December 1999


Jackson Hewitt recently announced the creation of a joint venture with two of its largest franchisees for the purpose of acquiring independent tax preparation firms in selected markets. To be named Tax Services of America (TSA), the venture is intended to provide financing to the franchisees and give them the capability to be players in the rapidly consolidating tax preparation field.

Jackson Hewitt will contribute a majority of its company-owned locations, 83, to TSA; its parent company, Cendant Corporation, will contribute $5 million in exchange for TSA convertible preferred stock. The two franchisees, TFFS and Visalli Enterprises, will contribute all of their 116 locations to TSA and initially own 100% of the joint venture's common stock. Cendant will contribute additional funding in exchange for convertible preferred stock based upon TSA achieving certain performance and acquisition targets.

"TSA has the potential to take the lead, as a stand-alone entity, in identifying, purchasing, and integrating independent tax preparation firms into the Jackson Hewitt fold," said Daniel Tarantin, president and COO of Jackson Hewitt. "This, in turn, will help us optimize market penetration and economies of scale, greatly accelerating the growth of our brand."

TSA will be led by key management of the franchisees. Scott Cardozo of TFFS will become CEO; Fred Roberts of Visalli, its senior vice president of operations. Harry Buckley, formerly president and COO of H&R Block Tax Services, will chair TSA's board of directors.

Jackson Hewitt claims to be the country's second largest tax preparer, with 3,000 franchised offices in 154 U.S. cities. *

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