Liberty Tax Service Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Liberty Tax is a tax-preparation franchise serving individual filers in offices and online. Franchisees run seasonal storefront locations preparing and e-filing returns using the brand's software and marketing.
FranchiseVerdict summary · 2026
A Liberty Tax Service franchise requires a total initial investment of $50K – $71K, including a $25K franchise fee and an ongoing 14.0% royalty[2]. Per the 2026 FDD, average unit revenue was $165K[2]. SBA 7(a) loans show a 11.7% charge-off rate across 264 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2026 FDD issuance
Overview
- Investment
- $50K – $71K
- 20th pct Financial Ser…
- Avg gross sales
- $165K
- 7th pct Financial Ser…
- Royalty
- 14.0%
- 25th pct Financial Ser…
- Units
- 1,663
- 77th pct Financial Ser…
- SBA charge-off
- 11.7%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Financial Services · color = vs category peers
Green = favorable by >10% vs Financial Services avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $50K – $71K including a $25K franchise fee, 14.0% ongoing royalty.
- RETURNSAverage unit revenue of $165K/year (median $139K).
- RISKVerdict A (Strongest tier), verdict score 71/100 (higher is better). SBA loan charge-off rate of 11.7% across 264 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- FLAGBankruptcy history disclosed in the FDD. Review Item 4 for details before proceeding.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- JTH Tax LLC d/b/a Liberty Tax Service
- Parent company
- LT Intermediate Holdco, LLC (direct); ultimate parent BP LTCT LLC
- Ultimate parent
- BP LTCT LLC
- CEO title
- Chief Executive Officer
- Scott Terrell
- Incorporated in
- Delaware
- HQ
- 2387 Liberty Way, Virginia Beach, VA 23456
- Auditor
- Deloitte & Touche LLP
- Audited financials
- Franchisor revenue
- $88.6M
- vs $100.9M prior year
Overview
About
- CEO
- Scott Terrell
- Headquarters
- VA
- Founded
- 1996
- FDD year
- 2026
- States available
- 14
Can you afford it, and what does the money buy?
Entry cost runs 54% below the typical financial services franchise.
Source: FDD 2026 · Items 5–7
FDD Item 7 · 2026 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $25K | $25K |
| Working capital (3–6 mo) | $3K | $5K |
| Equipment, build-out, other | $22K | $42K |
| Total initial investment | $50K | $71K |
Source: Liberty Tax Service 2026 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $50K – $71K
- Top 40% of category vs category
- Liquid capital req'd
- $3K – $5K
- Top 40% of category vs category
- Franchise fee
- $25K – $25K
- Top 40% of category vs category
- Royalty
- 14.0%
- percentage · typical 6–8%
- Ad fund
- 5.0%
- typical 3–5%
- Total fee load
- 0.2%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 14.0% of gross sales |
| Marketing / ad fund | 5.0% of gross sales |
| Transfer fee | $5K |
| Renewal fee | $0 |
| Total fee load | 0.2% of rev |
A 0.2% total fee load is unusually lean. More of each revenue dollar stays with the franchisee.
What do units actually make?
Average unit sales run 35% below the financial services norm.
Source: FDD 2026 · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$7K
4.0% margin
Unlevered ROIC
10%
EBITDA / total invested capital
Payback
9.8 yrs
cash-on-cash, unlevered
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one Liberty Tax Service unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
10%
Below the 30–60% attractive-franchise band
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2026 FDD
Financial Performance
- Avg gross sales
- $165K
- Per unit/yr · from the Item 19 franchised-cohort breakdown (no single system-wide average disclosed)
- Median gross sales
- $139K
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- historical average median
- Sample size
- 1,411 outlets
- vs category median 72 · large
- Range (low → high)
- $5K→$1.1M
- Cohort dispersion (min → max)
- Reporting year
- 2025
- Fiscal year the figures cover
- Source filing
- FDD 2026
- Disclosed in the 2026 filing, covering 2025
- Transparency
- 4 / 10
- vs category median 0 / 10 · above
Compared against 45 Financial Services brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $165K/year in gross sales. Median is $139K — top performers pull the average up, so a typical unit earns less. Revenue-to-investment ratio: 2.7x.
Fee burden
Total ongoing fee load of 0.2% — below the Financial Services average of 17.0%.
Disclosure
Transparency score 4/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Financial Services averages
How Liberty Tax Service Compares
Is the system healthy?
Source: FDD 2026 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 1,663
- Opened
- 22
- Last reporting year
- Closed
- 28
- Terminated
- 62
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 38
- Term expired, not renewed (per Item 20)
- Turnover rate
- 8.3%
- Company-owned
- 126
- Corporate units in the system
- % franchised
- 92%
- vs corporate-owned
3-year detail · Item 20
- Opened (3yr)
- 22
- Closed (3yr)
- 28
- Terminated (3yr)
- 62
- Non-renewed (3yr)
- 38
- Transfers (3yr)
- 59
- Reacquired (3yr)
- 43
- Franchisor bought back
Last reporting year only, multi-year history not disclosed in this brand's FDD.
Item 20 · 41 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator. Not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 264
- Loan volume
- $41.2M
- Median loan
- $60K
- 50th percentile
- Charge-off rate
- 11.7%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 88.3%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 107
- Defaults
- 27
- Typical loan rate
- 6.6%
- avg rate to borrowers
- Franchised industry avg
- 7.8%
- brand above franchise avg ↑
- Jobs supported
- 4,038
- 9.8 per loan
- Lender concentration
- 6%
- top lender's share
Borrower mix: 13% went to startups / new businesses, 87% to established operators
Franchise vs independent — in tax preparation services, franchised businesses charge off at 7.8% vs 17.7% for independents — franchising is associated with 56% lower SBA default risk in this category.
Vintage analysis
Liberty Tax Service charge-off rate by loan vintage
Top lenders financing Liberty Tax Service franchisees
Showing 3 of 107 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into Liberty Tax Service's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 10 lenders with concentration factor
- Per-state charge-off rates across 15 states
- Startup risk premium and job creation velocity
- 26-year lending trend
- SBA 504 real estate/equipment data
Instant access. No subscription.
What could kill this investment?
SBA loans charge off at 11.7% — 27% below the 16.0% national norm, i.e. lower lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Liberty Tax Service exhibits acute systemic distress: a collapsing franchise network (−8.9% YoY), regulatory scandals with DOJ settlement, zero profitability transparency, and franchisor going concern issues—collectively signaling high franchisee failure risk and diminishing brand viability.
Litigation (Item 3)
32 disclosed actions including franchisee breach-of-contract/termination suits (several filed by JTH Tax in 2025), a DOJ enforcement action re: franchisee tax-return fraud controls (settled Dec 2019, monitor imposed), a DC AG consumer-protection settlement re: Cash-In-A-Flash promotion ($550K+ $200K), multiple securities class actions and shareholder derivative suits tied to former CEO John T. Hewitt (some settled for $1.4M in fees), a California wage-and-hour class action settled for $1.2M+ (stayed/resolved via Canadian bankruptcy), state regulatory actions (Virginia, Minnesota, Wisconsin FDD violations), and trademark/franchise-termination litigation with former franchisees/area developers.
Largest disclosed settlement: $1,200,000
Bankruptcy (Item 4)
Disclosed in last 7 years
Former parent NextPoint Financial Inc. (Chapter 15, US Bankruptcy Court for Delaware, Case No. 23-10983, filed July 26, 2023) and related Canadian CCAA proceeding (Supreme Court of British Columbia, filed July 25, 2023); Liberty Tax assets sold to lenders associated with current parent BP LLC on January 2, 2024. Current CEO Scott Terrell and CLO William Harvey were principal officers when these cases were filed.
Audited financials (Item 21)
Yes · Deloitte & Touche LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results — the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: Yes
Score breakdown · what drove the 71 / 100 verdict
- 01MINORSystem contracting sharply: 1,885 units declining 8.9% YoY signals accelerating franchisee exits and market saturation
- 02HIGHExtensive litigation including DOJ/IRS settlement and class actions indicates regulatory scrutiny, reputational damage, and potential ongoing compliance costs
- 03HIGHGoing Concern = False suggests franchisor financial distress, heightening risk of operational support degradation or system collapse
- 04MINORHigh royalty burden (14% of gross receipts) leaves minimal cushion given seasonal tax prep business and declining unit count indicates franchisees unable to sustain profitability
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 0.2% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2026 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 5 years |
|---|---|
| Renewal term | 5 years |
| Territory type | none |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Territory population | 7,750 |
| Online sales rightsℹ | Granted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 25 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 7 days |
| Curable defaultsℹ | 6 |
| Mandatory arbitration | No |
| Arbitration location | Virginia (litigation forum); Indiana, Illinois, and North Dakota franchisees must arbitrate before the American Arbitration Association |
| Jury trial waiver | Yes |
| Governing law | VA |
| Litigation count | 32 |
View Item 3 litigation summary
32 disclosed actions including franchisee breach-of-contract/termination suits (several filed by JTH Tax in 2025), a DOJ enforcement action re: franchisee tax-return fraud controls (settled Dec 2019, monitor imposed), a DC AG consumer-protection settlement re: Cash-In-A-Flash promotion ($550K+ $200K), multiple securities class actions and shareholder derivative suits tied to former CEO John T. Hewitt (some settled for $1.4M in fees), a California wage-and-hour class action settled for $1.2M+ (stayed/resolved via Canadian bankruptcy), state regulatory actions (Virginia, Minnesota, Wisconsin FDD violations), and trademark/franchise-termination litigation with former franchisees/area developers.
Items 10, 11
Training & Operations
- Classroom training
- 24 hrs
- On-the-job training
- 8 hrs
- Training location
- Virginia Beach, VA or Dallas Fort Worth, TX (IOT); selected existing franchisee locations nationwide (HOT)
- Ongoing training
- Required
- Site selection
- franchisor_approved
- Franchisor financing
- Offered
- Item 10
Items 5 & 11
Franchisor Support
Item 20 · call current owners
Franchisee Contacts
186 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
Liberty Tax Service · FDD (2026) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Liberty Tax Service franchise?
The total investment to open a Liberty Tax Service franchise ranges from $50K – $71K, with an initial franchise fee of $25K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Liberty Tax Service franchise owners earn?
According to Item 19 of the Liberty Tax Service FDD, the average gross sales per unit is $165K. The median is $139K. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Item 19 in the Liberty Tax Service FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Liberty Tax Service FDD and qualifies whose outlets they describe.
What is Liberty Tax Service's franchise failure rate?
Based on SBA 7(a) loan data, Liberty Tax Service has a charge-off rate of 11.7% across 264 loans, meaning 11.7% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Liberty Tax Service franchise locations are there?
As of their most recent FDD filing, Liberty Tax Service has 1,663 total units in the United States, including 1,537 franchised units and 126 company-owned units. 22 new units were opened in the latest reporting year.
Is Liberty Tax Service a good franchise to buy?
FranchiseVerdict rates Liberty Tax Service as a A-grade franchise with a verdict score of 71 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.