Liberty Tax Franchise Cost, Profit, & Failure Rate 2024

Tax services are one of the most essential services in the United States due to the complicated nature of it. Liberty Tax is one of the largest tax preparation services operating in the United States and Canada. If you are an entrepreneur looking to own a franchise, you might have your eyes on Liberty Tax and wonder if it’s worth owning one or not.

Liberty Tax Franchise Cost

Although they are one of the largest tax preparation companies in the country, whether it’s worth making the investment or not is a feasible thought.

We will dive into Liberty Tax’s franchise system, costs, and what they offer and show you all the necessary details.

About Liberty Tax And Liberty Tax History

Liberty Tax is an American tax preparation franchise that serves in the United States and Canada. The company was founded in 1997 formally when Jackson Hewitt Tax Service was acquired and given its current name, Liberty Tax. They have been franchising continuously since 1998 and have created a franchise system that focuses on succeeding entrepreneurs.

This system was so successful that the company now owns over 2,800 stores all over North America. They are one of the largest tax preparation franchises in the United States and have a proven franchise success track record. They offer all kinds of tax-related services to a loyal customer base, which makes them a great opportunity.

Franchise Model Table

Cost Or FeesAmount
Initial Investment      $58,700-$71,900
Franchising Since1998
Estimated Outlets2,800

How Much Does It Cost To Open A Liberty Tax Franchise?

The total expected average cost to open a Liberty Tax Franchise is between $58,700 and $71,900. This total cost includes every kind of startup cost, like the $15,000 franchise fee, payroll, construction if needed, lease, equipment, and other similar costs.

This number comes from the Franchise Disclosure Document of Liberty Tax and is calculated by the average spending of their existing franchisees and their plans. The real costs might be different for each case.

Franchise Requirements

Liberty Tax doesn’t look for any kind of business experience to apply to be a franchisee with them. It might help in your application to have business acumen and business management experience, but it is not obligatory. They are looking for like-minded people who can bond with the brand.

On the financial side, you need to have a net worth of at least $100,000 and liquidity of $50,000.

Liberty Tax Overall Sales

For the fiscal year 2020, the latest available financial statement in the 2021 Franchise Disclosure Document, Liberty Tax had a total revenue of $2.1 million. Of this $2.1 million, $27,154 was the net profit for the company in total.

Liberty Tax Franchise Profit & Revenue

According to the latest available franchise disclosure document of Liberty Tax, stores open for more than 5 years had average overall annual sales of $239,930. Stores that are open for less than 5 years averaged $180,000 annually.

If we assume a profit margin of 15% as per the industry standard, then we can say that Liberty Tax franchise owner makes approximately $35,989 in net profits on average.

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%239930.00
Franchise Royalty Fees5.31%(12746.28)
Cost of Goods Sold (COGS)26.56%(63731.41)
Labor (Variable)13.81%(33140.33)
Total (Expenses)85.00%(203940.50)
Net Profit15.00%35989.50

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.

Failure Rate Of Liberty Tax

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change

For the Franchised outlets:

  • In 2018, the failure rate was (412)/3282×100≈12.55%
  • In 2019A, the failure rate was (209)/2870×100≈7.28%
  • In 2019B, the failure rate was (154/2669×100≈5.76%
  • In 2020, the failure rate was (260)/2515×100≈10.33%

Company-Owned Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change

For the Company-Owned outlets:

  • In 2018, the growth rate was (35)/226×100≈15.48%
  • In 2019A, the failure rate was (177)/261×100≈67.81%
  • In 2019B, the growth rate was (50)/88×100≈56.81%
  • In 2020, the growth rate was (36)/138×100≈26.08%

Total Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change

For Total outlets:

  • In 2018, the failure rate was (377)/3508×100≈10.74%
  • In 2019A, the failure rate was (386)/3131×100≈12.32%
  • In 2019B, the failure rate was (104)/2757×100≈3.77%
  • In 2020, the failure rate was (224)/2653×100≈8.44%

According to the above-mentioned data, we can see that the franchised outlets for Liberty Tax grew from 2018 to 2020, showing a growth rate between 12.55% and 10.33%.

On the other hand, the number of outlets of the company-outlets of Liberty Tax increased from 2018-2020, showing a growth rate between 15.48% and 26.08%. The company also experienced decline, showing a failure rate of 67.81%.

Overall, when we combine the data of franchise and company-owned outlets, we can see that the Liberty Tax franchise has declined in the years 2018-2020 showing a total failure rate between 10.74% and 8.44%.

Payback Period Of Liberty Tax

With an investment of $71,900 and an estimated 15% profit on the average net sales, the yearly profit would be $35,989.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Investment / Yearly Profit = $71,900 / $35,989 = 1.99 years

Based on these figures, it will take approximately 2 years to recoup the initial investment for Liberty Tax. This time period could be longer or shorter depending on your sales, revenue, and profit figures.

Training and Support Of Liberty Tax

The initial training program is a minimum of four days of training in a classroom and an additional online training, which is about 12 to 15 hours long. After this training, there is a one-day hands-on training happening at a Liberty Tax location.

Both of the training focuses on the operation of the business and preparing for the opening.

Liberty Tax has a detailed support system that helps the franchisees before, during, and after opening.

They give support with newsletters, business tools, intranet platforms, regional marketing campaigns, and training webinars to keep you up to date. They also make occasional store visits and give you operational support.

Terms of Agreement and Renewal

The initial Liberty Tax franchise agreement is for five years. There is an option to renew the agreement for five-year terms in each renewal. The franchisor needs to approve your renewal if you want it. Liberty Tax doesn’t charge any fees for renewal.

Obligations and Restrictions

Either the franchisee or a designated manager must always be present at the franchised outlet to oversee the daily operations. The franchisee must keep the store open during certain hours during the tax season and off-season. Also, they must follow the daily operation hours stated in the manual.

Franchisees are restricted from offering any product or service that the franchisor doesn’t give written consent. They also need to offer all kinds of products and services that the franchisor asks for.

Financial Assistance

Liberty Tax offers both direct and indirect financial assistance, depending on the situation of individual franchisees. The Franchise Development Representative of Liberty Tax will talk to you if you need financial assistance to see if you can get direct assistance from the company.

If you are not eligible for direct financial assistance, Liberty Tax has established relationships with third-party lenders that could assist you with whatever financial assistance you need. Each assistance will be different depending on the need and financial situation.

Entrepreneurs considering a venture into the finance franchise sector might explore options such as H&R Block Franchise, Allstate Franchise, and Ameriprise Financial.

Liberty Tax Comparison

NameFranchise FeeRoyalty FeeInitial Investment
H&R Block$2,50020%$31,557-$157,898
Liberty Tax$15,00014%$58,700-$71,900


With relatively low startup costs, franchise fees, and royalty fees compared to some of its competitors, Liberty Tax looks like a great opportunity to own a franchise. The expected overall sales per store are quite high compared to what you invest in, and there is an extensive franchise support system.

They are one of the biggest tax preparation franchises, which also gives you the brand recognition you need with a loyal customer base. If you have the capital and the business understanding of the industry, a Liberty Tax franchise could be a great opportunity.


What is the franchise fee for Liberty Tax?

The franchise fee for one Liberty Tax franchise store is $15,000. There is a discount available for veterans and active military personnel.

How much liquidity do you need to open a Liberty Tax franchise?

You need $50,000 in liquidity and $100,000 in net worth to apply and open a Liberty Tax franchise store.

Who owns Liberty Tax?

The parent company of Liberty Tax is NextPoint Financial. It was purchased in 2021 and became the subsidiary of the company.

Who founded Liberty Tax?

Liberty Tax was founded in 1997 by CEO John T. Hewitt. Hewitt is nationally recognized in the tax and accounting world. He is also the CEO of ATAX.

How many locations does Liberty Tax has?

Liberty Tax has 12000+ tax professionals and 2500+ retail branches across the United States.

Where is Liberty Tax headquartered?

Liberty Tax is headquartered in Virginia Beach, Virginia, United States. It full corporate address is Virginia Beach, 1716 Corporate Landing Pkwy, United States.


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