H&R Block Franchise Costs, Fees & FDD

Year Business Began: 1955

Franchising Since: 1957

Headquarters: Kansas City, Missouri

Country of Origin: Canada

Estimated Number of Units: 9,470

Franchise Description: H&R Block Tax Services LLC is the franchisor. Franchisees operate a tax return preparation business and may have the right to offer bookkeeping, payroll services, and training. One franchise opportunity is to open a new retail office located within a defined franchise territory. Another franchise opportunity that may be available is to purchase a furnished and equipped, company-owned, retail office that is currently operated by the franchisor’s affiliate. A third type of franchise opportunity that may be available is the conversion of an existing tax preparation business to an H&R Block franchised business.
Training Overview: New franchisees are required to attend the franchisor’s initial training. The first session will be an in-person session facilitated in Kansas City, MO with all other sessions conducted virtually. In addition, the franchisor may require the franchisee’s management-level employees to attend initial training. Initial training may consist of 32 hours of classroom or virtual instruction and 19 hours of on-the-job training. The franchisor also offers ongoing training opportunities related to the preparation of tax returns. Franchisees and their employees may also be required to take annual training on H&R Block’s products and services or on other compliance-related matters that the franchisor designates as required training.

Territory Granted: The Franchise Agreement grants franchisees the right to operate the franchised business from a location or locations within a prescribed franchise territory approved by the franchisor in writing. When operating in a rural location, the franchise territory is generally described as the municipal boundaries of a city, town, or village. The franchise territory for a franchise located in a metropolitan area will vary but is typically limited to a specific address or a mapped territory. Therefore, the minimum franchise territory granted to franchisees may be limited to a specific address. Nothing in the Franchise Agreement prohibits franchisees from performing tax return preparation services at an approved location within the franchise territory for persons residing outside the franchise territory, and they are not prohibited from advertising in media originating in the franchise territory that extends beyond the franchise territory. Except as provided in the Franchise Agreement, the franchisor will not operate or license any other person to operate a network office using both the licensed marks and the system at any location in the franchise territory. Franchisees will not, however, receive an exclusive franchise territory. Franchisees may face competition from other franchisees or H&R Block tax businesses that the franchisor or its affiliates franchise or own and that operate at traditional sites outside the franchise territory.

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 preseason to maintain the highest degree of competitiveness in their regional market. Franchisees need not be personally present in the office during all business hours. But franchisees need to have qualified employees and staff to assist them in operating the franchised business. Franchisees must offer or sell only those services and products that the franchisor has expressly approved for sale in writing. Franchisees may not deviate from the franchisor’s standards and specifications without its prior written consent and must discontinue offering or selling any services or products that it may, in its discretion, disapprove of in writing at any time. Franchisees must operate the franchised business in strict conformity with the Franchise Agreement and the manual and all applicable federal, state, and local laws, ordinances, and regulations.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years ending June 1 following the 10th full tax season after the effective date unless otherwise specified. There is no automatic renewal, but the franchisor may, at its option, offer franchisees another franchise.

Financial Assistance: The franchisor’s affiliate, Franchise Partner, Inc. (FPI) offers commercial financing to H&R Block franchisees, subject to credit approvals. The full terms of FPI’s standard loan product are set forth in the Term Loan Credit and Security Agreement and annual Short-Term Loan Credit and Security Agreement. FPI’s term loan may only be used to acquire an H&R Block franchise, another tax preparation business, buy out a partner, refinance a U.S. Small Business Administration loan, or use on brand office standard upgrades. FPI’s short term loan may be used to pay some of the operating and related expenses prior to the beginning of each tax season. Franchisees are not required to obtain financing from FPI and are permitted to obtain loans with third-party lenders. Except as described, the franchisor does not offer, directly or indirectly, any arrangement for financing franchisees’ initial investment or the costs associated with the initial operation of their franchised business.

Estimated Initial Investment

Name of Fee	Low	High
Initial Deposit	$2,500	$2,500
Real Property (estimated cost total is for 3 months)	$1,400	$30,000
Leasehold Improvements; Construction Costs	$0	$50,000
Signage	$1,200	$6,500
Furniture and Decor Items	$15,000	$30,000
Equipment	$10,000	$12,000
Opening	$500	$1,000
Pre-opening Salaries, Travel and Initial Training	$1,500	$3,000
Start-up Supplies	$500	$500
Insurance	$744	$1,244
Zoning Expenses	$0	$500
Utility Deposits	$50	$300
Architect Design	$0	$4,500
Professional Fees	$0	$2,500
Additional Funds	$430	$12,000
Applicable Business Licenses, if required	$0	$1,800
ESTIMATED TOTAL	$33,824	$158,344

 
Other Fees

Type of Fee	Amount
Royalty	See FDD.
POM Extended Service Plan and POM Protection Plan	The peace of mind extended service plan (POM) is a required service and franchisees must participate in the POM protection program. Each POM unit sold will be subject to both a 20% product-specific royalty payable to the franchisor and a designated-premium charge that did not exceed $15 last tax season. Claims are subject to a $50 deductible per claim only after notification of claim approval. All costs associated with POM are charged and collected by H&R Block, its affiliate or third parties and are subject to change. The premium costs are determined annually based on annual actuarial evaluations and will be released to the franchisee each year prior to the tax season.
Transfer	$2,500
Audit	Cost of inspection or audit.
Additional Training	$35 annual fee per participant.
Term Loan Interest Rate	If franchisees enter into and default under either security agreement, the franchisor may increase the loan interest rate by 4%.

The above information has been compiled from the FDD of H&R Block. Year of FDD: 2024.

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