TAX FRANCHISES: Biggest Winners & Losers of 2010

Tax franchises

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%).

Franchise Ent. 500 
Ranking 2011
# Franchises 2008 # Franchises 2009 # Franchises 2010 # Change  franchises 2008-2010 %Change 2008-2010
Liberty Tax 21 2579 2940 3280 701 27%
H&R Block 27 4833 4502 4572 -261 -5%
Tax Centers of America 187 122 128 179 57 47%
Eagle Tax 413 3 17 25 22 733%
Roni Deutch 418 16 59 72 56 350%
Colbert/Ball Tax Service NR 252 252 236 -16 -6%
Daniel Ahart Tax Service NR 22 20 25 3 14%
ExpressTax NR 509 376 263 -246 -48%
Instant Tax Service NR 1181 1197 873 -308 -26%
Smart Tax NR 0 0 8 8 800%
The Tax Refund Store NR 0 0 0   0%
Totals   9517 9491 9533 16 .168 %
Franchises not in Ent. 500            
Jackson Hewitt       5431*    

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


30 thoughts on “TAX FRANCHISES: Biggest Winners & Losers of 2010

  • Pingback: Tweets that mention TAX FRANCHISES: Biggest Winners & Losers of 2010 : Unhappy Franchisee --

  • The tax industry is going through a tremendous time of change. Some of these changes are positive and some are negative. With the increase in regulation and with further regulations coming in the next several years the Tax Industry will continue to evolve and change.

    Liberty has won mainly because John Hewitt has been able to calculate what was going to happen and position Liberty to take full advantage of situations plus Liberty continues growing at a rapid pace further making there performance numbers look better and better. HRB will appear to be the biggest looser by the end of Feb but as the season ends I feel HRB will be flat to slightly down overall. Liberty will be a huge winner this year without doubt.

    I feel in the future we will start to see considerable consolidation in the Paid Preparer arena. I also feel that the online tax prep companies enjoying much success now will soon run into a period of scrutiny causing them to stumble but in no way fail but in now way will they ever replace paid preparers.

    After this season we will be able to see who survives another year and what other major changes are coming down the road. I gurantee this it will not be boring.

  • Bill


    you are an area developer and are a successful franchisee, however most franchisees are not successful. If they where they wouldn’t need operating loans from JTH. According to the 2010 financials JTH Tax had to loan $32,488,000 in operating loans to its franchisees. Based on the 3,280 stores listed on this web site that breaks down to $9,904.88 per store. This shows the stores don’t generate enough cash flow to stay open. With the exception of certain stores the only winner in this is JTH Tax.

    As far as JH being such an innovater why doesn’t Liberty have a bigger piece of the on-line tax filing business?

    Will JTH Tax go public?

  • Bill is a Hater

    The operating loans are mainly used for expansions. Please get your facts straight before you post disparaging information on a public forum.

    You probably don’t know this but a company must have a quiet period before any planned IPO for up to 3 months. Even if Liberty were planning on going public, they couldn’t talk about it until it was officially announced. If you are talking so much trash about Liberty why are you concerned when their shares will be publicly available?

  • Operating loans are just as they say they are. Just go on Liberty Tax Services website, under investors information and look at the financial statements. It explains that Notes are for the sale of the franchise, are colleteralized by the undrelying franchise, quaranteed by the franchisee and payable back in 5 years. The operating loans are for working capital or equipment loans and are payable within 1 year. Both notes carry a 12% interest rate.

    My job on this website is to present the facts and the information I gave comes right from the company’s financial statements.

  • Frustrated and Disgusted

    I know for a fact that there are a ton of territories paying minimum royalties rather than opening a storefront. So when you read that Liberty supposedly has 3280 franchises, I would bet the actual number of store fronts is significantly less than 3000. And next year there will be even less. Let’s get real, this is a lousy time to own a tax franchise. Even the H&R folks are finding it rough, and the fallout there will be significant also.

  • ITS Ponzi

    Instant Tax Service is one big PONZI scheme. They offer a buy back and use money from new franchisees to off the old ones

  • Why are there son may lawsuits pending and judgement against Instant Tax Service but the owner, Fesum Ogbazion is living high on the hog.

    Hey Fez, pay your debts and your franchisee buy-backs. Your Ponzi-Scheme is over

  • STAY AWAY. Don’t let their sales smiles fool you. Yes they will deny this but I wouldn’t take the time to write this if it wasn’t true.

    They say it’s cheap to start a Smart Tax but don’t tell you about all the crazy over priced products they force you to buy. Besides every new store lately has been an outright failure loosing thousands and thousand with owners going bankrupt when they find they are money pits.

    Their support sucks, when you call in the middle of tax season with a client in front of you and an important question, their “support” staff is actually doing returns for the main branch’s customers at the same time. Very often you her them say things like “sorry I’m with a client I’ll call you back” and they don’t even call back half the time.

    It’s too new of a company and lacks the proper support especially since they spend their time and funds on selling more franchises and not helping the poor franchisees. Heck why should they care they get minimum fees from your office whether it gets a single customer or not. Plus they make you buy all kinds of Smart Tax crap at a premium like umbrellas, pens, envelopes, $1,000 plus murals, posters, mats, etc, etc, etc.

    Very unprofessional and they control all the funds, always threatening not to pay or let you operate from your office unless you put up with their unethical ways.

    When company decisions are made it’s not in the best interest of the clients and franchisees but the owner of the franchise and his main men.

    STAY AWAY don’t let the small start up costs fool you, they will take you to the cleaners. If you doubt this you should call individual franchisees. Beware though the franchisees are cautious of the Smart Tax spies calling them. You should still be able to sense when you call, aside from his main men Joe and Jorge every one is miserable.

  • Smart Tax went down from 27 stores in 2011 to 27 stores in 2012. The company’s goal was to grow to 50 by now but many franchisees closed shops after the relatively new start up model not being as successful as anticipated.

  • Smart Tax went backward NEGATIVE 22%. They went from 27 Stores in 2011 to 21 Stores in 2012. Some went out of business. Is that a good business model? They take 23% of the gross revenue by year two.

  • testaipira

    Liberty Tax has 4000 offices….

  • Frustrated and Disgusted


    I would suggest you confirm the actual number of offices with Liberty Tax corporate, and post it on this site. I know for a fact that many offices have closed and can suggest what you are presenting is only an uneducated opinion at best.

  • Based on facebook it has 3,868 office this year I think last year they had 3294 offices. The year before that I believe they had 3133 offices and the year before that they had 3184 offices. In an effort to gild the lily and make this year’s numbers impressive for their IPO they offered territories with only 2500.00 down and a higher royalty. The problem with that is the franchise fees they collected was a large part of their cash flow. Looking forward to see this years financials.

    Imagine all the 1st year franchisees who only had to put 2500.00 thinking what I good year they were going to have. Only to have the airwaves, the internet, radio and print ads all claiming free returns. I believe with the step-up in competition from competitors, the loss of RALs (only 1500) this year and the high unemployment rate for low income filers, Even with its increase in number of stores, I see Liberty’s market share staying flat.

    Buyer beware!!!

  • testaipira

    Corporate just send a marketing newsletter celebrating the 4000th office that opened….

  • testaipira


    (City, ST) Liberty Tax Service marked another milestone as the company held a grand opening for its 4000th office in the Tampa Bay area recently. Since its inception in 1997, Liberty Tax Service has grown to 4,000 offices in the United States and Canada. When rival tax companies reached fifteen years, H&R Block (NYSE:HRB) had 1,700 offices, and Jackson Hewitt (PINK:JHTX) had 1,300 offices. Liberty Tax surpassed the 1000 office mark in 2004. All Liberty Tax offices are open and ready for the tax season, with familiar costumed Lady Liberty wavers signaling that tax season is here.

    The 4000th office is located at 927 Lithia Pinecrest Rd, in Brandon, Florida. The owner-operator is Joanna Parichkov, who has 9 Liberty franchise offices in the Tampa Bay area.
    “This year has been an exhilarating time of record growth in many areas for Liberty Tax. As we hit the mark of 4000 offices in our operating system, we continue our quest and drive to be the number one tax company in the industry,” said John Hewitt, CEO and Founder of Liberty Tax Service. For the eleventh consecutive year, Accounting Today has named Hewitt one of the Top 100 most influential persons in the tax industry. He has founded two of the top three franchised tax companies.
    About Liberty Tax Service

    Liberty Tax Service is the fastest growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 9,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service. Each office provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax. Liberty Tax Service has been ranked on Entrepreneur magazine’s annual “Franchise 500” every year since 1998.

  • Frustrated and Disgusted


    So now I am confused. From the last time I looked, Liberty had sold over 4500+ territories. Some territories have multiple stores, so there are probably at least 1500-2000+ empty territories, most likely from people who have failed? And you think this is something to be proud of ?

  • testaipira


    Why are you mad that Liberty has reached 4000 territories… Obviously, you want them to fail so you can feel good about yourself. Give it up! A lot of people including myself, have bought a bunch of territories but we have a 3 or 4 years before we must open them. I just bought them to secure them now instead of when they will be going for $80k.

  • testaipira:

    I personally don’t want individual franchisees to fail, I want JTH Inc. to fail. I don’t think one franchisee would cry if they had to go it alone.

    thank you for the information on the 4000 store which includes the stores in the US. and Canada. Liberty has always been good at coloring the facts.

    Based on Liberty news releases at the end of the 2010 (2009 tax year) tax season Liberty said they prepared over 8,000,000 individual returns and after the 2011 (2010 tax year) tax season they prepared over 9,000,000 returns so we can guestimate they prepared around a 1,000,000 to 1,200,000 returns. If we use the high figure and divided it by the number of stores that season (3294) we come up with an average of 364 returns. Take out the 100 free returns per store and that leaves an average of 264 returns. This is much lower then the 600 average Liberty has their first year stores budget for.

    The fact of the matter Liberty grew too fast for its own good. It should have developed a strong regional present and built brand loyalty. Instead it sold franchiees to anyone, anywhere regardless of the ability of the individual or the quality of the territory. There is no methodology in place that can insure that all franchisees are trained approprately to provide consistent and quality service across the board. This is based on believing that JTH truely wanted to build a business to compete with HR Block.

    The reality is it’s all about selling franchises and now John Hewitt is going in for the payoff by having an IPO. Unfortunately he dosen’t know what he’s doing just like he didn’t know what he was doing when he bought e-smart.

    No one in this current investment enviroment is going to invest 90,000,000 in a business model that is outdated. The future of the tax industry is with the technology that Intuit and HR Block are displaying this year. Libery’s presents on the internet is through facebook a place for unhappy customers and here a place for Unhappy Franchisees.

    Buyer beware!!!!

  • Frustrated and Disgusted


    As could have been expected, your numbers don’t add up. It’s good you use software to do income taxes, but be careful, from experience, Liberty software is often wrong. I do not want people to invest in a business that the chances of succeeding the first year is close to 50/50. Liberty’s business model is a loser, and people should know it.

  • The amount of territories for Liberty do not determine how many unhappy franchisees there are. The royaly fees are huge and eat into the ability to make a profit. You can work at a tax office and learn the business in a season or two and save yourself the franchise fee and thousands of dollars in royalties.

  • If your disgruntal about your current tax franchise situation or looking to break in to the industry try Colbert/Ball Tax Service. This is an exciting time for our entire franchise system. Over the next two years we plan to make available more than 5,000 new territories across the U.S. We would like for you to join us in our mission to provide top quality tax preparation with fast refunds to middle and low income wage earners nationwide.

    We are looking for motivated individuals who want to be in business for themselves but not by themselves. Colbert/Ball Tax Service is one of the most successful companies in the tax preparation industry. We were recently awarded the Pinnacle Award for outstanding achievement as a tax service business. Our management team has larger than 40 years combined experience in the tax industry. If selected, you will become part of a family oriented team of tax industry experts.

    I will be in touch with you shortly to discuss the process & qualifications required to be granted a Colbert/Ball Tax franchise. We strongly feel that this is by far, one of the most exciting franchise opportunities of the 21st century and we want to share it with YOU!

    Thank you again for your interest in Colbert/Ball Tax service. For additional information visit our website at

    Best Regards,

    Andrew Olemgbe
    Franchise Consultant

  • Pingback: H&R BLOCK To Close 200 Company Locations, Cut 350 Jobs : Unhappy Franchisee

  • Im a semi-retired corporate accountant looking to break into the tax prep business. All this back and forth turns me off to the idea. There has to be positve feedback. Not looking to become rich, just something to keep my mind fresh while helping others with thier tax returns.

    Any good storie to share.


  • Todd A. Peterson

    Anthony if it involves franchising RUN! Start up your own business! You don’t need a middle man (Franchisor) to treat you criminally after you sign THEIR agreement.

    If you are SERIOUSLY considering franchising please look at the contract in GREAT DETAIL! Especially the part about if you have a problem with your franchisor and where you will have to be represented if you have a problem.

    My agreement says that I have to submit in writing first a disagreement which I did.

    Then it says I have to go through ARBITRATION. Now I am being told that it is BINDING ARBITRATION even though I don’t read that into my contract.

    Basically anyone who signs up with a franchisor who is PARTNERED with the IFA can expect to get ROYALLY SCREWED by their franchisor while the IFA, your Attorney General, State Representative, State Congressman and Governor sits on their hands and does NOTHING!

  • Joe Gotripped

    You think that’s bad, my franchisor took money and knew I was going to sue so took me to local civil court for some silly nonsense I didn’t even do and asked for a sttop on my already filed and paid for arbitration and the did it. Now I have to appeal the damn unfair decision to get to arbitration and claim what’s rightfully mine. Wasted so much money and the tax franchises are pretty much designed for just the franchisee to make money. Learn the business for a year working at a franchise and start your own. Wish I did it that way.

  • Joe Gotripped

    Wow don’t know any tax franchisee besides one in Harlem, NY making any money. Feel sad for them. The Franchise itself has hefty minimum fees or hidden fees so they make money whether you fail or not. And guess what if you fail they just take back your territory and resell it while you are not able to get back into the business within a certain amount of miles and years because of the non-compete.

  • Liberty is a scam

    Liberty is not a company you want to be a part of. They add to there numbers. More than half of their offices lose money year after year. The ones that do good, only do that by ripping the custimers off. Liberty locations under Alex Davis in north ga.

  • SanFranDan

    ^^Liberty is a scam:

    I agree. Come over to the main LTS forum and join our discussion.

Leave a Reply

Your email address will not be published. Required fields are marked *