The Man Who Built Two Billion-Dollar Franchise Empires with CEO of Loyalty Brands Inc.

Most franchisors fail. More than 50% of franchisors that start up each year fail within 5 years. Jeff, what drives me is not the desire to win as much, the desire to win, but the disgust in losing. There's only one way to get loyalty, and that's to give loyalty. You have to earn it by giving it. Otherwise, you don't get loyalty, real loyalty.

Hey, ladies and gentlemen, welcome back to the Unemployable Podcast. I'm Jeff Dudan. If you are the founder and builder of the 2 largest, greatest tax franchises in existence with over 10,000 locations combined and over a 57-year career have created over 1,000 millionaires, your name can only be the incredible John Hewitt. Welcome, John.

Thanks, Jeff.

Is that accurate?

Actually, since I wrote that, I'm up to 1,100 millionaires. Otherwise, it's accurate, but we're improving every day. I'm adding about 150 new franchises a year, so about 12 a month. So every day the numbers go up.

Yeah. Well, coming from the tax industry, I'm not going to question your math. Like you, if anyone would know how to calculate that on the balance sheet.

And actually most or many taxpayers aren't good at math. They're good at law, but I happen to be, I was in school to be a mathematician when I started.

Okay. Well, here I have an opener for you.

How does the desire to win play into I think that in it, I'll say that Sam Walton wrote a book, Made in America. And in the foreword, he said, people ask me why I'm different. And, you know, the only thing I can think of is I'm driven, that I'm just totally passionate and driven. And the great, one of the greatest coaches of football of all time, he said, winning isn't everything, it's the only thing. So those are 2 of my favorite quotes on drive and winning. And the name of my book is I Compete. So I can tell you that at anything I do, whether I'm playing a card game, Or figuring out who sings a song or what the name of a song is, or just any argument. Win, win, win. It's again, winning isn't everything. It's the only thing.

How did that play when you were growing up? Did people think you were aggressive, assertive, you know, not a team player because you always had to win?

Well, it played out in a couple of ways. Number one is I was almost always captain of my team. And so I was always a leader. And people, I'm afraid most people are like sheep and they look for leadership. And I was always a— So I was always at the top of my whatever I did, whether it was sports or in class. But also, Peter Drucker, one of the greatest business authors ever, said, people with great strengths have great weaknesses. And one of my weaknesses is I'm a horrible loser. When I lose, I'm just so— I'm just not— I just pout for a— depends on what I've lost at, whether it's a minute or an hour. But one of my favorite phrases, and again, it's obnoxious. I'm sure it's obnoxious to most people, but I said, show me a good loser and I'll show you a loser.

Right.

So yeah, so it pans out that I'm just not a good loser. And Jeff, I think that it wasn't only until 10 or 20 years ago that I realized that When I'm competing and business, everything's a competition to me, but certainly businesses. And I've always wanted to be number one in my businesses, but everything's a competition. But I realize, Jeff, what drives me is not the desire to win as much the desire to win, but the disgust in losing. So it's 10 times worse Losing versus winning. It takes, I have to win like 9 out of 10 to equal the joy versus the sorrow.

Yeah. You know, John, people are probably listening to that and saying, this guy's probably unsufferable. He's hard to work with. He's hard to work for. But, you know, coming from the franchise space, I, with the success that you've had with over 10,000 owners, units, however many owners that was, and also some of your employees have been with you for 40 years. I mean, you have an incredibly loyal group of people that have followed you from company to company since the beginning. So what that would tell me is people, people respect game. And, you know, and, and I, I heard an interesting thing on, you know, we had our all-hands meeting today and somebody said the comment, you know, welcome to the family. We just acquired a new brand. And then I heard, I think it was Robert from Shark Tank. He said, your business is not a family because you would never tolerate things that your family members would do from employees. And, you know, business is a place where there's mutual respect. You have mutual goals. You care about each other. You respect each other. But, you know, it's also a performance environment, which is, I imagine what it is like working with you.

Yeah, that's complicated. So let me start from the beginning that, yeah, I have— the reason we call it Loyalty Brands today is I have 20 people that have been with me 25 years or more. And we have the most experienced team on the planet in franchising. I mean, I've been doing this 57 years. I started in 1969. At H&R Block. I have my chief marketing officer started with me in '88, 38 years. My CFO in '89, 37 years. And one of my top franchise guys started with me in '93, 33 years. So I have a very experienced team. And yet to have great— there's only one way to get loyalty, and that's to give loyalty. That you have to earn it by giving it. And so it starts with— otherwise you don't get loyalty, real loyalty. And so I would say that the— again, the author of Nuts, Herb Kelleher, about Southwest Airlines, he said, if you want your customers to treat you as number one, then you have to be You have to treat your employees as number one. But the key is, as you said, is it's not family. And I squirm a little because people talk about working with John Hewitt and they say it's a family and I feel part of the family. But you're exactly right. I'd never say no, it's not a family.

Yeah.

But I way prefer the word team. Rather than family. We're a team. And I think people confuse the loyalty that we give as a company and I give as an individual. They feel that's family-like, but I prefer to view our relationship as team.

Yeah. And grace certainly has a part in it because nobody's perfect all the time. People are going to make mistakes. Sometimes those mistakes are going to cost you time, energy, or money. But, or, and, you know, you, you know, you, there has to be a standard that people are held accountable to. So, you know, I, I, you know, I'm probably, I think I might, might've heard it on one of your podcasts that, you know, once you hire, you should immediately look to promote or to fire, you know, as quickly as possible so that you get people, you don't get people a job and get them status, you know, in status quo. You want them moving in one direction or the other and you want them to know that progress is expected. And, uh, but you know, to your point, we are a family business here. People join us at Homefront Brands because the perception that we are, that we do operate as a family. Um, we're respect and resolution versus angles and leverage. We always pick up the phone. We're, everything we do is super high engagement and we're all about putting the franchisee success first, which is clearly what you've done because you measure it. You measure it in terms of the outcomes that you've gotten for now 1,100 people that have joined your organization and, you know, it made an impact on their lives. But on the people piece specifically, outside of loyalty, what are one or two things that you look for, characteristics for people that you want to join your team?

Well, I want to criticize you quickly. You said sometimes it costs time, energy, or money. It always costs at least one of those, if not all of those. When you make a mistake, it costs time, energy, or money, or all 3, or it could be all 3 of them. So that's always going to happen. And they say, Jeff, that—

Yes.

The most successful people have made the most mistakes. And so one of the most important parts of being a great leader is you have to let go and you have to let people make mistakes. And you have to understand they're going to make mistakes. You have to understand that you're never going to get the perfect employee. Like I said before, that people with great strengths have great weaknesses. So my greatest people have had the greatest weaknesses. So you have to find people that can Their weaknesses aren't too tough that you can put up with them. In terms of how I hire, I learned this about 35 years ago. I was in my 40s before I learned what was the number one attribute of great companies. And I used to wonder when— what are the differences in the executives at great companies versus poor companies? So what's the difference between the executives at Walmart and the executive at Kmart? And I'm old enough, and you may be too, to remember in 1988, about 1988, when Kmart passed Sears to become the largest retailer in terms of number of locations, and then was quickly passed by Walmart. And they both married 15 or 20 years ago to go down the toilet together, while Walmart is the greatest employer in terms of number of people on the planet. And I wonder, are the executives at Walmart, are they smarter? Are they more experienced? Are they more educated? And I said, no, that's not possible because you can hire the smartest person, you can hire the most educated person, you can hire the most experienced person. So what's, what's the difference? And the difference is, I realized, is attitude and culture. And Tom Watson Sr., one of the founders of IBM, said, give me 100 great Engineers, or give me 100 people with great attitudes? And he said, I will take— every day I'll take the people with great attitude because you can teach engineering, you can't teach attitude. And one of the biggest mistakes I've made in my career is trying to change people's attitude. And you're exactly right, you can't. You have to fire. And, and/or promote. I just saw that quote a couple months ago. I learned that quote that it's not hiring that's the key. You should number, but you should, you need to hire for attitude. He said, but the, the, the speaker, and I forget who it was, Vaynerchuk or, or Tony Robbins or one of those speakers said, but you can't leave it there because they're going to fool you. The people pretend to be the best at an interview. It's better than first date. An interview's like, I'm going to put my best foot forward. And I've been fooled routinely. A third of the time I've been fooled, no matter how much I check their references and I interview them and have other people interview them. Occasionally I'm fooled, at least a third of the time. And so if you find someone that doesn't fit in the attitude of your culture, you need to move quickly and move them out because toxic behavior spreads 10 times faster than supportive behavior. So firing is very important. And then the people that are the leaders in culture, they're gonna lead your charge. You know, there's, I mean, you have to, if you're gonna grow to to great things. And I brought in 5,700 franchisees and founded 2 of the top 100 retail chains in the country. And I'm the only person that's founded 2 of the top 100 retail chains in the United States. And of course I did it once in Canada. But the key is people. It's not John Hewitt. John Hewitt doesn't do any tax returns. I don't groom any dogs. I need people and you have to have people that you can empower. And the best leaders, there's really 3 levels of leadership. There's, okay, I can manage some people and then I can manage leaders. And it's where as only about 5 or 10% of us can manage other people well. Only 1% can manage other leaders well. And so that's the real key to leadership is being able to lead other leaders.

John, how did you get from H&R Block to founding Jackson Hewitt?

I was loving life at H&R Block. I took— I started in college to be a mathematician, and I was so blessed. I don't even have any idea what a math— today, what a mathematician would do. I didn't have any clue. I guess you'd be a professor or something. But my dad tried to buy an H&R Block office, and they said, well, as a matter of fact, we're going to open a company store there. Why don't you have your son Take our tax course and work for us. And I took the tax course, best course I'd ever taken. And then I started working for them. And I knew what I wanted to be when I grew up. I wanted to be in taxes. I just loved, loved it. And 10 years later, I'm soaring. I'm 30 years old, running, running 250 H&R Block locations out of, out of about 5,000 or yeah, about 5,000. And again, loving lives. And my dad, I give all the credit to my dad. He was an entrepreneur and a visionary. And he had bought one of the first Apple computers back when there were no desktops in the country. That Apple computer is so old, it's in the Smithsonian. It was 50 years ago this month, probably. And he bought, there weren't even, 100,000 Apple computers in the country. And he was the CFO of a public company, and he decided that we should computerize taxes. And no one had computerized taxes there. Everything was done pen and paper, but paper and pencil and a calculator. And so he finally convinced me, and in 1981, I left my job And built the first tax software for an Apple computer. No one wanted it. I tried to sell it to Block. I had been high in Block management, so I got to show it to Tom Block, the CEO of the son of Henry Block, the CEO of H&R Block, a quasi friend of mine from because we're about the same age. And and they Block was so backwards. That in an annual report, their public company, Fortune 500 company, in 1983, they wrote in their annual report, people asked us why we don't computerize. Said, why should we? People don't, people don't care. Customers don't care. Doesn't save any money. We're never gonna computerize. So I got blessed and found a company since I grew up in Buffalo, it was a special blessing. I found a company here in Virginia Beach called Mel Jackson Tax Service. Mel had died. We bought 6 offices from his widow, and H&R Block by then had 9,000 locations. And I set out, remember that competition we talked about? So I guess, I think you can guess how many offices I wanted to have.

9,001?

Exactly. 9,001. And we wanted to go from 6 to 9,001, add 8,995 offices. Well, we never quite got that big, but over the next 15 years, we merged the computer company with Mel Jackson. We changed the name to Jackson Hewitt. We went public and sold it 15 years later for $483 million.

Wow. Now, was it a franchise model from the start or were you doing company stores? And I don't— was H&R Block a franchise model?

H&R Block has always been a franchise model when I was with them. Okay. So they started with one office in 1955 and the second year they expanded it and they were in Kansas City, Missouri. Second year they opened 2 offices in In New York City. And they realized that that was too far away for them to be able to delegate. So they immediately sold those offices as franchises in 1956. So they were franchising since their second year. You know, one of the biggest mistakes I ever made in business, Jeff, was I didn't franchise initially. I was— I don't know why I was so Stupid. Just stupid. I started with 6 locations. My goal was 9,001. And by the— so that was in August of '82. By January, I had 11. By the following January, I had 15. And going into the 3rd January, I had 22 locations. And I realized going into that 3rd year, That's pretty good growth to go from, in 2 and a half years, to go from 6 to 22. But I realized that if I'm going to get to 9,001, I'm going to be about 1,001 years old before I get there. So what am I doing wrong? And I realized that, oops, I got a franchise.

Yeah.

And so from that day forward, from in late 1995 or '90, yeah, in late 1985, We began franchising after realizing that I was never going to get my goal. And all my companies have been franchising every day since.

Let's go back to when you sold the company. And many people sell a business and they, now they've got to decide what what to do next. So you're, you're sitting on that, you know, you got the, they, they back the dump truck up with the big bag of money in it. They drop the big bag of money on your front door. But you've made a, you've gone right back into franchising multiple times. You've got Loyalty Brands now with a bunch of great brands in it. You had Liberty Tax. So what is it about the franchise model? Because I have this debate with some of my investors. All the time. Uh, you know, we, I do business with other family offices and, you know, it's like, why don't we do direct business? Why don't we just start rolling up direct HVAC companies or roofing companies or things like that? But, you know, for us, the franchise model, it's asset light. It, it has this great element of owners that you get to deal with. And, and it has the ability to scale really in a, you know, in a, without, without 1,000 direct employees or 10,000 direct employees. without buying all the trucks yourself and all of that. What was it about the franchise model for you that pulled you right back into it? Or did you do something different for a little while after you sold?

No, I immediately started franchising. I've never missed a day since 1985 of franchise. But think of it this way, that When you have employees, and I've had thousands of employees, and my franchisees have had hundreds of thousands of employees. When you have employees, only less than 5% act like owners. And that's the ideal employee, someone that acts like an owner. That's the way I define my greatest employees, all think like owners. And yet you can only get less than 5%. Whereas with franchises, Not 100% act like owners, but 95% act like owners. So you get ownership. And so you have the greatest team that you can ever have, far better than if you had company employees. And Jeff, no, you probably never hear another human being say this. And franchisors almost are probably reluctant to say this. But when you're my franchisees, you pay me to work for me. You pay me to work for me. So not only are you going to act like an owner, but because you have money, you're probably more talented than an average employee. Because you have passion and you want to grow, you're probably more talented than an average franchisee. You're more than an employee. Employee. You're more motivated. You're going to act like an owner, but you give me money. You pay me upfront. So you pay me, I average hundreds of thousands of dollars to work for me. Now I can't, I mean, many of the people that I've had as franchisees at the size of the company I was at, I couldn't afford to hire them.

Right.

But I don't have to hire them. I, what my job is to create a model That is replicable where they can be all they can be and they can become— again, out of the 5,700 people I brought in, 1,100 have become millionaires already. And that number grows every month or 2 months, right? But they pay me to work for me. That's an amazing model. If I do my job, if I create the best system in my industry, I can't stop growing and they can't stop making me money.

With all these years in franchising, 50, I guess it's 57 and probably not 57 in franchising, probably more like 47 in franchising, it sounds like, or 45.

I only missed those 3 years at Mel Jackson when I first started.

Got it. That's right. Yeah.

You can call it 54 years of franchising.

Yeah. So what are some of the, if you're a new franchisor today, young youngster starting up, he's got a great business, they're going to franchise it. What are some of the core philosophies either about leading a franchise network or about franchisees that you would, that are fundamental to what you believe?

Well, I hope this doesn't sound negative, But people need to be careful that if, when people ask me about whether they should franchise, my first response is no, don't. And what isn't common knowledge, Jeff, is that most franchisors fail. And they're more than 50% of franchisors that start up each year fail within 5 years. And here's what I've seen happen. So here's what to watch out for. Here's what to watch out for if you're thinking of franchising. First of all, you have to have a working model. And almost all franchisors that start have a working model, right? They may have whatever it is. They may have a pizzeria or a golf event, or I mean, who knows what they have, but they're very successful. And people come to them and say, you know, you should franchise this. You know, I would be interested in doing one of these myself, and you should grow. You should grow exponentially. So you start with this very talented mom-and-pop who has typically only one location, but sometimes a handful of locations. So almost 95% of the time they have less, 5 or less locations. More than half the time they just have one location and it's very successful. But the thing is, it needs them. It needs them. So the model has to be replicable and it has to be replicable by normal people. They can't have to be a Jeff Dudan, right? Or a John Hewitt. They have to be someone A normal person that can manage a business needs to be able to get in the driver's seat and drive it to success. And so they start and most of them don't have a replicable business because it needs some special skills. But now there's another problem. Now they're wearing 2 hats. They invest $300,000, That's an average number of cash invested. They invest $300,000, they start a franchise system, they pay the advertisers, they get salespeople, they get people to build the business, operating support and so forth, and write the manual and do the legal work, and they invest $300,000. So now the owner who's making, let's say he's making $300,000, $400,000, $500,000 a year. He's invested $300,000 and now he has 2 jobs because he's always cocky enough to believe that he can be CEO of both. He can be CEO of the franchise company and the mom-and-pop, but the mom-and-pop needs him and he needs that.

Yeah.

He needs, he's used to living on $300,000, $400,000, $500,000 a year or more, and he needs that revenue. And yet, so he's got his foot in In both camps.

Right.

He's got a foot in both camps, so he's got 2 jobs and he's not— and running a franchise system is different than running company employees, right? Franchisees are not employees. They can't be treated like employees. They're renegades. They're rebels. You have to earn their trust. You have to have leadership where Where you have to be a leader of leaders. And in the history of franchising, there's less than, less than 1,000 companies. Do you know how many, do you know how many companies there are in this country that have 500 or more locations, Jeff?

I do not.

Yeah, there's, there's only about 500. So in the history of franchising, there's only been 1,000 or 2,000 or 3,000. leaders that can run a great franchise. Most people can't do it because they're used to handling employees. And when someone rebels, and believe me, if you've had children, you understand rebellion.

Yeah.

Or even if you haven't had children, you've been a child. They're going to rebel. They're going to complain about everything you do, right or wrong. They're going to complain. Someone's going to complain. And In a way, I love that because I am fanatically committed to have the best system and to have the best system, it has to be improving. And it's real hard to improve when no one gives you advice. And no one, when you run a business, even when I'm a franchise CEO, no one likes to give the CEO bad news. But your franchisees give you bad news even when they're wrong. And you're always, and you will improve. I believe, Jeff, that if you and I have a disagreement, you're a smart guy. If you and I have an argument, I've learned that neither one of us is right. The answer lies somewhere in between. You might be 95% right. I might be 90% right. Might be 50/50, but you need to listen to franchisees and learn. They're a huge asset in that capability. But what happens is this person that started the franchise system Just hates it. They hate being argued with. Their employees don't argue with them. You know, when they're running their mom-and-pop location, their employees don't come in and rebel and change the sign and threaten to take the sign down and change it and tell them their marketing sucks. And I mean, everything's bad. You know, out of all the franchisees in my career that I brought in, 5,700, it's like all 5,700 have the same disease that the minute they signed the franchise agreement, they became a marketing expert. Right. And it doesn't matter if I've been in taxes 57 years and there is their first day, they design their own ad better than our ad. It's amazing that all 5,700 thought they were marketing experts. And so in my 57-year career, I've never had one year when 100% where people were happy with the marketing. So it's very difficult for all those reasons. And for all those reasons, I would say you have to face a lot of adversity before you get to success. And one last number that I think might amaze you. How long have you been in franchising? 30 years.

20-plus years.

Okay. So there are 4,000, roughly 4,000 franchisors, almost 4,000 in the United States. To be in the top 50%, to be in the top 50% of number of locations, guess how many locations you have to have?

To be in the top 20%?

Top 50%.

Top 50%.

Right.

Of the 4,000 actively growing brands. Um, right. I would say 20.

Exactly right. You nailed it. You nailed it. So, but think of that now. Would you, do you know the, there's a, a well-known theory about how many locations you need to, to make it in franchising? Do you know that number that people, I mean, people, it's like an old wives' tale.

Yeah. I mean, I say like, if you want to be in our business, if you want to be what I would call, you know, transactable, you want to have a normal profit P&L, you know, it'd be about 100 owners operating with different levels of maturity. That would give you a normal mature franchise or P&L. But royalty self-sufficiency for us is around 40 units.

Yeah.

40 owners.

The historic number that's been used in the industry back to 57 years is 100 locations. Okay. 100. Yeah. Is 100 locations. And that's probably 40 or 50 owners. But, and remember, half of them only have 20 or less, less than 20. So it's to be in the top 15%, You only need 700, I think, to be in the top 15% of all franchisors. So, yeah.

And these are, these are legacy brands. These are the McDonald's, these are the—

Yeah.

These are all, all the big ones that you see up and down the street. And those people, they're not going anywhere. Um, exactly. But I think the statistic that I heard, you know, you said 50% fail in 5 years. I heard 90% fail within the first 12 years, and I've seen it play out. Owners get 20 or 30 or 40 owners and then they, you know, and then they have some problems, then development stops, then you get your attrition and then they kind of die a slow death over 8, 9, 10, 11 years. At the end of the day, it's going backwards. It's not, it's not going to go forwards and they just release everybody to their own, you know, contracts and all. And, and I've seen it, you know, specifically in the time that I've been Doing some consulting and advising with emerging brands. It's tough. Um, and you need, I mean, I, I say that if you're gonna launch a brand, you better have $1.5 million or $2 million to cover you for the first 24 months if you're gonna do it right, minus maybe whatever you can generate in franchise development. I mean, if you're doing 12 deals a month and you're doing 'em organically, um, not a lot through brokers, you, you're gonna put some money in the bank to be able to help fund your operations. But You're still gonna spend that amount of money to support your growing network of franchise owners.

Yeah. The average first-year franchise doesn't do 10, 10 the first year.

Mm-hmm. No. So talking about, uh, franchisees, you make a, a, a great point about they're all marketing experts and we use the word genius attacks here. We, we encourage 'em. I, the first thing I tell 'em, or one of the things I tell 'em in my initial training is, Um, you know, if you have a genius attack, meaning you, you wanna change the model or you wanna change the plan, um, it might be because you're uncomfortable doing the thing, whether it be sales, business development, whatever. People change the plan when they, when they're uncomfortable doing it. What are some of the characteristics when, when a franchisee walks in the door? Do you meet your franchisees before you award them personally? Do you get a chance to meet them?

You know, our process is this, that our most— we seldom use business brokers. We do our own advertising. And the franchise development team's goal is to decide whether they're right for us or not. And if they decide they're right for us, then I talk to them.

Okay.

So I talk to 98% I have a Zoom, at least a Zoom with 98% of the people that join us in my whole career. So out of the 5,700 people that I brought in, probably 5,500 people have spent 20 minutes plus with me before, personally, one-on-one. And I don't allow my people to talk during that time. So it is actually even, they can listen and I want, like them to listen, but it's one-on-one with John Hewlett.

What are you looking for that gets you excited and said, this is somebody we want? And then on the flip side of that, what's a deal breaker?

Well, since you've been in franchising for, you know this, and for so long, you know this as well as I do that there's, my job is to give you the best system on the planet. If I do my job, What's your job? Your job is to follow the recipe, follow the yellow brick road, get on the yellow brick road. And Jeff, after 57 years of business and 5,700 franchisees, and again, I'm adding 10 to 12, 12 or 13 a month still now, and that's accelerating. Guess how many people have listened to me 100%? Zero, zippity-doo-dah. No one's ever listened. So what I look for is the capability of putting aside what you think you know better than me. And that's the number, that's pass or fail. I've had the 1,100 millionaires, they listen 98 or 99%. I've had 800 people go out of business and they listen less than 90%. And as you said earlier, that when you don't listen and you don't follow the— because it's not the John Hewitt system. This is proven model that's working across the country. This isn't the John Hewitt model. My job is to take the pulse of what works and from our internally and watching our competitors to give you the best practices. And so it's best practices. And if we say you should charge X, then you should charge X. If we say you should be open by 8:00 AM, then you should be open by 8:00 AM. You can't change it. It's gonna cost you time or money or energy or all, all the above. So you need to follow the program. So what excites me is someone who's proven In our, let's say they're proven, let's say they've been a franchisee and they've proven that they can do it. Right. They've proven that they can follow the model because the smarter you are, the more successful you've been in life, the less you are likely to listen to me. And whenever you don't listen to me, I promise you it's gonna cost you.

Yeah, that's, that is, we have had some people that I thought were slam dunks because they had these huge roles at huge corporations. And they came in and, you know, 2 weeks in, I got a 16-page memorandum about all the things they wanted changed in the system as opposed to just following the plan because it's just not what they're used to doing. And a new broom sweeps clean. You know, I just, I like, sometimes I like people that have had a little bit less experience or maybe, you know, but they've proven that they're hardworking, successful, diligent, And committed. And I mean, those are the types of things and those people will just, they will do great. They will do great.

I've learned that one category of people to stay away from, never hire this person. Their job has been to be a consultant.

Yes. Yes.

I mean, because all consultants just find things wrong.

They don't do anything.

They just keep finding things wrong. They don't do anything. They don't fix it. But they give you a list of what's wrong. And so not only can't they be employees normally, they can't be franchisees. So if over the last 20 years they've been 5 years as a consultant or 10 years as a consultant, ding, ding, ding, warning, warning. They're warning Will Robinson.

John, we had this, you know, we do a meet the team day dinner and we had this, I'll get a prep from our our team who's coming in and talk to this. They think this is this incredible candidate coming in. And I meet him and we're having a conversation and he says, I've been a consultant with, and I stopped him right there. And I told him, I said, I said, that's not good. I said, we have a terrible track record with consultants. I said, you need to, like, if you're going to do any franchise, you need to understand it's not your job to fix it. It's your job to do it. And the look on his face was, At first he was shocked and taken aback and I'm like, oh, I just killed this deal. And he is like, you know what? Thank you for saying that. That makes a lot of sense because I mean, I would've, I would've walked into it. And with that awareness, I think we awarded them actually, or I think we're going to actually, we did award them. Uh, we did award them, uh, out in, uh, out in Vegas with, uh, one of our, uh, Window Hero business. So, you know, but it, it's, but you're right. Um, okay. So, I know, I know we've got 20 minutes left. There's some stuff around how you got into Walmart, uh, and, you know, some of the early stuff that's amazing. But I also want to get into Loyalty Brands and I want to, I want to bring this forward a little bit of like what's going on, uh, in franchising now. Why did you choose the brands that you choose for Loyalty Brands? What are you seeing in terms of trends? Like if we're, if we want to talk about what's going on today and what, what you're seeing with your experience, like I really want to make sure we cover that. But I also think it's important for people to understand, like you went out and you, you know, one of the things I like to say is, is it the easiest dollar you can make? You went right at Walmart and you cut a deal with them and that basically made Jackson Hewitt. Is that correct?

Well, I'm not sure that you would go all the way that it made Jackson Hewitt, but It's part of going after Walmart is the reason I set big, hairy, audacious goals, you know, and we didn't talk about that earlier, that of why I set a goal of 9,001 versus a rational goal. I don't think any human being would say that was a rational goal when I had 6 and H&R Block, household name, 9,000 locations. And they had been in business for 27 years and that, and no one would say that was a rational goal. So my goals tend to be a bit irrational and big, hairy, audacious goals. And the Walmart is an example of why, because we got to about 1,000 locations and still H&R Block had their 9,000. And by the way, Today they have 9,000. So they haven't changed since I started competing with them. They have, except for they're declining a little over the last few years, but they still have about 9,000 locations. And, but the reason for the goal is, okay, we have 1,000 now. I mean, we need 8,000. What are we going to do? Well, H&R Block was in Sears and Sears was dying. And with, uh, there were in, out of the 800 Sears, they were in about 600 and Walmart was growing like weed. Right. And so I, and the foot traffic in a Walmart back in 1993, when I reached out to them, the foot traffic in a Walmart was, was 40,000 people a week compared to, you know, like 5,000 a week at a Sears. And I said, wow, if this is working in Sears, think how good this could work in Walmart. And so we set our sights. And back then, back then in 1993, it wasn't clear yet that Walmart was gonna— because Walmart and Kmart had about the same number of locations. They both had about 1,200, 1,300, 1,400 locations, and Kmart hadn't started dying yet. And so it wasn't clear. It was clear that Walmart was better, but it wasn't crystal clear like it is today. And so I set out to be in either Walmart or Kmart back in 1993, and I visited both of their headquarters and I immediately saw the difference in just by visiting the headquarters. When you visited Walmart headquarters, you sit at the cheapest table, I mean, this is all the vendors, whether you're General Foods or Kellogg's or Campbell's or whoever you are, you sit at these cheapest table. It's in a factory building and still there. And I was there last year. It's still there. And I guess they're building a new one maybe now, 33 years later, but it's in a factory building in Bentonville, Arkansas, in the middle of nowhere. And you sit at these cheap chairs that they sell in the store for about $10 each or $12 each. It's not fancy at all. It's no ornaments. I mean, no photographs on the wall. No, you see photograph behind me. There's nothing like that. It's very plain. And then when you go to— that was in— and then you go to Kmart headquarters and they're in Troy, Michigan, suburb of Detroit, right across from the most expensive mall, and I'd never seen where the almost the janitors were almost wearing tuxedos. It was so expensive. It was all the big name stores. It was a beautiful glass building. There was a huge fountain in the foyer. And I said to the person that I went with, I said, every person that buys a product at Kmart pays an extra penny just to support this building. So it was clear in my mind who was going to be better. But The reason we set our sights on that was because we had a goal of 9,000. If we had a goal of 2,000, we wouldn't have needed to go to Walmart. And today, out of 6,000 Jackson Hewitt offices, 3,000 are in Walmart. So it doubled the size. They do $1 billion worth of business in Walmart, and they're twice as big because of that arrangement that I sought in 1993 because of my big, hairy, audacious goal to be number one and to have 9,000 locations.

That's incredible. So moving to Loyalty Brands, what was the first brand in the platform?

Well, we had a couple of, uh, the, the first brand was Because of my non-compete in tax was Zoom and Groom.

Okay.

Our mobile dog grooming. And when, during my non-compete with Liberty Tax, I took my top 4 people with me from Liberty over to Loyalty. Yeah.

What year did you sell Liberty?

In 2018.

Okay.

My second $500 million public company. I built 2 $500 million public companies. One went on to become a billion-dollar company. So I founded a billion-dollar company and a $500 million, and now Loyalty Brands is going to be my second billion-dollar company. So, and my third, and Zumagrimm will be my third chain in the top 100 retail chains. In this country. And again, no one else has done more than one. But when I took my people and had a non-compete, I couldn't get back in tax right away. So we looked at what are our franchisable industries that are the fastest growing? And at the time in 2018, '19, it was elder care and pets. And so pets to me is a lot more fun than elder care. We pursued both, but I was most anxious to get into the pet industry. And today, 4 of our 7 brands are in pets and we're looking for more. We have, today we only do 2 things. We do pets and then we do tax accounting advisory. We're keeping all our brands focused in one of those, in one of those channels. Got it.

And I've heard you talk on podcasts about family and a little bit about society and kind of what's going on right now. And what did your, as you were building these businesses, how did you balance or integrate your desire for family with building the business? And do— has anybody in your family participate in the businesses?

Well, first of all, I believe that it's that your priorities in life are God, family, and then business. So, but if you know me well, even my own family, Because I'm such a competitor, it's hard to see that every day, right? But I brought my dad into the business. I mean, we merged, we did the computer company. He was a director at Jackson Hewitt. He was a director at Liberty Tax. And so, I mean, my dad turned into be one of my greatest friends and allies. And we fought as a teenager. I fought to the nail. I mean, I consider myself, I left, I was a prodigal son almost, except I didn't get— the prodigal son got a lot of money to leave with. I got no money to leave with, but we fought until I went into business and then we got so close. And then I have 6 children. And all 6 of my children have worked with me. 4 of them became franchisees over the years in the business. And so I've offered, virtually all my friends or relatives have either been stockholders, employees, and/or franchisees. I work 365 and people laugh at that, But I can't go to a Christmas dinner or Easter dinner or have a family event where we're not— they've worked with me, they've owned franchises, they wonder what's happening there, they're interested. So there is never a day that goes by that I'm not talking or thinking about business. But yeah, my family's been integrally involved and it's not always positive. And it's hard. It's harder to— I had to fire my ex-wife. I had to fire 2 of my children. I mean, it's not easy and it's tough love sometimes, but it's been—

it's—

I have to say it's been very worthwhile.

Yeah, that's interesting because when you own a business and you're hiring, the family members are saying, hey, could you give so-and-so a job? Or it just, it just seems to make sense, right? So you do end up with cousins. Relatives, kids. My wife did some marketing for a little bit while. I had to fire her. That wasn't going to work out very well. And brother-in-law, you know, so it is interesting. I do work with my son. He's an executive at our company. He's 28 and he's kind of a rising star, I think, in the industry. He led our development. We did 230 placements in 30 months. Which is clipping at, you know, kind of clipping at the pace where you are right now. And, you know, he led that and I tell you, it's been one of the greatest joys to see other people pour into him and see him succeed. But for every one of those, I've probably had 5 that didn't work out over the years.

Most of my children have left. There's only There's only one. My youngest is working part-time while she's finishing college. So all the older ones have left, so that's fine.

Yeah.

Yeah.

So, you know, maybe we just wrap up a few minutes. You know, I have great respect for your career and your perspective. When you think about society in general right now and trends when it comes to things like values or it comes to things like integrity, work ethic, optimism, commitment. But like, what are you seeing from your perspective with the franchisees that are coming across your desk in terms of, you know, their ability to just buckle down and be good partners to you?

Well, I hate to be, you know, I hate to be negative. I'm such a positive person, but I will say this, that in my life, the service in the United States has declined every year. And the quality of service in the United States is just disappointing. I'm not— a day goes by that I'm not disappointed. Having said that, Because I get to work with entrepreneurs who act like owners, I'm always getting the best of the lot. The people that join us, they act like owners. They follow the system. They care about customers. They realize that, they realize or leave if they don't show it, that We only— it doesn't matter, Jeff, if you're a franchisee of mine, doesn't matter if you think you do a good job or I think you do a good job. It only matters if our customers do think we do a good job. So we do something, Jeff, to ensure that we have the highest quality. And just— and I'll tell you that in a second, but just like you said earlier, we gotta fire people that don't meet our standards. That— and so you have to drive people. To a higher standard. We do something that no other, almost no other business in the, let alone franchisor does in this country. We call every customer after their first visit and say, how did we do for you? Now everyone does surveys. Everyone surveys them by text or by email or by snail mail or by giving them a card. We actually call them and talk to them. And so we, and we do that yearly with every customer. And so we measure my measurement. The measurement that Loyalty Brands has is different than, it's not a promoter score like everyone else does. We understand that Stan Phelps, one of my favorite authors who's been a keynote speaker at To my companies. He said in one of his books, he said, people never arrive at a meeting exactly on time. They're either early or late. And let's say that our meeting today was 2 o'clock. I was either before 2 or after 2, not exactly at 2. So he said, and just as people rarely arrive just exactly on the hour, He said, it's the same with customer service. You don't just meet customer service. You either exceed it or fail to meet it. So we judge ourselves on, we know we can't please 100% of customers. We know we can't do that. But we, what we do is every year with each business, we have to get a higher percentage of customers that we exceed their expectations.

And do you do that even in the grooming concept? In every concept.

Every one. I've, yeah, every concept. And, and you know what? That's in, especially in tax and grooming, they're horrible at asking for referrals. They're horrible at asking for referrals. So we, the 95% of our people are happy and we say, could you, do you know anyone else that might be interested? And so our referrals go up double.

Yeah, that's, that's a fantastic practice. Uh, and, and I gotta think the franchisees, You know, at first I could see, uh, I could look at this 2 ways, but I would think that the good ones would greatly appreciate it.

The, the best do. And, and, you know, I found it, uh, now we have an offer that if you don't want to call your customers for $5 each, we'll call each of your customers.

Not a bad deal. Not a bad deal. Okay, John. Um, This has been amazing. I've got, uh, 2 questions. I've got a curveball and if, if you wanna play, uh, I know you wanted to be a baseball player growing up, so I've got a curveball and I got a fastball right down the middle for you. But before we do that, if people wanted to get more information about Loyalty Brands or anything else you've got going on, where would you direct them?

Uh, just, uh, loyaltybrands.com.

Fill out, fill out the form, check out the brands, uh, and, and get connected. Okay. Here we, here's a curveball. Gun to your head, you've gotta start a new business in the next 30 days. It can't be something that you're currently in. What would that new business be? Where do you see the opportunity in the marketplace?

Either if I, can I have it in pets, like dog training, for example? Sure. We don't do dog training. Yeah, I would do dog training.

Dog training. Okay.

Something I've got a great, for sure.

I've got a great introduction to make to you. That's so awesome. And, and that, I know a great, I know a great little brand that's doing that right now.

Okay.

Last question. Fastball straight down the middle. If you had one sentence to make an impact in somebody's life, what would it be?

Find something you love to do. Work hard.

Persevere. Perfectly said, John. I've enjoyed this very much. Thanks for being on, Jeff.

It was my pleasure. Great job. Thank you.

I appreciate it. I'm Jeff Dudan here with the legendary John Hewitt. We have been on the Unemployable Podcast. Thanks for listening.