Liberty Tax Service
Bottom line
- Total investment $42K – $61K including a $15K franchise fee, 14.0% ongoing royalty.
- Average unit revenue of $147K/year (median $132K).
- Rated MODERATE with a risk score of 65/100. SBA loan default rate of 0.0% across 314 loans (below the industry average).
- 82 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Liberty Tax Service unit return on the cash you put in?
Unlevered ROIC · per unit
11%
Below typical band (30–60%)
Overview
About
Franchisees operate tax preparation and financial services offices, primarily serving individuals filing annual income tax returns during tax season (January–April). Day-to-day activities include client intake, tax return preparation (often using franchisor software), filing, and ancillary services like refund loans and bookkeeping. Revenue concentration in Q1–Q2 creates cash flow volatility and off-season staffing challenges.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 30 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 phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
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.
Score breakdown · what drove the 65 / 100 rating
- 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
- 03MINORNo Item 19 (average net income) disclosure combined with $147k average revenue raises profitability questions—14% royalty on declining revenue severely impacts franchisee margins
- 04HIGHGoing Concern = False suggests franchisor financial distress, heightening risk of operational support degradation or system collapse
- 05MINORHigh 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
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
97 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Liberty Tax Service · FDD (2024) PDF