He Likes an Analogy: Competitive Juices Fuel This Multi-Brand Operator

Ken Leese, a New Jersey-born accountant who played on the tennis team at Old Dominion University, sees his career as a multi-unit franchisee and area developer in terms of sports analogies.

"When I was doing due diligence before buying my first Jackson Hewitt unit, I liked the similarities with playing college tennis," he says. "In both cases, you're playing on a team and you have to win the match for the sake of a bigger cause--the team--but ultimately, you're on your own out on the court. The franchise brand provides support, but ultimately I would be an independent business owner making my own mistakes and successes. I liked that."

Out of college, he went to work as an accountant at a small firm, and quickly learned that the majority of his business was preparing income tax returns. That wasn't satisfying enough.

At the time, H&R Block was the top tax prep business, but wasn't franchising. "I read about Jackson Hewitt in Entrepreneur and realized they were headquartered in Virginia Beach, which was also where Old Dominion was. That spoke to me," Leese says. In 1994, he opened his first Jackson Hewitt unit in New Jersey. By 2003, he had more than 80 units in 6 states.

In 2002, however, he'd become a father of twins and wanted to spend more time at home in Moorestown, N.J., raising his children. He began to slowly sell off his Jackson Hewitt units and today has 40 in New Jersey, Pennsylvania, and Delaware.

In building his Jackson Hewitt career, Leese has combined his competitive spirit and love of numbers with his family roots in franchising. "When I was growing up, my uncle got into franchising with an Athlete's Foot store. During summers and school holidays in high school, I worked there, and so I understood some of the basic principles behind it," he says. "That's where my interest in franchising and my understanding of the power of franchising began."

The tax business has changed a lot since he entered it 16 years ago, he says. "Obviously, there's been a paradigm shift since the Internet enabled people to go online and file their own taxes. Over the years through the little bumps in the economy, we've been able to work through things. But we really got hurt in this big one. And with higher unemployment, there are fewer W-2s, which means fewer tax returns." The 2009 tax season wasn't a great one. He hopes this year will be better.

In 2008, at Franchise Update's Multi-Unit Franchising Conference, Leese met the owners of Play N Trade, a video games concept. "My kids were almost six then, and we'd gotten them a Wii and they enjoyed it. I enjoyed playing it with them, too, so when I met these guys at the conference, I was intrigued," he says. "The stereotypical gamer was a sort of cultish figure, but now with the newer games, I realized it has become a more family-oriented activity."

In investigating further, he saw striking similarities between Play N Trade and Jackson Hewitt at the time he joined. "Both were young companies that had just started franchising. Both had only one major competitor , and both were second players in the market. It seemed to call my name," he says.

He opened his first Play N Trade in Marlton, N.J., in November 2009, just before Black Friday, and will open his second and third this summer. "I bought this three-pack and also the area development rights for Southern New Jersey, a small part of Pennsylvania, all of Delaware, and parts of Maryland," he says. "The store has been well-received and we project huge growth."

Although his two brands are completely different, they work well together, and Leese's competitive juices continue to fuel his businesses. "That's what makes me want to get up every morning and see how much better I can do than the day before."

QUESTIONS

Name: Ken Leese
Title: President and CEO
Company: The Tax Authority Inc. and The Video Game Authority LLC
No. of units: 40 Jackson Hewitt Tax Service; 1 Play N Trade (and 2 under construction)

PERSONAL

Age: 43
Family: Eight-year-old twins Peter and Grace
Years in current position: 16
Years in franchising: 16

Key accomplishments: Being placed in the Jackson Hewitt Hall of Fame.
Biggest mistake: Not diversifying with multiple brands sooner.
Smartest mistake: Getting into the business before I was sure I was ready.
How do you typically spend a day? I review reports, discuss how things are going with department heads, and handle administrative chores.

Work week: Whatever is needed.
Favorite fun activities: Spending time with my children, fishing, summer concerts. Exercise/workout: Tennis Favorite stuff/tech toys: BlackBerry

What are you reading? Everything I can find that is related to social networking.
Do you have a favorite quote or advice you give? Love what you do.
Best advice you ever got: Try to pay as you go as much as possible.
Formative influences/events: My uncles owned Athlete's Foot franchises, and I worked around them as a young person.
How do you balance life and work? I just try to fit the business around my life.

MANAGEMENT

Business philosophy: Diversify and grow smart.
Would you say you are in the franchising, real estate, or customer service business? All three.
What gets you out of bed in the morning? The next challenge, whatever it may be.
What's your passion in business? New development and new units.

Management method or style: I believe in centralized management in administration and de-centralized management in operations.
Greatest challenge: Dealing with a new work force every year at Jackson Hewitt.
How close are you to operations? Not as close as I am to the administrative end of the business.

Personality: Easygoing
How do others describe you? Easygoing
How do you hire and fire? I take my time hiring, but fire quickly.
How do you train and retain? We use a career path, and we're constantly training.
How do you deal with problem employees? I cut my losses as soon as possible.

BOTTOM LINE

Annual revenue: $6 million
2010 goals: $8 million (adding additional Play N Trade units)
Growth meter: How do you measure growth? By profitability.
Vision meter: Where do you want to be in 5 years? 10 years? I'd just like to continue to add brands and units.

How has the most recent economic cycle affected you, your employees, your customers? High unemployment affects customers and it means fewer tax returns for us, so we've certainly been affected at Jackson Hewitt.
Are you experiencing economic growth/recovery in your market? Not yet.

What did you change/do differently during the recent tough economic times that you plan to continue doing into the future? We've been forced to cut costs and change our infrastructure.
How do you forecast for your business during trying times? Can you even forecast at all? We study our industry and make the most realistic forecast that we can.

Where do you find capital for expansion? Cash flow.
Is capital getting easier to access? Not easier--tougher, because of the economy. Have you used private equity, local banks, national banks, other institutions? Yes, we've used them for a line of credit.
What kind of exit strategy do you have in place for your business? I'm evaluating all my options.

How are you handling rising employee costs (payroll, healthcare, etc.)? After discussions with our employees, we're cutting corners where we can.
How do you reward/recognize top-performing employees? We offer them gift cards during tax season, tickets to concerts and sporting events, and we have a year-end banquet.