Franchise and Business Opportunities Articles

Roni Lynn Deutch talks in exclamation points about, well, lots of things -- from her adopted stomping grounds ("I fell in love with Northern California! I love Northern California!") to her love affair with America’s pastime ("I’m a baseball freak!") to the business on which she’s staked her name ("I’m not your typical geek tax attorney!") There’s only one response to the latter: She’s not kidding!

Midmrning television viewers across the country know Deutch as the "tax lady" whose in-your-face commercials generate buzz even among those who aren’t necessarily looking for a way to escape the clutches of the taxman.

Although she’s tasted success with her tax resolution legal practice, Deutch isn’t putting any periods on her aspirations. She is taking on a new franchise venture, Roni Deutch Tax Centers, with nothing less than market domination in mind.

"This is going to be huge!" promised Deutch, 43, who’s still as hard-driving as she was as a standout college softball player at the University of California, Berkeley. "I don’t want to have five stores. I want 1,000 stores! I want to be H&R Block-huge!" To pull it off, the tax lady is teaming up with a payday lender, a "strategic alliance" that will likely produce a polite shudder in some legal circles where such lenders are viewed as preying upon people who can least afford to borrow.

Deutch said the partnership makes good business sense because her clients fit much the same demographic as customers in the $45 billion payday lending segment. These companies tend to draw borrowers who hold their jobs for less than five years, earn $25,000 to $50,000 a year and typically rent their homes, according to the Consumer Federation of America, based in Washington, D.C. The median age is 32.

One key statistic that Deutch cites for the deal: Her clients have about a 50 percent chance of getting a tax refund.

"They literally take the check into the (payday lender’s) location," she said. "They want that money immediately."

For Deutch, the potential synergies outweigh the stigma attached to an industry where interest rates average 400 percent. She’s sold on her new partner, Money Mart, even though the company drew fire in April from San Francisco City Attorney Dennis J. Herrera.

In a lawsuit, he alleged that Money Mart, based in Victoria, British Columbia, employed an "illicit lending scheme that would make a loan shark blush" by marketing short-term installment loans at illegal triple-digit interest rates to low-income borrowers.

Money Mart representatives did not return calls requesting comment. In a payday loan, a customer provides the lender with a postdated check in exchange for cash. Deutch said she was surprised to hear of the allegations against her new partner. "I would be totally and completely shocked if they broke any laws," she said. "I’m shocked to hear about any allegations."

In any business alliance, attorneys must be mindful of the ethical obligations -- and consumer perceptions --but it’s particularly important here, said John Sims, a law professor who teaches professional responsibility at University of the Pacific’s McGeorge School of Law in Sacramento.

"These customers are vulnerable people ... so the standards are even more demanding," he said. "I’m sure (Deutch) will be quite conscious of that."

Deutch knows what it’s like to be in hot water with government regulators. In 2005, the New York City Department of Consumer Affairs officials targeted her for advertisements that claimed customers could "settle your back tax problem for only $20" and implored clients to "... resolve your back taxes without paying anything to the IRS."

Deutch paid $300,000 in fines and restitution last December to settle a 2005 lawsuit filed by the office alleging deceptive advertising.

Deutch stood by the commercials, saying she settled rather than engage in a protracted legal battle. "For 16 years, I’ve run the exact same commercial and have never had a problem," Deutch said. "My position was that New York was wrong, but my attorneys advised me to pay what I thought was a small amount of money to resolve it."

Deutch’s franchised tax centers would join a market that is as competitive as it is lucrative. Although brands such as H&R Block and Jackson Hewitt Tax Centers stand out to consumers, more than 90,000 firms vied last year for a piece of the massive $65 billion U.S. accounting and tax preparation market, according to Research and Markets, a firm based in Dublin, Ireland, that tracks U.S. and international market trends. Combine demand -- more than 44.2 million individual tax returns were prepared by tax professionals in 2007, according to the Internal Revenue Service -- and a no-more-Mr.-Nice-Guy IRS poised to ramp up its enforcement efforts to close the country’s $300 billion "tax gap," and Deutch may be entering the crowded field at the right time.

"There’s going to be an increased demand for that type of service. We’re seeing the IRS move from a period of kinder and gentler to one that’s more aggressive," said Greg McKinsey, chairman of the California Small Business Association and a small business tax consultant. "A lot of individuals are not bad actors, but they find out they owe," McKinsey continued. "They’re going to need someone to guide them through the process."

Deutch, who said her firm has saved clients millions of dollars over the years, wants to be that guide. Her TV-heavy advertising campaign -- she spent about $4 million on advertising last year, according to Nielsen Monitor-Plus -- and her irrepressible spirit helped her to build one of the country’s largest tax resolution law firms, Roni Lynn Deutch, a Professional Tax Corporation. She made a believer out of 50-year-old Kenneth Cushman, a roofer for nearly 30 years before striking out on his own as a handyman in 2003.

The Sacramento resident spends long days crawling on local rooftops to make a living. After becoming self-employed, the self-proclaimed "little guy" ended up owing $20,000 in back taxes to the IRS.

Six months ago, Cushman called Deutch’s North Highlands offices to try to find a way out of the hole. At $420 a month for five years, Deutch’s attorneys drafted an installment plan with payments reasonable enough to whittle down Cushman’s tax debt.

"They kept the IRS off my doorstep, put me in a payment plan," Cushman said by telephone from a tree-trimming job in Citrus Heights. "A lot of little guys get behind. The IRS got real stinky with me. They figure you’re poor, you can’t afford a lawyer, but once I got Roni, they backed the hell off of me. (Deutch) gave me a way out. They helped me find a way."

Deutch said she’s seen the toll taken on taxpayer customers subjected to sloppy tax work and said she wants to help.

"Taxpayers with tax troubles don’t sleep," Deutch quipped. "I want to make (taxes) less painful." The Fair Oaks resident plans to open 200 tax kiosks nationwide in two years inside outlets owned by Money Mart, she said. The nation’s second-largest payday lender, Money Mart operates more than 325 stores under that name or under the Loan Mart brand.

In as many as five years, Deutch predicted, she could have 1,000 outlets and franchisees nationwide. Right now, she’s embedded her kiosks in six Sacramento Money Mart locations. "We’re selling all across the U.S. The focus is on the right franchisee -- (whether) it’s Atlanta, Houston or Chicago," Deutch said.

Granite Bay contractor Gary Starbuck bought two new franchises for the Sacramento area, and he plans to open them in September and October.

"I love my business," he said. "It’s been very successful, but it’s kind of cyclical."

Starbuck first met Deutch about seven years ago and said he was struck by her work ethic. Deutch said Starbuck and other franchisees will be able to capitalize on her name recognition -- she claims one of every three Americans knows the name "Roni Deutch."

"We’ve got to fill the void. Why can you name only two tax preparation franchises, but 500 fast-food restaurants?" she said. "The greatest way to build a business is to franchise. I’m a motivated, exciting, driven woman, but I couldn’t achieve this without a franchise concept."

Deutch is pushing the business as recession-proof since taxes are one of the few certainties in life. She attributes her driven, competitive nature to growing up surrounded by five ballplaying brothers in Granada Hills. "I was toward the end of the litter. They’d grab you by the hair, stick a mitt on you and drill balls at you and you either fielded them or you got injured," she said with a laugh. "It was a 100 percent competitive, athletic environment. And, you know what? I was the best athlete in my family."

Russell Deutch, one of the three Deutch brothers who work for their sister’s firm, heads the franchising effort. He recalled his sister as a girl who loved dirt bikes and baseball and wasn’t afraid of a fight. "Roni was quite a tomboy. She was a ‘Peppermint Patty,’ tough, hit homers," said the 40-year-old Russell Deutch. "She was well-liked, but she was a little bit of a terror, playing baseball with the boys. She got into some scuffles."

Today, Deutch’s second-floor office on Watt Avenue in North Highlands doubles as a baseball playbox -- complete with an overstuffed chair shaped like a leather glove that would have fit Paul Bunyan and mini-shrines to everything Giants and future Hall of Fame pitcher Greg Maddux.

The memorabilia also capture a certain softball standout in the middle of a typical all-out play at second base. The framed photograph, hanging on the wall behind the attorney’s desk, says as much about Deutch in her days at Cal as it does about her professional life, said Cal softball coach Diane Ninemire.

"She was always an intense player at Cal, definitely high energy," Ninemire said. "There wasn’t a task she wouldn’t take on. That’s what makes her such a successful person."