Serving a Focused Viewers Led to Massive Success for this Franchisor
December 8, 2020 4 min read
This story appears in the December 2020 issue of Entrepreneur. Subscribe to “
Rafael Alvarez knows how to serve his community. Born in the Dominican Republic in 1986, Alvarez lived in New York with his parents and set about opening a tax preparation business for the Latino market – people like his own mother and father. It was a shrewd instinct. Today there are more than four million Spanish-owned companies operating in the US, and Alvarez ‘franchise company ATAX has grown into a premier service provider to the community, providing assistance with tax preparation, bookkeeping, bookkeeping, notary services and immigration referrals of more than 60 locations across the country. But that scale and growth – and the trust of a demanding community – was not easy. As Alvarez is now working to expand the geographic reach of his brand and grow to 400 locations by the end of 2021, the CEO ensures he can maintain trust and quality, and forms smart partnerships to support his mission.
Tell me how you started in 1986.
I only had $ 200. So I asked my dad for $ 20,000 to start the business and he said, “Are you crazy?” But my mom gave me $ 20 and said, “I think you can do it.” This support meant more than the real money – but I still needed it! I asked 35 friends to loan me $ 1,000 each, and 18 did. I opened my first office in the Washington Heights neighborhood, filed about 350 tax returns, and paid them all back.
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How did you win customers back then?
I told my earliest customers, “If you refer 50 new customers to me, I’ll give you a brand new Dell computer.” People thought I was crazy, but it was the early 90s and almost no one had a computer. So that promotion actually brought in a lot of people.
You started franchising in 2007. Why?
I looked at the industry and H&R Block and Jackson Hewitt had so much business and so many locations and I knew I could do it. I also knew I had a niche: none of these people are Latino or serve and focus on the Hispanic or Latin American market. I had to use this potential.
Photo credit: Courtesy of ATAX
How did you start to recruit franchisees?
I hired one of the best lawyers in New York to help me out and he said, “I know you want to get as many people as possible into this system, but don’t do that. Find 10 people ready to follow you and your system and we will make sure they make money – and if they do, they will attract the next 100 franchisees. “But first, since I chose Latinos and franchising is not part of the Latino culture, it took me a while to figure out how to really educate people about the system.
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Fast forward and you have 60+ locations. Last year you partnered with the Loyalty Brands franchise company. What does this mean for growth?
They will really be able to help us scale beyond the east coast. When John Hewitt, CEO of Loyalty, approached me, he said the only segment growing in the tax market is the Latino market. He wants to open thousands of ATAX locations. So far we’ve sold more than 730 areas, including some in Los Angeles, and we now have locations in Vegas, Houston, Denver – it really happens.
What support do you offer your franchisees?
We will of course help them with any training and certification they need, and in the beginning we do a lot of manual work. We would like to review and review their work first before sending it to the IRS. That’s why we designed these systems so that we have access and control even when they’re sitting with a customer. Everything they do bears our name, so we all work to protect our brand.