Jim's Group chief being sued for $5m by former master franchisee

ONE of Australia's best-known businessmen is being sued for more than $5 million over claims that he unlawfully conspired to get rid of the head of his British operation.

By InvestSMART · 31 Mar 2010

By InvestSMART ·
31 Mar 2010

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ONE of Australia's best-known businessmen is being sued for more than $5 million over claims that he unlawfully conspired to get rid of the head of his British operation.

A statement of claim has been filed in the High Court in London claiming Jim Penman, the owner and head of Jim's Group, and two of his business associates acted in concert to remove the British master franchisee, Paul Carr, last year.

Jim's Group is the second-largest franchise operation in Australia with more than 3000 franchisees in 28 different businesses. It has branches in Britain, Canada and New Zealand.

Mr Carr is suing Mr Penman, his former offsider Phil Maunder, former British business partner Richard Harrison and Jim's Group. Mr Penman said he would defend the claims and countersue for damages.

His lawyers had already sent Mr Carr a letter claiming he had been behind websites "highly defamatory" of Mr Penman, and were expected to launch a defamation action in the Victorian Supreme Court.

Four former British franchisees also intended to launch a class action against Mr Carr, "with our full moral and financial backing", Mr Penman said. "We expect others to join in."

Mr Carr said he was preparing a defamation action against Mr Penman. "I am also now, having got this far, not interested in any settlement he may eventually decide to offer," Mr Carr said.

Mr Penman earlier offered Mr Carr 80 per cent of the value of the business, which the former estimated was worth between $100,000 and $200,000. Mr Carr's statement of claim, obtained by WAtoday.com.au, says he had a reasonable gross profit expectation of about $5 million in the next six years.

In an email to Mr Harrison, copied to Mr Penman and tendered as evidence, Mr Maunder writes: "It is clear to me that Paul Carr does not have the confidence of the franchisers, therefore I personally think we should organise the UK franchisers to vote out Paul Carr."

Mr Penman said he was also considering suing Fairfax Media, publisher of WAtoday.com.au and the Herald, over what he said were "false and defamatory statements" made in stories about the battle between Mr Penman and some of his Australian master franchisees. Those franchisees tried to vote Mr Penman out as chief executive, claiming dissatisfaction with his methods.

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Frequently Asked Questions about this Article…

What is the lawsuit against Jim Penman and Jim’s Group about?

According to the article, a statement of claim was filed in the High Court in London alleging Jim Penman and two associates conspired to remove the British master franchisee, Paul Carr. The claim names Jim Penman, Phil Maunder, Richard Harrison and Jim’s Group.

How much is Paul Carr claiming in damages and what is his basis for the $5 million figure?

Paul Carr’s statement of claim seeks more than $5 million, saying he had a reasonable gross profit expectation of about $5 million over the next six years. The claim relates to loss arising from the alleged removal as the British master franchisee.

What offers or valuations were mentioned in the dispute between Paul Carr and Jim Penman?

The article says Jim Penman earlier offered Paul Carr 80% of the value of the business, which Penman estimated to be worth between $100,000 and $200,000. Carr’s claim, by contrast, projects much larger future profits.

Could this legal dispute affect Jim’s Group’s reputation or franchise network?

The article notes several reputational and legal threads: Penman’s lawyers have accused Carr of running ‘highly defamatory’ websites and may launch a defamation action; four former British franchisees intended to launch a class action against Carr with Penman’s backing; and some Australian master franchisees previously tried to vote Penman out. These developments suggest reputational and franchise-relations risks to monitor.

What defamation claims are involved in the case?

Penman’s lawyers reportedly sent Carr a letter alleging he was behind websites described as ‘highly defamatory’ of Mr Penman and were expected to bring a defamation action in the Victorian Supreme Court. Paul Carr is also reported to be preparing a defamation action against Mr Penman.

Who else is named in the legal action besides Jim Penman?

The London High Court statement of claim names Phil Maunder (a former offsider), Richard Harrison (a former British business partner), and Jim’s Group itself, alongside Jim Penman.

What evidence or communications are cited in the article?

The article cites an email from Phil Maunder, copied to Penman and Harrison, where Maunder wrote that Paul Carr ‘does not have the confidence of the franchisers’ and suggested organising UK franchisers to vote him out. That email was tendered as evidence.

What should everyday investors watch for next in the Jim’s Group legal dispute?

Investors should watch for formal court filings and outcomes in the High Court in London and any defamation proceedings in the Victorian Supreme Court, official statements from Jim’s Group or the parties involved, and any announcements about class actions by former British franchisees. These items will clarify potential financial or reputational impacts.