Fran’s Chocolates Tests Avalara’s Agentic AI for Tax Compliance

Hey everyone. Welcome back to our continuing coverage of Avalara CRUSH North America. It's been a great two days here so far.

We hope you've seen some of our earlier coverage. tv or wherever you're watching this, you could probably watch it there as well. tv, TechstrongTV YouTube channel, and our TechstrongTV OTT channel, which will play on iOS, Android, Amazon, Roku, Apple TV.

If you've got a screen, you can watch this somewhere. I want to introduce you to our next guest today. His name is Ken Harrison.

Okay. Ken is with Fran's Chocolates, with an S, so there's multiple chocolates in there for all you chocolate fans out there. Ken, welcome to TechstrongTV.

It's great to have you on here. Thank you. Happy to be here.

So we'll talk chocolate in a minute, but let's talk Ken first. Yeah. My name is Ken Harrison.

I'm the senior accountant at Fran's Chocolates. I've been with Fran's Chocolates for 20 years. I've been doing accounting for probably 35 years.

I am a self-taught accountant. I've taken some 200 level accounting classes, but otherwise, everything I know I've taught myself, and I really have specialized and enjoy working for small, independent companies where I can really make a difference. So let me just get this straight.

So obviously you took the 100 level. And let me just say, I admire you. I have zero affinity for accounting.

As a matter of fact, the lowest mark I ever got, I went to college and then law school. The lowest mark I ever got is I took accounting for lawyers in law school, and I think I got a D+. So that should give you an idea where I'm coming from.

But self-taught, you went to college, obviously, and you had- I did some college, yeah ... and then kind of just picked up on your own, took courses here and there. I had been doing accounting before I went back to school.

I went back to school with the idea of getting my degree. And then I got some really good jobs, and that just didn't pan out, so I just continued on doing what I was doing and learned along the way. That's great.

And 35 plus year career, it served you well. Thank you. So let's talk Fran's Chocolates a little bit.

I'm always happy to talk about Fran's Chocolates. Fran's is a small, family-owned gourmet chocolate here. We're based in Seattle, Washington.

com. We specialize in fine chocolate. Everything is made by hand.

All of our boxes are packed by hand. All of our ribbon is tied by hand. So we are really a handmade chocolatier.

You don't see a lot of those anymore. No, you don't. What about, though, in terms of scale distribution, can you give us any- Yeah ...

like amount of chocolate? How much chocolate does Fran sell? Well, for instance, this year we will make probably in excess of five million individual pieces of chocolate.

We have a large wholesale business where we're in a lot of national chains. We have four retail stores in the Seattle area. And then we also have a very large mail order business.

We ship chocolates nationwide. We have a really extensive business gifting program. Great.

And I imagine, so the website and the whole e-commerce piece of this must be a big piece of the business then. It's a huge piece of the business. It can represent sometimes 40 or 50% of our total revenue.

Really? Yeah. Oh, that is huge.

Yeah. I couldn't help but thinking as you're mentioning four million pieces of chocolate, you remember, well, people at home probably won't remember, but you might, the old "I Love Lucy" one where she's on the truck- Yes ... eating.

Yeah. That's right. When people come to look at our viewing room, that's the first thing they think about because they see the Enrobers and they mention Lucy, that episode with Lucy.

Well, that's a classic- Yeah ... for people of an age. Yeah.

Let's say that. But back to the business here. 40, 50% of the business is online.

What's the website? com. com.

Oh, she must've got that early on. She, yes, I believe so. Yeah.

Because that was a hard one to come by. So I wanted, so people would say, "Okay, we get it. They make great chocolate.

" What are they doing here at Avalara CRUSH? The reason why I implemented Avalara, back in 2018 when the Supreme Court released the Wayfair decision, it forced us to take a real hard look at our indirect taxing and realize that we could not manage this on our own. There was absolutely no way we could do this.

So we investigated a number of companies, and Avalara was the best in the industry. They offered the most complete package. So we implemented Avalara, and we have had a very strong relationship with Avalara since then.

We are using several of their products. We're using AvaTax, Returns, we're using ECM. We just started using the 1099 product.

Great. So yeah. Yeah, you mentioned the Wayfair decision.

It's actually a decision I'm familiar with because in my past life, I had businesses that did e-commerce- Mm-hmm ... in various states, and that decision really It was huge. Yeah.

It changed the game a bit. But for those folks at home maybe who aren't familiar with the Wayfair decision, how would you... I get it.

You're an accountant, not a lawyer. I'm the lawyer. But how would you describe the Wayfair decision?

Prior to Wayfair, Supreme Court had said that the individual states did not have the right to impose sales tax on interstate transactions. " And overnight, the entire mail order industry went, "What now? How do we deal with this?

How do we come into compliance? " And then right after the Wayfair decision, all of the states kind of took their own path. Some of them put in transaction and dollar thresholds.

Some people only put in dollar thresholds. So you had to navigate every state separately to figure out where your- Yeah, it was not just states. Sometimes you had to navigate by municipalities- Yeah ...

and so forth as well. Yeah. And so let me just make sure our audience understands this, right?

So now all of a sudden, you are responsible for dealing, satisfying the sales tax requirements for every jurisdictions that your customer resides in. So if you've got a customer in Seattle, a customer in New York, a customer in Fort Lauderdale, and anywhere else, you need to collect the proper amount of sales tax for that jurisdiction, obviously record it, send it in, file it, right? Right.

Show compliance, and then at the end of the year with your tax returns, generally, you've got to submit your entire sales tax- Yep ... type of return, too. If I tell you, if it were not for companies like Avalara, a nightmare, especially a company like Fran's Chocolates, right?

Yeah. As big as you are, four million pieces of chocolate and all, that is such a burden. Mm-hmm.

And it gave rise to this whole industry in many ways. Yep. So that Wayfair decision's a really important decision, a really important case that kind of changed the game.

So we get why you use Avalara. It makes perfect sense. You're a multi-product customer, but you are also a beta customer of their new agentic product.

That's right. Right? Aviator.

Mm-hmm. Why? Didn't have enough on your plate?

Okay, so I have been an Avalara ambassador for quite some time, and- Hence the orange vest ... hence the orange. I swear I'm not a plant.

Okay. I get it. Look, he's giving us chocolate.

He's not a plant. He's really from Fran's Chocolates. But go ahead.

So when they announced on the Ambassador website that they were looking for beta test customers, I thought, "This is intriguing. This could take us to the next level in tax compliance. " So I was very enthused, and so I immediately sent the message saying, "Hey, I'm interested.

I want to beta test this. " And so they selected me as one of the beta testers, and I went through and did some pretty extensive testing. I don't know, I spent probably three or four weeks putting it through its paces, and I am so impressed with the product.

It's going to be game-changing. I don't disagree. If you don't mind, other than the Aviator product, what's your, would you say, your experience level?

Or how much have you dabbled even or go deep into AI, agentics, and these kinds of things? To be honest, I haven't really used AI, and some of that is because of the position I'm in. Being in finance and accounting, we're really sensitive to where we put our data out there, and since that's the majority of my work, I have to be really selective about where I put stuff.

So I'm probably at the mid-beginner range of AI. I'm hoping with Aviator, and once we get some security around some other tools, we'll be able to dive a little bit deeper in that. But I will say our CEO is leaning into AI as a way to...

We have a really small team. There are only two of us in accounting. Yeah, no, it's got to scale.

Yeah. And your CEO's not alone, because it's a funny thing. A lot of cloud, right, cloud adoption came from the bottom up.

Mm-hmm. Developers whipping out their credit cards and opening service, AWS accounts and so forth. Open source software generally came from the bottom, from the practitioners who brought it in and then convinced their bosses to use it.

With AI, we've seen a revert back to the reverse, that top-down. Right. Where it's the board, it's the CEOs who are saying, "Hey, we can't afford not to do this.

We need to be utilizing this. " Yep. " But I think what we have found is cutting headcount because you think AI's going to do people's jobs- Yeah ...

that don't work. No. It makes people more efficient, more effective.

It's a force multiplier, but it's not a substitute for. It's not a substitute for. It is an investment in your team.

Yeah. It's an investment in the team. It's an investment to let your team work better, not harder, and it's an investment to let your team pull out maybe some of the factors or KPIs or meaningful information that can get missed if you're just reading through a report.

Absolutely. It lets you do more. Mm-hmm.

Yeah. No. I completely think that.

So you used Aviator a few weeks. Give us an idea of the kind of things you did with it. There were a number of things I did.

Okay, we have a huge number of very small transactions, and some of those transactions have lots of lines. " And I was able to dig into it and say, "Well, it's not an Avalara problem. Avalara calculated it the way we sent it to them.

" Sent it wrong. We sent the data incorrectly. Yeah.

" Yeah. And I have to give credit where credit is due. With the help of the wonderful Tam here at Crush, we were able to get to the bottom of it, and we fixed the problem yesterday.

Really? Yeah. How cool is that?

Yeah. It's awesome. I love it.

Now, of course, Aviator, it won't be out GA, I think, for a couple weeks yet. No. But I would assume then you're going to be using it.

Oh, absolutely. Yeah. In fact, right now, I did the beta test, so right now I'm thinking, "Okay, how else can I use this?

What more can we do with Aviator? " And then as Aviator improves, it's just going to open up more and more opportunities to use it. I love it.

Again, what a great story. I got to be honest with you, right? And there are a lot of people out there who are saying, "We're too small for AI.

We're not a big enough company. " But I think it misses the point. I think AI may wind up being more helpful for companies like Franz Chocolates- Yeah ...

than the big guys. Yeah. I think AI for small companies is more impactful.

Yeah. It's a force multiplier. It absolutely is.

Yeah. Anyway, hey, thank you so much. Thank you so much.

Thank you for all you do with Avalara, too. I've done a lot of product companies in my life, getting people to beta test, but getting real, live customers who are willing to talk, it's much appreciated. I appreciate the opportunity to talk about it, because it really is an awesome product.

Fantastic. All right, you heard it here first. com for Franz Chocolates.

Don't miss that. We got more coming to you today from Avalara Crush, so stay tuned. "