221: Have Fun and Improve Lives with John Hewitt

05
Jul

John Hewitt, CEO of Loyalty Brands, is driven by a deep commitment to changing lives through entrepreneurship, fueled by his passion for helping others and belief in the power of business to create opportunities.

We learn about John’s journey from developing the first tax software with his father to building billion-dollar companies like Jackson Hewitt Tax Service and Liberty Tax. 

John explains his “Kill CEO Disease” framework, which consists of three steps: Engage, Listen, and Improve. 

—

Listen to the podcast here

 

Have Fun and Improve Lives with John Hewitt

Good day, dear listeners, Steve Preda here with the Management Blueprint Podcast. And my guest today is John Hewitt, the CEO of Loyalty Brands and the serial entrepreneur in the Tax & Accounting, Pets, and Marketing Industries. John, welcome to the show.

My pleasure. Thanks for having me.

Well, I’m excited to have you. You’re a very seasoned entrepreneur and you started a billion dollar companies. And I’m really curious, why does one become a serial entrepreneur in the first place?

Well, simplistically, you become a serial entrepreneur if two things. Number one is if you’re an entrepreneur at heart. Secondly, then you sell your first business, then you go on to the second business. So, the reason I’m a serial entrepreneur is I saw my first entrepreneurial start and actually most people think of my start at Jackson Hewitt but actually when I built Jackson Hewitt Tax Service, which it became a billion dollar company, but actually I started in 1981 when my dad and I developed the first tax software for a Apple computer. And when we couldn’t sell it, we couldn’t find anyone to buy it. Then we had to look for our second company and we found a company here in Virginia Beach called Mel Jackson Tax Service. We bought six offices from his widow and we grew it to, today it’s 6,000 offices, 23rd largest retail franchise chain in the country. And along the way we sold it. And so now I had to start, now I’m beginning to be a serial entrepreneur because now I started Liberty Tax. And again, I built Liberty Tax to be a half a billion dollar company with 4,000 locations and sold that. Many people my age would retire and relax, and I think most people would. But to me, that seems ridiculous.

I'm at the pinnacle of my knowledge and experience and wisdom. And my goal has always been to help other people, but through business, through entrepreneurship, I'm able to help thousands and thousands of people. Share on X

I brought in 5,200 franchises. So with me, it’s like an obsession that when I, you know, when I was a kid, when I was in high school, I was cocky and I thought, you know, I’ll just make a few million dollars and retire. Then along the way, I said, well, that’s silly. What would I do? I’m a life master, bridge player, and a master chess player and I play, but those aren’t as much fun as what I do every day and that’s pay it forward and changing people’s lives. I’ve helped develop a thousand millionaires and my 5,200 franchises had over a hundred thousand employees. The joy is in the journey. And if you’re an entrepreneurial spirit, then you’re a serial entrepreneur, as long as you have more than one company.

Yeah. Love it. The joy is in the journey. That’s a great alliteration as well. So what does it take for a franchisee to be successful? I was always wondering about this because in my mind, a franchisee starts with an advantage and a disadvantage. So, the advantage is that they got a ready-made system that they just have to execute on. The disadvantage is they’re gonna lose three, four, five, 6% of their net profit that they can hand over to the franchisor. So how does that work out and what is the secret and how do you actually scale a franchise business if it’s even possible?

Acquiring a franchise is cheaper than starting it from scratch and even ongoing. And it’s hard to understand because it looks like you’re sharing your profits with another organization. But actually, because of things like this, the customers come in because they’ve heard of you, because they’ve used services of one of your other sites around the country. For example, when I was at H&R Block and today, one out of every seven customers comes in just because they were at H&R Block somewhere else in the country. And so if I live in Virginia Beach and I move to Washington, D.C. or to Los Angeles or to Miami, and I was happy using H&R Block, then I’d find another H&R Block. Because we’re a national organization, because you’re a chain, you get more credibility. And so actually you charge more. And so even those two things make up for the percentage you’re paying. You make more money because of the referrals, of the fact that people are just coming to you. You get extra employees and so forth. So, if you have a high quality franchise, if you’re a McDonald’s, if you’re a Dairy Queen, if you were a Wendy’s, you’re going to get your money’s worth just in the name brand. And because people don’t come to McDonald’s because they have the best hamburger in the world. And my 10-year-old grandson could go to the grocery store and get some hamburger buns and some hamburger and some condiments and make a higher quality hamburger than McDonald’s at a cheaper price. But they’re going to McDonald’s, but McDonald’s has a 25% market share. They’re a Fortune 500 company. They sell billions and billions of hamburgers, and that the percentage you pay is well worth it. And that’s why their franchisees pay to join them, pay millions of dollars, because it’s worthwhile. It’s better than starting Steve’s hamburger.

Yeah, it’s the brand. The brand is the hardest piece of the puzzle and the hardest to create.

Exactly. And that’s part of the system.

If you follow someone’s brand, you’re going to get a big leg up in the company.

Now when you ask the question, what does it take? It’s surprisingly simple. It’s my job is, and yet it’s impossible, it’s simple yet impossible to find the perfect franchise because my job as a franchisor is to give you the best system of business in my industry. I’ve been doing that for 55 years. How many people now have been in the same industry for, I just completed my 55th taxi. So how many people have done the same thing for 55 years? And then I’ve done it with the top four firms. I did 12 years with H&R Block. I did 15 years with Jackson Hewitt. I did 20 years with Liberty. And now I’ve done five years with ATAX. In all of those times, I was always the fastest growing. So there’s a coincidence there. If when I was at H&R Block, you’re the fastest growing. And when I’m at Jackson Hewitt, they were fastest growing. When I was at Liberty, they were fastest growing. And now with ATAX, we’re fastest growing. There’s a coincidence there. So I’ve done my job. I’ve created the best system. I’ve created the unique top, and it’s objective, not subjective. It’s not we offer better service, because if you call the CEO of H&R Block, he’d say, instead of, who offers the best service? He’d say, H&R Block. You call the CEO of Liberty Tax, who offers the best service? Liberty Tax. That’s not the key. There’s objective things that we do better that I could talk about if needed. So your job, Steve, if you become my franchise, your job, it doesn’t matter how smart you are. It doesn’t matter how educated you are. It doesn’t matter how experienced you are. What matters is I give you a recipe, I give you a formula, I give you a system. Share on X

Your job is to implement that system in your area. So that’s your job. Now, you would think with 55 years of experience, I don’t know, I would guess, Steve, that you’ve never been in the income tax industry. Half of the people that join us have never been in the industry for 55 minutes. And yet, out of the 5,200 people I brought into my franchise, not one is listening 100%, zero. It may be difficult to understand that, conceptualize that, but if you have children, you understand it, right? If you have a pet, if you have a dog or a cat, you understand it. People can’t follow people. No one can follow systems. No one can do what they’re supposed to do. The winners, the successful, listen 98 or 99%. They’re able to put aside. Sometimes you’re gonna think you know better, and the winners, 98 or 99%, put aside what they believe and do it our way. But the losers, I’ve had a thousand millionaires and I’ve had a thousand people go out of business. The ones that go out of business listen less than 90%. If I’ve been doing this 55 years, and I said that during these seven days, between the last seven days of April, instead of being open at 9 a.m. in the morning, change your hours to 7 a.m. because it’s so busy you’ll improve your business. And it’s proven. We have offices that do it and don’t do it. The offices that do it do 10% better than the offices that don’t do it. And so it’s absolutely proven across the country, across the United States, across Canada, and yet only half of the franchisees expand their hours. That simple little thing, that’s a differentiator. That’s better than our competitor. I love driving by an H&R Block, especially in cold weather, and seeing customers at quarter to nine standing outside, waiting until the office opens at 9 and inside the lights are on. The tax preparers are sitting there working away on their computer, but they’re like a bank. They don’t open until 9 a.m. Well, what do you think our franchisees do? They’re hungry. They outwork, they out-hustle, and they out-perform the company employee over at H&R Block. So it’s a simple differentiator that gives a consumer advantage, customer advantage, is just expand your office. So long story, but it comes down to one thing, how much you’re going to listen.

Yeah, love it. Okay, so that’s a great segue. And actually, I want to talk to you more about the competition as well, because I sense even in this discussion that you’re a hyper-competitive individual and you’ve written a book about it. I guess I should have mentioned it in the introduction that you’re the author of iCompete, but we’ll get to that. So the segue here is listening and you talk about a concept, the CEO disease, and you have a three-step framework to avoid the CEO disease. So tell us what the CEO disease is and then what are your three steps to avoid it?

Well, I invented this. I think I have about 30 novel philosophies. And I invented the CEO disease phrase from watching. I watched two things. Tom Bloch, the CEO of H&R Block, the son of Henry Bloch, the founder. H&R Block was founded by Henry and Richard Bloch. That’s where the H&R came in. Richard left the business quickly. And so it was run by Henry and then it was taken over by his son Tom Bloch and he left in 1995, April 9th of 1995. And subsequently, in those 30 years, they’ve had a dozen CEOs. So they last an average of two and a half years. And then after I left Jackson Hewitt in 1997 season, that’s been 27 years, they’ve also had 12 CEOs. And I just left Liberty Tax five years ago, and they’ve had five CEOs. So I watched them come in. And to me, it’s unbelievable. And now that that our new company, Loyalty Brands, we’ve helped over 30 different brands. So I see this everywhere, that somehow, someway, and I don’t know what happens. But when someone becomes CEO, all of a sudden they act like they know everything. Now, out of all those CEOs I mentioned in the tax industry, out of those 29 CEOs, only two of them knew anything about the taxes, but they come in and they make changes. And in fact, one CEO said to me the dumbest thing, he’s probably deceased, but 1998, I met with the CEO of H&R Block. And he said, the first time and only time I met with this particular CEO, I met with half of them, the dozen that have been, including Tom Bloch, and Henry Bloch. But I met with him and he said, John, my goal before I leave H&R Block is to find something to do with these offices the rest of the year, because they’re sitting vacant for eight or nine months, and we’re only busy for three months. So it’s obvious we have all this office space. So I said to myself, that’s the dumbest thing I’ve ever heard. And because he had CEO disease, he had come from the airline industry, never been in a tax office in his life. And he came from the airline industry. His last 15 years were with US Air. But now, why is that a dumb thing? It doesn’t sound like it sounds like a smart thing, but the reason it’s dumb, Steve, is that do you think you’re the first guy that ever thought of this? Do you think that’s like John Hewitt and Tom Bloch and hundreds of thousands of taxpayers haven’t said, well, there must be something we could do the rest of the year with this empty office. Do you think this is a unique, great idea that never occurred to us? And then, but way worse, right? Way worse. And is that, do you think we haven’t tried everything we could think of? We’ve tried everything. At Liberty Tax, I had a franchise in Alberta. The husband had a pet store and the wife had a Liberty store, and they’re both in the same site. So you walked in and over there on the other side, there’s dogs barking and there’s all kinds of animals and pet food and so forth. On this side, there’s a tax office. When I started, one of my first offices that I supported as a franchise, they had a towel and bath store, so at H&R Block back 50 years ago. So you would have to walk through the towel and bath to buy and to get to H&R Block in the back. So we’ve tried everything. And so the CEO comes in and he thinks his ideas are novel, right? And without having the experience of knowing that it’s tried and failed. And so that’s CEO disease to me. When I join another industry, I sit down with the franchisees and listen. I pick out the best franchisees and say, how can we improve? Then we decide how we’re going to improve, what we’re going to do now and what we’re going to do sometime in the future. And I don’t have the audacity or the ego or the crazy. It’s just crazy to have CEO disease, to think that I know all the answers, that I’m gonna come into your industry and teach you, I’m gonna come in with these novel, fresh ideas that no one in the industry has ever thought of. If you get an experienced group of 6 or 10 or 12 franchisees that have been in this business for combined hundreds of years, and you don’t listen to them, that’s CEO disease. So it starts with listening to your franchisees and then modifying that. First of all, you have to listen and then you have to involve them and participate with them in improving your system.

My goal is always to have the best system. To have the best system, it has to be evolving, it has to be improving. Share on X

There isn’t any system today that was effective five years ago and gonna be affected 10 years in the future. You have to have a commitment to improvement. But it’s amazing to me somehow in all of these cases and finally for the first time ever, one of the CEOs, I was chairman of the board. I brought in the CEO and it was like magic. She had been my franchisee for 15 years. She listened to me. She was a superstar. The minute that we gave her the title CEO, she got the disease. And then all of a sudden, she knew better than I did. It’s amazing. It’s like joke.

Yeah, it’s really interesting. People feel like they have to demonstrate that they have the answers as opposed to continue to listen. I guess it’s probably afflicting more the higher-hand CEOs than the owner operators, because the owners don’t have anything to prove to anyone, because they are the business, so they can afford to be very humble, perhaps, or they feel like they are not, I don’t know. But that’s a fascinating thing.

Well, speaking of being humble, God humbles me every day. And when I get too big for my britches, and I think I know too much, God is very humbling and make sure that we should be paying attention. Each of those people have failed in their efforts. And, for example, the CEO, he brought in accounting, so they became the fifth largest accounting in the country. They bought in the mortgage business. They were top five mortgage business in the country. They bought a financial services firm like a Charles Schwab. Only discount. Fail, fail, fail. It took them a while to fail, but they all failed. All of those ideas failed. It took 10 to 20 years, but they all failed.

So, John, you mentioned the pet store next to the H&R block. So you actually happen to have, you are invested in the pet business as well. So is this a combination that actually works to combine a tax and accounting prep, real estate with a pet store, which is all year round or it was just an example?

That was an example. And to make it simple that happened started in about 2004. And not only does it not exist anymore, that store, it was in a mall. I’ve never seen it since. No, that’s not a great combination. But yes, if as a business, one of our new franchises, which is working incredibly well, I just love the pet industry, is mobile pet grooming. Our new Zoom and Grooming pet, our vehicles,  is fastest growing out of our eight companies. Love the industry, love pets. It’s amazing how much people spend on their pets.

Yeah, and it sounds like it’s a low entry, low cost entry for a franchisee, so it’s probably an easy one to get into as well. So before we wrap up, I’d like to ask you about your book, iCompete. So I wonder why did you decide to write this book and what is the principal message? I understand there are 30 systems that you discussed there, but what is your principal message? What do you want to tell the world with this book?

Yeah, our mission statement of Loyalty Brands, our company, is having fun, improving lives. And so I wrote the book to improve lives. I think I’ve just been so blessed in my career. I mean, blessing after blessing after blessing that it’s too much is given, much is required. And so I’m here to give back. And the book is an effort to give back. And I think one unique thing about my book that surprised me. When I was writing it, it didn’t occur to me, but many, many people have come to me after reading it and said, you know, the thing I liked about the book was, you admit big mistakes, you admit mistake. And other books I read, and they talk about their victories. As I talk about my victories, I talk about victories over caused by my mistakes that I needed to rise, sometimes rise from the ashes of my mistakes. So it’s, yeah, the purpose is simply to improve on it.

Love it. It’s interesting you share this insight of the mistakes leading to victories. I also wrote a book recently, which is behind me. And one of the things that I discovered was that the most successful companies, they faced certain constraints, which looked like impossible to overcome type constraints. And they were forced by the circumstances to figure something out, to survive. And that led to a breakthrough which became a unique ability for them because no one else had to go through what they went through and therefore no one else developed the skills they had to develop. But then those skills became really hard to copy for others. And it’s kind of a secret of a successful business. So, the bigger the failure, if you can survive it, the bigger the payoff in the end.

Bigger the learning.

Yeah, which leads to the breakthrough and the payoff. One final question I want to ask you is, why are you excited to be an entrepreneur in America today?

Life’s short, and it’s my joy, it’s my fun. And if I wasn’t changing lives, it wouldn’t be fun, right? I don’t do it for money. I mean, if you do wild business, you’re always going to have money. But I do it to change people’s lives. And I think I mentioned earlier that I just thought I’d get rich and retire. But there’s no joy in that. I’m not a guy that can sit on a beach, ride a golf cart all day, or go out fishing and enjoy it. I enjoy changing people’s lives. And so it’s my joy. It’s that simple. And I don’t know how to change. I’ve sat in lots of churches and listened to preachers. And they talk about preaching and changing people’s lives through talking. But that’s not my skill set. My skill set is mentoring, guiding people through business success. So I’m just using my skill set to the nth degree. That drives me. That every day I wake up happy, every day I go to bed, go to sleep happy, and all the way in between I’m aggravated. Because as a CEO of businesses, in my case, I have thousands of children. I think of them as children, whether they’re employees or franchisees. I have thousands of people that are rebelling and arguing and fighting and threatened to sue me. I mean, I have all kinds of issues, but it starts out with being grateful and then understanding that the way to appreciate is to give back.

Love it. That’s a great final words. So, if people listen to this, they’d like to read your book, iCompete, that they find is available on Amazon, where they find the book. And how can they reach out to you if they want to ask you a question or want to connect with you or your businesses?

Yeah, it’s the best seller on Amazon. But if you just send me an email to john.loyaltybrands.com, I’ll send you a book for free.

Awesome. Yeah, well, you did send me a copy as well. So thank you. So, you know, have fun and improve lives. That’s a great mantra to have. It’s a great life philosophy. And you subscribe to the Bob Dylan quote as well of the definition of success. Wake up in the morning, go to bed at night and do what you love to do in between. So awesome. Thank you for coming to the show. And for those of you listening, don’t miss any episodes because as you can see, we have really cool entrepreneurs share their wisdom here. So please be sure to subscribe and stay tuned for future episodes. Thanks, John, for joining us today.

Thank you, Steve. Have a wonderful day.

 

Important Links:

This entry was posted in . Bookmark the permalink.
kristine

Discover your WHy

Discover Your “Why”

Articulate the benefit to society your company can spire to deliver. Let your people join an adventure bigger than themselves.