Latest / The Inspired Stories Podcast / Building Top Franchise Chains and Changing Lives, with John Hewitt | Tax Series

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Building Top Franchise Chains and Changing Lives, with John Hewitt | Tax Series · The Inspired Stories Podcast

0:04
Welcome to another edition of Inspired Stories, where leaders
0:07
share their experiences so we can learn from their successes,
0:10
how they've overcome adversity, and explore current challenges
0:13
they're facing. Welcome to another edition of
0:17
the Inspired Stories podcast, where leaders share their
0:20
experiences so we can learn from their successes and be inspired
0:24
by how they've overcome adversity.
0:26
My name is Anthony Cotispoti, and today's guest is John
0:29
Hewitt, founder and CEO of Loyalty Brands, which houses a
0:33
successful group of franchise systems including financial
0:37
services, accounting and tax services, dog grooming and
0:41
business brokerage. You probably recognize the names
0:44
of some of the powerhouse brands that he has started and built
0:46
over the years. Jackson Hewitt was formed in
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1982 to bring the new technology of software to the process of
0:53
tax preparation for customers across the country.
0:56
They used franchising and a variety of creative partnerships
1:00
with places like Sam's Club and Kmart to grow the brand to 1500
1:04
locations by 1997 when the business was sold for $483
1:09
million. Later he would go on to start
1:11
Liberty Tax Service, which grew to 4000 locations by 2012.
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Then in 2018, John left Liberty to start Loyalty Brands.
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He has brought in over 5000 franchisees across his different
1:24
brands. He's opened over 10,000 offices.
1:27
He's founded two top 100 retail franchise chains, and he's the
1:32
author of the best selling book called I Compete.
1:36
How my extraordinary strategy for winning can be yours.
1:39
Before we get into all that good stuff, today's episode is
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Add Back benefitsagency.com. Now back to our guest today, the
2:10
CEO of Loyalty Brands. John, thanks for making the time
2:13
to Share your story today. My pleasure, thanks for having
2:16
me. So John, you're someone who's
2:19
achieved a great deal of success in your career.
2:21
Tell us what was the inspiration behind starting Loyalty Brands?
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You know, I got fortunate then when I was after I sold Liberty
2:31
Tax, I've been in the tax industry for 50 years and I was
2:36
having dinner with one of my former employees, say attorney,
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a franchise attorney at both Jackson Hewitt and Liberty.
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And he said you know why don't you while I was during my not
2:48
compete and he said why don't you think about getting in
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helping other franchise industries.
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He said I have about 30 franchisors that I represent.
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One of them has a great industry.
3:03
They have a great company there. Every franchise makes about 6
3:07
figures and yet they only have 13 franchises in 13 years.
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He said you did that every every few weeks, 3 weeks you were
3:17
bringing in 13. So he said why don't you look at
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other industries. And so that's how I have.
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And now, now we're just getting ready to start our 9th franchise
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chain, but really love the diversity and the cross
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marketing opportunities and and being in more than one brand.
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So the the desire really came from wanting to take the
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expertise that you developed over the years in building
3:49
franchises and be able to offer those to other really good
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strong brands that just don't sort of have the playbook that
3:55
you do. Exactly.
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So let's let's do the part that everybody wants to do first and
4:03
then let's come back to the loyalty brands.
4:05
Let's look back at the the past successes that you've had.
4:08
So you're working in H&R Block, you've you and your father had
4:11
this idea to bring software into the tax prep world in the early
4:17
80s. And you know, for people who
4:19
weren't alive back then or, you know, maybe don't remember, you
4:22
know, that that was that was cutting edge.
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You know, not everybody had a computer, certainly not in their
4:28
homes and not most people at work.
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And so, you know, I think, I think this was sort of a pattern
4:34
of you bringing different styles of innovation to improve over
4:39
the, the current standard. And the, the biggest thing you
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did there with starting Jackson Hewitt was to, to bring software
4:46
to the tax prep world. But even once you did that and,
4:50
and you launched this competing service, you still had a, a big
4:53
uphill climb. What were some of the other
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things besides the introduction software that you did that were
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sort of innovative that allowed you to grow so quickly?
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Well, you're right. You have to have differentiators
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to separate yourself from from your competition.
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If if David had gone on to the field with the same armor and
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shield and sword as Goliath, there wouldn't be any any David
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and Goliath story. There'd be David would have been
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the 189th guy killed by Goliath. So you have to do things
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different, especially we have when we, when we started, we
5:31
bought Jackson Hewitt and Mel Jackson and changed the name of
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Jackson Hewitt and they had six locations.
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And we immediately sat a huge, huge, impossible goal to be #1
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and, and it was impossible because H&R Block had 9000.
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So to be bigger than Block, we had to grow by 8995 offices,
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which is quite audacious. And today I'm I'm proud to say
6:00
that there are 6000 Jacksonville locations, billion dollar
6:04
company and the 23rd largest retail chain in the country.
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But we never got quite the block size.
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We have to do things different. So the major, major difference
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in in 1981 and I'm sorry, 82, when we started, there was no
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one that was computerized. And as you said, Anthony, most
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of your, your listeners won't have been around them, but there
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weren't even a million PCs in the country.
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I mean, it was a rudimentary, oh time.
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There was no such thing as that Apple Store.
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Everything you ordered had to be online.
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So it's a different world. So we computerized tax it gave
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us a competitive advantage, but there were other advantages that
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that we did that were different and and we looked at and I have
6:55
been with HR block for 12 years. So I saw their weaknesses that
7:00
that I I invented a few things that are you still, you know,
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Sam Walton said you don't just steal from your competitors, you
7:11
or ideas from your competitors. You look at all your customer
7:14
experiences. So for example, in here in
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Virginia Beach during season, our hotels and our restaurants
7:25
change things. They staff up, they expand their
7:27
hours, they they change things. Well during the tax season, it's
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very seasonal as you as you can imagine and it's even more
7:36
seasonal than most people think. It's we do most of our business
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not in the 15 weeks from January 1st to April 15th, but in just
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four weeks. So we looked at how, how can we
7:48
improve our service to our customers and we asked and, and
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we asked our customers and our asked our our franchisees that
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were close to the customer, what do you need and what can you do?
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And I love driving by, for example, H&R Block during that
8:03
period is open, They're open all tax season from Monday to
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Friday, 9:00 to 9:00 and also Saturdays and Sundays, but let's
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just use Monday to Friday. Well, during that time when
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you're really busy, I love driving by an H&R Block office
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at 8:45 in the morning and seeing the customer standing
8:24
outside and the pair sitting in the office working on working
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with the lights on. And what would you do?
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I mean, if you're owned a competing business, you're going
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to be open. And So what a simple competitive
8:41
advantage is expand your hours during, during that peak period.
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And, and we, so we open during those four weeks.
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We open at 7:00 AM and then at at 9:00 at night, there's a
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knock on the door. And at 5 after nine at H&R
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Block, they, they wave them away.
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They don't even get out of their desk.
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Come back tomorrow. Well, what would you do?
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You're going to grab that customer.
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It's your business, you're an owner.
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So one of the things we did is made sure that every office was
9:16
franchised. So we had an owner mentality.
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You know, in my thousands of people I've employed in my 55
9:24
years, only two or three percent act like owners, but my owners
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act like owners. And so we differentiator, huge
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differentiator that got us 10% more business every year is
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simplistically and it's not rocket science.
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You just expand your hours during peak.
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Other industries do that, right? My the hotels in Virginia Beach,
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the restaurants in Virginia Beach, it's a very seasonal
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here. It's a very seasonal, you know,
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summer, summer tourist area. And so it's easy.
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You steal ideas from competitors.
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And so we have about 15 different competitive things
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that we do better that are objective, not subjective, but
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objectively better than our competition.
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And those are the things that set us apart from H&R Block back
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in the 80s when we we beat them every year, we grew faster than
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them every year in in the entire 15 years I was there.
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I like it. Sometimes the best solutions are
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the most simple stay open later franchise so you get an owner
10:30
mentality in every office rather than a a manager slash employee
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mentality. That person's going to work
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harder, work longer, think more creatively to to problem solve.
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So tell me, what was it that gave you and your father the
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vision to see where things were going with software back in the
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early 80s when H&R Block couldn't?
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I'll credit that drive to my father.
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I was not, you know, I had taken one course in college with a,
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with a mainframe computer and you had to use these cards that
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these punch cards that you fed the computer and you couldn't
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even type, let alone you could, there was no such thing as
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typing on dashboard. But he had bought one of the
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first apples by mail and it was in the 70s.
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It was so, so ancient that it's in the Smithsonian today.
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You know, we went to the science Smithsonian a few years ago and
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there's the little Apple 48K if you, if anyone knows what that
11:43
means, that's 100 thousandths of a of a cell phone today, right?
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And capability. But he, he had experimented with
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it and said, you know, we can we can computerize taxes and he
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said computers are are going to his company was advanced.
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He was CFO of a public company and his company was one of the
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most advanced in the United States in using internal
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software. So he saw it and it was his
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vision and drive that that got me to leave H&R Block.
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I was happy at, I love my job and I love, I love my the where
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I was in the company and I thought I was going to be at H&R
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Block forever, or at least a long time.
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I've been there 12 years, was running 250 offices at 30 years
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old. And so I thought I'd be CEO of
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H&R Block someday, but he pulled me out of there.
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I give him all the credit for that.
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You mentioned that there were 15 things that made you objectively
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better. I'm curious if some of those
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have been sort of Common Core anchor values that you've
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continued to implement in your other businesses going forward
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that this, this helped to make Jackson Hewitt better and we're
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going to implement the same kind of thing in, in the future
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businesses Liberty tax and now loyalty brands, etcetera.
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Yeah, the you already mentioned two that are across all brands,
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but my, my real favorite is it's it.
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And it's amazing to me because it's been so successful is after
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every customer comes in, two days later we call them and ask
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them for. And it has several purposes.
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One is so we can improve on the fly because it doesn't matter
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Anthony, if you or I think that we're doing a good job.
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It only matters if the customer thinks we're doing a good job
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and everyone surveys their customers and they're they're
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foolish in almost every company that does it.
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If not every company is foolish and they think they're going to
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get a realistic answer by a e-mail survey or handing them a
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postcard or survey. You only get the people that are
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very happy or very unhappy or have a lot of time.
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You, you get when you survey customers normally you're lucky
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to get a 5% retention of that or a response.
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What we call the customers that what we learn is the obvious.
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The obvious thing you get is you get to improve your service
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along the way. In the tax business, we don't
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want to wait till April 15th to see how each preparer is is
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being appreciated by the customer.
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We want to know on January 15th and January 20th and January
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25th. So we get to improve on the fly.
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But also customers love being called.
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No one, almost no one in this country is calling their
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customer. So it isn't just an advantage
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over each and our block and our competitors, it's an advantage
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in, in that's unique in all, virtually all industries.
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You know, I've quizzed many, many people and talked about
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this often said have you been called by a customer or by a
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business in the last year? The only ones that are come up
15:18
time and again are automobile. When you buy an automobile,
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typically you'll be called, but in every other industry they
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don't call you. So our customers love to be
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called. So our retention rate goes up.
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It it goes up by approximately double digits, 10%.
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Then something that, that most people don't think about is
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most, most people in this country are, are poor at asking
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for referrals. And our tax preparers not, I
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mean you, you, you want them to ask for a referral, right?
15:54
There was a, there's a book called Guerrilla marketing for
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accountants. And this accounting firm wrote a
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book and they, they quizzed all their customers and they said,
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tell us, tell us that how do we do it for you?
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And, and, and 95% were happy. And how many of you referred
16:15
another customer And half, only half of the people that were
16:18
happy had referred a customer and they said, well, why didn't
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you refer? And that they said, well, no one
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asked us, we didn't know you wanted more business.
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So we found that in our two biggest franchise, our mobile
16:34
dog grooming and our tax franchise today, neither the
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mobile groomers nor the taxpayers are good at asking for
16:43
a referral. I mean, you try to get them to,
16:46
you try to explain it to how important it is, but at the end
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of the day, they're either too shy or they don't care.
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And heaven forbid that you ever go outside to a party or
16:59
something to mention your company.
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I mean, it's amazing. So this very personable caller
17:07
is instructed to be, you want to show the customer you care and
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95% of them are happy and then ask for a referral.
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So our referrals are 50% higher than our competitors just
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because we have this very personable person ensuring that
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the customer understands that we want number one, we want
17:30
referrals and we pay a $50 referral fee so that the fee
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isn't really the big motivator. It only changes about 10 or 20%
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of the people's time. The biggest motivator is that
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someone has asked them and then they think about it.
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Then do you know someone else that might benefit from our
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service and that forces the customer to think about it and
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know that you're looking for more business.
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So that's my favorite of all the differentiator because it's not
18:01
just industry specific, it's it's better than every customer
18:05
service that you're going to that our customer's going to
18:08
have that year. So for everybody listening,
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break it down into very simple steps.
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It's call the customer very shortly after the service has
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been provided. You ask them two questions.
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You ask them, are you happy with the service?
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And then you listen, right, there's a problem, this gives
18:24
you a chance to solve it. And then you ask them, is there
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somebody that you could refer? Is, is there someone you know
18:31
that would benefit from our services?
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And if they say yes, how do you sort of coach that hand off?
18:36
How do you ask them to kind of make that introduction?
18:39
Well, if you have the numbers handed, we'd love to reach out
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and you don't mind. I'd love to reach out for you.
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But please, if and we're going to give you $50.00 for every
18:50
customer you send. If you send us 5 customers then
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your tax return costs you nothing or your grooming costs
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you send us 2 customers. Your groom costs nothing.
19:00
Right. OK.
19:01
So back to the timeline. So at some point you make the
19:03
decision to sell Jackson Hewitt. What was behind that decision?
19:06
Was it just the time to give the investors return on on their
19:09
capital? It's a long story, but what what
19:14
happens with and, and it's related to the problem in
19:19
private equity and it, it's was a private equity investor
19:26
battle. So what happens in private
19:29
equity when they invest and, and I've had in all my chains in
19:33
loyalty and Liberty and Jackson, you know what I took, I took
19:38
venture capital, private equity. Well, the the problem with that
19:42
is when you start out, you both thinking long term, because
19:49
you're both thinking as a, as a great entrepreneur, you're
19:52
always thinking five years ahead or more.
19:56
And in when the the venture capital or the private equity
20:00
invest, they're thinking five years in advance.
20:03
But they're soon in the five. They want to be out in five to
20:07
seven years. So as you approach the 5th to
20:10
7th year, they become a little antsy and they want to maximize
20:17
the short term numbers so they they can get at the highest
20:21
price when they exit. So they're way less concerned.
20:25
They don't want to invest money today that's not going to
20:28
benefit the company financially until two or three years from
20:31
now. You as a great entrepreneur or
20:34
leader, you're always thinking about, we want to be #1 we're
20:38
going to, we want to make, make this company the best.
20:40
And we have to have vision and keep the pulse and stay.
20:45
I mean, if it's AI or computer computers, we have to have the
20:49
state-of-the-art. And so we have to invest today
20:52
in order to reap the harvest in the future.
20:55
So you become you become at odds with your as you as you are as
21:03
the investor, the private equity gets along in the two and then
21:08
private equity what what happens in virtually every company that
21:13
starts up on. I mean, even Steve Jobs got
21:17
fired from his own company from Apple, right?
21:20
And the the greatest, the greatest mind and and
21:24
development of, of personal computers ever.
21:27
He got buyer from his own company.
21:28
And then, of course, years later went back.
21:31
But the it's venture Capital One O one that the entrepreneur that
21:36
starts with six offices like I did isn't going to be able to
21:41
grow and run thousands of offices.
21:43
So at some point you need to replace them.
21:46
And so in 1995, there was an extraordinary once in a lifetime
21:52
event in my 55 years of dealing with the IRS.
21:56
The IRS broke down one year and it was a disaster.
21:59
It was so bad that, for example, H&R Block had had never they in,
22:07
they've been public since 1961 and in and this is 1995 and they
22:14
had only two years where they lost.
22:17
They had a decrease in profits and this year and, and those
22:20
were less than $2,000,000. This year they lost $60 million.
22:26
And it was so bad that Tom Block, the son of founder Henry
22:30
Block was CEO. He resigned during the taxes and
22:34
he resigned on April 9th. The the pressure was so bad and
22:38
it'll take a long time to explain what happened, but the
22:42
venture capitalist was just not understanding and we had a
22:48
disastrous season. Not as bad as Block, way better
22:51
than Block, but we had a disastrous season and and didn't
22:56
come close to making our numbers.
22:58
And he took that opportunity to try to take over the company and
23:02
fire me. So we had a a long battle that
23:06
went on. It took a year, but I eventually
23:10
agreed to leave a year later after we saved the company and
23:14
and had the greatest year ever. So I, I fought for about nine
23:18
months and then finally agreed to leave after the tax.
23:21
And so 95 was my worst year ever in the tax industry.
23:25
And then 96 was the best because the recovery, the rebound was so
23:31
strong with all the customers who had not paid us in 95 paid
23:36
US in 96. So again, long story, but so we
23:39
got two payments instead. And so it was just an incredible
23:43
year. So I left.
23:45
So I was forced to sell because of an internal battle that was
23:49
started by my venture campus and it was over a you know, when you
23:54
when you, when you have bad years, it's usually it's either
23:59
your fault as CEO, typically it's internal or external.
24:03
I've had bad years and made mistakes that were my fault.
24:07
This is not my fault. This was an industry situation.
24:11
And in 15 years of running the company, I got, we had a
24:15
unanimous board agreement for 14 years until that last year.
24:20
So I was forced to leave the company and the company was so
24:26
and it was so that amazing profit we had invested.
24:30
The total investment in 1982 was $129,000.
24:35
And if you hadn't been one of those, if you had been one of
24:38
those investors that invested in 1982, your life would have
24:43
changed because the smallest investment was 5000 and it was
24:48
worth $2,000,000 for every $5000 you invest in 15 years later.
24:54
So we changed, changed thousands of I mean all the investors
24:59
lives and franchisees and so forth.
25:02
And the in, in it was a public company in 1997, the year I
25:08
left, it was the number one stock on any exchange back then
25:13
there was a, not only the NASDAQ and the, the American there,
25:18
there, there was the American. And so the, there was 3 stock
25:22
exchanges and the New York American and, and NASDAQ.
25:27
And we were the number one stock increase.
25:30
We went, the stock went from 6 to 68.
25:33
And because of that incredible year we had after after the
25:38
after the disaster year in 95, we were showing an incredible
25:43
trajectory of growth. I want to dig in a little bit
25:46
more to that disastrous year because, you know, I think these
25:50
are where some of the most helpful stories for other
25:53
entrepreneurs and leaders are. Because, you know, you can go on
25:57
Wikipedia, you can go online and, and you can read the
25:59
accolades and all the accomplishments that you've had.
26:01
And people look at you and say, wow, that guy, he just has it
26:04
together. He was born to succeed.
26:06
He never makes mistakes, you know, it's just all rainbow
26:10
rainbows and sunshine for him. And they don't see some of the
26:13
real big struggles that, you know, happened behind the
26:15
scenes. But I have to imagine that.
26:17
I mean, you use the word disastrous year, worst year.
26:20
And, you know, my career had to have been really challenging.
26:24
How did you cope with that? How did you deal with what has
26:27
to be some negative self chatter that comes in questioning
26:30
yourself? Am I doing the right thing?
26:32
Should I be fighting this? Should I leave?
26:35
Kind of talk us through some of those behind the scenes
26:37
struggles. Yeah.
26:39
Can I take you back to another bad year that was my fault and
26:43
talk about and talk about that and then if you want, we can
26:47
come back to to that because that might be.
26:49
More. That's probably more
26:50
instructive. Yeah, right.
26:51
But yeah, because in 19 eighty, 1988, we were six years old and
27:00
we had just done an offering to raise money.
27:03
I hired two of my my people that had worked with me at Blocks.
27:07
We had executives. I had hired 2 executives and all
27:11
of a sudden I got this great opportunity.
27:13
We had about 49 offices the previous tax season and we had
27:18
an opportunity, the second largest tax service in the
27:21
country called us and was for sale.
27:25
And H&R. Remember H&R Block had 9000
27:28
offices and we had six. Well, this, this second largest
27:32
had a couple 100 and they approached us late in the year
27:38
in October and said would you like to buy our, our
27:41
relationship? They had most of, again, most of
27:45
your listeners probably don't even remember Montgomery Ward,
27:49
but at the time Montgomery Ward is a miniature Sears, I mean 2/3
27:53
or 3/4 of the size of the Sears chain.
27:56
And H&R Block had a very successful Sears relationship.
28:02
They were in about 600 locations doing, doing about a million tax
28:09
returns and a very, very successful in, in Sears.
28:17
And so there was another company that had a relationship with
28:21
Montgomery Ward and they were in about about 150 Montgomery Ward
28:25
locations. And so they said they would sell
28:28
the, the relationship to us. So we said, well, we just hired
28:33
these two people. We raised money.
28:36
And what a perfect time. It's like God's saying, OK here.
28:39
And we would immediately, you know, my goal was to be #1.
28:43
But before you do get to be #1 you got to be #2 And now six
28:47
years into my existence, I was going to have over 250 offices
28:52
and be #2 in the country. And what a, what a accolade,
28:56
what a, what a achievement, right?
28:59
And so I got full of myself and decided that, OK, we're going to
29:03
go for it. Well, we, it was too late in the
29:05
season, too late as we are approaching the season.
29:09
Come to find out we didn't do this due diligence that we
29:14
didn't go and talk to the taxpayers who had worked in the
29:18
Montgomery Ward. The company was coming off a bad
29:21
year. And in Montgomery Ward, this
29:24
company we acquired and they hadn't paid all the bonuses that
29:30
were due or they hadn't honored their word with their preparers.
29:35
And so when we went to the to hire their preparers from the
29:39
previous year, say we had a great office in one of the best
29:43
sources in St. Petersburg, FL, we go to hire
29:47
the preparers from last year. They were angry at the company
29:51
because they either didn't get paid their bonus or they got,
29:56
they missed paychecks during the season, whatever, whatever they
29:59
had screwed up. So they were all mad at the
30:02
company. And so our retention of
30:04
employees was very low. And all of these employees, if
30:09
you worked in St. Petersburg, FL, you had access
30:13
to the, the database, you knew the names and addresses and
30:17
phone numbers of all the customers.
30:19
So not only did you compete, you, you went out and and you
30:25
called those previous customers and said, wait, I'm not in the
30:29
store anymore. I'm over here in my home or in
30:33
this office. And some of the repairs in two
30:35
or three of the locations in the country, they would come in into
30:39
the Montgomery Ward and grab the people walking in and saying,
30:43
you know, I'm over here now. Can I do your texture?
30:46
So we we had we had to struggle to staff the offices, number
30:51
one. And then we have this immense in
30:54
every, virtually every location we had angry taxpayers, not not
31:01
virtually ever, but but certainly in, in at least half
31:04
of the locations we had existing customers that that said, I'm
31:11
sorry, existing taxpayers from the past that were competing
31:15
with us and using our customers. So it was so bad that our we
31:20
lost so much money that we had to go to Montgomery Ward.
31:25
It was one of the biggest beatings I ever verbally
31:28
beatings I got. We went to Montgomery Ward
31:31
headquarters in Chicago in February and said we have to
31:36
close 100 of these 150 oz and we're just getting killed
31:40
bloodbath. And they were they were angry
31:43
right, because they had were new were new kids on the block.
31:49
They had been dealing with this other company.
31:51
They. Thought you screwed it up.
31:53
Yeah, right. Yeah.
31:54
You're just cherry picking. They accuse me of cherry picking
31:57
that you're just these other locations, you're aren't as
32:01
profitable for you. You're just cherry picking the
32:03
best ones and saving them for yourself.
32:06
And we didn't. We don't know you from that,
32:08
right. We, we've only known you since
32:10
you came here in November or December and and promised that
32:14
you could do a good job even better than before.
32:17
You're worse. You're horrible.
32:19
So we, we got beat up badly in that meeting, but we were, we
32:27
did a good job in the offices we kept open.
32:30
We did a good job at shutting down the ones that we shut down
32:33
in terms of customer service. They didn't get faced with a lot
32:37
of a lot of customer issues. So we handled the customer
32:41
issues well and we did, we finally did what we said we were
32:45
going to do and completed the season in those offices.
32:48
And we went back after the season and you know, kind of beg
32:52
for forgiveness and, and give us another chance.
32:55
And we eventually grew it back big, way bigger and stronger
32:58
than it had been initially and went back into those offices in
33:03
the future. But it was a it, we had to, we
33:08
had to, to, to tighten our belts and we almost went bankrupt.
33:14
And, and so after the season, we, most of the staff, we took a
33:20
50% pay cut. So I said from May until
33:24
December, if you're making back then people were, I mean, the
33:27
best people were making $50,000 a year at corporate input.
33:31
You're only from now until December, you're only on half
33:33
pay. And so, and some people we later
33:37
I, I took, I went down to zero. I took zero.
33:41
But so my, I took, I took zero salary during that that
33:47
offseason. We went to our advertisers and
33:50
said our, our advertising company, we had, we owed them
33:54
about 100 or 150,000 that was due in May.
33:59
And we said, well, we can't pay you, but we will pay you.
34:01
We will pay you over the, over the a monthly, We'll pay this
34:07
back monthly our company. So we had to make deals with,
34:13
with, internally with, with staff, with our, with our
34:17
vendors. We, one of our, our board of
34:20
directors stepped up and we needed, we needed about $500,000
34:25
to get from December to February till we started getting big
34:29
checks in February from, from our customers.
34:33
And he stepped up and lent us the money, but everyone had to
34:38
participate. We had to get everyone to buy in
34:41
the employees, the franchisees, the new franchisees.
34:46
We sold franchise. We were able to sell many of
34:49
those existing Montgomery Ward offices as franchises and many
34:54
of them to our own employees because we couldn't pay them.
34:58
And here's an opportunity to, we'll give you a good deal on
35:00
the office. So we had to do many things and
35:04
we again, we made it through and then had an incredible, another
35:08
horrible, it went down into the valley and then another huge
35:11
peak with that. The following year was a was a
35:14
great year in terms of growth and and profitability.
35:19
But yeah, you had to tighten your belt and and we almost went
35:22
bankrupt. What was the big lesson there?
35:25
What would you have done differently?
35:27
I, I didn't do enough diligence in buying that company that that
35:33
even though it was a great it, it appear it had the appearance
35:36
of a a great opportunity. But I would have, I would have
35:40
called the taxpayers and around the sampling, we would have
35:45
sampled the the taxpayers around the country.
35:49
And there were, there were about there each each of the offices.
35:55
Typically they would have one person managed three to five
35:58
offices. So we didn't do do sampling and
36:01
call, call the management around the country.
36:04
It's just to just to ensure that they were, they were going to
36:09
come back and, and work with us. So.
36:15
During this difficult time, was there ever a period where you
36:17
thought about just throwing in the towel?
36:20
Mean you said you almost filed for bankruptcy.
36:22
You're like, it might just be easier if we just quit.
36:25
Oh, even even when we found, if we had filed for bankruptcy, we
36:29
would have kept going, right? There's no question.
36:31
And so I always have the, I'm a chess player.
36:36
And so I'm always thinking ahead, if they, if this happens,
36:39
I'm going to do that. If they do this, I'm going to do
36:41
that. I always, and so in my mind, I
36:44
always had Plan B. This is our skeleton group.
36:47
It's down to. So instead of whatever we had 30
36:50
employees, it'll get down to five or six of us.
36:53
And we will, instead of going into the next year with 200 oz,
36:59
we'll go in with 100. And, but we're never going to
37:02
quit the, you know, they got to kill me to stop.
37:05
And, and the number one most important attribute in, in
37:11
success is perseverance. And everyone gets punished and
37:15
knocked down and beaten up. I've never seen a human being
37:19
that just skated through life. Everyone has adversity and the,
37:24
the great winners, the, the, the, the people that are the
37:28
most successful, they never get, they never stayed out.
37:33
So no, you can't keep me down. I'm again, you got to kill me to
37:37
stop. We were going to move forward.
37:39
It would have been smaller than smaller and we would have to
37:46
circle the wagons and be a much smaller group going into the tax
37:52
season. But the tax seasons is we are
37:55
always going to have a, a, a harvest and a successful tax
37:59
season, except for the those tax seasons that were affected by
38:04
the industry or that, that significant mistake that that I
38:09
made in, in deciding to, to grab that opportunity.
38:14
And so it's either my fault or industry fault.
38:19
But we're always gonna, we're always gonna persevere.
38:22
You got to kill me, to stop me. Where does this dogged
38:25
determination come from, John? Is it you feel like this is
38:27
something that you were just born with or was it cultivated
38:31
as as you grew up? You know, it's, it's been in my
38:36
life as long as I can remember. So I would have to say I was
38:39
born with and because I do not, I, I never, never remember
38:45
changing and thinking, OK, for now on, I'm never going to give
38:48
up. But I mean, I was always that
38:50
I'm a, I'm a poor loser. And you know, my philosophy is
38:54
show me a good loser and I'll show you a loser.
38:56
So I'm, I'm a poor loser. And, and like Vince Lombardi
39:02
said, he said, you go on to the field every time with a game
39:07
plan and you're so you're either going to win, you're going to,
39:11
you're going to meet your game plan and win, or you're going to
39:15
learn something, you're going to learn a lesson so that you're
39:18
more prepared to win the next thing.
39:21
So I'm always learning and I'm a committed to improvement.
39:24
You know, our, our mission statement at at Liberty was set
39:31
the standard at have fun, set the standard to prove each day.
39:34
So I'm committed to improve, to have the best system.
39:38
And, and we've always had the best system.
39:40
We've always been best in the industry when I was with Block
39:44
or Jackson knew it or Liberty or now a tax.
39:46
We've always been best in in class, best in industry.
39:51
So I'm always going to be the competitor, the competition
39:54
because we have, we have a a more, we're much more fanatical
39:59
in exceeding customers expectations.
40:03
So you exit Jackson Hewitt, you are not done with the tax base,
40:09
obviously, because you go on to start Liberty Tax.
40:12
But you sort of have a little bit of a problem because you now
40:16
have to compete against this monstrosity that you've already
40:21
built over here with your name attached to it, with the
40:24
software that you helped develop, with all of the systems
40:27
and processes that you know, you built these innovative ways.
40:31
What were you going to bring to Liberty Tax to compete with this
40:37
amazing machine that you'd built over here?
40:41
Yeah, you missed one thing. You were right where I either
40:43
can be with our system, our software and that my name, but I
40:48
also could be with my people, right.
40:50
These are people I trained that knew knew how to run a tax
40:54
visits they were and they were better than blocked.
40:57
So every year Jackson Hugh was beating up on blocks.
41:00
So my people knew how to, they knew those differentiators,
41:04
right? They knew differentiates well,
41:07
the good. Well, there's good news in a
41:10
couple things. First of all, both H&R Block and
41:16
Jackson Hewitt and now Liberty. It's since I left all three of
41:20
those companies, they're, they've never been able to get a
41:24
good CEO. They have the average length of
41:27
the CEO is 2 years. So in so Block, since I left
41:32
Block and or since since I started, started Liberty,
41:39
they've had a dozen different CE OS Jackson News had a dozen
41:43
different CE OS and Liberty's had I left five years ago,
41:46
they've had five CE OS. So they're one a year.
41:50
So what happens is you don't get anyone that's experienced and
41:55
they're not. They take my ideas that I just
42:00
told you and they throw them out.
42:02
They don't like them. We're not going to expand our
42:05
office. It's not that important, right?
42:07
We're not going to call customs. It's not that important.
42:09
So even though and, and then they get rid of my franchisees,
42:12
they get rid of my staff and they don't listen to them.
42:16
I call it CEO disease. That from what I've seen is and
42:21
I and I, I saw it much more clearly when I left Liberty
42:26
because I stayed on as chairman of the board for two, two
42:30
different CEOs. And for it seems to me, Anthony,
42:34
that when someone gets appointed CEO, it's like their Caesar or
42:42
their God. They, they're supposed to know.
42:45
Even the last person I hired at at Liberty before I left when I
42:49
was chairman of the board, she was a, a franchise, my one of my
42:53
best franchisees, one of my best performing.
42:57
But as soon and she agreed, she, she became CEO of a public
43:01
company. I mean, we had gotten to $500
43:04
million market cap, a large coming with 4000 locations.
43:08
And she she was from South Dakota ACPA with one office that
43:15
that went to four Liberty's offices, very successful Liberty
43:19
offices. So their CBA practice and and I
43:22
brought her in to be CEO of the company, but with the
43:25
understanding that I would help. She didn't listen to me.
43:28
They they ignore my advice. So, so in I'm I'm competing with
43:33
inferior competition. My, the people that have
43:38
replaced me are not at my level. I have better systems and the
43:42
systems I described to you that are clear differentiators
43:46
expanding your hours, even though I was they were doing it
43:49
at Jackson knew it. They got rid of it.
43:51
So one was I'm competing against inferior in, in inexperienced.
43:57
They don't know the tax industry and everyone came in.
44:00
I mean, in the tax industry, for example, every single CEO that
44:04
comes in that's never been in the industry.
44:06
And out of the 30 people I described, the 12 CE OS that
44:10
block and, and, and Jackson Hewitt and, and at liberty, only
44:14
one had any tax experience. So they don't know anything
44:17
about tax. So they come in and they think
44:19
they have a good idea. You know what it looks like?
44:22
It looks like we should do something the rest of the year
44:25
with these offices. They're closed for eight months.
44:28
We should be able to sell insurance or do real estate or
44:31
do financial planning. And it's like they have a light
44:35
bulb went off in their mind and they became the smartest person
44:37
ever. And like, don't you think we
44:40
thought about that? Don't you think John Hughes been
44:43
thinking about that for 55 years and Henry Block thought about
44:47
that? You think you're the first
44:49
person ever thought of that simple idea?
44:52
But, and worse than that, you think we haven't tried it.
44:55
We've tried everything we can think of.
44:57
It doesn't work. So they go in idea after idea
45:01
that they invent has been tried and failed and most of them
45:04
failed and yet they implement it because they have CEO disease.
45:08
The first thing I would do if I took over a company in an
45:11
industry I didn't understand is I would ask my top people, tell
45:16
me about this industry and give me, and here's what I'm thinking
45:19
of it is this the right way to think about?
45:22
But they didn't listen to the top people.
45:25
So that was one thing, but we also, I had read a book called
45:30
Guerrilla Marketing just before I left Jackson Hewitt and I
45:34
think it was published in the 90s and, and I read it in the
45:37
year before I left Jackson. You know, we began implementing
45:40
it and they got rid of it as soon as I left.
45:47
And one, one of the things we did is we had little doughnut
45:50
boxes. If you think of a a box of
45:53
Munchkins, we had little doughnut boxes that held about
45:55
four doughnuts that said Jackson knew it on it and we would take
45:59
a door to door to businesses. They had a coupon on it with it.
46:04
They called it the donut. The next CEO called it the donut
46:06
caper and said we're getting rid of the donut caper.
46:09
He bragged about it. Well, it was working in effect,
46:12
but he was so so we implemented guerrilla marketing and best the
46:17
most obvious clear thing that people recognize is our liberty
46:21
waiver. You know, when I started Liberty
46:24
in the, when we only had 50 offices and then a hundred, 205,
46:28
four hundred people say, well, liberty tax, I never heard of
46:31
it, but within four or five years especially, I mean, I go
46:33
to Wall Street and and everywhere I went, they was oh,
46:38
Liberty tax. Are you the one with the waiver,
46:40
the the costume character out in front of the offices?
46:44
So, yeah, I mean, when you talk about differentiators, that's
46:48
one of our differentiators, right?
46:50
If when you, when you think about it, a the size of one of
46:54
our territories is about, yeah, tax is about 35,000 people in
47:00
that in that area of 35,000 people, there's over 300
47:06
businesses on now. All of them are trying to get
47:09
your attention, right? They're they're doing, they're
47:12
doing phone book, TV, radio, newspaper, billboard.
47:16
They're they're, they have signs, they have SCO, they have
47:21
online. Everyone's trying to get your
47:22
attention, right? And everyone's doing the same
47:25
thing. They're in the Yellow Pages back
47:26
then and on the radio, everyone's doing the same thing.
47:30
But how many people, Anthony, are have a costume character
47:36
from January 1st to April 15th dancing out in front of your
47:40
store, right? There's one, there's 1.
47:43
So it's a differentiator. So our guerrilla marketing
47:47
became our differentiator. Our liberty waiver set the
47:51
standard and we would have a put on a liberty costume and go door
47:56
to door with gifts and, you know, cookies and Donuts and
47:59
pizza or candy. And then we would have roadside
48:03
parties. So every, every Saturday we have
48:07
a party outside the, the office and we'd be cooking hot dogs or
48:11
hamburgers and, and I have a popcorn machine.
48:14
And sometimes they'd have donkeys or I mean, once they had
48:19
elephants or fire trucks or that so we would catch attention and
48:23
no one else is doing it. So the, our real claim to pay
48:28
was guerrilla market. So and then just, and then it
48:33
was supplemented with having the best system that when I left,
48:38
Jackson knew they abandoned it and
48:59
you froze there for a minute. Yes, we got, we got a, we got a
49:04
great answer there. So we'll just we'll, we'll
49:06
stitch that part out. But so your your advantage was
49:12
the guerrilla marketing plus the fact that your previous company
49:15
got rid of a lot of the great ideas that you had implemented
49:18
that were working. And so you could implement those
49:21
into your new company, Liberty Tax and not be competing on, you
49:25
know, some of those same ideas. What do you attribute this CEO
49:29
disease to? Is it just an ego thing?
49:31
Like somebody comes in and they feel like they've got to put
49:34
their fingerprints on it. You know, I try not to get into
49:38
what I, you know, sometimes with my employees, I can be brutally
49:41
frank and sometimes I call them in and they want to explain to
49:45
me why they made a mistake. And I'm I say this in a in a
49:50
funny way, I'm not in a mean way, but I say, you know,
49:55
Anthony, I don't want to get into cesspool of how you think.
49:58
I don't want to know why you made that mistake, right?
50:02
You need to learn how I think. So I try not to get into
50:05
cesspool of how those CE OS think.
50:08
But to me it's it's it's I'm incredulous.
50:12
I'm incredulous at the stupid things they do and the things
50:17
that they replace that are work. And there there is somehow, yes,
50:23
I think that the title CEO it's it's all of a sudden you think
50:28
you're supposed to know. So if you and and so my my
50:33
suspicion is they're so they get an arrogance that they're
50:37
supposed to know. And so it's like they come up
50:42
with this theory. This is a very another common
50:44
theory that especially if you've never been in the franchise
50:48
industry before, we're we need to have a model office and we
50:54
need to show the franchisees how to do it right.
50:58
Well, the thing that they're missing every time is that the
51:02
model office is corporate employees and only 2% of them
51:06
are going to act like owners and that franchisees are the
51:09
franchisees are going to out hustle out, work out, think out,
51:14
create you every time. You can't create a better office
51:18
than the franchisees can. The best office in every company
51:21
is the franchisees office because they're they're owners
51:25
and they're much more committed. But this this CEO thinks for
51:31
here's here's another simple, simple example.
51:34
At my conventions, I invented this 3030 years ago at Jackson
51:38
Hewitt. We set our franchisees down and
51:43
say, tell us on a group, tell us how to improve our tax off, tell
51:47
us how to improve our Technical Support, tell us how to improve
51:50
our our online market and and our grill bar.
51:54
And then we listen to every idea and we write it down.
51:58
And then after the after the the convention, we sit down with the
52:03
executives and franchise representatives and say what are
52:07
we going to change this year? What are we going to change
52:09
sometime in the future and what are we not going to change?
52:12
Well, I'm proud to say that in my 30 years of doing this, 150%
52:16
of the ideas are implemented that year.
52:18
But each time I left the company, I left Jackson, even I
52:22
left Liberty, they stopped doing that.
52:25
They stopped asking the franchisees for input.
52:27
They said no, no, no. We're supposed to know.
52:30
Tell them how to do it. We're supposed to tell them how
52:33
to do it. Well, sorry, you're never going
52:36
to be as good. Your company employees are never
52:39
going to be as good on average as your quality franchisees.
52:43
They're you get these great, great entrepreneurs that are
52:48
thinking about it. An employee doesn't think about
52:52
many employees. Most employees don't think about
52:54
this business 24 hours a day, 365 days a year.
52:58
But when you're an owner, you're taking a shower or running or
53:03
running or bicycling, you're thinking about business and
53:06
you're thinking about what can I do better?
53:08
What can I, how can I get one more employee, one more
53:10
customer? How can I get, how can I hire a
53:12
better employee? How can I get a customer?
53:14
How can I market? How can I save money?
53:17
You're never going to be at those that low because they're,
53:21
at the end of the day, they're employees and they're not
53:24
owners. So you grow liberty tax for
53:27
several years, very impressive growth trajectory again and then
53:30
decide to step away. What was behind that decision?
53:34
Same thing happened 20 years later.
53:38
I had this time though, I, I'm, you know, when you start a
53:41
company and you build it to 1/2 a billion dollar company for 15
53:45
years, you better be able the next time to do it a lot better,
53:48
right? So one of the first things I
53:52
said is OK, I'm never going to let that I'm never going to let
53:55
that happen again where I'm going to lose control.
53:57
So I'm going to keep controlling stock.
54:01
So now at Liberty stock, even though we're a public company, I
54:04
have controlling stock. So I got to have one more vote
54:08
than than one more director than all the other shareholders.
54:14
So there were nine directors, I appointed 5 including myself and
54:18
the others got to vote for four. So same thing happened.
54:23
We had one bad year and the venture capitalist again the
54:28
tries to take over the company because it was my fault, right?
54:31
I mean, after 20 years that this person at this venture
54:35
capitalist had he, he did something very unusual.
54:38
He invested in and then about five years later sold his
54:43
investment at a nice profit. And then he, this almost never
54:47
happens in venture capital. Then on his, one of his next
54:50
funds, he invested again. So he invested twice, right?
54:53
But the first time he had made a killing.
54:55
I don't remember the number. Let's say he invested 3 million
54:58
and sold it for 20 million, right now he invested another
55:01
3,000,000. So but he decided and, and he
55:05
wanted the job as CEO. He wanted my job.
55:08
So but he also, we had a bad year and he came.
55:11
So we had an, a, a civil war, a civil war that was very, very
55:17
bloody. And they eviscerated me in the
55:21
press. They just, they did everything
55:25
they could and I, they finally did something.
55:28
I never, I never thought that, that I never in, in thinking it
55:34
through this about my having control, I never realized how
55:39
what they could do. Well, he got, he got his three
55:43
board members on his side. So now there's four board
55:46
members and he got four of my officers out of the So I had I
55:51
had eight officers and nine board members.
55:55
So now it was nine of us against eight of them.
55:58
And they, they came up with a great strategy, they said, and
56:02
we're public company. So their greatest strategy was
56:04
we said if you don't agree to leave job, we're all going to
56:08
resign. The whole board's going to
56:11
resign and the four officers are going to resign.
56:13
So we would have a bad year and I would take the the blame,
56:20
right? I would, I would get hit with
56:21
the blame because they all quit. They're going to say they quit
56:24
because of me. They eviscerated me.
56:26
They quit one at a time eventually.
56:28
And every time they quit, they used my own attorney firm,
56:32
internal attorney firm, because my attorney was one of the
56:35
people on the other side. They used my attorney to write
56:38
the letter so that it was published.
56:41
And there was a local reporter that, that treated me like I was
56:44
the, the worst person in the history of the, the human race.
56:50
Every time someone quit, they would say it was my fault.
56:52
So eventually, eventually I, I saw my stock and, and left and I
56:57
was right. Five years later, last last
57:00
summer, they bankrupted the company.
57:02
So this company that had been worth $500 million and they
57:08
after the battle, it was down to half of that.
57:10
And but last year they, these five CE OS with CEO disease
57:17
bankrupted the company. And, and so the stock which is
57:20
worth the stockholders who were had 500 million of value, had
57:24
zero. So and it was and it was again,
57:28
I'm I'm not a fan of venture capital and private equity
57:33
because when things are bad, they turn it, they can turn it.
57:39
Is there a little bit of mixed feelings about that results the
57:43
company filing for bankruptcy? I mean, it's something that you
57:45
built. It's a baby that you helped to
57:47
birth. So it's got to be painful on the
57:49
one hand. But in in some ways, like
57:51
there's got to be some anger and resentment of them pushing you
57:54
out. And it got to be some
57:56
vindication. Like hey, without me you guys
57:58
couldn't do it. Well, vindicated in the fact
58:01
that I was right, that these people that thought I was doing
58:05
a bad job were thought they could do better and they, I
58:10
needed to be replaced. They were wrong, right?
58:13
They can't do better and no one has done better.
58:15
They every year they, they decrease by about 25% in
58:19
locations. So that, you know, when we
58:22
peaked 5, seven years ago, we had 4000 locations.
58:26
They're down to 2000 locations, but going bankrupt doesn't mean
58:30
you go out of business. So the public really doesn't
58:33
know. They still have 2000 offices and
58:36
liberty tax is still around. But what really hurts is all the
58:41
employees that they screwed, all the franchisees that they
58:44
screwed. My remember, my goal is well, I
58:48
guess I haven't said it yet. My goal is to, to have fun,
58:52
enjoy my, my life and improve lives.
58:56
And I had, there were so many people there that franchisees
59:00
and employees that I cared about and had proved their lives and
59:04
they took everything back. They took, they, they destroyed
59:07
hundreds and hundreds of good people's franchise in their
59:11
lives out of greed because they wanted to maximize their short
59:15
term profit. So they, they had the typical,
59:18
what I've seen is the worst, not the maybe not the typical, but
59:22
the worst kind of private equity is they only go after numbers
59:27
and they don't care about people and that you can't, the secret
59:31
of having a great company is happy successful employees and
59:35
happy successful franchisees and Liberty Tax.
59:39
It was on the wall, big letters, you know, 4 foot letters when
59:43
you come in, happy successful franchisees.
59:45
Then when I was gone, they whitewashed it off the wall and
59:49
that's how they treated. They didn't care about happy,
59:51
successful franchisees. If you have happy, successful
59:54
franchisees, you can't help but succeed.
59:58
If you don't, you can't help but fail.
1:00:01
So then you step away, you decide to start loyalty brands.
1:00:04
You have pulled together sort of this eclectic version collection
1:00:10
of brands and I see pet grooming, tax prep which is very
1:00:14
familiar to you, business brokers, home inspection.
1:00:17
What's kind of the common thread that drew you to bring each of
1:00:21
these brands under your umbrella?
1:00:24
Well, again, I made the, the good news is that I have two
1:00:32
brands and it looks like maybe three that are doing well,
1:00:35
great. And I'm I'm the only person
1:00:37
that's about two of the top 100 brands in this country, 100
1:00:42
franchise brand. No one else has done more than
1:00:44
one. I mean, you got one McDonald's
1:00:46
and one Wendy's and one H&R Block.
1:00:48
But I did both Jackson and Liberty.
1:00:51
It looks like Zoom and groom and mobile dog grooming in three
1:00:55
years will be one of the top 100 largest retail chains in the
1:00:58
country. So that's growing so fast.
1:01:00
So the, so I'll have done it three times.
1:01:06
No one else has done it twice. So it's it's on that kind of
1:01:10
same kind of trajectory that Liberty Tax and Jackson Hewitt
1:01:14
were even fast, way faster than a tax.
1:01:17
So the others. And then I made a mistake in, in
1:01:22
when I started this concept of having multiple brands, here's
1:01:26
what I thought. I thought, well, I can come into
1:01:29
it. Or let's say you have a brand
1:01:32
and you have your franchise chain, you have 10 or 20
1:01:36
locations and you can't grow because you can't, you can't
1:01:40
bring in new franchise. So what you get when you get
1:01:42
with us is, is you get #1 is our mentoring.
1:01:47
We caught loyalty brands because I have, I have 10 people that
1:01:51
have been with me 30 years of work and I have another ten that
1:01:56
have been with me 20 years of work.
1:01:57
So we have huge mentoring capabilities.
1:02:00
We're we're great at franchise development sales.
1:02:03
I brought in at Liberty, we brought in almost one a day.
1:02:06
We brought in in 12 years, We brought in 4000 franchisees
1:02:10
that's over 300. I mean that's 330 a year that
1:02:14
we're bringing in. So I have the capability plus I
1:02:16
brought in 5200 franchisees that had hundreds of thousands of
1:02:20
boys. So we should give these new
1:02:23
franchise systems access to all the people that have been with
1:02:26
me before that know that John Hewitt's a great operator and
1:02:31
want to join me. And, and in truth, many of the
1:02:34
many of the other brands have been developed by former Liberty
1:02:38
people or Jackson Hewitt people. But I made this huge mistake
1:02:42
that I thought that I could change them.
1:02:45
And what I learned is this, that each of the times I went in that
1:02:50
most franchisors fail in this country, you only to be in the
1:02:54
top 50% of all franchisors. You only need 20 locations.
1:02:58
So there are 400 that are start every year and 400 fail each
1:03:02
year. It's not the same 400, but I
1:03:05
mean, so there's been no growth in the number of franchisors in
1:03:08
this country. And the, the reason they fail is
1:03:10
this, well, simply they don't get that, that it's happy,
1:03:13
successful franchisees. But what happens is you get an
1:03:17
entrepreneur has a great, has a great company and he has a mom
1:03:22
and pop. Let's say it's a pizza chain
1:03:24
pizza store with 125 locations doing a great job and someone
1:03:28
comes to them and said, why don't you franchise?
1:03:30
I would like one of these. This is a great concept, special
1:03:34
crust or whatever. And so he gets followed himself
1:03:37
and says OK, I'm going to franchise.
1:03:39
Well, a couple things happened. Number one is it costs a few
1:03:42
$100,000 to get up and running with all the marketing and legal
1:03:46
work and so forth. And so now you have this mom and
1:03:50
pop who's been doing a great job of running his stores as a
1:03:55
owner, managers, CEO, founder, but now he has a second company
1:04:02
and he still needs the income from the first location because
1:04:06
it takes three to five years, at least.
1:04:09
It took McDonald's seven years before they made money from
1:04:12
royalties. The only thing to say McDonald's
1:04:14
is they made money from leasing the the land to the to the
1:04:19
franchisees. And so it takes 35.
1:04:23
And so you're not making any money.
1:04:25
So you need to have your money. So now you have two jobs and one
1:04:29
is you're running your mom and pop and you're a franchise.
1:04:32
And so you don't have enough time to devote to the franchise.
1:04:36
And then even worse is that running a franchise system is
1:04:39
different than than having employees because having
1:04:43
employees, they have to do what you said.
1:04:45
Franchisees are very independent, very rogue,
1:04:49
maverick and very argumentative. And it's a whole different skill
1:04:54
set running a franchise chain of, of entrepreneurs than
1:04:59
running hundreds of employees. So I've had hundreds of
1:05:01
employees, I've had thousands of franchise.
1:05:04
It's a whole different skill set.
1:05:06
And I found that none of the companies that I, that I merged
1:05:10
with have the seat the, the founder could not make that
1:05:14
transition. They could not, not make the
1:05:17
transition of being the CEO of a, a franchise system, both
1:05:23
because they still love their mom and pop and they're making
1:05:26
all their money from that, but they just don't have the
1:05:29
capability of dealing with entrepreneurs.
1:05:31
And they just like my children, just like my franchisees, they
1:05:36
won't listen. And so, so other I've had, I've
1:05:39
had about 5 or 6 divorces already with, with franchisors
1:05:44
that, that we partner with that wouldn't listen to me.
1:05:47
And so no matter and, and if you don't listen, I can't help you.
1:05:52
If you don't, you're not willing to if you want to improve, you
1:05:54
have to change or if you're not willing to change, I can't, I
1:05:57
can't help you bring in new franchisees.
1:06:01
So not happy with all of the the chains I've been involved with,
1:06:05
but I am happy with we have, we have three that are that are are
1:06:10
going well and the other one is roofing, roofing and siding and
1:06:16
solar. But the three industries that
1:06:18
we're doing really well and the rest are not, are not meeting,
1:06:23
meeting my minimum requirements of growth.
1:06:28
In in which territories are you looking to expand those
1:06:31
opportunities? If someone's listening and they
1:06:33
say, hey, I buy into John Hewitt, I want to, he said.
1:06:36
I want to be part of what he's what he's handing out there.
1:06:39
What? What?
1:06:40
Yeah, most of them are just the United States, but for example,
1:06:46
a couple of them are in Canada, but I just think United States
1:06:50
primarily, OK. John, you said your mission is
1:06:53
to have fun and improve lives. How do you have fun away from
1:06:57
work? You know, when you love what you
1:07:00
do, it's I'm never away from work.
1:07:03
And so wherever you know, people say, you know, do you go on
1:07:07
vacation? I say I work every day and I
1:07:09
vacation every day. So I travel two or three days a
1:07:12
week wherever I go. If I go to San Diego or Chicago
1:07:16
or Jacksonville, FL or anywhere I go in the country, there's
1:07:20
people that either are interested in joining me or have
1:07:24
already. And they, their existing
1:07:27
franchisees that, you know, I was in Toledo the other day and
1:07:30
and my franchise there from Liberty had just won a franchise
1:07:35
of the year award with Liberty Tax and where I left five or six
1:07:40
years ago. And he's still gung ho and
1:07:43
Liberty Tax. And we went out to dinner.
1:07:45
We went out with Prospect. So, yeah.
1:07:48
And when I was a kid, I thought I was cocky because I think the
1:07:53
difference between confidence and cocky is confidence.
1:07:56
You've already done it. And I was, I was cocky and I'm
1:08:00
going to be a millionaire and I'll just retire.
1:08:02
And I realize that's crazy. What would I do?
1:08:05
I love, I love playing bridge. I'm a life master bridge player.
1:08:10
I love playing chess. I love horses, horse racing.
1:08:14
But nothing is as much fun as every day I get to change
1:08:19
people's lives. There's, you know, I saw, I saw
1:08:23
Denzel Washington in Facebook, the totally surprising comment.
1:08:28
He said, this is about six weeks ago.
1:08:31
He said the most selfish people are those that are, are changing
1:08:36
people's lives and improving lives.
1:08:38
I said, what, what are you talking about?
1:08:40
Cause those are the and, he said, because they're the
1:08:43
happiest people, Because there's nothing more rewarding than
1:08:46
changing people's lives, improving lives.
1:08:48
There is in my whole life, there's nothing more rewarding
1:08:51
than thinking of all the 10s of thousands of lives.
1:08:54
I've changed thousand millionaires already.
1:08:58
John, I just have one more question for you, but before I
1:09:00
ask it, I want to do a few things.
1:09:02
First, If you like today's content, and of course you did
1:09:04
because you listened all the way to the end, then hit subscribe,
1:09:07
like or share on your favorite podcast app.
1:09:11
I also want to point people to your website, loyaltybrands.com.
1:09:15
And am I correct in understanding that you're giving
1:09:17
up free copies of your book? Anyone that reaches out to me,
1:09:22
John at loyaltybrands.com, I'll send them a free book.
1:09:25
There you go. OK.
1:09:27
Last question, John, What are the biggest changes that you see
1:09:30
coming to your collection of brands here in the next five
1:09:33
years? I think that because of my age,
1:09:37
because I'm in next month, I'll be 75, but it it seems that I'm
1:09:43
never that they're never going to be able to stop me.
1:09:46
They without killing me and I'm so I'm always going to be in
1:09:50
business, but it seems to me having eight or nine brands is
1:09:54
too many. So I think I'll be down to we'll
1:09:58
sell off those brands and focus on one or two industries.
1:10:04
You know, I'm going to go back on that.
1:10:06
I said that was one last question.
1:10:07
But it occurred to me, John, your story's been really well
1:10:10
told. You've done lots of interviews
1:10:12
over the years, been asked lots of questions.
1:10:14
What's the question that you wish people asked you that they
1:10:17
don't? You know, I don't, I don't do
1:10:21
what is so I I never think about that.
1:10:24
You know, I think it's a waste of time to do what it so, so I
1:10:28
never, I never say, well, what if they had asked me that?
1:10:30
So it never occurs to me. Fair enough.
1:10:33
I appreciate that. Well, John, thanks for sharing
1:10:35
your story with us today. I really appreciate your time.
1:10:38
Anthony, it was my pleasure. That's a wrap on another episode
1:10:42
of the Inspired Stories podcast. Thanks for learning with us
1:10:45
today.