Watch the full episode of The Real Franchise Episode 6 – here
Rhiannon – Hello and welcome to The Real Franchise, a video series designed to deliver real information, real answers, and real insights into franchising. This 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 we’re going to tackle all of the big topics unscripted, unplanned and unfiltered.
No sales, no fluff. We’re just going to give you really information straight up. Today’s topic is all about our subscription model. If you’ve been researching us for a little while, you may already be very well familiar with the term subscription model. If you haven’t been researching us for very long, this might be the first time you’re hearing about a subscription to your own business.
So in this video, we’re going to dive in and we’re going to dissect what is a subscription to your own business. Justin, let’s start there. What is a subscription to a James Home Services franchise?
Justin – A subscription, for one thing, is very different to any other traditional model. it’s I have a lot of I talk to people every day that are investigating and looking to join us. And one of the misconceptions is, oh, it’s just a loan. And, what I’ve found over the last 14 years working with people, are they a lot of people that would love the opportunity to be able to get into their own business, but they don’t have that upfront initial lump sum, you know, 30,000, 50,000 or whatever it might be, depending on the franchise you’re looking at.
And I just saw so many people not be able to join us because of this lump sum. And the beauty of a subscription is it’s just that, you know, it’s like Netflix. It’s like Spotify, those sorts of things where you can subscribe, you pay a very low weekly fee and you have access to everything, right? I often describe, like Netflix you subscribe on Netflix, you got access to all their movies, only shows, but you don’t own any of them, right?
You have access to everything. You don’t own it. Same with a subscription. So with James, you’ve got access to everything. We provide you with everything. Just as if you bought it upfront. But you only pay at the weekly fee. so yeah, our subscription is is simply a thousand upfront. and you pay that when you sign your franchise agreement.
And then there’s two options you can choose from either $100 a week or 125 a week. for most of our franchises, particularly the two we really focus on with the subscription model, our cleaning businesses and our the one garden care businesses. So the 125 a week option, everything’s provided.
The $100 a week option is one that we have a lot of people with existing businesses that want support, want help, want to be part of a network, been struggling on their own. And so they already have the gear and equipment and things like that. So they just pay 100 a week and rebrand and they just pay for any, you know, uniforms and things like that that they need as part of that process.
Yeah. So people have those two options.
Rhiannon – So a subscription model is not actually common, not in Australia and not even across the globe in terms of what other franchise networks offer as a way to start a business in their network. We are, at the moment the only franchise network in the world from what we can find, who are doing this subscription model. How did the subscription model came about?
Justin – Oh, this is a bit of egg and face on face here. So in one of our leadership meetings a few quite a few years ago now, you came to Darren and myself, the two owners of the company, with this idea of a subscription. And I’ll be honest, we laughed. Actually, we thought, how crazy is this how can you know it costs over $10,000?
Easy to set someone up in one of these businesses. And what do you want to give it away for? Nothing. Like at the start. Like, how is this going to work? And, but one thing about you, your persistent and, it was a great idea and I forgot was that over the course of our 18 months. Yeah, I sort of work through the hurdles and and and and put together what has proved to be very successful.
We’ve had so many people and so many lives changed that would never have been able to get into their own business without the subscription model.
Rhiannon– Yeah. When you bought the, the network, with, with your business partner back in 2020, we were in the midst of Covid was dawning on our globe. And and so it was not exactly the most fruitful time to be trying to make a sustainable business out of a franchised network. People just simply were not interested in purchasing a franchise business at the time.
And so we understood that that really was the economic climate that we were working in. And we, you know, we sort of allowed 12 months or so for that to, to work through. But even though we were marketing and even though we were updating our systems and processes, and even though, in fact we had embarked on organizational wide change to, bring us back into the 21st century, we still weren’t saying the growth that we were really working towards.
And so we went back to the drawing board and we kind of asked, well, why aren’t we seeing this growth? We’re working really hard. We have got a product that people want. If you really think about it, owning your own business is about having freedom and flexibility. And I think that, you know, quintessentially the great Aussie dream is to own your own backyard, preferably big enough to have a set of cricket stumps at the end of it.
And then the second part of that quintessential Aussie dream is actually to own your own business, to flip the bird to the boss one day and say, I ain’t coming in on Monday, I’m going to go work for myself. And so if yeah, if you look at it that way, then what we do is we enable everyday Aussies to live out half of what, for so many of us is part of the dream, you know, have your own business.
So there is we that question a market for what it is that we’re offering. And we really had to ask ourselves, well, why is it that people aren’t joining our network and we did an awful lot of research. You did an awful lot of research. You spoke to so many of our, people who had inquired about a franchise but hadn’t proceeded, you know, had looked like really wonderful potential business owners who we had been excited about the prospect of working within our network, and they hadn’t proceeded.
And what you found was that, you know, asking for that upfront lump sum on the table from them. It just it was too much of a hurdle. It was too much of a barrier. You know, they’d spent the last decade working really hard in their jobs to actually save that sum. And they felt it was too risky to put it all on the table at once.
Upfront with the franchise network. And so, yeah, over time, over lots of conversations with you. With your business partner with our head office team with other people in industry, with our own franchisees, over time, just pieces of the puzzle started kind of falling into place. And one day I just thought, yeah, we’ve got to do this really differently.
We got to flip some tables, you know, I think we’ve got to offer a very different way to be able to access business ownership in this country. And so, yeah, I mean, the world is moving at pace towards subscription models for everything you can think of. You know, it started with software and entertainment. And now basically there is not an industry that hasn’t made subscriptions part of their model.
So it was a natural progression for us, I think, to think that way. The other thing that I really like about our move to a subscription, as opposed to asking for a lump sum payment upfront, is that it turns the tables and it asks us to put our money where our mouth is exactly. In every other franchise network in the country.
You’ve got to put your money on the table up front. You have to invest in them in order to be permitted to run a business in their network. Yeah, and there’s a lot of fear in there. So naturally it’s a huge decision, you know, am I going to get the support that’s promised? Am I going to get the leads that they’re talking about?
You know, is that is the am I going to get the training? Am I going to get the equipment? What happens if something goes wrong? Are they going to all of a sudden be completely non-existent and I can’t get any help? There are there must be so many fears and, what I really love about the subscription is that it’s really us saying way back our system and our processes.
We know it works when when we have people coming into our network who follow our system and our processes and follow our guidance and follow our support and commit to their training, and they really show dedication and persistence. We know, we know it works. And we back that, and we back that to the tune of more than $10,000 every time we start a new business now in our network.
And, I mean, it doesn’t take a rocket scientist to do the numbers, but we’ve started almost 80 since launching the subscription, and that’s an enormous investment in our network. And it’s going to be a little while until we say that coming back. But the idea is that actually we work alongside our business owners as equals. You know, it’s not that they’ve put money on the table, and then we kind of send them out into the world and hey, good luck.
Hope you do. Okay. No, no. Like we are, we are more invested in their success than any other network in the country right now, because it’s our money that set their business up.
Justin – That’s what I really love about the subscription model. And I say that every day that I meet with people every day talking this through, you know, you look at any other franchise, a big part of the profit that a franchisor owner, max out of the franchisee is in that initial sale. Okay. And my experience in observing franchising, I’ve been in the industry for 15 years now.
I’ll be honest, in James and in other networks in the past is the focus is so much on that sale. You know, it’s it’s like the next chicken dinner is the way we used to describe it. Right? You got to resist the temptation of looking at, you know. Oh, yeah, we’ve signed them up. We’ve sold them. We might have chunk of money and then the attention goes to the next person.
Right. And poor person that just bought the business is given a little bit of training and shoved out the door. And you know, all the best. Hope you do well this subscription model is totally turns it on its head because like you said, we invest, we take the risk. And that’s why we take people through a long information journey.
So we get to know them. They get to know us. Right? It’s a two way thing, but what it does is it puts the onus on us. The only way James Home Services can be financially successful is if we help our franchisees be successful, because we don’t make anything upfront. It’s, cost us a lot of cash to set someone up.
So we’re actually to make sure do everything we possibly can to help people succeed. And I love the ethos in that.
Rhiannon – Yeah, it totally changes our perspective in that it we call it an information process because for us that is what it’s become. But it’s but for most and what’s more familiar is a sales process. the reason why it’s an information process for us and it’s not sales is that we’re not we’re not trying to sell you a franchise.
We are trying to assess whether we think that you can work really well in our network and make a successful business, because we’re not actually selling anything. We’re the ones investing in your business and putting the money down on the table. So that whole process just takes on a totally different perspective. It’s not sales. There’s no tactics, there’s no rubbish, there’s no insane amounts of follow ups and ridiculous volumes of emails coming at you trying to give you every reason under the sun why you should sign up tomorrow.
There’s none of that. Because actually, we’re not trying to sell you on our network. We know works. We’ve got tens and tens and tens of businesses in our network that are right now proving to us that it works, so we know it does. The only reason we’ve gone down the road of taking the risk of offering a subscription is because we know it works, but now our information process is actually about making sure we’re making the right decisions in selecting who we invite into our network.
Because if we get that wrong, it’s our money that’s been on the table. And also if we get that wrong that somebodies life and their family that, you know, don’t get a great outcome. And that’s not what we want. And, you know, we offer the subscription model and we take on the risk. So it’s I feel it’s a far more even playing field in our process than it may be in others, because, you know, you’re no longer being asked to put 40 grand on the table and just, you know, I’ll just trust us, you know, and I we’re putting the money on the table.
It’s costing us to get you started. And we’re doing that because we know if you follow our systems and our processes, we back ourselves. You know, we know we give great support and we back that in. We say, if you if you commit and you give it your all, we know you can make it work. And that’s why we’re prepared to actually invest upfront.
Justin – Yeah. A couple other key, things about the subscription is, is the flexibility. You know, we’ve had a lot of people take a subscription with us. They could have bought the business upfront, but, you know, it was about managing the risk and just saying, you know, because with a subscription, you know, if you don’t like Netflix, as you know, you can cancel, right?
You can cancel your subscription. So everyone else may well, what’s hell on the subscription go. Well, it’s five years if you, but you can pay out early at any time, and that saves you money. the other thing is, what’s the minimum period? Well, minimum is two years. You can cancel a subscription at any time, but you will have to pay at least two years of that 125 a week, for example.
And the simple reason for that is, like we’ve been saying, you only put 1000 upfront, but we put over ten, so we need to recover that capital. So, that’s that’s another beauty is, you know, if you buy a normal franchise and you put 40 grand up and you decide or find out this isn’t for you, you’ve blown that at least a 40 grand in James when it comes to the subscription side of our agreement.
You haven’t blown, you know, 26 or 40 grand or whatever it is. Your maximum is two years. You know, the maintenance of two years of the subscription saves the entire year. You’re managing risk to me. So they are subscription with this.
Rhiannon – And I think, you know, the decision behind the two year window is that, you know, it does take time to grow a business. And whilst not everybody takes the entire two years in our network to grow, in fact, in fact, our data indicates that sort of by the 10 or 12 week mark, it’s a strong indicator as to whether someone’s going to be really successful or not.
So, you know, whether you really whether you start strong is a real good indicator as to whether you’re going to grow, a sustainable business over time. But it is realistic to plan that for the first 6 to 12 months, you are going to be growing your business. So we don’t want people to come in with that expectation that overnight there’s going to be a really steady, strong income stream coming in.
There may be, we have businesses that in the first four weeks achieve a really strong income stream and then maintain that level and continue to grow it. But we also have business owners who come in and who take their time to build. So what we want to do is we want to be really, realistic with our potential business owners and say, hey, look, it’s not going to happen overnight.
Please be prepared to have your boots on the ground walking the walk for quite some time before you. You know, see that business, maybe achieve exactly what you’re wanting it to achieve. And that’s normal. There is no business on the planet that you walk into an overnight. It’s a raging success. Even the businesses that maybe come to mind when you think of big, successful businesses they worked for, you know, five, ten, 15 years behind the scenes being absolutely not known whatsoever before they had their big break, you know, so it’s very realistic to have a longer term plan for your business growth.
And so we want you to have that mindset when you come in. I’m really going to commit to this and I’m going to give it a go. And I’m prepared for putting in the hard yards over an extended period of time to get where I want to go, because that’s how it happens in the business world. You you must commit over time.
There are no overnight successes, even the apparent overnight successes. You would be surprised to know actually how long they worked to get there.
Justin – Yeah. So true. The other big thing I find with our subscription and the come to think of it sort of I don’t mention or it doesn’t come up in conversation when I’m talking to people through this process, is you in particular did a lot of homework into what people can afford to pay in these businesses per week and pre-subscription.
When I was walking the journey with people over the last decade or two, decade or so, you know, they’d go and get a bank loan for argument’s sake. So many people still think you can just run out and get a bank loan. And what I found was people were paying between 2 and $400 a week in loan repayments for their franchise, which is a big cost.
You know, when you’re starting a new business, it’s all about minimizing your expenditure so that you can have the cash flow to get up on your feet. And one of the things that you did was really assess that. And and that’s, you know, the reason we pulled 100 or 125 a week wasn’t just a figure we plucked out of the air, and it’s so I do have people that go, oh, I had a go actually in Melbourne just yesterday say, oh, I’m just going to get it, but I’m going to go get a bank loan.
I’d rather pay it upfront. It’s like, fine, but what he is going to find is they will be paying 2 to 400 a week when he could have had a subscription, which was more flexible for 100 to 125. Obviously for us it’s better that he pays it upfront have I’m happy with that. But I think financially it probably would have been wiser, to do a subscription.
But you know, it’s it’s your choice as an individual. Which way you want to join us.
Rhiannon – Yeah, it always is. It is down to an individual’s, choice as to which way they want to go. And, you know, everybody has different financial and family circumstances that we don’t necessarily always dive into with them. and, you know, we will always support whatever decision is made by our potential business owners. But we like to make sure that we at least educate on what the different options are so that when someone’s making that decision, they’re best placed.
You’re right. I did, and it’s a great point that you bring up because I had forgotten. I had forgotten about the spreadsheet that I had developed in order to actually land on a number, because it wasn’t it’s not plucked from thin air. It’s actually based on, it’s based on real data. I modeled out what, you know, what the typical business in our network, makes in income in the first 12 months, I modeled out what their typical expenses are, and I also modeled out what their basic life expenses would be.
You know, keep the roof over the head, keep the food on the table, keep the kids in school, you know, and allow a little extra on the side for activities going out, date nights, things like that. and then I looked at, well, after all of that has been serviced, what is left over, i.e. what realistically could, in addition to their business expenses and their life expenses, what realistically could they afford to pay to us as a subscription?
And that’s where we landed on the 120 to 125 number, is that it’s it’s sitting around that point still leaving a little bit extra on the side in case the fridge blows up or the oven stops working or, you know, you need some work done on your car, etc.. So we tried to be really fair, you know, and it was a two stage process.
It was you got to look at it from, I mean, for you and your business partner, you know, your questions to me was how does this stack up financially for James Home Services Australia? And I said, well that’s a secondary, investigation.
Fundamentally, we need to know that what we’re offering is going to stack up for the people taking this offer up, because if it doesn’t, when negligent, we’re offering something we know that they can’t service.
That’s not fair. That’s not a good way to start a relationship in business together. So I actually kind of pushed back a little bit and said, you know what? Actually the priority for us is to set a number that’s achievable by a new business owner in anyway. And then we make it work for us. And it it does.
You know, we’ve got to be patient to see a return on our investment. It takes it takes quite a bit of time for us actually to see we don’t, you know, we’re not sort of making any money out of a new business owner, at least in the first 12 months. And sometimes it takes two years. Hence the two year mark, you know, so it, it it genuinely is an investment for us.
But we are really committed to making sure that we set up businesses in a responsible way so that they can afford what it is that we’re asking them to pay to us. But also, you know, we found that that dynamic, when we get somebody who has been looking at business options, hasn’t been able to afford it. It’s been a dream for so long.
And then all of a sudden they land across our subscription model and the dream becomes a reality. And then they work hard in their business and they build their income and they, you know, get get to a position that they didn’t think was possible in quite a short space of time. And it’s so fulfilling. That’s why we’re doing it.
That’s why we’re doing it because we know we know when people work really hard and sell our system, that it works. And so we’re prepared to back that. We’re prepared to put our money where your mouth is and say, we’re going to be out there saying, our support is great. You know, we really you know, our training is great.
Our equipment is great, our system works. I think I think these days I think you have to be prepared to actually back what it is you offer the market. You know, people are a lot smarter than just simply to take a couple of fluffy testimonials on your website as truth these days. And so we’re not about the fluffy testimonials where about real business outcomes.
And that’s what our subscription model helps us to deliver in partnership with our business owners rather than rather rather than starting on different pages, we start on the same page and we genuinely work in partnership.
Justin – Yeah, yeah. That’s excellent.
Rhiannon – Yeah, I think that’s a great place to leave this little episode. But there was one thing that we hinted at in the episode, and it was, it was about the support that you get in our network. And so our next episode is actually going to be all about our accelerated startup program. So if you’ve made it this far in this episode, and if you’re really interested in understand exactly what happens once you’re in, once you’re in, once you’re part of the 2% club, what happens?
Tune into the next episode. And if in the meantime, you’ve got questions that we haven’t answered yet in one of our episodes, leave us a little comment below with your question, and maybe we will tackle it in one of our upcoming episodes.
Hopefully we’ll see you soon.
More Information on subscribing to your own business
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