Don't Spend That Refund! Hold that Stock?

Well if you had your tax return prepared by THE LARGEST Jackson Hewitt Franchisee or one of his offices, you may want to hold on to that refund, because the IRS will be calling.

And if you own Jackson Hewitt stock, do you hold or do you sell?

Shares of Jackson Hewitt Tax Service Inc. plummeted Tuesday after the federal government sought to bar a major franchisee from preparing tax returns over allegations of fraud and more than $70 million in combined losses to the U.S. Treasury.

Read More  (Business Week)    |     Read Even More!  (MSNBC)

I wonder what one does when they get the BIG REFUND --- Spends It --- and then they IRS comes and says GIVE IT BACK?

This will be very interesting to watch in the coming months.  It could easily become a situation whereby a franchisee brings down the entire network...Franchisor and Franchisee.  If, as is alledged, the franchisee was promising LARGE REFUNDS in order to stir up more business, I wonder if he paid royalties on ALL of the business?  I wonder if corporate ever looked to see why 1 franchisee's sales and client refunds were so much higher than the norm?  It will be interesting and we all know that the IRS will spend $1,000 to collect $1 --- what do you think they'll do about $70 million?

The attached shows some extremely interesting financials on Jackson Hewitt.  It looks like the franchisor is making MONEY, and that franchisees are doing well, as well, in spite of 19.2% Royalties, Mktg & Adv. 

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

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Comments

Need To Cut Out Jackson Hewitt Franchisees

This is an example of a few franchisees with bad business practices messing up business for everyone else in the system. It is in the best interest of the system to find the guilty franchisees and cut them out for the health of the network. Scape goat needed.

Four civil lawsuits filed in Chicago, Atlanta, Detroit, and Raleigh allege that local franchisee's staff received kickbacks from customers in helping them file fraudulent tax returns. Jackson Hewitt's CEO, Michael Lister replied to the allegations that it will conduct an internal audit of the franchisee who is alleged to owe the Treasury Department millions.

"Jackson Hewitt takes allegations against our franchisees seriously," said Michael Lister, President, and CEO of Jackson Hewitt Tax Service Inc. "We have launched this internal review to investigate the specific allegations against one of our franchisees. We intend to identify all of the facts related to these allegations and address them appropriately. The review will also examine practices and procedures and make any recommendations that may be needed to ensure that customers continue to have the utmost confidence in all of our franchises." (See PR Newswire)

Who is liable? Jackson Hewitt!

What could Michael Lister say but what he did say! We notice that he didn't explain that this franchisee was an independent business man who may have broken the law and that Jackson Hewitt would have no liability because this business man was just renting the Brand Name and has been accused of indulging in practices that are forbidden by the Brand policies and the law.
It appears that Franchisors know that the American Public think that these franchised businesses are owned and controlled by the Corporate Brand and don't realize their are just individuals who are renting the brand name.
I'm sure the publicity will help Jackson Hewitt Brand Services in the long run because this is the way of things. I don't imagine they can terminate this franchise until the franchisee has been found guilty under due process of law.

Why do both franchisee and franchisor gain from blurred identity

If you took a survey and asked people who owned the McDonald's on the corner or the Quiznos, etc..up the street, at least 60% would think that the Corporate Brand was the owner. The average American does not not understand that the corporate brand store is owned by an individual business man or woman and that the corporate brand has no capital investment in the physical unit. f
When we were in business, I know that at lest 60% of the people thought we were actually a division of the Brand and owned by them, and we, who were wearing their uniforms, had no reason to enlighten them.