Profiles in Franchise Development: Mario Costanz of Happy Tax

Before Mario Costanz founded Happy Tax, the career tax professional owned both independent and franchised tax offices, the latter of which he grew to 99 units before selling his portfolio and starting his own concept. Costanz was well aware of the benefits of franchising when he started Happy Tax, which he built from the ground up as a franchise concept.

By eschewing brick-and-mortar offices in favor of virtual communications and digital tools, Happy Tax offers franchisees a business with low overhead and high flexibility. That model has proven attractive to tax professionals looking to own their own business, and in just four years, Happy Tax has taken on more than 100 franchise partners.

We talked to Costanz to learn more about why he chose franchising for his business and what kind of changes he’s seen in the industry since he started.

When did Happy Tax decide to franchise?

I owned an independent business before buying into another franchise brand, and I was able to grow to 99 units with the franchise, so I knew just how valuable the franchise model was when I started Happy Tax. I built Happy Tax specifically as a franchise. We had our FDD prepared on day one.

What do you love about franchising?

I’ve been an independent business owner, a franchisee and now a franchisor, all in the same segment, and I can say that the thing that makes franchising so valuable is the support franchisees receive. Having the resources and support of an established business is what helped me go from one office to 99.

Franchising empowers people to go out and start a business and avoid all the hard lessons that independent business owners have to learn. I’ve done all that, and it’s not fun. With franchising, all those lessons have already been learned and the best practices have been established.

Is there anything you wish you could change about the industry?

If the franchisor has all the right disclosures and if the franchisee understands what they are getting into and it’s a good fit, it all works very well. There’s not much I would change about that. Where you run into trouble is when a franchisee doesn’t see the value of the system they’ve joined and they want to recreate the wheel instead of using the wheel that works. If a franchisee sees the franchisor as just a brand that they can use, but they don’t care to follow the system, that’s going to be a problem. If as an industry, we could do a better job of educating people on the value of what they are buying into, that would a positive change.

What’s the biggest change you’ve noticed in franchising since you started?

The biggest change in our segment, which is something we spearheaded, is going virtual and doubling down on digital services. For most people, franchising means buying a store and doing business out of that one location. Well, that’s not the way people interact today. People want flexibility. They want to be able to utilize your services wherever they are. So we brought that to our industry. Now we’re starting to see the same thing happening in other industries. Companies that used to be exclusively brick-and-mortar are going digital.

What makes a great franchisee?

The biggest thing is effort. Output — the bottom line — is always going to match input. The franchisee has to be the one driving the business. They need to be focused on the big picture as well as the day-to-day minutia. Franchisees who are willing to roll up their sleeves and stay close to the ground are going to be the most successful.

What’s the number-one thing that sells franchises?

A franchise’s core values have to appeal to the franchisee. There are all types of models and all types of industries, but at the end of the day, the franchisee has to see their own values align with the franchisor’s. You have to believe in the same goals so you can work toward them together. If there is a discrepancy in believes, there are going to be challenges ahead.