Building Top Franchise Chains and Changing Lives, with John Hewitt | Restaurants & Franchises Series

Intro  

Welcome to another edition of inspired stories where leaders share their experiences so we can learn from their successes, how they’ve overcome adversity, and explore current challenges they’re facing.

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Anthony Codispoti: Welcome to another edition of the inspired stories, podcast where leaders share their experiences. So we can learn from their successes and be inspired by how they’ve overcome adversity.

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Anthony Codispoti: My name is Anthony Codaspodi, and today’s guest is John Hewitt, founder, and CEO of loyalty brands which houses a successful group of franchise systems, including financial services, accounting and tax services, dog grooming and business brokerage.

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Anthony Codispoti: You probably recognize the names of some of the powerhouse brands that he has started and built over the years. Jackson Hewitt was formed in 82 to bring the new technology of software to the process of tax preparation for customers across the country

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Anthony Codispoti: they used franchising and a variety of creative partnerships, with places like Sam’s Club and Kmart to grow the brand to 1,500 locations. By 1997, when the business was sold for 483 million dollars.

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Anthony Codispoti: Later he would go on to start Liberty Tax Service, which grew to 4,000 locations by 2,012.

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Anthony Codispoti: Then in 2,018, John left liberty to start loyalty brands.

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Anthony Codispoti: He has brought in over 5,000 franchisees across his different brands. He’s opened over 10,000 offices. He’s founded 2 top, 100 retail franchise chains, and he’s the author of the best-selling book called I Compete. How my extraordinary strategy for winning can be yours

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Anthony Codispoti: before we get into all that good stuff. Today’s episode is brought to you by my company, add back benefits agency, where we offer very specific and unique employee benefits that are both great for your team and fiscally optimized for your bottom line.

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Anthony Codispoti: One recent client was able to save over $900 per employee per year by implementing one of our proprietary programs.

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Anthony Codispoti: Results vary for each company, and some organizations may not be eligible to find out if your company qualifies contact us today at Addback benefits agency com.

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Anthony Codispoti: Now back to our guest today, the CEO of loyalty brands John. Thanks for making the time to share your story today.

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John Hewitt: My pleasure. Thanks for having me up.

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Anthony Codispoti: So, John, you’re someone who’s achieved a great deal of success in your career. Tell us what was the inspiration behind starting loyalty brands.

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John Hewitt: You know I got fortunate then when I was after I sold liberty tax. I’ve been the tax industry for 50 years, and I was having dinner with one of my

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John Hewitt: former employees say attorney, a franchise attorney at both Jackson, you would, and liberty, and he said, You know. Why, don’t you? Why I was German by not compete? And he said, Why don’t you

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John Hewitt: think about getting in helping other franchise industries? He said. I have about 30 franchise that I represent. One of them

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John Hewitt: has a great industry. They have a great company there. Every franchise makes about 6 figures, and

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John Hewitt: yet they only have 13 franchise in 13 years, he said. You did that every every few weeks 3 weeks you were bringing in 13. So

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John Hewitt: he said, why don’t you look at other industries? And so that’s how I have. And now

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John Hewitt: now we’re just getting ready to start our ninth franchise chain.

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John Hewitt: But really love the

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John Hewitt: diversity and the

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John Hewitt: Cross marketing opportunities, and and being in more than one brand.

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Anthony Codispoti: So the the desire really came from wanting to take the expertise that you developed over the years in building franchises and be able to offer those to other really good strong brands that just don’t

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Anthony Codispoti: sort of have the playbook that you do.

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John Hewitt: Exactly.

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Anthony Codispoti: So let’s

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Anthony Codispoti: let’s do the part that everybody wants to do first, and then let’s come back to the loyalty brands. Let’s look back at the the past successes that you’ve had.

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Anthony Codispoti: So you’re working at H. And R. Block, you’ve you and your father had this idea to bring software into the tax prep world in the early eighties, and you know, for people who weren’t alive back then, or you know, maybe don’t remember. You know, that that was that was cutting edge, you know. Not everybody had a computer certainly not in their homes, and not most people at work.

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Anthony Codispoti: And so you know, I think I think this was sort of a pattern of you, bringing different styles of innovation to improve over the the current standard

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Anthony Codispoti: and the the biggest thing you did there with starting Jackson. Hewitt was to to bring software to the tax prep world. But

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Anthony Codispoti: even once you did that, and and you launched this competing service, you still had a big uphill climb. What were some of the other things besides the introduction of software that you did that were sort of innovated, that allowed you to grow so quickly.

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John Hewitt: Well, you you’re right. You have to have differentiators to separate yourself from from your competition. If

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John Hewitt: if David had gone on to the field with the same armor and shield and sword. It’s the wire there wouldn’t be any

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John Hewitt: Annie, David and Goliath story there’d be.

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John Hewitt: David would have been the 180 ninth guy killed by Galat.

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John Hewitt: So you have to do things different, especially

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John Hewitt: we have.

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John Hewitt: When we. When we started we bought Jackson, Hewitt, and Mel Jackson, and changed the name of Jackson Hewitt, and they had 6 locations, and we immediately set a huge, huge, impossible goal to be Number one, and and it was impossible, because H. In our block had 9,000,

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John Hewitt: so to be bigger than block, we had to grow by 8,995 offices, which is quite audacious. And

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John Hewitt: today I’m I’m proud to say that there are 6,000 Jackson, new locations, 1 billion Dollar Company.

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John Hewitt: and the 20 third largest retail chain in the country, but we never got quite the block size. We have to do things different. So

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John Hewitt: the major major difference in

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John Hewitt: and 1981. And I’m sorry. 82. When we started there was no one

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John Hewitt: that was computerized. And, as you said, Anthony, most of of your your listeners won’t have been around them, but there weren’t even a million

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John Hewitt: Pcs in the country, I mean, it was a rudimentary oh, time! There was no such thing as that apple store. Everything you ordered had to be online. So it’s a different world. So we computerized tax. It gave us a competitive advantage. But there were other advantages that that we did

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John Hewitt: that were different, and and we looked at, and I have been with Hr. Block for 12 years.

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John Hewitt: So I saw their weaknesses. That that I I invented a few things that

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John Hewitt: are you. Still, you know, Sam Walton said. You don’t just steal from your competitors, you, or ideas from your competitors. You look at all your customer experiences. So, for example.

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John Hewitt: in here in Virginia Beach during

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John Hewitt: season.

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John Hewitt: our hotels and our restaurants change things. They staff up, they expand their hours, they they change things well during the tax season. It’s very seasonal, as you as you can imagine, and it’s even more seasonal than most people think.

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John Hewitt: It’s we do most of our business, not in the 15 weeks from January first to April fifteenth, but in just 4 weeks. So we looked at how? How can we improve our service to our customers? And we asked, and and we asked our customers, and are asked our our franchisees that were close to the customer, what do you need? And what can you do? And I love driving by, for example.

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John Hewitt: each in our block during that period is open. They’re open all tax season

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John Hewitt: from Monday to Friday 9 to 9,

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John Hewitt: and also Saturdays and Sundays. But let’s just use Monday to Friday.

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John Hewitt: Well, during that time, when you’re really busy, I love driving by an H. And R. Block office at quarter to 9 in the morning, and seeing the customer standing outside

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John Hewitt: and the pairs sitting in the office working on working with the lights on. And what would you do? I mean, if you’re owned a competing business, you’re gonna be open. And so simple competitive advantage is expand your hours during during that peak period.

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John Hewitt: and and we so we open during those 4 weeks we open at 7 Am. And then at at 9 o’clock at night, there’s a knock on the door.

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John Hewitt: and at 5 after 9 at H. And R. Block they

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John Hewitt: they waved them away. They don’t even get out of their desk. Come back tomorrow.

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John Hewitt: Well, what would you do? You’re gonna grab that customer. It’s your business. You’re an owner. So one of the things we did is made sure that every office was franchised.

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John Hewitt: So we had an owner mentality, you know, in my thousands of people I’ve employed in my 55 years only 2 or 3% act like owners.

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John Hewitt: But my owners act like owners. And so

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John Hewitt: we differentiate or huge differentiator that got us 10% more business every year is simplistically, it is not rocket science. You just expand your hours during Peak. Other industries do that

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John Hewitt: right. My! The hotels in Virginia Beach, the restaurants in Virginia Beach. It’s a very seasonal here. It’s a very seasonal, you know, summer summer tourist area. And so it’s easy. You steal ideas from competitors. And so we have about

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John Hewitt: 15

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John Hewitt: different competitive things that we do better, that are objective, not subject, but objectively better than our competition. And those are the things that set us apart from H. And R. Block back in the 80 s. When we we beat them every year, we grew faster than them every year. In in the entire 15 years. I was there.

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Anthony Codispoti: I like it sometimes the best solutions are the most simple.

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Anthony Codispoti: Stay open later franchise. So you get an owner mentality in every office rather than a

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Anthony Codispoti: a manager, slash employee, mentality, that person’s going to work harder, work, longer, think more creatively to to problem, solve.

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Anthony Codispoti: So

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Anthony Codispoti: tell me, what was it that gave you and your father the vision to see where things were going with software back in the early 80 S. When H. And R. Block couldn’t.

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John Hewitt: I’ll I’ll credit that drive to my father.

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John Hewitt: I was not.

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John Hewitt: you know. I had taken

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John Hewitt: one course in college with a

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John Hewitt: with a mainframe computer. And you had to use these cards that these punch cards that you fed the computer and you couldn’t even type, let alone you could. There was no such thing as typing

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John Hewitt: I’m gonna hit now.

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John Hewitt: dashboard but he had bought one of the first apples by mail, and it was in the seventies. It was

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John Hewitt: so so agent, that it’s in the Smithsonian today.

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John Hewitt: you know, we went to the Science Smithsonian few years ago, and there’s the little apple 48 k. If you. If anyone knows what that means, that’s one

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John Hewitt: 100 thousandth of a of a cell phone today, right? And capability. But he! He had experimented with it and said, You know we can. We can computerize taxes. And he said, computers are are going to. His company was advanced. He was Cfo of a pub company, and his

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John Hewitt: company was one of the most advanced in United States in

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John Hewitt: using internal software.

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John Hewitt: So he saw it, and it was his vision and drive that that got me to leave Hnr block. I was happy, and I love my job, and I love. I love my the where I was in the company, and I thought I was gonna be at Hr Block forever.

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John Hewitt: or at least a long time. I’ve been there 12 years. He’s running 250 offices at 30 years old, and so I thought I’d be CEO of Hr. Block someday but he pulled me out of there. I give him all the credit for that.

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Anthony Codispoti: You mentioned that there were 15 things that made you objectively better. I’m curious if some of those have been sort of common

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Anthony Codispoti: core anchor.

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Anthony Codispoti: Values that. You’ve continued to implement in your other businesses going forward that this this helped to make Jackson Hewitt better. And we’re going to implement the same kind of thing in the in the future businesses, liberty tax. And now loyal loyalty, brands, etc.

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John Hewitt: Yeah the

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John Hewitt: you already mentioned 2 that are across all brands.

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John Hewitt: But my, my real favorite is it’s it. And it’s amazing to me, because it’s been so successful.

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John Hewitt: is

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John Hewitt: after every customer comes in

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John Hewitt: 2 days later. We call them and ask them for, and it has several purposes. One is so we can improve on the fly

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John Hewitt: because it doesn’t matter, Anthony, if you or I think that we’re doing a good job. It only matters if the customer thinks we’re doing a good job, and everyone surveys their customer.

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John Hewitt: and they’re they’re foolish in

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John Hewitt: almost every company that does it. If not, every company is foolish. And to think they’re going to get a realistic answer by a

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John Hewitt: email survey or hand in them a postcard or survey you only get the people that are happy, very happy, or very unhappy, or have a lot of time you you get when you survey customers. Normally, you’re lucky to get a 5%

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John Hewitt: retention of that or a response. What we call the customers, that what we learn is

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John Hewitt: the obvious. The obvious thing you get is

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John Hewitt: you get to improve your service

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John Hewitt: along the way in the tax business. We don’t want to wait till April fifteenth to see how each prepare is

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John Hewitt: is being appreciated by the customer we wanna know, on January fifteenth and January twentieth and January 20 fifth. So we get to improve on the fly, but also

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John Hewitt: customers love being called No. One, almost no one in this country is calling their customer. So it isn’t just an advantage over H. In our block and our competitors. It’s an advantage in in that’s unique in all virtually all industries, you know. I quiz many, many people and talk about this often said, Have you been called by a customer or by a business in the last year. The only ones that are come up time and again are

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John Hewitt: automobile. When you buy an automobile.

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John Hewitt: typically you’ll be called but in every other industry they don’t call you so. Our customers love to be called so. Our retention rate goes up.

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John Hewitt: it goes up by approximately double digits. 10%.

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John Hewitt: Then something that that most people don’t think about

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John Hewitt: is, most most people in this country

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John Hewitt: are are poor at asking for referrals

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John Hewitt: and our tax repairs. Now, I mean you you will. You want them to ask for a referral right? There was a there’s a book called

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John Hewitt: Gorilla Marketing poor

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John Hewitt: Accountants, and this accounting firm wrote a book, and they they quiz all their customers, and they said.

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John Hewitt: Tell us.

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John Hewitt: tell us that. How do we do for you? And and and 95%? We’re happy.

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John Hewitt: And how many of you referred? Another customer and half, only half of the people that were happy had referred a customer, and they said, Well, why didn’t you revert?

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John Hewitt: And

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John Hewitt: that they said, Well, no one asked us. We didn’t know you wanted more business. So we found that in our 2

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John Hewitt: biggest franchise, our mobile dog grooming and our tax franchise today.

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John Hewitt: neither the mobile groomers nor the taxpayers are good at asking for a referral.

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John Hewitt: I mean, you try to get them to you. Try to explain it to how important it is, but at the end of the day they’re either

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John Hewitt: too shy

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John Hewitt: or they don’t care.

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John Hewitt: and Heaven forbid they ever go outside to a party or something to mention

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John Hewitt: your company. I mean, it’s amazing. So this very personable caller

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John Hewitt: is instructed to

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John Hewitt: and be

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John Hewitt: you want to show the customer you care, and 95% of them are happy and then ask for a referral.

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John Hewitt: So our referrals are 50% higher than our competitors. Just because we have this very personable person

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John Hewitt: ensuring that the customer understands that we want number one. We want referrals, and we pay a $50 referral fee. So the the fee isn’t really the big motivator, it only changes about 10 or 20%.

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John Hewitt: The people’s time. The biggest motivator is that someone has asked them. And then they think about it

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John Hewitt: can. Do you know someone else that might benefit from our service.

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John Hewitt: and that forces the customer to think about it and know that you’re looking for more business. So that’s my favorite of all the differentiators, because it’s not just industry

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John Hewitt: specific. It’s it’s better than every customer service that you’re going that our customer is going to have that year.

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Anthony Codispoti: So for everybody listening. Break it down into very simple steps. It’s call the customer very shortly after the service has been provided. You ask them 2 questions. You ask them, are you happy with the service?

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Anthony Codispoti: And then you listen right? There’s a problem. This gives you a chance to solve it, and then you ask them.

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Anthony Codispoti: is there somebody that you could refer? Is is there someone, you know, that would benefit from our services? And if they say, yes. How? How do you sort of coach that handoff? How do you ask them to kind of make that introduction.

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John Hewitt: Well, I I if you have the numbers hand, it’d be love to reach out, and you don’t mind. I’d love to reach out for you. But please if and we’re gonna give you $50 for every customer you send. If you send us 5 customers, then your tax return costs you nothing, or your grooming cost you send us 2 customers. Your groom cost nothing.

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Anthony Codispoti: Okay. So back to the timeline. So at some point, you make the decision to sell Jackson Hewitt. What was behind that decision? Was it just the time to give investors return on on their capital.

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John Hewitt: It’s a long story. But

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John Hewitt: what what happens with? And and it’s related to

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John Hewitt: the problem in private equity.

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John Hewitt: And it it was a private equity

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John Hewitt: investor battle.

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John Hewitt: So what happens in private equity when they invest and and I’ve had in all my chains, in loyalty and

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John Hewitt: liberty and Jackson unit I took, I took venture capital private.

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John Hewitt: Well, the the problem with that is, when you start up.

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John Hewitt: you both thinking long term.

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John Hewitt: because you’re both thinking as as a great entrepreneur. You’re always thinking 5 years ahead or more.

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John Hewitt: and in when the the venture capital or the private equity and best, they’re thinking, 5 years in advance, but they’re soon in the 5. They want to be out in 5 to 7 years.

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John Hewitt: So as you approach the fifth to seventh year

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John Hewitt: they

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John Hewitt: become a little antsy, and they wanna maximize the short term numbers so they can. They can get the highest price when they exit. So they’re way less concerned. They don’t want to invest money today. That’s not gonna benefit the company financially until 2 or 3 years from now, you, as a great entrepreneur or leader you’re always thinking about. We wanna be number one. We’re gonna we wanna make

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John Hewitt: make this company the best. And we have to have vision and keep the pulse and stay. I mean, if it’s AI or computer computers, we have to have the state of the art. And so we have to invest today in order to reap the harvest in the future. So you become.

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John Hewitt: You become at odds with your as you

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John Hewitt: as you are as the investor. The private equity gets logged in the 2,

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John Hewitt: and then

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John Hewitt: private equity, what what happens in virtually every

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John Hewitt: company that starts up on, I mean, even Steve got jobs got fired from his own company, from apple

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John Hewitt: right, and the the greatest, the greatest mind in in development of of personal computers ever. He got fired from his own company, and then, of course, years later, went back.

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John Hewitt: But the it’s venture capital one. One that the entrepreneur that starts with 6 offices

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John Hewitt: like I did isn’t going to be able to grow and run thousands of offices. So at some point you need to replace them.

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John Hewitt: And so in 1995. There was a extraordinary once in a lifetime event in my 55 years of dealing with the Irs, the Irs broke down one year.

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John Hewitt: and it was a disaster. It was so bad that.

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John Hewitt: for example.

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John Hewitt: H. And R. Block had had never they in. They’ve been public since 1,961.

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John Hewitt: And in and this is 1995, and they had only 2 years where they lost. They had a decrease in profits. And this year, and and those were less than 2 million dollars. This year they lost

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John Hewitt: 60 million dollars.

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John Hewitt: and it was so bad that Tom Block.

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John Hewitt: the son of founder, Henry Block.

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John Hewitt: was CEO.

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John Hewitt: He resigned during the tax season he resigned on April 9.

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John Hewitt: The the pressure was so bad, and it would take a long time to explain what happened.

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John Hewitt: But the venture capitalists was just not understanding, and we had a disastrous season, not as bad as block way, better than block.

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John Hewitt: But we had a disaster season and and didn’t come close to making our numbers, and he took that opportunity to try to take over the company and fire me.

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John Hewitt: So we had a long battle

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John Hewitt: that went on. It took a year but I eventually agreed to leave. A year later, after we saved the company, and and had the greatest year ever. So I I fought for about 9 months, and then finally agreed to leave after the tax, and so 95 was my worst year ever in the tax industry. And then 96 was the best, because the recovery, the rebound, was so strong with all the customers who had not paid us in

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John Hewitt: 95 paid us in 96. So again, long story. But so we got 2 payments instead. And so it was just an incredible year. So I left. So I was forced to sell because of an internal battle

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John Hewitt: that was started by my venture campus, and it was over a, you know, when you when you. So when you have bad years, it’s usually it’s either

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John Hewitt: your fault as CEO, typically it’s internal or external. I’ve had bad years and made mistakes that were my fault. This is not my fault. This was an industry situation, and in 15 years of running the company I got. We had a unanimous

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John Hewitt: board agreement for 14 years until that last year, so I was forced to leave the company, and the company was so, and it was so that amazing profit we had invested. The total investment in 1982 was $129,000,

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John Hewitt: and if you hadn’t been one of those. If you had been

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John Hewitt: one of those investors that invested in 1 82, your life would have changed because the smallest investment was 5,000,

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John Hewitt: and it was worth 2 million dollars for every $5,000 you invest in 15 years later.

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John Hewitt: So we changed changed thousands of I mean, all the investors, lives, and franchisees, and so forth. And the In. In it was a public company in 19

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John Hewitt: 97, the year alone.

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John Hewitt: It was the number one stock on any exchange.

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John Hewitt: Back. Then there was not only the Nasdaq and the Dad, the American.

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John Hewitt: there, there, there was the American, and so the there was 3 stock Exchanges and the New York American and and Nasdaq, and we were the number one stock increase. We went. The stock went from 6 to 68, and because of that incredible year we had after the after the disaster year in 95, we were showing an incredible trajectory of growth.

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Anthony Codispoti: I wanna dig in a little bit more to that disastrous year? Because, you know, I think these are where some of the most helpful stories for other entrepreneurs and leaders are is, you know, you can go on Wikipedia. You can go online and and you can read the accolades and all the accomplishments that you’ve had, and people look at you and say, Wow, that guy. He just has it together. He was born to succeed. He never makes mistakes.

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Anthony Codispoti: you know. It’s just all rainbow rainbows and sunshine for him, and they don’t see some of the real big struggles that you know happen behind the scenes, and I have to imagine that I mean you use the word disastrous year worst year in, you know, my career had to have been really challenging. How did you cope with that? How did you deal with what has to be some negative self chatter that comes in questioning yourself? Am I doing the right thing. Should I be fighting this? Should I leave kind of talk us through some of those behind the scenes? Struggles.

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John Hewitt: Yeah, can I take you back to another bad year? That was my fault

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John Hewitt: absolutely, and talk about and talk about that.

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John Hewitt: And then, if you want, we can come back to to that, because that might be more.

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Anthony Codispoti: Probably more instructive. Yeah.

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John Hewitt: Right. But yeah, because

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John Hewitt: in 1980,

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John Hewitt: 19

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John Hewitt: 88, we were 6 years old

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John Hewitt: and we had just done an offering of raise money.

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John Hewitt: I hired 2 of my

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John Hewitt: my people that had worked with me at Block, so we had executives. I had hired 2 executives, and all of a sudden I got this great opportunity. We had about

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John Hewitt: 49 offices

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John Hewitt: the previous tax season, and we had an opportunity. The second largest tax service in the country called us, and was for sale.

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John Hewitt: and H. And R. Member H. And R. Block had 9,000 offices, and we had 6. Well, this this second largest had

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John Hewitt: a couple 100

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John Hewitt: and

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John Hewitt: they approached us late in the year in October, and said, Would you like to buy our

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John Hewitt: our relationship? They had most of again. Most of your listeners probably don’t even remember Montgomery Ward.

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John Hewitt: but at the time Montgomery Ward is a miniature Sears.

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John Hewitt: I mean 2 thirds or 3 quarters of size of the Sears. Chain, and

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John Hewitt: H. And R. Block had a very successful

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John Hewitt: Sears relationship. They were in about

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John Hewitt: 600 locations doing

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John Hewitt: doing about a million tax returns, and a very, very successful in

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John Hewitt: in

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John Hewitt: Sears. And so

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John Hewitt: there was another company that had a relationship with Montgomery ward, and they were in about about 150 Montgomery Ward locations.

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John Hewitt: and so they said they would sell the the relationship to us.

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John Hewitt: So we said, well, we just hired these 2 people.

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John Hewitt: We raised money.

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John Hewitt: And what a perfect time is like God saying, Okay, here. And we would immediately. You know my goal was to be number one. But before you could get to be number one, you gotta be number 2. And now, 6 years into my existence. I was gonna have over 250 offices, and be number 2 in the country.

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John Hewitt: And what a what a accolade! What a what a achievement

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John Hewitt: right? And so I got fold myself and decided that, okay, we’re gonna go for it.

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John Hewitt: Well, we it was too late in the season, too late as we are approaching the season.

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John Hewitt: come to find out

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John Hewitt: we didn’t do this due diligence, that

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John Hewitt: we didn’t go and talk to the taxpayers who had worked

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John Hewitt: in the Montgomery Ward. The company was coming off a bad year.

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John Hewitt: and in Montgomery Ward this company we acquired.

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John Hewitt: and they hadn’t paid all the bonuses that

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John Hewitt: were due, or they hadn’t honored their word with their prepares.

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John Hewitt: And so, when we went to the to hire their prepares from the previous year, say we had a great office in one of their best

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John Hewitt: stores, is in St. Petersburg, Florida. We go to hire the Paris from last year. They were angry

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John Hewitt: at the company because they either didn’t get paid their bonus, or they got they missed paychecks during the season, whatever whatever they had screwed up. So they were all mad at the company.

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John Hewitt: and so our retention of employees was very low, and

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John Hewitt: all of these employees, if you worked in Saint Petersburg.

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John Hewitt: Florida, you had access to the the database. You knew the names and addresses and phone numbers of all the customer. So not only did you compete

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John Hewitt: you.

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John Hewitt: you went out and and

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John Hewitt: you called those previous customers and said, Wait, I’m not in the store anymore. I’m over here in my home or in this office, and some of the prepares in 2 or 3 of the locations in the country, they would come in into the Montgomery ward and grab the people walking in

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John Hewitt: and saying.

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John Hewitt: You know I’m over here now. Can I do your texture? So we we had. We had to struggle to staff the offices number one.

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John Hewitt: and then we have this immense company in every

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John Hewitt: virtually every location. We had angry taxpayers.

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John Hewitt: Not but not virtually ever, but but certainly in in at least half of the locations we had existing customers that

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John Hewitt: that

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John Hewitt: said or I’m sorry, existing texts from the past that were competing with us and using our customer list.

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John Hewitt: So it was so bad

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John Hewitt: that we lost so much money that we had to go to Montgomery Ward. It was one of the biggest beatings I ever verbally

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John Hewitt: beatings I got. We went to Virgin, Montgomery Ward headquarters in Chicago in February, and said, we have to close a hundred of these 150 offices.

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John Hewitt: and we’re just getting killed. Bloodbath. And they were. They were angry, right? Because they had

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John Hewitt: we’re new. We’re new kids on the block. They had been dealing with this other company.

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Anthony Codispoti: Screwed it up.

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John Hewitt: Yeah, right? Yeah. You’re just cherry picking.

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John Hewitt: They accuse me of cherry pick that. You’re just these other locations. You’re aren’t as profitable for you. You’re just Cherry, picking the best ones and saving them for yourself. And we didn’t. We don’t know you from Adam.

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John Hewitt: right? We we’ve only known you since you came here in

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John Hewitt: November, December, and and promised that you could do a good job even better than before. You’re worse. You’re horrible.

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John Hewitt: So we we got beat up badly in that meeting, but

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John Hewitt: we were. We

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John Hewitt: did a good job in the offices. We kept open.

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John Hewitt: We did a good job at shutting down the ones that we shut down in terms of customer service. They didn’t get faced with a lot of

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John Hewitt: a lot of

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John Hewitt: customer issues. So we handle the customer issues well.

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John Hewitt: and we did. We finally did what we said we were going to do, and completed the season in those offices.

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John Hewitt: and we went back after the season, and

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John Hewitt: you know, kind of beg for forgiveness and and give us another chance. And we eventually grew it back big way, bigger and stronger

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John Hewitt: than it had been initially, and went back into those offices in the future.

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John Hewitt: But it was a

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John Hewitt: it we had to. We had to to to tighten our belts, and we almost went bankrupt. And and so after the season, we most of the staff, we took a 50% payup.

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John Hewitt: So I said from May until

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John Hewitt: December. If you’re making back then people I mean the best people making $50,000 a year at corporate network. You’re only from now until December. You’re only on half pay.

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John Hewitt: and so, and some people we later I I took. I went down to 0.

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John Hewitt: I took 0. But so my, I took. I took 0 salary. During that that off season we went to our advertisers and said

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John Hewitt: our advertising company. We had we owed them about

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John Hewitt: 100 or a hundred 50,000. That was due in May.

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John Hewitt: and we said, Well, we can’t pay you, but we will pay you.

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John Hewitt: We will pay you over the over the

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John Hewitt: a monthly.

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John Hewitt: We’ll pay this back monthly. Our Ad. Company. So we had to make deals with

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John Hewitt: with internally, with with staff, with our, with our vendors, we, one of our our board of directors, stepped up, and we needed. We needed about $500,000 to get from December to February

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John Hewitt: till we started getting big Chucks in February from

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John Hewitt: from our customers. And he stepped, stepped up and let us the month, but everyone had to participate. We had to get everyone to buy in the employees.

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John Hewitt: the franchisees.

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John Hewitt: the new franchisees. We sold franchise. We were able to sell many of those existing Montgomery Ward offices as franchises, and many of them to our own

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John Hewitt: employees, because we couldn’t pay them. And here’s an opportunity. We’ll give you a good deal on the office. So we had to do many things, and we again we made it through, and then had an incredible. Another horrible! It went down into the valley, and then another huge peak with that the following year was a was a great year in terms of growth and and profitability. But yeah, you had a tighten your belt, and and we almost went bankrupt.

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Anthony Codispoti: What was the big lesson there? What would you have done differently?

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John Hewitt: I didn’t do enough due diligence in buying that company.

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John Hewitt: That that. Even though it was a great opportunity, it appeared it had the appearance of it a great opportunity.

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John Hewitt: but I would have. I would have called the taxpayers, and around the kind of sampling we would have sample the the taxpayers around the country. And there were there were about.

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John Hewitt: They’re each

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John Hewitt: each of the offices. Typically they would have one person manage 3 to 5 offices.

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John Hewitt: So we didn’t do do sampling and call call the management around the country, and just just to ensure that they were, they were gonna come back and and work with us.

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Anthony Codispoti: So during this difficult time. Was there ever a period where you thought about just throwing in the towel?

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Anthony Codispoti: Mean? You said, almost filed for bankruptcy. You’re like. It might just be easier if we just

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Anthony Codispoti: quit.

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John Hewitt: Oh, even even when we found if we had filed for a bankruptcy we would have kept going.

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John Hewitt: There’s no question.

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John Hewitt: And so I always have the.

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John Hewitt: I’m a chess player. And so I’m always thinking ahead. If they if this happens, I’m gonna do that. If they do this, I’m gonna do that I always. And so in my mind, I always had plan. B. This is our skeleton group. It’s down to. So instead of

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John Hewitt: whatever we had 30 employees. It’ll get down to 5 or 6 of us, and we will. Instead of going

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John Hewitt: into the next year with 200 offices, we’ll go in with a hundred.

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John Hewitt: and but we were never going to quit the, you know. They got to kill me to stop, and and the number one

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John Hewitt: most important attribute in

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John Hewitt: in success is perseverance, and everyone gets punished and knocked down and beaten up. I’ve never seen a human being that just skated through life. Everyone has it person

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John Hewitt: and the the great winners, the the the most, the people that are the most

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John Hewitt: successful

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John Hewitt: they never get. They never stayed up

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John Hewitt: so. No, you can’t keep me down. I’m yeah again. You gotta tell me to stop. We were going to move forward. It would have been smaller than smaller, and we would have to circle the wagons and

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John Hewitt: be a much smaller group going into the tax season. But the tax seasons is we were always gonna have a a harvest and a successful tax season except for

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John Hewitt: those tax seasons that were affected by the industry, or that that significant mistake that that I made in in deciding that to grab that opportunity. And

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John Hewitt: So it’s either my fault or industry fault. But we’re always gonna we’re always gonna persevere.

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Anthony Codispoti: You gotta kill me to stop me. Where does this dogged determination come from, John? Is you feel like this is something that you were just born with, or was it cultivated as as you grew up.

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John Hewitt: You know it. It’s it’s been it in my life as long as I can remember. So I would have to say I was born with.

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John Hewitt: and because I do not I I never, never remember changing and thinking. Okay, for now. And I’m never going to give up. But I mean, I was always that. I’m a I’m a poor loser.

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John Hewitt: and you know my philosophy is, show me a good loser, and I’ll show you a loser.

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John Hewitt: So

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John Hewitt: I’m I’m a poor loser and and like. Then somebody said.

349
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John Hewitt: he said, You go onto the field every time

350
00:41:34.860 –> 00:41:36.089
John Hewitt: with a game plan.

351
00:41:36.520 –> 00:41:38.920
John Hewitt: man. You’re either. So you’re either gonna win.

352
00:41:39.060 –> 00:41:42.230
John Hewitt: You’re gonna you’re gonna meet your game plan and win.

353
00:41:42.280 –> 00:41:44.739
John Hewitt: or you’re gonna learn something.

354
00:41:44.830 –> 00:41:48.850
John Hewitt: You’re gonna learn a lesson so that you’re more prepared to win the next thing.

355
00:41:48.950 –> 00:41:54.064
John Hewitt: So I’m always learning, and I’m a committed to improvement. You know our our

356
00:41:55.300 –> 00:41:57.279
John Hewitt: mission statement at

357
00:41:57.610 –> 00:42:08.830
John Hewitt: liberty was set. The standard, have funds set the standard improve each day. So I’m committed to improve, to have the best system, and and we’ve always had the best system. We’ve always

358
00:42:08.910 –> 00:42:29.880
John Hewitt: than best in the industry. When I was with Block or Jacksonville, or Liberty, or now, Ajax, we’ve always been best in in class best in industry. So I’m always gonna beat the competitor, the competition because we have, we have a a more. We’re much more fanatical in exceeding customers, expectations.

359
00:42:31.070 –> 00:42:34.439
Anthony Codispoti: So you exit Jackson Hewitt.

360
00:42:34.780 –> 00:42:50.549
Anthony Codispoti: you are not done with the tax base, obviously because you go on to start a Liberty tax. But you sort of have a little bit of a problem, because you now have to compete against this monstrosity that you’ve already built over here

361
00:42:50.570 –> 00:43:05.139
Anthony Codispoti: with your name attached to it with the software that you helped develop with all of the systems and processes that you know you built these innovative ways. What were you going to bring to Liberty Tax to compete with this

362
00:43:05.370 –> 00:43:07.830
Anthony Codispoti: amazing machine that you built over here.

363
00:43:08.940 –> 00:43:13.560
John Hewitt: Yeah, you missed one thing. You were right where I had to compete with our system, our software.

364
00:43:13.700 –> 00:43:15.370
John Hewitt: and that my name.

365
00:43:15.660 –> 00:43:17.500
John Hewitt: But I also could be with my people.

366
00:43:18.190 –> 00:43:25.049
John Hewitt: Right? These are people I trained and knew knew how to run a tax business they were, but and they were better than black people.

367
00:43:25.210 –> 00:43:32.209
John Hewitt: So every year Jackson hit was beating up on block, so my people knew how to. They knew those differentiators

368
00:43:32.400 –> 00:43:34.939
John Hewitt: right. They knew differentiates. Well.

369
00:43:35.180 –> 00:43:41.420
John Hewitt: the good. Well, there’s good news in a couple of things. First of all.

370
00:43:41.930 –> 00:43:50.119
John Hewitt: both H. And our block and Jackson ewed. And now, Liberty, it’s since I left all 3 of those companies there.

371
00:43:50.200 –> 00:43:53.270
John Hewitt: They’ve never been able to get a good CEO.

372
00:43:53.460 –> 00:43:56.920
John Hewitt: They have the average length of the CEO is 2 years.

373
00:43:57.160 –> 00:44:00.020
John Hewitt: So in so block since I left

374
00:44:00.625 –> 00:44:09.189
John Hewitt: block. And yeah, it was since since I started started Liberty they’ve had a dozen different CEO.

375
00:44:09.906 –> 00:44:15.970
John Hewitt: Jacksonville said a dozen different Ceos and Liberty said, I left 5 years ago. They’ve had 5 Ceos.

376
00:44:16.020 –> 00:44:27.700
John Hewitt: so they’re one a year on it. So what happens is you don’t get anyone that’s experienced and they’re not. They take my ideas that I just

377
00:44:27.820 –> 00:44:29.880
John Hewitt: told you, and they throw them out.

378
00:44:30.150 –> 00:44:31.140
John Hewitt: They don’t like.

379
00:44:31.740 –> 00:44:34.430
John Hewitt: We’re not going to expand our office. It’s not that important

380
00:44:34.570 –> 00:44:37.410
John Hewitt: right? We’re not going to call customers, not that important.

381
00:44:37.550 –> 00:44:42.129
John Hewitt: So even though. And and then they get rid of my franchisees. They get rid of my staff.

382
00:44:42.160 –> 00:44:46.520
John Hewitt: and they don’t listen to them. I call it CEO disease.

383
00:44:46.600 –> 00:44:57.260
John Hewitt: that from what I’ve seen is, and I and I really I saw it much more clearly when I left Liberty, because I stayed on as chairman of the board

384
00:44:57.310 –> 00:45:02.899
John Hewitt: for 2 2 different Ceos, and it seems to me, Anthony, that

385
00:45:03.140 –> 00:45:08.219
John Hewitt: when someone gets appointed CEO, it’s like their Caesar.

386
00:45:08.660 –> 00:45:12.509
John Hewitt: or they’re gone. They they’re supposed to know

387
00:45:12.640 –> 00:45:18.799
John Hewitt: even the last person I hired at at liberty before I left, when I was chairman of the board.

388
00:45:19.250 –> 00:45:24.059
John Hewitt: She was a franchisee, my one of my best franchisees, one of my best

389
00:45:24.180 –> 00:45:38.259
John Hewitt: performing, but as soon and she agreed she she became CEO of a public company, I mean, we had gotten to 500 million dollar market cap, a large company with 4,000 locations, and she agree. She was from

390
00:45:38.450 –> 00:45:54.610
John Hewitt: South Dakota, a Cpa. With one office that that went to 4 liberties, offices, very successful Liberty offices sold their Cba practice, and and I brought her in to be C. Of the company, but with the understanding that I would help

391
00:45:54.670 –> 00:45:56.160
John Hewitt: well, she didn’t listen to me.

392
00:45:56.460 –> 00:46:01.519
John Hewitt: They they ignore my advice. So so in I’m I’m competing with

393
00:46:01.610 –> 00:46:03.040
John Hewitt: inferior

394
00:46:04.400 –> 00:46:19.010
John Hewitt: competition. My! The people that have replaced me are not at my level. I have better systems and the systems I described to you that are clear differentiators, expanding your hours even though I was, they were doing it at Jackson knew it, they got rid of it.

395
00:46:19.500 –> 00:46:23.109
John Hewitt: So one was, I’m competing against inferior

396
00:46:23.160 –> 00:46:26.400
John Hewitt: in in inexperience. They don’t know the tax industry.

397
00:46:26.510 –> 00:46:30.549
John Hewitt: and everyone came in. I mean, in the tax industry, for example.

398
00:46:30.800 –> 00:46:36.080
John Hewitt: every single CEO that comes in that’s never been in the industry. And out of the 30

399
00:46:36.310 –> 00:46:48.259
John Hewitt: people I described the 12 Ceos at Block and and and Jackson Hewitt and and at liberty. Only one had any tax experience, so they don’t know anything about tax. So they come in, and they think they have a good idea.

400
00:46:48.370 –> 00:46:54.220
John Hewitt: You know what it looks like. It looks like we should do something the rest of the year. With these offices

401
00:46:54.420 –> 00:47:09.560
John Hewitt: they’re closed for 8 months. We should be able to sell insurance or do real estate or do financial planning, and it’s like they have a light bulb went off in their mind, and they became the smartest person ever and like, don’t you think we thought about that?

402
00:47:09.760 –> 00:47:19.729
John Hewitt: Don’t you think with John Hughes been thinking about that for 55 years, and Henry Block thought about that? Do you think you’re the first person ever thought of that simple idea.

403
00:47:19.820 –> 00:47:41.110
John Hewitt: But and worse than that, you think we haven’t tried it. We’ve tried everything we can think of. It doesn’t work. So they go in idea after idea that they invent has been tried and failed, and most of them fail, and yet they implement it because they have CEO disease. The first thing I would do if I took over a company in an industry I didn’t understand

404
00:47:41.170 –> 00:47:43.680
John Hewitt: is I would ask my top people

405
00:47:43.980 –> 00:47:51.800
John Hewitt: tell me about this industry and give me. And here’s what I’m thinking of. It. Is this the right way to think about? But they didn’t listen to the top people.

406
00:47:53.040 –> 00:47:54.779
John Hewitt: So that was one thing, but

407
00:47:55.400 –> 00:47:59.270
John Hewitt: we also. I had read a book called Guerrilla Marketing.

408
00:47:59.450 –> 00:48:02.049
John Hewitt: Just before I left Jackson. He would in.

409
00:48:02.070 –> 00:48:08.869
John Hewitt: I think it was published in the 90 S. And and I read it in jet the year before I left Jackson. Yeah, we began implementing it.

410
00:48:09.020 –> 00:48:09.820
John Hewitt: and

411
00:48:13.080 –> 00:48:15.109
John Hewitt: they got rid of it as soon as I left.

412
00:48:15.130 –> 00:48:28.540
John Hewitt: and 1 one of the things we did is we had little donor boxes. If you think of a a box of Munchkins we had little donor boxes that held about 4 donuts. That, said Jackson. You and we would take it door to door to businesses.

413
00:48:29.020 –> 00:48:30.699
John Hewitt: They had a coupon up with it.

414
00:48:31.750 –> 00:48:40.259
John Hewitt: They called it the Don. The next CEO called it the donut caper, and said, We’re getting rid of the donut caper. He bragged about it what was working in effect.

415
00:48:40.330 –> 00:48:46.640
John Hewitt: but he was so. So we implemented gorilla marketing and best. The most obvious, clear

416
00:48:46.660 –> 00:48:50.220
John Hewitt: thing that people recognize is our liberty waiver.

417
00:48:50.550 –> 00:48:52.789
John Hewitt: you know, when I started liberty in the

418
00:48:52.810 –> 00:49:04.560
John Hewitt: when we only had 50 offices, and then a hundred, 205, 400, he would say, well, every Texan never heard of it, but within 4 or 5 years especially, I mean, I go to Wall Street, and and everywhere I went

419
00:49:04.730 –> 00:49:11.759
John Hewitt: they was, oh, Liberty text. Are you the one with the waiver, the the costume character out in front of the offices?

420
00:49:11.800 –> 00:49:15.940
John Hewitt: So yeah, I mean, when you talk about differentiators.

421
00:49:16.100 –> 00:49:24.370
John Hewitt: that’s one of our differentiate right? If, when you, when you think about it, a, the size of one of our territories is about

422
00:49:24.510 –> 00:49:27.590
John Hewitt: at tax is about 35,000 people

423
00:49:27.930 –> 00:49:29.680
John Hewitt: in that. In that

424
00:49:30.720 –> 00:49:35.570
John Hewitt: area of 35,000 people there’s over 300 businesses on average.

425
00:49:35.600 –> 00:49:38.040
John Hewitt: Now, all of them are trying to get your attention

426
00:49:38.470 –> 00:49:55.389
John Hewitt: right? They’re they’re doing. They’re doing phone book, TV, radio newspaper billboard. They’re they’re they have signs. They have SEO, they have online. Everyone’s trying to get your attention right. And everyone’s doing the same thing. They’re in the yellow pages back then and

427
00:49:55.430 –> 00:49:57.970
John Hewitt: on the radio, everyone’s doing the same thing.

428
00:49:58.100 –> 00:50:00.419
John Hewitt: But how many people, Anthony.

429
00:50:00.770 –> 00:50:01.690
John Hewitt: are

430
00:50:01.810 –> 00:50:03.859
John Hewitt: have a costume character

431
00:50:04.020 –> 00:50:08.610
John Hewitt: from January first to April fifteenth. Dancing out in front of your store.

432
00:50:08.930 –> 00:50:10.410
John Hewitt: Right? There’s one.

433
00:50:10.470 –> 00:50:13.700
John Hewitt: There’s one. So it’s a differentiator. So

434
00:50:13.880 –> 00:50:17.620
John Hewitt: our guerrilla marketing became our differentiator.

435
00:50:17.920 –> 00:50:23.459
John Hewitt: Our Liberty waiver set the standard, and we would have a put on a liberty costume and go

436
00:50:23.510 –> 00:50:25.520
John Hewitt: door to door with gifts.

437
00:50:25.610 –> 00:50:44.190
John Hewitt: and you know, cookies and donuts and pizza, or candy, and then we would have roadside parties. So every every Saturday we’d have a party outside the the office, and we’d be cooking hot dogs or hamburgers and and have a popcorn machine, and sometimes they’d have

438
00:50:44.580 –> 00:50:52.460
John Hewitt: donkeys, or I mean once they had elephants or fire trucks, or that, so we would catch attention, and no one else is doing it.

439
00:50:52.570 –> 00:50:55.460
John Hewitt: So the our real claim to them

440
00:50:55.730 –> 00:50:57.569
John Hewitt: was gorilla Market.

441
00:50:58.000 –> 00:51:04.389
John Hewitt: So, and then just, and then it was supplemented with having the best system that

442
00:51:04.980 –> 00:51:07.779
John Hewitt: when I left at Jacksonville they abandoned it.

443
00:51:27.640 –> 00:51:29.290
John Hewitt: You froze there for a minute.

444
00:51:29.290 –> 00:51:30.030
Anthony Codispoti: Yes.

445
00:51:30.140 –> 00:51:37.809
Anthony Codispoti: right we get. We got a we got a great answer there, so we’ll just we’ll we’ll stitch that part out. But so your

446
00:51:37.810 –> 00:52:03.619
Anthony Codispoti: your advantage was the gorilla marketing, plus the fact that your previous company got rid of a lot of the great ideas that you had implemented, that were working. And so you could implement those into your new company liberty tax and not be competing on. You know some of those same ideas. What do you attribute this CEO disease to? Is it just an ego thing like somebody comes in? They feel like they’ve got to put their fingerprints on it.

447
00:52:04.380 –> 00:52:12.259
John Hewitt: You know I try not to get into what I you know. Sometimes with my employees I can be brutally frank, and sometimes I call them in, and

448
00:52:12.340 –> 00:52:15.340
John Hewitt: they want to explain to me why they made a mistake.

449
00:52:15.600 –> 00:52:18.370
John Hewitt: and I say this in in a

450
00:52:18.620 –> 00:52:21.279
John Hewitt: funny way, and not in a mean way.

451
00:52:21.740 –> 00:52:29.789
John Hewitt: But I say, you know, Anthony, I don’t want to get into pool of how you think. I don’t want to know why you made that mistake right?

452
00:52:29.990 –> 00:52:31.929
John Hewitt: You need to learn how I

453
00:52:32.140 –> 00:52:36.450
John Hewitt: so I try not to get into cesspool, of how those Ceos think.

454
00:52:36.580 –> 00:52:38.519
John Hewitt: But to me it’s it’s

455
00:52:38.550 –> 00:52:40.680
John Hewitt: it’s I’m incredulous.

456
00:52:40.710 –> 00:52:47.210
John Hewitt: I’m incredulous at the stupid things they do and the things that they replace that are work.

457
00:52:47.440 –> 00:52:57.669
John Hewitt: And there there is somehow. Yes, I think that the title, CEO. It’s it’s all of a sudden you think you’re supposed to know.

458
00:52:57.860 –> 00:53:04.770
John Hewitt: So if you and and so my my suspicion is, they’re so they get an arrogance

459
00:53:05.070 –> 00:53:06.939
John Hewitt: that they’re supposed to know.

460
00:53:07.220 –> 00:53:13.240
John Hewitt: And so it’s like they come up with this theory. This is a very another common theory

461
00:53:13.470 –> 00:53:21.539
John Hewitt: that, especially if you’ve never been in the franchise industry before. We’re we need to have a model office.

462
00:53:21.600 –> 00:53:24.710
John Hewitt: and we need to show the franchisees how to do

463
00:53:25.100 –> 00:53:28.410
John Hewitt: right. Well, the thing that they’re missing every time

464
00:53:28.430 –> 00:53:29.740
John Hewitt: is that

465
00:53:29.820 –> 00:53:32.279
John Hewitt: the model office is corporate employees.

466
00:53:32.410 –> 00:53:35.770
John Hewitt: and only 2% of them are going to act like owners.

467
00:53:35.890 –> 00:53:43.359
John Hewitt: and that franchisees are the franchisees are going to out, hustle out, work out, think out, create you

468
00:53:43.470 –> 00:54:07.199
John Hewitt: every time you can’t create a better office than the franchisees. Get the best office in every company is the Franchisees office, because they’re they’re owners, and they’re much more committed. But this this CEO thinks for. Here’s here’s another simple example. At my conventions. I embedded this 30 30 years ago. At Jackson Hewitt

469
00:54:07.280 –> 00:54:10.680
John Hewitt: we sit our franchisees down and

470
00:54:10.810 –> 00:54:14.379
John Hewitt: say, Tell sign, improve, tell sign. Improve our tax law.

471
00:54:14.530 –> 00:54:20.210
John Hewitt: tell us how to improve our technical support, tell us how to improve our our online market

472
00:54:20.310 –> 00:54:22.220
John Hewitt: and and our guerrilla.

473
00:54:22.260 –> 00:54:24.460
John Hewitt: and then we listen to every idea.

474
00:54:24.580 –> 00:54:39.749
John Hewitt: and we write it down. And then, after the after the the convention, we sit down with the executives and franchise representatives and say, what are we going to change this year? What are we going to change sometime in the future? And what are we not going to change?

475
00:54:40.040 –> 00:54:48.609
John Hewitt: Well, I’m proud to say that in my 30 years of doing this, one and 50% of the ideas are implemented that year. But each time I left the company.

476
00:54:48.960 –> 00:55:00.040
John Hewitt: I left Jackson. You and I left Liberty. They stopped doing that. They stopped asking the franchisees for input they said, No, no, no, we’re supposed to know. Tell them how to do it.

477
00:55:00.090 –> 00:55:13.610
John Hewitt: We’re supposed to tell them how to do it. Well, sorry you’re never gonna be as good. Your company employees are never gonna be as good on average as your quality franchisees. There you get these great

478
00:55:13.690 –> 00:55:15.300
John Hewitt: great entrepreneurs

479
00:55:15.310 –> 00:55:19.580
John Hewitt: that are thinking about it. An employee doesn’t think about

480
00:55:20.441 –> 00:55:23.600
John Hewitt: many employees. Most employees don’t think about this business

481
00:55:24.040 –> 00:55:29.869
John Hewitt: 24 HA day, 365 days a year, but when you’re an owner you’re taking a shower, or

482
00:55:30.210 –> 00:55:47.690
John Hewitt: running or running or bicycling. You’re thinking about business, and you’re thinking about, what can I do better? What can I? How can I get one more employee, one more customer. How can I get? How can I hire a better employee? How can I get a customer? How can I market. How can I save money? You’re never going to be at those that level

483
00:55:47.840 –> 00:55:50.290
John Hewitt: because they’re they at the end of the day

484
00:55:50.340 –> 00:55:52.999
John Hewitt: they’re employees, and they’re not owners.

485
00:55:53.960 –> 00:56:01.659
Anthony Codispoti: So you grow liberty tax for several years. Very impressive growth trajectory again, and then decide to step away what was behind that decision.

486
00:56:02.800 –> 00:56:03.910
John Hewitt: Same thing happened

487
00:56:04.490 –> 00:56:05.760
John Hewitt: 20 years later.

488
00:56:05.880 –> 00:56:08.040
John Hewitt: I had this time, though I

489
00:56:08.660 –> 00:56:14.080
John Hewitt: you know, when you start a company and you build it to a half a billion dollar company for 15 years.

490
00:56:14.130 –> 00:56:17.130
John Hewitt: you better be able the next time to do it a lot better. Right?

491
00:56:17.310 –> 00:56:22.189
John Hewitt: So one of the first things I said is, okay. I’m never going to let that

492
00:56:22.210 –> 00:56:25.450
John Hewitt: I’m never gonna let that happen again where I’m gonna lose control.

493
00:56:25.640 –> 00:56:27.820
John Hewitt: So I’m going to keep controlling stop.

494
00:56:28.790 –> 00:56:33.090
John Hewitt: So now at Liberty stock, even though we were a public company, I had controlling stuff.

495
00:56:33.300 –> 00:56:36.370
John Hewitt: So I got to have one more vote

496
00:56:36.540 –> 00:56:37.610
John Hewitt: then.

497
00:56:38.040 –> 00:56:40.320
John Hewitt: then one more director

498
00:56:40.480 –> 00:56:49.160
John Hewitt: than all the other shareholders. So there were 9 directors. I appointed 5, including myself and the others, got to vote vote for 4.

499
00:56:49.300 –> 00:56:52.679
John Hewitt: So same thing happened. We have one bad year.

500
00:56:52.940 –> 00:56:57.820
John Hewitt: and the venture capitalists again tries to take over the company

501
00:56:57.860 –> 00:57:09.169
John Hewitt: because it was Michael right? I mean, after 20 years that this person at this venture Cabos, had he? He did something very unusual he invested in, and then.

502
00:57:09.230 –> 00:57:12.970
John Hewitt: about 5 years later, sold his investment at a nice profit.

503
00:57:13.190 –> 00:57:19.979
John Hewitt: and then he this almost never happens in venture capital. Then, on his one of his next funds, he invested again.

504
00:57:20.010 –> 00:57:27.689
John Hewitt: So he invested twice right, but the first time he had made a killing I don’t remember the number, let’s say, invested 3 million and sold it for 20 million.

505
00:57:27.910 –> 00:57:30.430
John Hewitt: Right now he invests another 3 million.

506
00:57:30.560 –> 00:57:34.709
John Hewitt: So but he decided, and and he wanted the job as CEO.

507
00:57:34.930 –> 00:57:42.679
John Hewitt: He wanted my job so, but he also. We had a bad year, and he came. So we had an a civil war.

508
00:57:42.900 –> 00:57:46.289
John Hewitt: a civil war that was very, very bloody.

509
00:57:47.150 –> 00:57:49.810
John Hewitt: And they eviscerated me in the press.

510
00:57:50.526 –> 00:58:00.770
John Hewitt: They just they did everything they could. And I they finally did something. I never! I never thought that that I never

511
00:58:00.780 –> 00:58:04.169
John Hewitt: in in thinking it through this about Miami control.

512
00:58:04.380 –> 00:58:17.470
John Hewitt: I never realized how what they could do. Well, he got he got his 3 board members on his side. So now there’s 4 board members, and he got 4 of my officers

513
00:58:17.520 –> 00:58:20.330
John Hewitt: out of the, so I had. I had 8

514
00:58:20.590 –> 00:58:25.530
John Hewitt: officers and 9 board members, so now it was 9 of us against 8 of them.

515
00:58:25.700 –> 00:58:36.769
John Hewitt: and they they came up with a great strategy, they said, and we’re public company. So their greatest strategy was, we said, if you don’t agree to leave Chad, we’re all gonna resign.

516
00:58:38.240 –> 00:58:44.500
John Hewitt: The whole board’s going to resign, and the 4 offices are going to resign, so we would have a bad year.

517
00:58:44.640 –> 00:58:47.059
John Hewitt: and I would take the the blame

518
00:58:47.730 –> 00:58:57.880
John Hewitt: right? I would I would get hit with the blame because they all quit. They’re going to say they quit because of me. They eviscerated me. They quit one at a time eventually, and every time they quit

519
00:58:57.890 –> 00:59:08.650
John Hewitt: they used my own attorney firm, internal attorney firm, because my attorney was one of the people on the other side. They used my attorney to write the letter so that it was published.

520
00:59:08.730 –> 00:59:30.019
John Hewitt: and there was a local reporter that that treated me like I was the the worst person in the history of the human race that every time someone quit they would say it was my fault. So eventually eventually I I sold my stock and and left, and I was right. 5 years later, last last summer, they bankrupted the company.

521
00:59:30.360 –> 00:59:33.529
John Hewitt: So this company that had been worth 500 million dollars

522
00:59:34.300 –> 00:59:38.450
John Hewitt: in a day after the battle, was down to half of that.

523
00:59:38.600 –> 00:59:42.040
John Hewitt: And but last year

524
00:59:42.290 –> 00:59:52.820
John Hewitt: they, these 5 Ceos, with CEO disease, bankrupted the company, and and so the stock which was worth the stockholders who were had 500 million of value had 0.

525
00:59:53.360 –> 00:59:56.600
John Hewitt: So, and it was, and it was again, I’m

526
00:59:58.100 –> 01:00:04.580
John Hewitt: Not a fan of venture capital and private equity, because when things are bad they turn on you.

527
01:00:05.010 –> 01:00:06.240
John Hewitt: they can turn it.

528
01:00:07.330 –> 01:00:16.150
Anthony Codispoti: Is there a little bit of mixed feelings about that result? The company filing for bankruptcy? I mean, it’s something that you built. It’s a baby that you helped to birth.

529
01:00:16.160 –> 01:00:26.069
Anthony Codispoti: so it’s gotta be painful on the one hand, but in in some ways like there’s gotta be some anger and resentment of th them pushing you out, and it gotta be some vindication like, hey, without me, you guys.

530
01:00:26.070 –> 01:00:31.869
John Hewitt: Well, well, then, vindicated in the fact that I was right, that these people

531
01:00:32.000 –> 01:00:34.400
John Hewitt: that thought I was doing a bad job

532
01:00:34.780 –> 01:00:37.090
John Hewitt: were thought they could do better.

533
01:00:37.120 –> 01:00:39.309
John Hewitt: and they I needed to be replaced.

534
01:00:39.600 –> 01:00:52.080
John Hewitt: They were wrong, right? They can’t do better, and no one is the better. They every year they? They decrease by about 25% in location. So that, you know, when we peaked 5, 7 years ago.

535
01:00:52.100 –> 01:00:55.640
John Hewitt: we had 4,000 locations. They’re down to 2,000 locations.

536
01:00:55.990 –> 01:00:59.520
John Hewitt: But going bankrupt doesn’t mean you go out of business.

537
01:00:59.740 –> 01:01:03.559
John Hewitt: So the public really doesn’t know they still have 2,000 offices.

538
01:01:03.620 –> 01:01:13.539
John Hewitt: and Liberty tax is still around. But what really hurts is all the employees that they screwed all the franchisees that they screwed.

539
01:01:13.690 –> 01:01:19.150
John Hewitt: My remember, my goal is right. I guess I haven’t said it yet. My goal is to

540
01:01:19.350 –> 01:01:37.820
John Hewitt: to have fun, enjoy my my life, and improve life. And I had. There was so many people there that franchisees and employees that I cared about and had improved their lives, and they took everything back they took. They they destroyed hundreds and hundreds of good people’s

541
01:01:38.020 –> 01:01:44.189
John Hewitt: franchise in their lives out of greed, because they wanted to maximize their short term profit.

542
01:01:44.350 –> 01:01:51.479
John Hewitt: So they they have the typical. What I’ve seen is the worst. Not that maybe not the typical, but the worst

543
01:01:51.530 –> 01:01:56.350
John Hewitt: kind of private equity is, they only go after numbers, and they don’t care about people.

544
01:01:56.450 –> 01:01:58.469
John Hewitt: and you can’t.

545
01:01:58.520 –> 01:02:00.610
John Hewitt: The secret of having a great

546
01:02:00.750 –> 01:02:16.699
John Hewitt: company is happy, successful employees and happy, successful franchisees and Liberty tax. It was on the wall big letters, you know 4 foot letters when you come in happy, successful franchisees. Then, when I was gone, they whitewashed it off the wall.

547
01:02:17.280 –> 01:02:23.720
John Hewitt: and that’s how they treat. They didn’t care about heavy, successful franchisees. If you have heavy, successful franchisees.

548
01:02:23.750 –> 01:02:28.159
John Hewitt: you can’t help but succeed. If you don’t, you can’t help but fail.

549
01:02:29.050 –> 01:02:51.570
Anthony Codispoti: So then you step away. You decide to start loyalty brands. You have pulled together sort of this eclectic version or collection of brands, you know. I see pet grooming tax prep, which is very familiar to you. Business brokers, home inspection. What’s kind of the common thread that drew you to bring each of these brands under your umbrella.

550
01:02:52.800 –> 01:02:54.455
John Hewitt: Well again I made

551
01:02:55.070 –> 01:02:57.730
John Hewitt: The the good news is

552
01:02:58.080 –> 01:03:15.549
John Hewitt: that I have 2 brands, and it looks like maybe 3 that are doing well, great, and I’m I’m the only person about 2 of the top 100 brands in this country. Ha! 100 franchise brand. No one else has done more than one. I mean you got one Mcdonald’s and one Wendy’s and

553
01:03:15.550 –> 01:03:29.340
John Hewitt: one Hr. Block. But I did both Jackson at liberty. It looks like Zoom and groom and mobile dog grooming in 3 years will be one of the top 100 largest retail chains of the country. So that’s growing so fast. So

554
01:03:30.560 –> 01:03:31.500
John Hewitt: the

555
01:03:32.780 –> 01:03:35.799
John Hewitt: so I’ll have done it 3 times. No one else has done it twice.

556
01:03:35.860 –> 01:03:45.249
John Hewitt: So it’s it’s on that kind of same kind of trajectory that Liberty Tax and Jackson were even fast way faster than a tax.

557
01:03:45.390 –> 01:03:46.320
John Hewitt: So

558
01:03:46.934 –> 01:03:52.100
John Hewitt: the others. And then I made a mistake in in. When I started this concept

559
01:03:52.220 –> 01:03:56.229
John Hewitt: of having multiple brands. Here’s what I thought. I thought, well.

560
01:03:56.430 –> 01:04:14.969
John Hewitt: I can come into it. Organ. Let’s say you have a brand, and you have your franchise chain. You have 10 or 20 locations, and you can’t grow because you can’t. You can’t bring in new franchise. So what you get when you get with us is is you get number one is our mentoring.

561
01:04:15.160 –> 01:04:21.150
John Hewitt: We call it loyalty brands, because I have. I have 10 people that have been with me 30 years of work.

562
01:04:21.620 –> 01:04:41.510
John Hewitt: and I have another 10. They’ve been with me 20 years of work. So we have huge mentoring capability. We’re we’re great at franchise development sales I brought in at liberty. We brought in almost one a day we brought in. In 12 years we brought in 4,000 franchisees. That’s over 300. I mean, that’s 330 a year

563
01:04:41.510 –> 01:04:56.179
John Hewitt: that we’re bringing in. So I have the capability plus. I brought in 5,200 franchisees that had hundreds of thousands employees. So we should give these new franchise systems access to all the people that have been with me before that

564
01:04:56.490 –> 01:05:07.449
John Hewitt: know the John Hewitt’s a great operator and want to join me. And and in truth, many of the many of the other brands have been developed by former Liberty People or Jackson Hewitt people.

565
01:05:07.730 –> 01:05:09.909
John Hewitt: But I made this huge mistake

566
01:05:10.090 –> 01:05:15.860
John Hewitt: that I thought that I could change them. And what I learned is this, that

567
01:05:16.040 –> 01:05:19.599
John Hewitt: each of the times I went in that most franchise wars fail

568
01:05:19.830 –> 01:05:25.969
John Hewitt: in this country, you only to be in the top 50% of all franchisors. You only need 20 locations.

569
01:05:26.090 –> 01:05:28.100
John Hewitt: So there are 400 that

570
01:05:28.270 –> 01:05:52.209
John Hewitt: our start every year, and 400 bill each year. It’s not the same 400, but I mean. So there’s been no growth in the number of franchisors in this country and th. The reason they fail is this, well, simply, they don’t gather that it’s happy, successful franchisees. But what happens is you get an entrepreneur, has a great, has a great company, and he has a mom, and Pop, let’s say it’s a pizza chain

571
01:05:52.270 –> 01:06:01.070
John Hewitt: pizza store with 1, 2, 5 locations doing a great job, and someone comes to them said, Why, if you franchise I would like one of these. This is a great concept.

572
01:06:01.120 –> 01:06:03.320
John Hewitt: special crust or whatever.

573
01:06:04.270 –> 01:06:11.680
John Hewitt: And so he gets followed himself and says, Okay, I’m gonna franchise. Well, a couple of things happen. Number one is, it costs a few $100,000

574
01:06:11.720 –> 01:06:25.516
John Hewitt: to get up and running with all the marketing and legal work, and so forth. And so now you have this mom and Pop, who’s been doing a great job of running his stores as a owner managers

575
01:06:25.980 –> 01:06:27.720
John Hewitt: CEO, founder.

576
01:06:27.960 –> 01:06:29.770
John Hewitt: But now he has a second company.

577
01:06:29.960 –> 01:06:38.110
John Hewitt: and he still needs the income from the first location because it takes 3 to 5 years at least. It took Mcdonald’s

578
01:06:38.210 –> 01:06:48.370
John Hewitt: 7 years before they made money from royalties. The only thing to say Mcdonald’s is, they made money from leasing the the land to the to the franchisees.

579
01:06:48.480 –> 01:06:49.640
John Hewitt: and so

580
01:06:49.910 –> 01:07:10.179
John Hewitt: it takes 3, 5. And so you’re not making any money. So you need to have your money. So now you have 2 jobs, and one is, you’re running your mom and pop, and you’re a franchise, and so you don’t have enough time to devote to the franchise. And then even worse is that running a franchise system is different than than having employees.

581
01:07:10.340 –> 01:07:16.050
John Hewitt: because, having employees, they have to do what you said. Franchisees are very independent.

582
01:07:16.060 –> 01:07:37.439
John Hewitt: very rope, maverick, and very argumentative, and it’s a whole different skill set running a franchise chain of of entrepreneurs than running hundreds of employees. So I’ve had hundreds of employees. I’ve had thousands of franchise. It’s a whole different skill set, and I found that none of the companies that I that I

583
01:07:37.840 –> 01:07:38.969
John Hewitt: merged with

584
01:07:39.240 –> 01:07:43.349
John Hewitt: had the see, the the founder could not make that transition.

585
01:07:43.390 –> 01:07:44.510
John Hewitt: They could not

586
01:07:44.550 –> 01:07:48.680
John Hewitt: not make the transition of being a CEO, of a

587
01:07:48.880 –> 01:07:55.829
John Hewitt: a franchise system, both because they still love their mom and Pop, and they’re making all their money from that.

588
01:07:55.930 –> 01:08:01.030
John Hewitt: But they just don’t have the capability of dealing with entrepreneurs, and they just like

589
01:08:01.080 –> 01:08:04.750
John Hewitt: my children just like my franchisees, they won’t listen.

590
01:08:04.760 –> 01:08:12.589
John Hewitt: And so so other I’ve had. I’ve had about 5 or 6 devices already with Fran, with Franchisors

591
01:08:12.610 –> 01:08:15.589
John Hewitt: that that we partner with that wouldn’t listen to me.

592
01:08:15.640 –> 01:08:19.849
John Hewitt: And so no matter. And and if you don’t listen, I can’t help you.

593
01:08:19.910 –> 01:08:44.939
John Hewitt: You know you’re not willing to. If you want to improve, you have to change. If you’re not willing to change, I can’t. I can’t help you bring in new franchisees. So not happy with all of the the chains I’ve been involved with. But I am happy with we have, we have 3 that are that are are going well, and the I, the other one is roofing, roofing, and siding and solar.

594
01:08:44.950 –> 01:08:48.260
John Hewitt: But the 3 industries that we’re doing really well.

595
01:08:48.310 –> 01:08:51.390
John Hewitt: and the the rest are not, are not meeting

596
01:08:51.460 –> 01:08:54.379
John Hewitt: meeting by minimum requirements of

597
01:08:55.285 –> 01:08:56.139
John Hewitt: growth.

598
01:08:56.800 –> 01:09:08.377
Anthony Codispoti: In in which territories are you looking to expand those opportunities? If someone’s listening? And they say, Hey, I buy into John Hewitt, I wanna piece of I wanna be part of what he’s what he’s handing out there. What what.

599
01:09:08.660 –> 01:09:12.119
John Hewitt: Yeah, mo. Most of them are just United States.

600
01:09:12.760 –> 01:09:18.749
John Hewitt: But, for example, a couple of them are in Canada. But I just think United States primarily.

601
01:09:19.410 –> 01:09:25.640
Anthony Codispoti: Okay, John, you said, your mission is to have fun and improve lives. How do you have fun away from work.

602
01:09:26.349 –> 01:09:29.089
John Hewitt: You know. When you love what you do.

603
01:09:29.459 –> 01:09:34.289
John Hewitt: it’s I’m never away from work. And so where you know, people say.

604
01:09:34.479 –> 01:09:38.299
John Hewitt: you know, do you go on vacation? I say I work every day, and I vacation every day.

605
01:09:38.419 –> 01:09:40.749
John Hewitt: so I travel 2 or 3 days a week

606
01:09:40.809 –> 01:10:05.809
John Hewitt: wherever I go. If I go to San Diego or Chicago or Jacksonville, Florida, anywhere I go in the country. There’s people that either are interested in joining me, or have already. And they their existing franchisees. You know I was in Toledo the other day, and and my franchisee there from liberty, had just won a franchisee of the year award with Liberty Tax

607
01:10:05.889 –> 01:10:14.979
John Hewitt: and where I left 5 or 6 years ago, and he’s still Gung ho! And Liberty tax, and we went out to dinner, we went out with prospect.

608
01:10:15.069 –> 01:10:17.799
John Hewitt: So yeah, when I was a kid, I thought

609
01:10:18.529 –> 01:10:33.389
John Hewitt: I was cocky, because I think the difference between confidence and cocky is confidence. You’ve already done it. And I was I was cocky, and I’m gonna be a millionaire, and I’ll just retire. And I realize that’s crazy. What would I do?

610
01:10:33.479 –> 01:10:36.239
John Hewitt: I love, I love playing bridge.

611
01:10:36.379 –> 01:10:42.279
John Hewitt: I’m a lightmaster bridge player. I love playing chess. I love horses, horse racing.

612
01:10:42.299 –> 01:10:48.909
John Hewitt: but nothing is as much fun as every day I get to change people’s lives.

613
01:10:49.109 –> 01:10:55.309
John Hewitt: There’s you know, I saw. I saw Denzel Washington in Facebook. It’s totally surprising

614
01:10:55.439 –> 01:11:07.009
John Hewitt: comment. He said. This is about 6 weeks ago, he said. The most selfish people are those that are are changing people’s lives and improving lives. I said one.

615
01:11:07.189 –> 01:11:12.199
John Hewitt: what are you talking about, because those are the. And, he said, because they’re the happiest people.

616
01:11:12.339 –> 01:11:19.599
John Hewitt: because there’s nothing more rewarding than changing people’s lives, improving lives. There’s in my whole life there’s nothing more rewarding.

617
01:11:19.639 –> 01:11:24.919
John Hewitt: Been thinking of all the tens of thousands of lives. I’ve changed 1,000 millionaires already.

618
01:11:26.210 –> 01:11:36.660
Anthony Codispoti: John, I just have one more question for you. But before I ask it, I wanna do a few things first, if you like. Today’s content. And of course you did because you listened all the way to the end. Then hit, subscribe, like or share

619
01:11:36.760 –> 01:11:38.759
Anthony Codispoti: on your favorite podcast app.

620
01:11:38.830 –> 01:11:47.459
Anthony Codispoti: I also want to point people to your website, Loyaltybrandscom. And am I correct in understanding that you’re giving up free copies of your book?

621
01:11:48.010 –> 01:11:53.270
John Hewitt: Anyone that reaches out to me, john@loyaltybrands.com. I’m sending them up free book.

622
01:11:53.630 –> 01:11:56.199
Anthony Codispoti: There you go. Okay. Last question, John.

623
01:11:56.290 –> 01:12:01.590
Anthony Codispoti: what are the biggest changes that you see coming to your collection of brands here in the next 5 years?

624
01:12:03.210 –> 01:12:06.780
John Hewitt: I think that because of my age, because I’m

625
01:12:06.800 –> 01:12:09.159
John Hewitt: in next month I’ll be 75.

626
01:12:09.480 –> 01:12:16.470
John Hewitt: But it it seems I’m never that. They’re never gonna be able to stop me, they without killing me and

627
01:12:16.848 –> 01:12:23.250
John Hewitt: I’m so I’m always going to be in business. But it seems to me having 8 or 9 brands is too many.

628
01:12:23.320 –> 01:12:27.520
John Hewitt: So I think I’ll be down to. We’ll sell off those brands

629
01:12:27.630 –> 01:12:31.570
John Hewitt: and focus on one or 2 industries.

630
01:12:32.780 –> 01:12:45.820
Anthony Codispoti: You know, I’m gonna go back on that. I said. That was one last question, but it occurred to me, John, your stories been really well told. You’ve done lots of interviews over the years, been asked lots of questions. What’s the question that you wish people asked you that they don’t.

631
01:12:46.890 –> 01:12:54.889
John Hewitt: You know I don’t. I I don’t do what is so. I I never think about that, you know. I think it’s a waste of time to do what it

632
01:12:55.110 –> 01:13:00.019
John Hewitt: so so I never I never say. Well, what if they had asked me that? So it never occurs to me.

633
01:13:00.640 –> 01:13:06.120
Anthony Codispoti: Fair enough. I appreciate that. Well, John, thanks for sharing your story with us today. I really appreciate your time.

634
01:13:06.640 –> 01:13:07.980
John Hewitt: Anthony was my pleasure.

635
01:13:08.480 –> 01:13:13.689
Anthony Codispoti: That’s our wrap on another episode of the inspired stories. Podcast thanks for learning. With us today.