Verified — real FDD extraction
Not found in the SBA Franchise Directory under this name — though SBA loans to its franchisees exist; verify eligibility with your lender
H&R Block
Other · independent · est. —
H&R Block is a tax preparation franchise providing individual income tax filing and related services. A franchisee operates a retail tax office staffed by trained preparers, serving consumers and small businesses with heavy seasonal volume around tax deadlines.
H&R Block net unit count declined -5.2% from 2017–2019 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Proven & steady
Distress
A real track record with an unremarkable region of the ledger: neither the growth nor the exits stand out, for better or worse. The main concern in the record: the system is shrinking.
Exit rate · latest year
3.9%
fiscal 2019, per Item 20
Cost to open
$32K–$149K
Item 7 total investment range
SBA loan defaults
2.7%
vs 14.8% avg across rated brands
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2017–2019
Survival record
FDD Item 20 · outlet status by year
In fiscal 2019, 129 of 3,345 franchised outlets left the system — a 3.9% annualized exit rate. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2017 | 2018 | 2019 |
|---|---|---|---|
| Outlets at start | 10,192 | 10,046 | 10,106 |
| Opened | 61 | 105 | 48 |
| Transfers | 125 | 129 | 123 |
| Terminations | 11 | 18 | 20 |
| Non-renewals | 1 | 0 | 1 |
| Reacquired by franchisor | 172 | 101 | 128 |
| Ceased — other reasons | 64 | 32 | 108 |
| Outlets at end | 10,046 | 10,106 | 9,524 |
| Net change | -146 | +60 | -582 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 150 SBA-backed loans to H&R Block franchisees since 1991. Of the 110 that have resolved, 2.7% were charged off (defaulted) rather than paid in full, versus 14.8% across 576 rated brands.
2.7%
3 of 110 resolved defaulted
81.6%
avg. charged-off $ ÷ approved $
2.2%
default rate × loss severity
$323,661
what recent franchisees borrowed
53 mo
approval → charge-off, defaulted loans
10 vs 35
distinct banks — pulling back
Charge-off rate by loan approval year (%)
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO H&R BLOCK BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
The owner's side of the deal
FDD × federal loan record
Who finances it
Union Bank and Trust Company
7.7% of this brand's loans
Who buys it
61.7%
first-time franchise owners
The rest already owned at least one other franchise. Across the corpus, brands bought mostly by repeat operators charge off at roughly 10% versus 17% for brands sold mostly to newcomers.
Does experience help here?
−2.6pp
multi-unit vs single-unit owners
Owners of multiple units default at 0.0%; single-unit owners at 2.6%.
Computed from 150 SBA 7(a)/504 loans to H&R Block franchisees joined to the brand's own FDD. Debt service assumes level amortization at the average disclosed term and rate. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $3K franchise fee (Item 5) and a total investment of $32K–$149K (Item 7). The franchisor publishes no earnings claim (Item 19) — ask current and former franchisees for real numbers.
To open (Item 7)
$32K–$149K
all-in investment range
Franchise fee (Item 5)
$3K
upfront, one-time
Royalty (Item 6)
40%
of sales, ongoing
Your figure — this brand discloses no Item 19 earnings; validate with current & former owners.
Royalty you'd pay / yr
$400K
40% of sales, before profit
Over a 10-yr term
$4M
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for H&R Block with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 16 wage cases against operators of this system, recovering $444K in back wages for 592 workers. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
16
Back wages owed
$444K
Employees affected
592
Since 2020
1
Read this carefully. The employers in these cases are individual H&R Block franchisees — separately owned businesses operating under the brand name — not H&R Block itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2022.
Modeled risk
FDD Risk Score · modeled from the public record
Modeled from the public record, this brand looks safer than 94% of systems we score.
Risk percentile
6 / 100
Measured
Modeled SBA charge-off
6.3%
Observed SBA charge-off
2.7%
Top drivers: System size (log units) (lowers) · Royalty rate (lowers) · Share financed by high-loss lenders (lowers) · Item 3 litigation (log) (lowers). 50+ resolved loans and complete disclosure data — the score is checkable against the brand's observed rate. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
No recent closures, bankruptcies, or major lawsuits found in the news for H&R Block. That's a good sign — but it reflects news coverage, not a guarantee.
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing H&R Block's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →H&R Block franchise questions, answered from the filings
What percentage of H&R Block franchises closed last year?
In H&R Block's latest FDD Item 20 (fiscal 2019), 129 of 3,345 franchised outlets left the system — an annualized exit rate of 3.9%. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a H&R Block franchise cost?
Per H&R Block's 2019 FDD, buying in requires an initial franchise fee of $3K (Item 5) and a total initial investment of $32K–$149K (Item 7).
What royalty does H&R Block charge?
H&R Block charges an ongoing royalty of 40.0% of gross sales, per Item 6 of its 2019 FDD.
Does H&R Block disclose earnings (Item 19)?
No — H&R Block's 2019 FDD makes no financial performance representation in Item 19. That is legal and common, but it means the franchisor publishes no earnings claim; ask current franchisees for real numbers.
How often do SBA loans for H&R Block franchises default?
Across 150 SBA-backed loans to H&R Block franchisees since 1991, 3 of the 110 that have resolved were charged off — a 2.7% default rate, versus about 14.8% across all rated franchise brands. This is the lender's-eye view of franchisee failure, drawn from public SBA 7(a)/504 FOIA data and independent of the franchisor's own disclosures.