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Liberty Tax Service Franchise Cost & Fees

Date of Incorporation: 1997
Franchising Since: 1998
U.S. Headquarters: Virginia Beach, Virginia
Country of Origin: Canada

Business 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: The franchisor may, in its sole discretion, provide financing to franchisees that may be used to finance a portion of the initial franchise fee, operating capital, or the initial franchise fee of additional territory purchases by existing franchisees. The franchisor does not have a written arrangement with a leasing company and does not receive payment for referring franchisees to a leasing company. However, it can refer franchisees to a company that provides leasing to qualified franchisees to finance furniture, fixtures, signs, equipment, and, to highly qualified franchisees, working capital and franchise fees.

Training and Assistance: The franchisor provides a minimum five day Effective Operations Training (EOT) course in Virginia Beach, Virginia which addresses critical aspects of operating an income tax preparation business. Through an existing franchisee, the franchisor provides a one day Hands on Training (HOT) at select franchisee locations throughout the United States, after the franchisee has attended EOT. HOT covers the steps involved in preparing and processing tax returns, delivering Financial Products, and related office functions. The franchisor will provide and may require franchisees’ attendance at a one to four day advanced training for experienced franchisees. The franchisor may hold this training at various sites that it selects across the country or it may offer such training on the web or electronically.

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 five years, with an option for renew for successive five year terms if the franchisee is not in default of any provision of the franchise agreement.

Obligations and Restrictions: Franchise services must be provided under the direct supervision and control of the franchisee and/or under the direct supervision and control of a full time general manager who has been approved. Franchisees must be open for business during the following standard operating hours and post office hours on the office door or window. For the duration of the franchise, the franchisee cannot offer products or services through the franchise other than the franchise services, unless he/she receives prior written consent.

Estimated Number of Units: 4,065

Investment Tables:
Initial Investment
Name of Fee Low High
Initial or Resale Franchise Fee $40,000 $40,000
Initial Advertising $5,000 $7,500
Travel and Living Expenses While Training $1,000 $2,500
Equipment and Furniture $3,000 $5,000
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
ESTIMATED TOTAL $58,700 $71,900
Other Fees
Type of Fee Amount
Royalties 14% of Gross Receipts subject to the following minimums:
First year- minimum $5,000;
Second year- minimum $8,000;
Third year and beyond - $11,000 minimum.
Deposits Depending on financing, up to $25,000 Operational Supply Deposit..
Advertising 5% of Gross Receipts.
Walmart License Fee Fee equal to market based rent as determined by Walmart.
K-Mart Tax Season Kiosk Rent $800.00 a month or 18.2% of Net Revenue, whichever is greater.
Sears Tax Season Kiosk Rent $800.00 a month or 18.2% of Net Revenue, whichever is greater.
Ace Cash Express Full Season - $1,500
HEB Kiosk Rent Base Rent:
Type A- January 1st - March 11: $3000. To extend Type A from March 11- April 18, the franchisee must pay $550 in Extended Rent.
Type B- January 1st - April 18th: $3,250.
Bonus Rent:
Type A and Type B- $5 Bonus Rent for each tax return prepared over 100 returns.
Family Dollar/Dollar Tree Kiosk Rent January 1 - February 28: $1,250 plus $15 per IRS funded return.
March 1-April 15: $250 plus $15 per IRS funded return.
The total amount payable for rent and IRS funded returns is capped at $2,000.
Mall and Retail Kiosk Programs Rent and applicable fees as required by the retailer.
Guerrilla Marketing Boot Camp - On-Site The fee varies based upon when the Camp takes place as follows:
January/February-$1,500; March/April-$500
Exclusion of Pre-Existing Clients $5 per client.
Interest 12%
Transfer Fee $5,000 per territory.
Commission Fee 10% of the sales price, subject to a minimum of $5,000
National Call Center for Tax School $.50 –Appointments; $1.50-Tax School; $3.75-customer follow up; $5.25- Tax School kit sent.
Customer Refunds, Penalty & Interest, unpaid Send a Friends The amount of tax preparation fee, financial 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
Walmart Rent to Own The franchisee 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. If the franchisee operates a Walmart office in the Territory, that office shall not be subject to the minimum royalty.
Rent to Own The franchisee 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, Electronic Filing of Software Fee $20 per tax return, presently limited to those returns requesting a financial product.
Cash in a Flash Financing Set Up Fee $55 for entities who own a single office; $110 for all other entities.
Assessment Related to Under¬statement of Revenues The costs of the review and interest of 12% per annum on the understated amount.
Other Business Fee $1,000 annually.
In some instances, the franchisor’s arrangements with certain other business providers may result in these payments being paid by the other business providers directly to the franchisor.

The above information has been taken from the FDD of Liberty Tax Service. Year of FDD: 2015

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