Owning a business is a dream for many, and thanks to franchise businesses, achieving this dream gets a little easier with it.
If you are someone who is looking for an affordable franchise opportunity in the tax industry, then you must have come across H&R Block & might be hoping to find out H&R Block franchise owner salary, profit, investment cost, etc.
So if this is what you have been looking for, then make sure you read this guide till the end, and we will tell you exactly if this franchise is worth it or not.
H&R Block In a Nutshell
H&R Block is a tax return preparation business that was founded in 1955 by two brothers, Henry W. Bloch and Richard A. Bloch, to help people with their income tax preparation.
The company claims that every seven out of ten Americans have their income tax prepared by H&R Block and takes pride in having prepared 800 million tax returns worldwide.
H&R Block offers a wide range of services, including electronic filing, online tax preparation, payroll, and business consulting services, among others.
If you are a budding entrepreneur who is looking to invest in the H&R Block franchise, then keep on reading to find out if this is a good investment or not.
How Much Does An H&R Block Franchise Owner Make?
The earnings of an H&R Block franchise could vary depending on a number of factors such as the operating expenses, location, number of employees working, etc.
The company has not revealed the exact revenue or sales figure of its franchise in its franchise disclosure document.
But as per the available sources, we can tell you that an H&R Block franchise owner generates an average unit volume of $130,661 on average.
How Much Does An H&R Block Employee Earn?
The salary for an H&R Block employee could vary depending on their skill set, experience level, position, department, etc.
However, as per ZipRecruiter, an H&R Block employee makes a minimum of $8.31 for the position of a receptionist and $19.23 for the position of Bookkeeper on average.
If we see this in yearly terms, then the pay of an H&R Block employee ranges between $17,283 to $40,000 a year on average.
How Much Does An H&R Block Cost?
The total investment required to open an H&R Block franchise lies in the range of $31,557 to $157,898, with the average being $94,727.
Here’s an expense breakdown of owning an H&R Block franchise:
| Type of Expenditure | New Outlet Amount | To Whom Payment is to Be Made | |
|---|---|---|---|
| From | To | ||
| Initial Franchise Fee | $2,500 | $2,500 | Us |
| Real property (Estimated Cost total is for three months) | $1,400 | $30,000 | Landlord |
| Leasehold improvements; construction costs | $0 | $50,000 | Contractor |
| Signage | $1,200 | $6,500 | Us, carrier, and installers |
| Furniture, Fixtures, Decor items | $15,000 | $30,000 | Suppliers |
| Equipment | $8,000 | $12,000 | Suppliers and us |
| Opening | $500 | $1,000 | Suppliers |
| Pre-opening salaries, travel, and initial training | $1,500 | $3,000 | Suppliers of transportation, food, and lodging |
| Start-up suppliers | $500 | $500 | Suppliers and us |
| Insurance | $477 | $798 | Affiliate Insurers |
| Zoning Expenses | $0 | $500 | Various government entities |
| Utility deposits | $50 | $300 | Landlord, utility companies |
| Architect design | $0 | $4,500 | Architect |
| Professional fees | $0 | $2,500 | Professionals |
| Additional Funds | $430 | $12,000 | Various |
| Applicable business licenses, if required | $0 | $1,800 | Various government entities |
| TOTAL | $31,557 | $157,898 | – |
H&R Block Franchise Financial Requirements And Fees
| Fees or Expenses | Amount |
|---|---|
| Liquid Capital | Not available |
| Net Worth | Not available |
| Total Investment | $31,557 to $157,898 |
| Franchise Fee | $2,500 |
| Advertising expenses | Not available |
| Royalty fee | 6% |
Pros & Cons Of H&R Block Franchise
Pros Of H&R Block Franchise
- Strong brand image
- Low start-up cost
- Outstanding results in untapped markets
- Leading position in market
- Effective distribution network
Cons Of H&R Block Franchise
- High sourcing expenses
- Stiff competition
- Demographic shifts
H&R Block Franchise Average Revenue & Profit
As per the median initial investment of $94,727 and AUV of $130,661, if we consider a profit margin of 25% to 35%, then an H&R Block franchise owner generates estimated profits of $32,665 to $45,731.
Since the company has not provided any information regarding its franchise’s financials, we had to assume the profit margin.
H&R Block Company Average Revenue & Profit
| Years ended in April 30, | |||
|---|---|---|---|
| 2021 | 2020 | 2019 | |
| REVENUES: | |||
| Service revenues | $3,067,223 | $2,327,323 | $2,691,727 |
| Royalty, product and other revenues | $346,764 | $312,397 | $403,154 |
| $3,413,987 | $2,639,720 | $3,094,881 | |
| OPERATING EXPENSES: | |||
| Costs of revenues | $1,842,092 | $1,712,276 | $1,756,922 |
| Impairment of goodwill | – | $106,000 | – |
| Selling, general and administrative | $802,268 | $744,361 | $722,167 |
| Total operating expenses | $2,644,360 | $2,562,637 | $2,479,089 |
| Other income (expense), net | $5,979 | $15,637 | $16,419 |
| Interest expense on borrowings | ($106,870) | ($96,094) | ($87,051) |
| Income (loss) from continuing operations before income taxes (benefit) | $668,736 | ($3,374) | ($545,160) |
| Income taxes (benefit) | $78,524 | ($9,530) | ($99,904) |
| Net income from continuing operations | $590,212 | ($6,156) | ($445,256) |
| Net loss from discontinued operations, net of tax benefits of $3,883; $4,085 and $6,788 | ($6,421) | ($13,682) | ($22,747) |
| NET INCOME (LOSS) | $583,791 | ($7,526) | $422,509 |
| BASIC EARNINGS (LOSS) PER SHARE: | |||
| Continuing operations | $3.11 | $0.03 | $2.16 |
| Discontinued operations | ($0.03) | ($0.07) | ($0.11) |
| Consolidated | $3.08 | $0.04 | $2.04 |
| COMPREHENSIVE INCOME (LOSS): | |||
| Net Income (loss) | $583,791 | ($7,526) | $422,509 |
| Change in foreign currency translation adjustments | $56,362 | ($31,160) | ($6,113) |
| Other comprehensive income (loss) | $56,362 | ($31,160) | ($6,113) |
| Comprehensive income (loss) | $640,153 | ($38,686) | $416,396 |
For the franchisor, H&R Block is a very profitable business.
As you can see, the retained earnings in 2021 for H&R Block franchisor was $640.15 million, indicating a growth of 53.73% when compared to the earnings of $416.39 million in 2019.
H&R Block Franchise Failure Rate
To see the failure rate of H&R Block Franchise, let us have a look at the number of outlets that opened and closed during 2019-2021 below:
Franchised Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2019 | 3,345 | 3,136 | -209 |
| 2020 | 3,136 | 2,886 | -250 |
| 2021 | 2,886 | 2,752 | -134 |
For the Franchised outlets:
- In 2019, the failure rate was (209)/3345×100≈ 6.24%
- In 2020, the failure rate was (250)/3136×100≈ 7.97%
- In 2021, the failure rate was (134)/2886×100≈ 4.64%
Company-Owned Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2019 | 6,761 | 6,388 | -373 |
| 2020 | 6,388 | 6,590 | +202 |
| 2021 | 6,590 | 6,601 | +11 |
For the Company-owned outlets:
- In 2019, the failure rate was (373)/6388×100≈ 5.83%
- In 2020, the growth rate was (202)/6590×100≈ 3.06%
- In 2021, the growth rate was (11)/6601×100≈ 0.16%
Total Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2019 | 10,106 | 9,524 | -582 |
| 2020 | 9,524 | 9,476 | -48 |
| 2021 | 9,476 | 9,361 | -115 |
For Total outlets:
- In 2019, the failure rate was (582)/9524×100≈ 6.11%
- In 2020, the failure rate was (48)/9476×100≈ 0.50%
- In 2021, the failure rate was (115)/9361×100≈ 1.22%
According to the above-mentioned data, we can say that a lot of H&R Block Franchise outlets closed down between 2019-2021, showing a failure rate between 6.24% and 4.64%.
As for the company-owned outlets, there was a failure rate of 5.83% in 2019, but then the company grew between 2020 and 2021, showing a growth rate between 3.06% and 0.16%.
However, if we combine the data of franchise and company-owned outlets, overall we can see that a lot of H&R Block outlets have closed between 2019-2021, showing a total failure rate between 6.11% and 1.22%.
H&R Block Franchise Payback Period
To determine the payback period of H&R Block franchise, let us do some calculations. Considering all the costs such as, revenue, initial franchise fees, profit, etc.
| AVERAGE INVESTMENT | $94,727 |
| AVERAGE REVENUE PER OWNER | N/A |
| AVERAGE PROFIT PERCENTAGE | 30% |
| AVERAGE PROFIT PER YEAR | $39,198 |
| AVERAGE PAYBACK PERIOD | 2.5 years |
PAYBACK PERIOD = TOTAL INVESTMENT / PROFIT PER YEAR
= 94727/39198 = 2.41 = 2.5 years based on median.
The average investment for a H&R Block Franchise is $94,727.
With an average profit percentage of 25-35%, the average profit per year is $39,198.
This means that the average payback period for a H&R Block Franchise is 2.5 years, as the total investment of $94,727 would be recouped within this period.
Is H&R Block Franchise Profitable?
As we saw from the figures above, an H&R Block franchise owner makes $39,198 in profit per year on average. This shows this franchise is profitable, especially considering the low-cost investment of $94,727 on average.
But is this the kind of profit that you are aiming for from a business? We do not think a yearly profit of $39,198 is that handsome amount.
There are plenty of franchises under $100,000 that you can invest in instead and earn way more money than this.
Not to mention, the franchise failure rate of H&R Block is quite high, and plenty of outlets have closed in the last few years. So we suggest you consider all the aspects before investing in any franchise.
H&R Block Franchise Earning Potential
The best thing about the H&R Block franchise is that it offers people an opportunity to do business that cannot go out of business.
Taxes are something that will be there for sure, and so will there be companies that deal with taxes.
Having said that, H&R Block has not generated that massive profit as per the information available to us. So, as of now, we can say that the earning potential of this business is not that high.
Wrap Up
In this article, we discussed details such as the investment cost, franchise failure rate, payback period, profit potential, etc., of the H&R Block franchise. And revealed to you the H&R Block franchise owner’s salary.
Although this franchise costs less and can be bought for under $100,000, it is not the best option out there.
In case you want to invest in a profitable yet affordable franchise, then you can pick one from the top 50 best franchises of all time.
FAQ’s
How many locations does H&R Block has?
H&R Block has over 1,200 retail offices worldwide.
Who owns H&R Block?
H&R Block was initially founded by brothers Henry W. Bloch and Richard A. Bloch. But in 2008, it was acquired by Ameriprise Financial Services for $315 Million.
Where is H&R Block headquartered?
The 17-story corporate headquarters of H&R Block is situated in the center of Kansas City, Mo.