H&R BLOCK

Item 7 lays out an accessible entry: franchise fee at just $2,500, initial investment spanning $34,080 to $158,750 covering buildout, equipment, and opening costs for tax offices. Royalties hit hard tiered at 60% on the first $5,000 of annual Authorized Services revenue, dropping to 40% after, with early payment discounts to 50%/30%—plus product royalties like 15-20% and $35 per training participant. No Item 19 means zero disclosed revenue or profit benchmarks, a glaring omission for a 1957 franchisor with 1,987 franchise units; this forces reliance on anecdotes or SBA proxies, amplifying risk for buyers blind to medians.

Franchise health shows contraction from 2,135 to 1,988 locations (-7%), 9 terminations, 1 non-renewal, and 26 transfers signaling churn over expansion. SBA records 80 loans averaging $390,766, hinting operators scale with debt but no default rates disclosed. Litigation clusters around breach, non-competes, and state laws in IL/MO, flagging enforcement rigor. For investors eyeing steady cash flow, the low barrier tempts but high fees, seasonality, and opacity demand scrutiny—strong brand buffers competition from TurboTax, yet shrinkage questions momentum.