The American Business Journal: ITS ITS ================================================================================ admin on 07 January, 2010 09:55:00 Young entrepreneur’s franchising company excels to top of the list There are many people who spend years af­ter college trying to find out what it is they want to do. But not Fez Ogbazion. At 19 years old, the Ethiopian-born sophomore college student at the University of Cincin­nati started his own business, then called In­stant Refund Tax Service in 1994. It was an “instant” hit. Over 600 people came back the following year, still thinking his business was H&R Block. About six years later, there were 26 locations across the state. In 1999, Ogbazion sold Instant Refund Tax Service to Jackson Hewitt, the second largest tax company in the United States. He willingly signed a five-year “no compete” agreement and strategically used the capital to start all over again. In 2000, Ogbazion moved to Dayton, Ohio, with the profits from his business deal. He found­ed Instant Tax Service (ITS), which specializes in professional tax preparation, expedited refund and refund anticipation loans, and offers both in-person and online filing services. By 2003, there were 100 offices across several states. The pri­vately-held company began franchising in 2004. “We really went into hyper-growth mode at that point,” tells Ogbazion. Experience key to successful launch Only five years after the initial start-up date, Ogbazion saw the fruits of his labor come to harvest. But for the first while, however, it was steep learning curve. Luckily for Ogbazion, he is a quick learner. With 30 employees in his franchise department, about 20 locations were sold in the first year and 40 others were sold in the second year. Ogbazion attributes his success to his com­bined 10 years of experience prior to starting the franchising company. When the mortgage business plummeted three years ago, Ogbazion recruited several people in sales with the launch of its Area Development Program in 2007. “A lot of people who were in the mortgage business were able to transition into a new career where they could still stay in sales, and many already had experience as self-employed in­dependent brokers. The franchise opportunity was a perfect fit for them,” explains Ogbazion. Strategic program offers competitive edge Prior to the launch of the company’s Area De­velopment Program, the franchises were, in a sense, struggling. Now, the company’s Area Development Program, which basically means having the sales support to sell territories. Once there are 10 to 15 franchise owners, there is capital for shared costs, such as advertising, real estate and marketing. “For example, this is our first year in Boston. We’ll have 28 locations in our first year, which gives us a tremendous amount of advertising dollars for a two-month period,” ex­plains Ogbazion. This strategic approach is differ­ent than other tax service companies which may only have handful new locations with little mar­keting support services. “The Area Development strategy brings together a group of motivated entrepreneurs in one market, working together, is really what separates us and is why we have been successful,” tells Ogbazion. Industry leader makes the top list The successful tax preparation and loan financing company has received numerous accolades from industry watchers. With 450 franchisees in 1,211 locations in 34 states, ITS got rated as one of the top 500 fastest growing franchises in Ink Maga­zine last November. “We came in as the 93rd and I was a little disappointed, but it was the first time we had entered the survey,” he says. Last year, ITS made Entrepreneur Maga­zine’s lowest cost franchise in the United States. “What’s really neat about that is the costs to get into our franchise today is roughly what it cost me to open my first stores 17 years ago, in 1993. Our average franchisee is probably younger than your average entrepreneur because this is most likely their first business; it doesn’t demand a lot of capital up front,” explains Ogbazion. But what he enjoys most is being able empower-hungry entrepreneurs (who may not have lots of money), with the opportunity to start up a low-cost fran­chise business. And then, there’s the obvious bonus of only working up to three months of every year. Challenges One obvious challenge for the company is the continual challenges in getting capital, however. “It’s tough in our business because we have no assets. Goodwill and our customer-base is our asset,” explains Ogbazion. The challenge of having a lack of capital is what initiated him to explore how to help each franchise start up. But oddly enough, the tough economy has not had a negative impact on the company, rather a posi­tive one. There have been an increased number of people interested in transitioning their career goals. “For many of these people, who may have never considered working for themselves, they literally changed their thinking and become self-employed,” explains Ogbazion, adding the kiosk option is also an incentive for those with little financing. This year, ITS will have expanded to 37 states with over 1,200 franchises. Future The tax preparation company is a huge corporate sponsor for Toys for Tots, which will give away 200,000 toys in 2010 as part of a fundraising campaign. As for growth plans, the company anticipates another 150 to 200 new franchisees for the next five years, which makes ITS the larg­est company of its kind nationwide. “What really gets our team excited is growth, so our goal is to find new opportunities for franchisees and to give them the resources to build their business, their dreams,” he says. www.instanttaxservicefranchise.com