Starting an H&R Block Franchise
Starting your own franchise
Are you interested in owning your own franchise? If you do happen to have that entrepreneurial spirit, one of the fast growing areas to start is the tax preparation services business. One of the advantages to starting a tax services business is that everybody needs this service. While the tax season is mainly limited to 4 months, there is still great potential to make money. Tax planning, counseling, working with small businesses to file quarterly returns, process payroll, accounting, working with employee benefits, and all the other necessary paperwork that needs to be filed quarterly are just a few of the ways that tax experts are able to make a living in “the offseason”.
If you are indeed interested in taking the next step to owning a tax services business, one of the most heralded franchise opportunities is with H&R Block.
H&R Block: Basic Franchise Information
Why Chose H&R Block:
H&R Block is a well-known company throughout the United States. It has one of, if no the strongest brand in the tax services business. They currently have over 14,000 offices worldwide and prepare over 24.5 million tax returns prepared worldwide. H&R Block has been around for over 50 years, and in addition to continually opening up corporate locations, have their own business financing for new and existing franchisees. In terms of start-up costs, H&R Block is one of the lower priced options available. They are highly regarded for their initial and continual training of franchise owners and their staff, including individualized public relations, marketing, and a strong national advertising campaign (which requires no additional funding from franchise owners). According to Entrepreneur Magazine, in 2012, H&R Block was named the #1 Franchise in the Tax Services Category, as well as the #1 Low Cost Franchise. They were also award the #5 Fastest Growing Franchise, #7 Global Franchise, and #8 Franchise in the United States.
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Initial Costs and Financing
Initial Costs: Aside from a $2,500 security deposit, there are no initial fees to get started with your very own H&R Block tax office. This, however, does not include the expenses of renting and furnishing an office space. The initial costs of renting office space (or buying, if you have the means) is largely dependent on the area you wish to open a branch. Certain areas such as New York and Los Angeles are obviously much more likely to incur larger start-up expenses due to the increased value of real estate, as well as the average cost of living. You will want to make sure that you pick a location with good traffic for high visibility. Expenses for furnishing your office is largely up to the franchisee, however phone lines, computer equipment, fax, copy-machines, and other standard equipment can also be fairly expensive.
Financing: There are currently two different options for financing the purchases of an H&R Block Franchise. The first is a revolving, secured commercial line of credit called a Franchise Equity Line of Credit (FELC), and the second is an Annual Payments, Adjustable Rate, Term Loan (APARTL). Both options are offered through H&R Block Affiliate, Franchise Partner, Inc.. Financing for new franchisees depend on 3 criteria:
1. Ability to repay the loan: determined by the business plan and such factors as the expected price (or value) of the business, ability to grow the business, controlling debts and business expenses, and other personal supplemental income streams.
2. Down payment amount: How much money you are personally risking with the H&R Block Franchise
3. Debt history: A strong credit history of repaying debt. The lower obligations, the better chance you will have of financing.
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Potential concerns about starting a tax preparation business
Over the last several years there has been exponential growth in the digital tax service arena. It is becoming increasingly more common for individuals to file their own taxes online with the help of automated software that asks questions and prompts the user for various financial inputs. H&R Block also has it’s own version of online tax-preparation which could potentially be cutting into your profits as a franchisee. While there will always be a need for qualified tax professionals, it is difficult to say right now exactly how much of an impact the digital tax preparation business will have on brick and mortar businesses like H&R Block.
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Interest has increased in owning your own business. Purchasing a franchise is a way to get a business up and running quickly. Do your homework so you find the right franchise for you. Quality franchises will be there the first day and for years to co