Six franchise brands run a tax preparation service. Here they are beside the independent version of the same business, with each brand’s fees as it publishes them and worked out in dollars. A brand can bring customers an independent has to earn one by one. The question is whether it brings in more than it costs.
Typical for a tax preparation service: $150k to $2M in sales, and the owner keeps 25% to 40% after paying for its own marketing. Change either to your own numbers.
How the two sides are counted
Sales. A brand’s name brings customers an independent wins one at a time, so each brand is worked out at the sales it reports where we have them, and at yours where we don’t.
Marketing. On your own you pay for all of it, about 3% of sales here (the SBA’s usual range for ongoing marketing). The ad fund does part of that job, so it is counted once, not twice.
Survival. New franchised businesses were about 5 to 6 points more likely to make it through their first two years in Census data, and about half of all new businesses close within five years. It is not in the dollars; each brand’s details give the sources.
Your own tax preparation service and each brand, side by side
The independent version
Your own tax preparation service
Built and run under your own name
Cost to open
$39k to $253k
Annual sales
$550ktypical
Franchise fee
None
Royalty + ad fund
Noneall marketing is yours
$181,500
The owner keeps in a year, after about $17k of marketing
Selective
H&R Block
Tax preparation
Buy an existing office or convert a tax practice
Total investment
$36k to $161k
Avg. annual sales
Ask the brand
Franchise fee
$3k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Taking new owners
Liberty Tax
Tax preparation
Total investment
$50k to $71k
Avg. annual sales
Ask the brand
Franchise fee
$25k
Royalty + ad fund
14% + 5% of sales
$94k
The owner keeps in a year at $550k in sales (your sales), after $105k to the brand
$88k less a year than on your own
Taking new owners
ATAX
Tax prep, bookkeeping and payroll
Total investment
$59k to $79k
Avg. annual sales
Ask the brand
Franchise fee
$35k
Royalty + ad fund
14% + 3% of sales
$105k
The owner keeps in a year at $550k in sales (your sales), after $94k to the brand
$77k less a year than on your own
Taking new owners
Jackson Hewitt
Tax preparation
Total investment
$71k to $105k
Avg. annual sales
Ask the brand
Franchise fee
$25k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Taking new owners
Paramount Tax & Accounting
Tax and accounting office
Total investment
$74k to $166k
Avg. annual sales
Ask the brand
Franchise fee
$40k
Royalty + ad fund
10% of sales
$127k
The owner keeps in a year at $550k in sales (your sales), after $55k to the brand
$55k less a year than on your own
Taking new owners
Fiesta Auto Insurance
Auto insurance and tax prep
Total investment
$88k to $172k
Avg. annual sales
Ask the brand
Franchise fee
$25k
Royalty + ad fund
In the details
The fee is not a simple share of sales, so it is not worked out in dollars. The details show it as the brand words it.
Free account
See all 6 tax preparation service brands side by side
Every brand’s investment and fees, and what the owner keeps against running your own
The yearly sales the first 3 report, and a plus to add brands to your comparison and benchmark them in your account
Members see the sales every franchisor reports, for every brand
Free, no card. A new account accepts the Terms and the Privacy Policy. smbnest is a self-assessment tool and never takes a cut of your deal or a fee from a franchisor.
Before you sign: what to read in the disclosure document
Every franchisor must give you its Franchise Disclosure Document at least 14 days before you sign or pay. These are the parts that answer the questions above.
Items 5 to 7, the fees and the investment. The franchise fee, every other fee (technology, training, transfer, renewal), and the full opening budget, including working capital.
Item 19, what owners earn. Whether the brand states owner sales or earnings at all, and for which units. Put its figures in the boxes above in place of the typical ones.
Item 20, units opened, closed and sold. How many owners left in each of the last three years, and a list of current and former owners you can call.
Item 12, the territory. Whether you get a protected area, and what the brand can open or sell inside it.
Item 21, the franchisor’s own finances. Whether the company behind the brand is in good health.
smbnest is a self-assessment tool, not individualized advice. Fees are as each brand publishes them on its franchising page and in its disclosure document, reviewed in the month shown, and change; the figures in dollars are worked out at the sales you enter and are not a forecast. We never take a cut of your deal or a fee from a franchisor. Before you sign, speak with a franchise attorney and a qualified financial adviser, and call owners from the disclosure document.
Your guidesmbnest
The guide is an automated assistant. Answers come from this business’s model, its sources and your plan; they are general information, not legal, tax or financial advice. Talk to a person