https://www.listennotes.com/e/93669e5de82046ee81de6927eb44b809

Welcome to Executing the Vision podcast. I'm your host, Brad Hunter, president of Emerge Labs. On the podcast, we'll get to know the person behind the vision, their successes, their challenges, and their plans for the future. If you're interested in becoming a guest or know someone who might be a good fit, stick around to the end and we'll discuss how to apply. Now, enjoy the show. All right, everybody, welcome to another edition of Executing the Vision. I'm your host, Brad Hunter and today our guest is John t. Hewitt. And Mr. Hewitt here is quite a legend, really. I'll let him talk about all the different things he's done, but he has quite an impressive resume. So go ahead, John.

I'll give you my 55 year career in a nutshell. I started when I was at the University of Buffalo working at H R Block. I loved it. 12 years later I was running 250H in our block locations and it was 1981 and my dad decided that we should computerize taxes. So he was a CFO of a public company. He quit his job, I quit my job and we built the first tax software for an Apple computer. No one wanted it way ahead of its time time. We got blessed and found a company here in Virginia beach called Mel Jackson Tax Service. And Mel had died. We bought six offices from his widow and we merged the two companies, the computer company and the tax company. Changed the name to Jackson Hewitt, went public and 15 years later sold it for $483 million. Jackson Hewitt went on to become Today it's the 23rd largest retail franchise chain in the country. And when I sold it, I had a three year non compete. But the, the non compete didn't cover Canada because Jackson knew it's never gone to Canada. And having grown up in Buffalo and done taxes there, I knew the Canadian tax system. So we opened Liberty Tax in Canada and within three years became one of the top 100 retail chains. So now I built one of the top 100 in US and one of the top 100 in Canada. When my non compete ended in 2000, we came back to the United States and now I had to compete with myself, my own name software system people. And yet not only did we go faster than them, we grew faster than them and HR block combined. We almost open one franchise a day for 12 years. We opened 4,000 locations. Top 10 fastest growing franchise or ever. Second public company for myself, second $500 million company. And again I sold my stock. And now for the last five years we have loyalty brands which is eight different Brands and one of them is in tax. But, but also I've learned to love the pet industry. And so our fastest growing brand is mobile pet grooming. It's called Zoom and grooming. But that's my 55 years in three minutes now.

Okay, talk to me about the beginning there. You guys create this amazing software that was before its time. Obviously eventually it became its time. What was that transition like then? You built the software, you're all excited, you got, I've got this great new thing, but nobody has interest. I obviously, eventually it caught on. What was the gap there?

Yeah, it, it was a different world because there weren't even 500,000 PCs in the country. There weren't. People were terrified of computers. Most of the taxpayers are in their 40s or 50s or older and they were afraid if they pushed the wrong button, it would explode. And so it was, it was, they were very risk averse to, to touching a computer. And H and R block was, lacked vision so much. In their annual report in, in 1983, they said, people ask us why we don't computerize. And we say, why should we? We tried. It doesn't save us any money. Customers don't care. We're never going to computerize. But it was clearly in our demonstration in our offices, it was clearly setting the standard. We were the only retail chain in the country that was computerized each desk and it set us apart. And we could see the difference in customer service and skills that it provided. The average preparer made everyone an expert. So we could see it. And it took about five years. And then the IRS tested electronic filing and we seized on that and they partnered with us for about four years. We were working hand in hand with the IRS and developing the first electronic filing and the testing. And now over 90% of tax returns are filed electronically. But the first year, when it rolled out in 1986, only 25,000 people filed electronically.

Yeah, yeah, I believe that. Okay, so other question for you. You've scaled all sorts of businesses. What are your keys to being able? First of all, I guess you were in the tax thing for a while. So as far as it being a viable business, what's your standard for it? And now that you're into the franchise, it would seem like the same thing, right? You have to come in and determine, okay, is this a viable business? A viable from a scalability perspective. And then what are your main strategies on how to scale so quickly?

That's the number one question I've been asked in my last 20 years of my career is you've grown these companies exponentially. How did you do it? And what's the key to success? And I have a weekly webinar that last week I did a whole, I did a whole 50 minutes. 5, 0, 50 minutes on what are the top 10 things that make a difference? And actually there's when I sat down and I just invented this last week and when I was asked the question on my previous week, I said, you know what? Next week I'm going to I love tap 10 list. I'm going to come up with top 10, 10 most important things. And then I, then I thought about it. I came up with 10. The next one surprised myself. I thought it would take me a while again. Next morning, sat down five minutes, wrote down 10 things. And then just before my last week's podcast or net webinar, I came up with two more. So my top 10 is 12. So there are really 10 things and, or 12 things. And I'll just give them to you quick because we don't have 50 minutes to go.

Yeah, well, and how do, how do we attend that webinar?

If you, if you go on loyaltybrands.com you can get a link to it.

Okay, great.

But I'll go through the, the 12 pretty quickly. Just fast. Yeah, these are the 12 most important things and I'll tell you that try to save the best for last. But you have to have integrity. You have to do what you say you're going to do. You have to do what's best for everyone involved. You have to be committed to improve. You have to listen to your people, to the customers especially. You have to have vision. You have to be able to delegate. All success requires hard work. You have to have a great, a positive attitude. You have to have a system, has to be a system in doing business. It can't just be hit or miss one offs. You have to get every, you have to get everyone to buy in. That means your customers, your vendors, your employees, your franchisees. And you have to, you have to. Most importantly, perseverance. The number one thing is perseverance. Everyone in life gets knocked down. I've never seen anyone have an easy life that just everything fell into place. The winners always get up and most or almost everyone gives up along the journey.

Nice all. And then do you have a favorite author or book that you recommend from a business perspective?

You know, I actually I have a reading list that I produce for my franchisees. I'll say this though, that my favorite business authors that, that I agree 100 with Peter Drucker and Dale Carnegie. I agree with every single thing they write. And in, in my other books, I usually only get one or two tidbits out of each book. But in those two, whatever they say is I, I say I should have written this.

Yeah. Okay, so now let's talk about loyalty brands. Okay. How did the transition come to be? You were in the tax world for years, just knocking it out of the park.

Yeah, we stumbled into it. I stumbled into it and blessed most of my good things that happened to me are blessings. But I was in my non compete with Liberty Tax and didn't have a lot to do. And having dinner with one of my former employees and he was a franchise attorney and he'd been a franchise attorney with me at both Jackson Hewitt and Liberty. And he said, John, I'm representing 35 franchises and why don't you try another industry? You've been doing this for 50 years, why not do something else? And he said, as a matter of fact, I have one franchise system that after 13 years they only have 13 franchises and they have a great system. Everyone's making six figures but they just can't bring in new franchisees. Why don't you partner with small companies like that and help build them, Help your bring your mojo to them and help them grow. And so we started, we decided then to start and acquire and help other franchise systems outside of income tax.

And then. Okay, so I'm looking at your portfolio right now. It looks like you've got seven different companies on here. And then how does this work with these were existing franchises that you came in and are helping to grow or you are partners with these. What is the actual kind of formation of things look like?

Yeah, it's. There are a number of different partnerships. Right. Some are 50, 50, some we acquire and some were minority shareholders. But we have a vested interest in all those companies.

Okay.

And our role is to mentor them, to bring franchise development to them and to help them cross market to our other brands.

Okay. And then tell me as far as, okay, so I've got some friends that have run successful businesses and then have grown their business substantially, doing really well. But then it's the point of it's about as big as it can get situation. So they've started to look at in franchises and open up some different franchises. Who is the right person to as far as if you're considering wanting to get into something else, if you're considering one of these franchises, like who is your kind of ideal client to take on one of these franchises and start to grow it.

Yeah. What I. The average person that starts a franchise has a very successful amount of time and when. And I get approached every week with does this make sense for me to franchise my business? And my first answer is don't franchise and. Because what happens, Brad, is that you take a very successful mom and pop and he has a couple problems. First problem, the smallest problem is this, that it costs hundreds of thousands of dollars to do it. And he has, he needs the revenue from his existing business to sustain his lifestyle. He hasn't outgrown, he hasn't got out of the rat race. He, when he spends that money, he just can't leave the business behind and go start a franchise. So he's got a foot in both camps. He's running his mom and pop and he's trying to be a franchisor, which in every franchisor wants to be national. So he's trying to develop a national brand and he's, but he's up to here in working at his mom and pop. So the first thing is he doesn't have time. And the second thing is 95% of them aren't good at, at handling franchise. It's a totally different relationship having an employee versus having a franchisee. Right? The franchisees don't work for you. You can't order them around. You can't require them to be there by 9:00am you or, and, and stay until 6:00pm you can't. You have to have a different relationship and set up a different culture of respect and partnership and customer that you treat them as customers. And as a result, Brad, over the last 10 years, every year four or 500 new franchisors come come start. And yet 10 years ago there were 4,000 franchisors and today there's 4,000 franchisors. So for every startup, there's about one startup every day and there's about one failure every day. So it's, it's a lot of it sounds good, but for those two reasons. But the primary reason isn't that that they don't have a good business. It's that they're not the right person. And none of them will agree to that. They have egos and they think they can do it and they don't understand that it's a whole different skill set. So I've never been able to convince one of them in less than two or three years that you shouldn't be CEO of your franchise brand. They all believe they're good enough to do it.

And why would. Okay. In my career, got out of college, came out to San Diego, and I got a job working at a little cart in the mall selling phones. And I was the first employee hired. And we were both the owners. We were both in our early 20s. And we ended up growing that to 500 locations across the country and all company owned. What would be the advantage of. Why choose the different paths? Right. One path is, hey, you've got a great mom and pop, Just keep growing it yourself. Then if you want to grow. Why would one choose franchise over just internal growth?

When you were that age, it was a lot easier to get great people. Today. Today, especially since COVID it's. If you want to expand nationally, to get someone in 100 different markets around the country is to get a corporate employee at a reasonable price is. I mean, no one's doing. No one's doing it. The beauty of franchising is you get a very talented person who pays all the cost of opening a location, and then they work for you for free. They pay you to work for you.

Right.

With. With the. The situation you're describing, I would imagine the investment was very small per location. Right. You probably got in for less than 20,000 or 10,000. In most franchises, the minimum investment is 70 to 80,000 and many are in the hundreds of thousand. So think about where do you get if you wanted to open 100 locations at $80,000 a piece, that's $8 million. Right. And then you got to find all these hundred people. It's just not doable in any short period of time. In the 2000s.

Yeah, yeah. Okay. So just finding quality people. And we get that you have that owner operator that was really going to care and work hard and be dedicated as opposed to some random employee across the country who may or may not care at all about this whole thing. So it's one thing is that finding that you get that dedicated person and then also the investment side of things. And from the investment side of things, what type of a franchise thing is? You know, what's the typical range of expecting somebody to be able to come in with this amount of money to start the franchise? You have a franchise idea, but it's going to cost them a million dollars. The. You can't really franchise that because there's not a bunch of people running around with $1 million to put into anything.

Yeah, there's really two kinds of franchises. One is most franchises, 80 or 90% require 100 to 200,000 or less. And then you get the McDonald's and the Dunkin Donuts and the hotel chains and those are millions of dollars of investment. Even a 711 is. You're talking hundreds and hundreds of millions of dollars in investment. The most franchises you can get in for under a net worth of under 200,000 and liquid cash of under a hundred thousand.

Okay, yeah. And now so talk to me about the people that are getting into these franchises and purchasing the franchises themselves. What does that person look like?

Typically it's a someone in corporate America that has been laid off or disenchanted with their career and doesn't want to be bossed around anymore, doesn't want to work for anyone. They want to take control of their lives and so they reach out and do it. Two thirds of Americans want to be self employed. Only about half of them ever try. But it's someone that. And everyone, virtually everyone I've ever met understands the opportunity in America is capitalism. Right. The people that get wealthy, you don't. Very few people get wealthy working for someone else. Right. It's the people that work for themselves that develop wealth. And so that's inherent in our belief system as Americans. But so you have, that's one kind of person and then the other another one. That's actually the best performing franchisees that I've ever had and I brought in 5,200 and about a third of them were high performing. Their first generation Americans, wherever they've come from, they may be, when they come here legally, they're the cream of the crop. So if someone comes from India, they're the top 1% of most successful people in India or from Colombia or from Belgium or wherever they're coming from. These are the elite of their countries and our American system does not allow them to have the same occupation they had in their country. So if they got a doctorate, their doctor in Brazil and they come to the United States, you can't use that. You got to go all through medical school again and no one does that. So how do you make money? You're not going to get a good paying job on an education in Brazil. So they buy businesses and those are the best franchisees on average because they're just so talented. Plus they're hungry. They're hungrier than Americans to seize the American dream. I have nine kids and they're all, they're not hungry, they're spoiled rich kids. They don't, they're not as hungry as the, these immigrants that come in and want them and want to provide for their families. So it's those are the two major characteristics of franchise new franchisees is people stepping out of corporate America or immigrants coming into the country.

Okay. And then, okay, so let's say I'm someone listen to this podcast and feel like, I don't know, that could be me. I've had a good job for a while, I've saved up a good chunk of money. But I'm tired of this. I'm just tired of this whole thing. I'm considering other possibilities in the back of my head, but I haven't taken any real action on that. Just what are those steps? What are the things I should be considering? And then just what are some of those first steps to really explore that further?

Yeah, it's not a. When you get a franchise, it's not like buying something and it's not like buying something where you buy a car and you drive out of the showroom and you hope to never see the dealership again. This is about you're going to spend your years with this organization and so you're going to change your life. Right? These are the order of things that I consider for people. Because we qualify just like people are qualifying us. I'm qualified. That so I get to pick you, you get to pick me. It's not a one way street. You don't just write me a check and become my franchise. Right. You got to prove to me. So first of all, number one, we analyze whether you're meant to be self employed. Twice as many people want to be self exploit that can be self employed. They're not self starters, they're not hungry, they're not go getters or, and or they just don't have the risk tolerance. Stuff happens. And Murphy's law is whatever can happen will happen at the worst possible time. Stuff goes wrong and you're going to face adversity and the risk takers, they just run away from that. So one is, are you meant to be self employed? Now you can prove it to me. If you've already done it, then okay, I agree you can be self employed. But secondly, what industry should you be in, right? You want a life's too short, you got to find something you love, right? Find something you love, work hard, persevere. That's my mantra. Find something you love, work hard, persevere. So you. So it has to be the right industry and then we have to be the right partner for you. This is about culture and getting along and spending years together. This isn't about. Okay, here's this agreement. Sign this agreement and it's all going to be hunky dory. It's not right. You have to deal with, we have to deal with each other. Every month, every week, every day, 365 days a year, we're dealing with each other. And so you want to see if you fit in with our system and our people. And then the most important thing is you. And this is so simple, but so impossible. It's simple, but impossible. My job as a franchisor is to give you the best system in the industry. I've been doing that for 55 years. I give you the best system if I do my job. What's your job? Your job is to listen to me and do what I tell you. And because I don't just guess at stuff, this works. This is what works. If you do that, it doesn't work. If you do this, it works. Your job then is to follow the recipe. If it calls for a cup of sugar, don't put in a cup of salt. Right? You gotta follow the recipe. And yet out of the 5200 franchisees that I brought in, not one has ever followed the system 100%. It's human beings just can't do it. They're emotionally incapable of following a system. They just have to invent, they have to be creative, they have to know better. And the successful ones, the one that become millionaires, they listen 98 or 99%. But I've had, I've created a thousand millionaires and I've had a thousand people went out of business. And the thousand people that went out of business list in less than 90%. So as if you're meant to be self employed, you have to either invent a system you can follow or follow a proven system. But if you don't get a franchise, you got to invent your own system.

Yeah, leads me to another question. Okay, one other thing on that topic. What are things to look out for.

In terms of a person, in terms.

Of, if I'm looking at franchise opportunities, what are, what are some things to be aware of?

It's real simple. Remember I said most over the last 10 years, over 75% of franchisors have failed. Okay, so you're talking to a franchisor, it's likely that going to fail. And it comes down to again, a very simple thing. This is a very simple idea. And it's so simple it's hard to believe that everyone doesn't get, but most franchisors don't get this very simple thing. Happy, successful, Franchisees, they create happy, successful. They try to create happy, successful franchisor that they don't understand that there's no happy, successful franchisor without happy, successful franchisees. So they create these one sided agreements and it's us against them. And the franchisees are bad people. They won't listen to me, they argue with me. And so it's always a fight. So the, it's simple to evaluate a franchisor. They, they're required by law to give you a list of every existing franchisee and everyone that's left over the last five years. So if 30 have left, you get their name, address and email address and phone number and you call them up and say it requires two things, not just happy. I've had seen franchisees that were blubberingly happy not making any money. So it's not just happy, it's happy and successful. You have to determine whether they've got a, a satisfactory return on investment because it costs time and money. And you got to make sure that franchisees feel they've got a satisfactory return on their time and their money. So if you just call the franchisees and ensure that they have happy, successful franchisees, that's the key.

Okay, so talk to me about your when in your mid-70s, you've been extremely successful, how come you're still going at it?

When I was a kid, when I was in high school, I've always been supremely confident and people see me as cocky. But I tell my eldest son, for example, son, you're just as cocky as me. But I'm proven. But back in high school I had proven. But I knew, even though I was poor, I knew I was going to get rich. I was just positive I was good. But I was stupid enough to think, okay, I make a few million dollars and retire. And in the journey of doing that, I realized what would I do? I love what I do. Our mission statement is having fun, improving lives. And life's too short. That the. You have to. If on Monday you're going to work, you're not looking forward to it, you're going to the wrong place. So you got to have fun and improving lives. There's nothing more fun to me than improving lives around me now. Now that means the lives of my employees, my customers, my vendors, my stockholders and the world around me. There's nothing more fun than that. I don't, there's nothing I could go do. I couldn't sit on the beach, I couldn't go fishing or golfing or anything. That's More fun than every day. Seeing the impact I have on changing so many lives.

Yeah, that's great.

That's great.

I told you. That kind of first company I was involved in that went on for 10 years and we had pretty good financial success there. And I took a year off and traveled the world and did all the different things. And partway through that journey is when I had that like moment of. I remember the exact day we were in New Zealand and woke up that morning. And I've been traveling for months all over South America and Hawaii, all over the place, doing all the magical things I could possibly think of. And woke up that morning we were going skydiving or no, sorry, that was a bungee jump. We were going to do this big canyon swing bungee jump. I remember waking up that morning and okay, so what are we doing today? Oh, yeah, yeah. I mean that should be cool. It should be fun. And it was that feeling of I didn't even. There was no excitement. That should have been such a great, exciting, wonderful thing. And that then it just started. The gears started turning and like, why do I feel that way? I don't even care. And is. You know what? Because I have zero stress in my life. I have no stress. So everything is just flatlined. All now there's. Without a little bit of stress, I feel like that there's nothing. Everything became flatlined. And then it was like the next couple, couple days, weeks, whatever, was very much so. Just that idea of I never want to retire. I just don't. I don't want to do this. I don't want to do this like this again. Like, I don't mind taking a couple weeks. Great. But to totally stop, to totally cut that out of my life. I never want that. I want to keep working till the day I die.

You got to kill me to stop me.

Yeah. Yeah.

Great.

Any other messages you want to get out to the audience here? Things you want to tell the things we've talked about? We'll certainly have later links. I love the idea of your weekly webinar. I want to check that out.

We haven't talked about my book. Free book to all your listeners. If they just. If they reach out to me@johnoyaltybrands.com I'll send them a free copy of my best selling book. It's called I Compete of my Journey of How I did it.

And when did you launch this book?

Ten years ago.

Okay. But yes, I too would love to. To read that book and learn more about your insights.

One is already on the way to you.

Okay, perfect. Okay. And then other than that, anybody wants to get in touch, loyalty brands go to loyaltybrands.com obviously they can get on the webinar, they can learn more about the opportunities you have here and I assume is your portfolio continue to grow over time?

Yeah, we're. Because I'm going to be 75 next month. We're going to focus on, I think on just two or three different industries, but we're going to have multiple franchises in those industries. And one is tax. I've always done tax. I'm the number one. I'm the great granddaddy of tax, self proclaimed and I have five great grandchildren by the way. So I can call myself great granddaddy. But the other is pets. I'm. I've fallen in love with everything. We may have some other brands. Those are our two focused industries, our Tax and pets.

And then I assume somebody comes to you, they're interested in franchise opportunities and some of the biggest things is, okay, where are you located or where do you want to grow and what kind of opportunity we have there. And then it's that in what do you enjoy? Right. What space do you enjoy and what. And then from there then they, you guide them to which one of your brands probably makes the most sense.

That's what we do.

Yeah. Awesome. It's been an amazing conversation. Thank you so much for your time and yeah, look forward to reading the book and I'll see you on the webinar as well. Thank you, John. Have a great day.

Thank you, Brad. You too.

Okay.

All right.

Thank you for listening to Executing the vision. If you'd like to be a guest, go to EmergeLabs US and click on the podcast page. If you like what you you heard, please share the episode and subscribe. Ratings and reviews go a long way to help promote the show. You can find us on instagram @brad emergelabs as well as x Facebook and LinkedIn where we strive to provide valuable information on business and life. We'd love to hear your thoughts on the show and what you'd like to see in future episodes. Thank you again and have a great day.