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Fri, Oct 26 2018, 11:34 AM
After Exit, Liberty Tax Founder Plans Launch No. 3
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October 26 is a red-letter date for John Hewitt, the founder of Liberty Tax Service who exited in August following a year-long battle for control over his company after the board fired him as CEO in September 2017. On that date in 1996, he said, he sat with his business partners to plan the launch of Liberty Tax, his second tax-prep brand, after his exit from Jackson Hewitt, his first tax-prep brand that he founded in 1982 and exited after a fight with the board. And “on October 26, 2018,” (today), “we will sit, me, Martha and Jack, and write down what we’ll do differently” when launching their new company, Loyalty Brands, Hewitt told Franchise Times in his first interview with a reporter to discuss the tumultuous events of the past 18 months. “Civil war,” is how Hewitt described the fight with his board this time around. “It was the worst battle ever.”

   Those business partners he mentioned are Martha O’Gorman, chief marketing officer at Liberty Tax until she was let go a couple of weeks ago, and Jack Seal, a Liberty Tax operator and area developer. The new company will include a business brokerage called First Choice, a barter brand, a high-end bookkeeping, accounting and tax brand and—wait for it—a retail tax preparation brand, this time aimed at Spanish-speaking customers. That last one will have to wait until March 2019, because that’s when his non-compete expires from his time as CEO at Liberty Tax. “I founded two of the top 200 in the industry, so I can do it again,” he says, referring to Jackson Hewitt (No. 135 on the Franchise Times Top 200+) and Liberty Tax (No. 178). Hewitt started his career at H&R Block, by far the industry’s leader and No. 46 on the ranking.

   In a wide-ranging interview in Virginia Beach earlier this week, Hewitt discussed for the first time with a reporter the allegations leveled against him last year over sexual misconduct and financial self-dealing, which led to his firing. He downplayed the claims and described the “evil venture capitalists” whom he said turned half the company against him when financial performance began to decline at Liberty. With Hewitt at the helm, Liberty Tax grew from zero to 4,000 units before systemwide sales plunged 12 percent and 480 offices closed last fiscal year. On August 1, 2018, Vintage Capital Management purchased 2.33 million shares or 16.7 percent of Liberty Tax stock, including all of John Hewitt’s holdings, for $20.58 million, and Vintage Capital’s Andrew Laurence became chairman of the board. Hewitt had retained his chairman title after his firing, and because he controlled the Class C shares was able to appoint his own board members and choose a new CEO, Nicole Ossenfort. All will be covered in an upcoming article in Franchise Times, including an interview with Ossenfort, named to the post February 19, 2018, and retaining her position after the change in control. “It’s a new day. We’re focused on here and now and the future,” she said in an interview Monday.

BY BETH EWEN

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