Liberty Tax Service
Date Incorporation: 1997
Franchising Since: 1998
U.S. Headquarters: Virginia Beach, Virginia
Country of Origin: Canada
Description: Liberty Tax Service is a retail income tax return preparation business serving primarily customers from the low to middle income brackets.
Franchise Offer: The franchise offered is for a franchise program to operate tax return preparation offices utilizing special marketing techniques and operating procedures.
Financial Assistance: If, during the first tax season of operation, the franchisee prepares at least 500 federal income tax returns, the franchisor will provide a Guaranteed Financing of up to $25,000. The interest rate for all financing is typically 12%. Guaranteed Financing must typically be repaid by the subsequent February 28. The franchisor may also provide other financing programs. Other Financing must typically be repaid over four years through four annual payments.
Training and Assistance: The franchisor provides a minimum five day Effective Operations Training ("EOT") course in Virginia Beach, Virginia for all new franchisees.
They also provide a one day Hands on Training ("HOT") at select franchisee locations throughout the United States, through an existing franchisee.
Territory: The franchisee will be granted an exclusive territory. The geographic area granted in the territory will typically cover an area which generates approximately 7,000 to 8,500 paid federal tax returns.
Term of Agreement and Renewal: The length of the franchise term is 5 years, with an option for renew for successive 5 year terms.
Obligations and Restrictions: The franchise must be under the direct supervision and control of the franchisor and/or under the direct supervision and control of a full time general manager who has completed the mandatory training programs.
Total Number of franchises Units: 3,372 Liberty offices in the United States.
Investment Tables:
Initial Investment:
| Expenditures | Low | High |
|---|---|---|
| Initial or Resale Franchise Fee | $40,000 | $40,000 |
| Initial Advertising | $5,000 | $7,500 |
| Travel and Living Expenses While Training | $100 | $2,500 |
| Equipment & Furniture | $2,000 | $3,000 |
| Signs | $500 | $1,000 |
| Rent | $3,000 | $6,000 |
| Payroll | $3,000 | $5,000 |
| Insurance | $200 | $400 |
| Additional Funds - 3 months | $3,000 | $4,500 |
| TOTAL | $56,800 | $69,900 |
Ongoing fees:
| Name of Fee | Amount |
|---|---|
| Royalties |
14% of Gross Receipts subject to the following minimums: |
| Advertising | 5% of Gross Receipts |
| K-Mart Tax Season Kiosk Rent |
Full Season Fees-$3,200 |
| Sears Tax Season Kiosk Rent | Rent in the calendar year 2010 tax season equalled 18.2% of Gross Receipts |
| Ace Cash Express | Full Season- $2,000 rent Peak Only- $1,500 rent |
| Guerrilla Marketing On-Site Coaching | $500 supply fee to purchase guerrilla marketing supplies for your office |
| Exclusion of Pre-Existing Clients | $5 per client |
| Transfer Fee | $5,000 per territory. |
| Commission Fee | If the franchisee elects to ask the franchisor for assistance to sell their franchise and the franchisor finds a buyer, the franchisee must pay 10% of the sales price to the franchisor, subject to a minimum of $5,000, as a commission fee, per territory sold. |
| National Call Center for Tax School | $3.50 per each telephone call that the franchisor handles |
| Customer Refunds, Penalty & Interest, unpaid Send a Friends | The amount of tax preparation fee, bank product fees, misdelivered check amount, penalty and interest, or unpaid Send a Friend or E-Send a Friend. |
| Change to opening schedule in multi-territory stipulation | $3,500 |
| Try Before You Buy | 14% royalty and 5% advertising fee on Gross Receipts earned. |
| Rent to Own | The franchisor must pay a royalty of 14% of Gross Receipts, subject to a $5,000 minimum, and an advertising fee of 5% of the Gross Receipts |
| Sales or Gross Receipts Tax | If required by the state or locality in which the territory is located, the initial franchise fee, royalties, and advertising fees will be subject to sales or gross receipts tax. |
| Transmitter Fee | $20 per tax return, presently limited to those returns requesting a bank product |
Date of FDD: 2010
The above information has been compiled from the FDD of Liberty Tax Service along with online sources.
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