Liberty Tax Service Franchise Costs, Fees & FDD

Year Business Began: 1997

Franchising Since: 1998

U.S. Headquarters: Virginia Beach, Virginia

Country of Origin: Canada

Estimated Number of Units: 2,090

Franchise Description: JTH Tax, LLC d/b/a Liberty Tax Service is the franchisor. The franchisor offers franchises to operate income tax preparation offices using its marks “Liberty Tax Service,” “Liberty Tax,” and “Liberty Income Tax,” any further marks it develops, and its proprietary business methods and marketing techniques in a specified geographic territory.
Training Overview: The franchisor provides a minimum three-day initial owners training (IOT) in-classroom training as well as 12-15 hours of online training that addresses critical aspects of operating an income tax preparation business. After franchisees have attended IOT, the franchisor provides a one day hands on training (HOT) at select franchisee locations throughout the United States. HOT covers the steps involved in preparing and processing tax returns, delivering financial products, and related office functions. Franchisees and/or any general manager must attend and successfully complete IOT and HOT to the franchisor’s satisfaction prior to operating a Liberty office. Family members who may be involved in the Liberty franchise may also attend. 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 Granted: Franchisees will not receive an exclusive territory. However, the Franchise Agreement restricts the franchisor from operating a physical location of an income tax preparation service business using the Liberty name and marks described in the disclosure document within the 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 based on IRS data coupled with population data. Franchisees agree that in the event of a mapping error, as determined by the franchisor, which results in a territory population which exceeds 35,000, the franchisor may re-size the territory.

Obligations and Restrictions: Franchisees must provide franchise services under their direct supervision and control and/or under the direct supervision and control of a full time on premises general manager who has successfully completed IOT and HOT and otherwise been approved by the franchisor in writing. Franchisees must comply with all federal, state and local laws and regulations. Franchisees must secure all necessary permits, certificates, licenses, and consents to operate their business. Franchisees must use their best efforts to promote the franchised business and agree to conduct the franchised business with sound business judgment, diligence and efficiency. Franchisees must open the franchised business by January 2 of each year. Franchisees are required to operate their franchised business during certain hours of the tax season and certain hours of the off season. For the duration of the franchise, franchisees cannot offer products or services through the franchise other than the franchise services, unless they receive prior written consent.

Term of Agreement and Renewal: The length of the franchise term is five years. The franchise can be renewed for successive five-year terms, if franchisees are not in default of any provision of the Franchise Agreement.

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. If franchisees own their franchise in a corporation, limited liability company (LLC) or partnership, the franchisor will not generally lend half or more of the initial franchise fee to them and it may be more difficult to obtain further financing from the franchisor later if requested. 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.

Estimated Initial Investment

Name of Fee	Low	High
Initial Franchise Fee	$25,000	$25,000
Initial Advertising	$2,500	$5,000
Travel and Living Expenses While Training	$1,000	$2,500
Equipment & Furniture	$7,500	$15,000
Signs	$2,500	$5,000
Rent	$3,000	$6,000
Payroll	$5,000	$7,000
Insurance	$200	$400
Additional Funds - 3 months	$3,000	$4,500
ESTIMATED TOTAL (does not include royalties, advertising fees or interest expense)	$49,700	$71,400

Other Fees

Type of Fee	Amount
Royalties	14% of gross receipts subject to the following minimums: First year – No minimum royalties. Second year – Minimum $5,000. Third year – minimum $8,000. Fourth and fifth year – Minimum $11,000.
Advertising	5% of gross receipts.
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.
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.
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, Handling or Software Fee	$25.00 per easy advance for each approved loan. In California, $39.95 handling fee for each refund transfer.
Set-Off	The amount the franchisee owes the franchisor for unbilled royalties or other amounts, which amount for the royalty can be in amount of 14% of gross receipts and advertising fee of 5% of gross receipts owed to Liberty from the gross receipts, plus an additional 25% for liquidated damages for the franchisee’s misconduct.
Assessment Related to Understatement of Revenues and Failure to Comply	The costs of the review and interest of 12% per annum on the understated amount.
Sublease Fee	Up to $1,000.
Attorneys’ Fees and Costs	An amount equal to the franchisor’s costs and expenses.

The above information has been compiled from the FDD of Liberty Tax Service. Year of FDD: 2025.
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