B64/100FDD 2025
H&R Block — Litigation & Risk
Business Services - Tax & Financial · FDD Items 3, 4 & 5
Elevated Risk
8 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
8
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
64 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
43
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$15.7M
Avg loan size
$366K
Participating lenders
26
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Missouri
State whose law governs disputes — relevant if you're not based there
What drove the 64/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-6.9% YoY) suggests system contraction and potential market saturation or franchisee dissatisfaction
- 02MINORExtremely high royalty structure (60% on first $5,000, then 40%) consumes majority of early-stage revenue, creating cash flow pressure
- 03MEDNo average revenue or net income disclosed in FDD Item 19, making ROI projections impossible and preventing informed investment decisions
- 04HIGHMultiple active litigation matters including FTC settlement, class actions on deceptive fees, and restrictive covenant disputes indicate compliance and reputational issues
- 05MINORUnprotected territory exposes franchisees to direct competition from other H&R Block franchisees and company-owned locations
- 06MINORDeclining system size suggests fewer operational references and reduced collective bargaining power for franchisees
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.