Patrick: Hey, this is Patrick Findaro here, cofounder at Vetted Biz and Visa Franchise. Today we have a really special guest, John Hewitt, the founder and CEO of Loyalty Brands. He also previously founded 2 franchises, Jackson Hewitt and Liberty Tax Service, which each had over 2,000 locations across the U.S. and globally. He’s the only individual, to my knowledge, that has founded 2 franchise brands that went public on the stock exchange and also had well over 2,000 locations each. John’s been in this industry, specifically taxes and business services, for over 50 years now and he’s developed an incredible business acumen, franchise experience, and he now has a portfolio through Royalty Brands of 9 different concepts that are largely in the business services arena.
So today we’re gonna be focusing on John’s career trajectory, advice that he has for future franchisees, where he sees the industry going. And if you have any questions, just ask them in the comment box and we’ll bring you on and propose them to John and we’re gonna keep this conversation as possible.
Again, for those that are just joining, we have a very special guest who’s a pioneer in the franchise arena and really developed the tax franchise vertical. John Hewitt of Loyalty Brands, CEO and founder. He was also…previously founded both Jackson Hewitt and Liberty Tax Service, and is the only person to ever create not 1 but 2 franchise brands that have over 2,000 locations and were at one point or another traded publicly on the stock exchange.
So very excited to have John. Again, you know, if you find this video relevant, subscribe to it, share with your friends. If you have questions for myself or questions for John, just ask it in the comment box and we’ll try to address your question as best possible.
So without further ado, I’m gonna go ahead and bring on John for today’s chat. Hey, John. How are you doing?
John: Super. Happy to be here.
Patrick: Well, yeah. Thanks a lot for joining. I gave a very brief intro about yourself but I don’t think it did justice. If you could just tell us a little bit about how you entered in this arena and maybe spend five minutes or so talking about, you know, what keeps bringing you back to franchising, in particular, business services and then I have other questions.
John: Great. So I started…in 1969, I was at the University of Buffalo and I took an H&R Block tax course, loved it and started working part-time. And 12 years later I was running 250 H&R Block offices. I was the youngest regional director in the country. And my dad was a CFO of a public company. He decided that we should computerize taxes. And so he left his job as a CFO of a public company, I left Block and in 1981 we developed the first tax software for an Apple computer. It was way before its time. No one wanted it. Even H&R Block said, “We’re never gonna computerize. People don’t care. We’ve tried it and it doesn’t save us any money. We’re never gonna computerize.”
And so got lucky and found a business here in Virginia Beach called Mel Jackson’s Tax Service. Mel had died. And put a group together and bought Mel Jackson’s Tax Service. And then for a few years ran both the software company and Mel Jackson. Then we merged them together, changed the name to Jackson Hewitt and went public. And 15 years later we sold it for $483 million. I had a noncompete that was three years in the United States but Jackson Hewitt wasn’t in Canada and still isn’t, and so I knew the Canadian tax system because I grew up in Buffalo. We opened Liberty Tax in Canada. And within 3 years, just as I had in the U.S., I grew one of the top 100 retail franchise chains in Canada.
Came back to the United States after my non compete ended 3 years later in 2000 and not only did we grow faster than H&R Block or Jackson Hewitt, we grew faster than both of them combined so…and reopened in 12 years, we opened 4,000 locations. More than Block and Jackson Hewitt did combined.
So we were the fastest growing ever, one of the top 10 fastest growing franchises ever, went public. It became worth about half a billion dollars just as I had done with Jackson Hewitt. And sold my shares two and a half years ago and now…then started Loyalty Brands. Loyalty Brands has 9 different brands and we are on our way adding about 1 a month to get to 50 brands.
Patrick: Incredible. So for those franchises that have no locations or maybe one location, what are some of the keys for rapid growth and, you know…you can make some money with 1 business services franchise but you can really develop, you know, a mini empire and getting up to 5, 10. And you’ve done that, you know, over the years having so many locations across your brands. What are some of the keys to getting growth relatively fast?
John: Well, the key to everything is you…hard work and find what you like to do, hard work and persevere. But delegation I think is something…one of the biggest diseases in American management. And you have to have the ability to delegate. The way I think of it is many of our people…most managers are like Indian chiefs that they have this one tribe. Then there’s the chief of chiefs that has chiefs that are subordinate and has many different tribes. So most people are incapable of going to that next level and it’s a matter of can you learn to delegate. Delegation is the key.
Patrick: Okay. So having trusted managers that are then managing other managers and managing other folks and really not being a control freak around your business?
John: Yeah. Being a control freak is…you know, it’s extremely dangerous being a perfectionist because people…perfectionists I know, they’re perfectionists about everything and even the smallest things. So if you talk about penny wise and pound foolish, the perfectionists will make the perfect penny. Meantime, the pounds are running away from them.
Patrick: Well said. So the service franchise industry is growing a lot and there’s a lot of PO, especially given the current pandemic we’re going…asset like business, not so much to start up, less failure rate than food and beverage for example and some other industries in the franchising space. Could you give us a little overview and what keeps drawing you back to business services and potentially tax in particular?
John: You know, when…I’ll start with tax and say that when I was in college, it fit all…it fit everything that I was looking for. It was mathematical and that’s my specialty…in fact, I was in college to be a mathematician. It was…and it was serving people that if you…I get more thank yous for doing tax runs than virtually any part of my life because people find it like visiting the dentist.
They don’t…you know, I hate…I mean, I really feel the most people that come into a tax office are like…they’re…except…if they get big refunds, they’re thinking, “Oh, this is horrible. It’s like going to the dentist.” I don’t know about you but I think 90 some percent of people hate going to the dentist. So it’s very gratifying…and my goal was to give back and give more than I receive. And so it’s so easy to do when you’re in a service industry.
Patrick: And why don’t…why isn’t it not just better to grow through corporate locations and why grow through franchising?
John: You know, that was the second biggest mistake I ever made when I left Block and started Jackson Hewitt. After one season…we bought six offices. First season we had 11 stores. Second season we had 15. Third season we had 22. Now that’s not bad to double in three years. That’s not horrible.
But in the meantime, Block had 9,000 offices and 9,000 offices. And I realized that at this rate of growth I would be about 400 years old before we got to … And so we said, “Well, how can we do this even better?” And much of what I’ve done is copied H&R Block. Ninety five percent of what I’ve used in my career is something that I learned from…by watching H&R Block. It’s much simpler to follow a proven system than to invent your own industry like Fred Smith did at Federal Express.
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