Liberty Tax ServiceFranchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A Liberty Tax Service franchise requires a total initial investment of $42K – $61K, including a $15K franchise fee and an ongoing 14.0% royalty[2]. Per the 2024 FDD, average unit revenue was $147K[2]. SBA 7(a) loans show a 11.7% charge-off rate across 264 loans[1]. Verdict grade: F. Run a live ROI scan →
Data last verified June 18, 2026 · figures per the 2024 FDD issuance
Overview
- Investment
- $42K – $61K
- 14th pct Financial Ser…
- Avg gross sales
- $147K
- 5th pct Financial Ser…
- Royalty
- 14.0%
- 23rd pct Financial Ser…
- Units
- 1,885
- 61st pct Financial Ser…
- SBA default
- 11.7%
- system-wide median varies by category
Quick verdict · Financial Services · color = vs category peers
Green = >15% above Financial Services avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Franchising since 1997. Systems this mature have refined operations and brand recognition.
Franchised units fell from 2121 to 1813 over 3 years. Investigate why operators are leaving.
82 legal cases disclosed in the FDD. Read Item 3 before signing.
Large franchise systems benefit from brand recognition, supply chain leverage, and proven operations.
Bottom line
- Total investment $42K – $61K including a $15K franchise fee, 14.0% ongoing royalty.
- Average unit revenue of $147K/year (median $132K).
- Verdict F (Bottom Quintile) with a risk score of 78/100. SBA loan charge-off rate of 11.7% across 264 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2024).
- 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
- Legal entity
- JTH Tax LLC
- Parent company
- BP LTCT LLC
- Incorporated in
- DE
- HQ
- 2387 Liberty Way, Virginia Beach, VA 23456
- Auditor
- Deloitte & Touche LLP
- Audited financials
- Franchisor revenue
- $118K
- vs $101K prior year
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.
- CEO
- Scott Terrell
- Headquarters
- VA
- Founded
- 1996
- FDD year
- 2024
- States available
- 50
FDD Item 7 · 2024 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $15K | $15K |
| Working capital (3–6 mo) | $3K | $5K |
| Equipment, build-out, other | $24K | $42K |
| Total initial investment | $42K | $61K |
Source: Liberty Tax Service 2024 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
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
$6K
4.0% margin
Unlevered ROIC
11%
EBITDA / total invested capital
Payback
9.4 yrs
cash-on-cash, unlevered
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $42K – $61K
- Better than avg vs category
- Liquid capital req'd
- $3K – $5K
- Better than avg vs category
- Franchise fee
- $15K – $15K
- Better than avg vs category
- Royalty
- 14.0%
- percentage_of_gross · typical 6–8%
- Ad fund
- 5.0%
- typical 3–5%
- Total fee load
- 19.0%
- 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 | 19.0% of rev |
At 19.0% total fee load, roughly $28K per year goes to the franchisor before you pay a single operating expense.
Financial Performance
- Avg gross sales
- $147K
- Per unit, per year
- Median gross sales
- $132K
- Item 19 type
- Average Prep Fees
- Sample size
- 1789 units
- vs category median 97 · large
- Range (low → high)
- $2K→$926K
- Cohort dispersion (min → max)
- Transparency
- 4 / 5
- vs category median 0 / 5 · above
Compared against 58 Financial Services brands
vs Financial Services averages
How Liberty Tax Service Compares
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 1,885
- Opened
- 23
- Last reporting year
- Closed
- 149
- Turnover rate
- 7.9%
- Company-owned
- 72
- Corporate units in the system
- % franchised
- 96%
- vs corporate-owned
- Net growth (yr3)
- -8.9%
- Net unit change last year
- 3-yr CAGR
- -14.5%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 77
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
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
Vintage analysis
Liberty Tax Service charge-off rate by loan vintage
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.
Risk analysis
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.
Audited financials (Item 21)
Yes · Deloitte & Touche LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Score breakdown · what drove the 78 / 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
| Initial term | 5 years |
|---|---|
| Renewal term | 5 years |
| Territory type | Geographic / Population-based |
| Protected territory | Yes |
| Online sales rights | Granted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Right of first refusalℹ | Yes |
| Termination notice | 7 days |
| Mandatory arbitration | Yes |
| Jury trial waiver | Yes |
| Governing law | Virginia |
| Litigation count | 82 |
Items 10, 11
Training & Operations
- Classroom training
- 20 hrs
- On-the-job training
- 8 hrs
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 (2024) 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 $42K – $61K, with an initial franchise fee of $15K. 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 $147K. The median is $132K. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
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 1,885 total units in the United States, including 2,121 franchised units and 72 company-owned units. 23 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 F-grade franchise with a risk score of 78 out of 100, 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.
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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.