Serving a Targeted Audience Led to Big Success for this Franchisor

Rafael Alvarez spent three decades building a tax-preparation franchise trusted by the Latino community. Now he's preparing for rapid growth and national expansion.
Serving a Targeted Audience Led to Big Success for this Franchisor
Image credit: Courtesy of ATAX
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4 min read

This story appears in the December 2020 issue of Entrepreneur. Subscribe »

Rafael Alvarez knows how to serve his community. In 1986, Alvarez, who was born in the Dominican Republic, was living in New York with his parents and set out to start a tax-preparation business to serve the Latino market — folks like his own mom and dad. It was a smart instinct. Today, there are more than four million Hispanic-owned businesses in operation in the United States, and Alvarez’s franchise, ATAX, has become a leading service provider for the demographic, providing help with tax preparation, accounting, bookkeeping, notary services, and immigration referrals from more than 60 locations across the country. But that scale and growth — and the trust of a discerning community — didn’t come easy. As Alvarez is now working to expand his brand’s geographic reach and grow to 400 locations by the end of 2021, the CEO is making sure he’s able to maintain trust and quality, and he’s forming smart partnerships to support his mission.

Tell me about how you first got started in 1986. 

I only had $200. So I asked my dad for $20,000 to open the business, and he said, “Are you out of your mind?” But my mom gave me $20 and said, “I think you can do this.” That support meant more than the actual money — but I still needed it! I asked 35 friends to each lend me $1,000, and 18 did. I opened my first location in the Washington Heights neighborhood, did about 350 tax returns, and paid everybody back. 

Related: 3 Ways Your Small Business Can Pivot Toward Focusing More on Hispanic Consumers

How did you recruit customers in those days? 

I told my earliest clients, “If you refer 50 new clients 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 a lot of people in. 

You started franchising in 2007. Why? 

I was looking 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 those guys are Latinos or serving and focusing on the Hispanic or Latino market. I needed to capture that potential.

Image Credit: Courtesy of ATAX

How did you start recruiting franchisees? 

I hired one of the best attorneys in New York to help me, and he said, “I know you’ll want to bring as many people into this system as possible, but don’t do that. Go find 10 people willing to follow you and your system, and we’ll make sure they make money — and when they do, they’ll attract the next 100 franchisees.” But at first, since I was going after Latinos and franchising is not a part of the Latino culture, it took me a while to figure out how to really educate people on the system. 

Related: How to Find the Right Franchisees, According to D1 Training's COO

Fast-forward and you’ve got more than 60 locations, and last year you merged with the franchise company Loyalty Brands. What does that mean for growth?  

They’re really going to be able to help us scale beyond the East Coast. When Loyalty’s CEO, John Hewitt, approached me, he said the only segment growing within the tax market is the Latino market. He wants to open thousands of ATAX locations. So far we’ve sold more than 730 territories, including some in Los Angeles, and we have locations now in Vegas, Houston, Denver — it’s really happening. 

What kind of support do you provide to your franchisees? 

We help them with any training and certification they need, of course, and in the beginning we do a lot of hand-holding. We like to review and double-check their work at first before they send it off to the IRS, so we’ve built those systems to give us access and oversight, even while they’re sitting with a client. Everything they do has our name on it, so we all work to make sure we’re protecting our brand.

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