RetroTax Featured in Franchise Times

Empowerment -- RetroTax helps companies get credits

South Carolina businessman Joey Dixon had the concept 13 years ago: help businesses access tax incentives from the federal and state governments.

Stan Friedman, a franchise development executive for real estate franchise ERA, would head up the franchise end of the company. The third friend, Al Newcomb, would roll his similar businesses into Dixon's and then be charged with operations and sales.

It was a good dream, but the company they dreamed up was never launched. Dixon became ill with ALS (commonly referred to as "Lou Gehrig's Disease") a year after the trio got together, and died soon after. Newcomb went back to his business in Atlanta, continuing to offer tax incentive processing to businesses there, and Friedman headed back to franchising and ERA.

"Our paths were just not ready to connect in business, but the two of us remained friends and maintained our connection," says Friedman.

Over the years, when Newcomb and Friedman got together for dinner, Friedman said, "I would beg him to franchise his business." Newcomb, however, was content to keep it local in his hometown of Indianapolis.

Friedman, continued to be intrigued by the subject of empowerment zones, which was part of the tax incentive business. When he joined Blimpie International, Friedman used what he had learned from his friend and helped the company expand in empowerment zones - impoverished urban and rural neighborhoods in which businesses are encouraged to build via tax incentives in order to offer the community jobs and opportunities.

Fast forward to today

Friedman finally convinced Newcomb to franchise the venture. ACI Franchising was launched late last year under the brand name RetroTax.

The basic premise is this: RetroTax helps business owners gain federal and state tax credits and incentives. According to Friedman, state and federal governments legislate these incentives and a fair amount of the resulting dollars go unclaimed. The franchisees are trained to help businesses claim these dollars.

There are two types of businesses that can best take advantage of these incentives:

1.) Businesses that are geographically located in empowerment zones. They employ people who live in the empowerment zone and receive a tax credit for each employee. "Each of these employees could be worth up to $3,000 a year in tax credit," said Friedman. "Before you've made your first sandwich, if you have 10 qualified employees you have $30,000 worth of tax credit."

2.) Businesses with employees who qualify demographically. Certain demographics, such as employees who come from a family that may receive some assistance, those who are part of the Welfare to Work program or returning veterans with disabilities are employees who would be qualified to earn tax credits for a company. This could account for up to $2,400 per employee, per year in tax credits.

Stan Friedman, right, worked with Cincinnati Mayor Mark Mallory on city incentives that give tax breaks.

The RetroTax target customer is smaller businesses, said Friedman. "Most companies don't know these credits are available and don't have the resources to do the onerous paperwork to get the credits." Worse, he says, is that many of these small companies believe these types of credits are being taken care of by their accountant, and usually they aren't.

RetroTax franchisees charge 15 percent of the dollar value of the credit they help the customer gain. The franchisor splits that 15 percent with the franchisee, since the franchisor does the paperwork to claim the credits. "The franchisee is the relationship manager," said Friedman.

The best franchisee for the concept will be someone with high-level, tangible sales experience, he added. It is a home-based opportunity for someone who desires a 9-to-5 business.

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