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D68/100FDD 2025
Jackson Hewitt Tax Service — Litigation & Risk
Business Services - Tax & Financial · FDD Items 3, 4 & 5
Moderate — Review
5 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
5
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
68 / 100
FranchiseVerdict composite
Rating
CAUTION
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
164
Government-backed loans issued
Default rate
4.9%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
7 loans
Loans charged off or defaulted
Total loan volume
$60.2M
Avg loan size
$367K
Participating lenders
73
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
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
Florida
State whose law governs disputes — relevant if you're not based there
What drove the 68/100 rating
Risk Score Breakdown
- 01MINORUnit count declining 3.6% YoY (5,197 to ~5,011 units) indicates shrinking franchise system and potential market saturation or franchisee dissatisfaction
- 02MINORNo net income disclosure (Item 19) prevents financial viability assessment; average revenue of $117,660 may be insufficient after 3-15% royalties, operating costs, and seasonal tax service volatility
- 03HIGHLitigation portfolio reveals recurring business model issues: state investigations into grant programs, class actions over customer fees, franchisee disputes over incentives, and antitrust no-poach provisions suggest systemic franchisor-franchisee tension
- 04MEDRoyalty structure up to 15% is punitive on disclosed average revenue of $117,660 (up to $17,649 annually), creating thin margins before expenses
- 05HIGHTax preparation is highly seasonal (peak Dec-Apr) creating cash flow and staffing challenges; no going concern status suggests franchisor stability questions
- 06MEDHigh initial investment ($71,050-$105,000) combined with declining unit count and undisclosed profitability creates unfavorable risk-reward ratio
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.