Date of Incorporation: 1955
Franchising Since: 1957
Headquarters: Kansas City, Missouri
Country of Origin: Canada
Business Description: H&R Block offers franchises for the establishment of offices which offer to the general public income tax return preparation, related services and income tax return preparation training courses conducted for a fee. H&R Block also owns and operates such businesses.
Franchise Offer: H&R Block grants the right to establish and operate one or more H&R Block offices at a location or locations chosen by the franchisee and approved by the franchisor in writing within a defined territory.
Financial Assistance: H&R Block has an affiliate, Franchise Partner, Inc. (FPI) that, subject to credit approval, offers financing to H&R Block franchisees. FPI offers two loan products: (1) a Franchise Equity Line of Credit (FELC), and (2) an Annual Payments Adjustable Rate Term Loan (APARTL). FPI's financing may be used by franchisees for any purpose related to the operation of the franchisee’s H&R Block franchise. The maximum amount of credit offered the franchisee is determined by FPI in its sole discretion. Except for FPI loan products, the franchisor does not offer, directly or indirectly, any arrangement for financing franchisees’ initial investment or the costs associated with the initial operation of the business.
Training and Assistance: Franchisees must attend the New Franchise Orientation (NFO) program offered by the franchisor. The NFO program will consist of a minimum of 27.25 hours or as many as five days of classroom instruction. In addition to NFO, distance learning is required for franchisees in order to prepare for tax season. The franchisor also offers to provide initial training in the preparation of tax returns in a 75-hour course held at its offices. In some states there may be additional training hours required to meet state minimum requirements. Franchisees and their employees may also attend additional courses, seminars, and other training programs that may be offered, some of which may be mandatory.
Territory: The Franchise Agreement grants the franchisee the right to operate the Franchised Business from a location or locations selected by the franchisee within a prescribed Territory approved by the franchisor in writing. The Territory may vary, but is generally described as the municipal boundaries of the city, town or village in which the Franchised Business is located when operating in a rural area. The Territory for a franchise located in a major metropolitan area will vary and could be limited to a specific site or a mapped territory including a specific geographic area. Nothing in the Agreement prohibits a franchisee from performing tax return preparation services at an office (or offices) within the Franchise Territory for persons residing outside the Franchise Territory and franchisees are not prohibited from advertising in media originating in the Franchise Territory which may extend beyond the Franchise Territory. Franchisees will not receive an exclusive Territory. Franchisees may face competition from other H&R BIock tax businesses that it or its affiliates franchise or own and that operate at traditional sites outside of the Territory.
Term of Agreement and Renewal: The length of the franchise term is 10 years, ending June 1 of the tenth year after the effective date unless otherwise specified. There is no renewal but H&R Block may, their option, offer the franchisee another franchise.
Obligations and Restrictions: During the term of the Franchise Agreement, franchisees are obligated to operate the Franchised Business during certain hours of the tax season and during certain hours of the off season to maintain the highest degree of competitiveness in their regional market. Franchisees need not be personally present in the office during all of the specified hours and may hire additional qualified employees and staff to assist them in operating the Franchised Business. Franchisees may sell or offer for sale only those services and products as H&R Block has expressly approved for sale in writing; must refrain from any deviation from H&R Block standards and specifications without the franchisor’s prior written consent; and must discontinue selling and offering for sale any services or products which the franchisor may, in its discretion, disapprove in writing at any time.
Total Number of Units: 11,315
|Name of Fee||Low||High|
|Real Property (Estimated cost total is for 3 months)||$1,400||$30,000|
|Leasehold Improvements; Construction Costs||$0||$50,000|
|Furniture and Decor Items||$15,000||$23,000|
|Pre-opening Salaries, Travel and Initial Training||$1,500||$2,500|
|Applicable Business Licenses, if required||$0||$1,800|
|Type of Fee||Amount|
|Royalty||60% of the first $5,000 of annual Gross Receipts (50% if paid to the franchisor within 4 days after the end of the Reporting Period to which the royalty relates and no other amounts payable are overdue) and 40% on the annual Gross Receipts in excess of $5,000 (30% if paid to the franchisor within 4 days after the end of the Reporting Period to which the royalty relates and no other amounts payable are overdue).
However, all Gross Receipts in any calendar year which are in excess of the average Gross Receipts of the Franchisee for the two previous calendar years are subject to a Royalty Fee of 20% of such annual Gross Receipts if paid to the franchisor no later than four days after the end of the Reporting Period to which the royalty relates. Franchisees are responsible for establishing their own incentive base and the reduced rate is not effective until they have completed two full Tax Seasons.
|POM Extended Service Plan and POM Protection Plan||The Peace of Mind (POM) is an optional service. If franchisees elect to offer this optional service, they must participate in the POM Protection Program. Sales shall be reported under Gross Receipts as POM income and are subject to a 20% royalty. All costs associated with POM are charged and collected by H&R Block, its affiliate or third parties and are subject to change. The costs are determined annually based on annual actuarial evaluations and will be released to franchisees each year prior to the Tax Season.|
|Audit||Cost of inspection or audit|
Date of FDD: 2013
The above information has been compiled from the FDD of H&R Block.
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