I wish that I was working with a franchised network that did that for me. That’s what I wanted. I wanted a network that would actually skill me because I ended up in such a bad situation because I hadn’t had that help. So there’s there’s pros and cons to every model.

And I also want to say, I think, I think we sort of can almost wrap this conversation. But I also just want to add that, you know, there are lots of people out there who our model doesn’t suit, and there are lots of people who are genuinely looking simply for a company that will just send work to them.

And if that’s what you’re looking for, then and and if even after listening to this video and listening to the reasons why, that’s not how we operate. If your preferred method of operating a business is still just simply that you want someone to send all the work to you, then we’re probably not the best fit for you. They are absolutely other networks out there that would benefit what you need.

But if you’re looking genuinely for control, if you’re looking genuinely to build sustainability in a business, and if you’re looking genuinely to build your skill set as a business owner, then what we’re offering is a system designed to support those goals.

Justin Yes.

Rhiannon Very simply, that is what that’s what we’re working toward for our business owners.

Justin Yeah. That’s excellent.

Rhiannon Perfect. So let’s leave this episode here for today. If you enjoyed it, leave us a thumbs up or a comment. Let us know. Throw any questions down below. We do monitor these. We can be in touch and help with any other information. Otherwise, we hope that you might join us for another episode of The Real franchise very soon.