TAX FRANCHISES: Biggest Winners & Losers of 2010 Learn which tax prep franchise chains have grown – and which have declined – in the past three years.
Every January, Entrepreneur magazine publishes the Entrepreneur 500, its ranking of what it deems the top 500 franchise companies.
The Entrepreneur 500 is a pretty big franchise advertising event, as franchisor’s will tout their inclusion throughout the year as proof of their legitimacy (I never understood why companies considered being #476 – with 475 companies ahead of you – the basis of bragging rights).
While the rankings themselves are in many cases are suspect, the Entrepreneur 500 nevertheless provides year-over-year data about franchise companies.
The tax franchise data below are from Entrepreneur’s 2011 Franchise 500. Is the data accurate? Tax preparation franchisees and other insiders are invited to add their insights via the comment section below.
According to Entrepreneur, the number of tax preparation franchises remained stable at just under 10,000.
The total number of tax franchises listed in the Entrepreneur 500 has remained relatively stable throughout the past 3 years. In 2008, Entrepreneur listed a total of 9517. In 2009, they listed 9491 tax franchise locations, a decline of 26. For 2010, they listed 9533 tax franchises, an increase of 41 units over 2009 and an overall increase of 16 units over the 3 year period.
No mention of Jackson Hewitt.
Noticeably absent from these numbers – and from the ranking itself – is any mention of Jackson Hewitt. Jackson Hewitt marketing materials reference being named Entrepreneur 500’s #1 tax franchise for 15 years straight. Yet, the Entrepreneur 500 has made no mention of Jackson Hewitt since January, 2008 and their last franchise numbers are for 2007 (5778). It’s not clear whether the troubled Jackson Hewitt chose not to participate, or whether they were dropped from the list by Entrepreneur.
While the total number of tax franchises may appear stable, that doesn’t mean that there hasn’t been significant turmoil, closings and turnover of franchises in the tax preparation sector. Entrepreneur’s numbers suggest there have been some big losers and some big winners in terms of unit growth.
Biggest Losers: Instant Tax Service, H&R Block, ExpressTax
In terms of the total decline in franchise units, the biggest losers in the Franchise 500 are Instant Tax Service (-308), H&R Block (-261), and ExpressTax (-246).
In terms of the greatest percentage of unit decline, the biggest losers are ExpressTax (-48%), Instant Tax (-26%) and H&R Block (-5%).
(If included, Jackson Hewitt may have represented a decline of about 347 units, or -5%, from 2007- 2010).
It’s worth noting that these percentages should not be misconstrued as failure rates. Failure rates could be much higher, as new franchise sales and resales could be masking franchise failures.
Biggest Winners: Liberty Tax, Tax Centers of America, Roni Deutch
In terms of total franchise unit growth, the winner by several lengths is Liberty Tax, which boasts an increase of 701 locations (28%) since 2008. In the 2nd and 3rd spots are Tax Centers of America (+57) and Roni Deutch Tax Centers (+56).
In terms of franchise system growth, the winners are Smart Tax (800%), Eagle Tax (733%), Roni Deutch Tax Centers (350%), and Tax Centers of America (47%).
|# Franchises 2008||# Franchises 2009||# Franchises 2010||# Change franchises 2008-2010||%Change 2008-2010|
|Tax Centers of America||187||122||128||179||57||47%|
|Colbert/Ball Tax Service||NR||252||252||236||-16||-6%|
|Daniel Ahart Tax Service||NR||22||20||25||3||14%|
|Instant Tax Service||NR||1181||1197||873||-308||-26%|
|The Tax Refund Store||NR||0||0||0||0%|
|Franchises not in Ent. 500|
Your comments and insights wanted.
How accurate are the Entrepreneur 500 numbers and rankings?
What factors affected the growth – and decline – of these franchise companies?
What factors will affect their viability in 2011 and beyond?
No doubt, 2011 will be a volatile year for tax franchises. Who will be the biggest winners?
Who will be the biggest losers… and why?
Please share your industry insights and opinions below.
* Source: Jackson Hewitt 2010 Annual Report
All other data is from Entrepreneur Magazine, January, 2011