H&R BLOCK Dumps EXPRESSTAX… & Franchisees?
Tax Preparation giant H&R Block (NYSE: HRB) has announced that it is discontinuing its franchised EXPRESSTAX subsidiary. What this means for the franchise owners of 269 EXPRESSTAX locations is not quite clear. H&R Block has stated that it will give some franchise owners the opportunity to convert to the H&R Block brand. It did not say how many would be extended the conversion option, nor what would happen to those who weren’t.
The news comes a little over two weeks after the nation’s biggest tax preparer announced it won’t offer refund anticipation loans next tax season because the appeal of the high-cost loans is shrinking. CEO Bill Cobb said in a statement that the company is getting rid of the brand because “it was no longer a growth driver and therefore not a good fit for our company.”
H&R Block acquired EXPRESSTAX in 2006 when it was a 300-unit chain. According to Entrepreneur, H&R Block grew the chain to 408 locations in 2007 and to 509 EXPRESSTAX locations in 2008. EXPRESSTAX locations then declined to 376 in 2009, and 263 in 2010.
Here is H&R Block’s 9/29/11 press release regarding EXPRESSTAX:
H&R Block to discontinue EXPRESSTAX brand
Latest move signals another step to focus efforts on client growth and brand expertise
FOR RELEASE SEP 29, 2011
H&R Block (NYSE: HRB) announced today it will discontinue service under its EXPRESSTAX brand. Currently, there are 269 EXPRESSTAX franchise offices, which collectively prepared nearly 100,000 tax returns and generated $3 million of royalty fees to H&R Block in fiscal 2011. As H&R Block seeks to continue growth in its franchise base and clientele, it will invite many EXPRESSTAX franchisees to join the H&R Block brand.
“This move is consistent with where we want to focus our future investments and resources,” said Bill Cobb, H&R Block CEO. “After a thorough review of the EXPRESSTAX business model and its recent performance, we concluded it was no longer a growth driver and therefore not a good fit for our company.”
In connection with this announcement, H&R Block will record a pretax charge of approximately $0.02 to $0.03 per share in the fiscal second quarter ending October 31, 2011.
H&R Block purchased EXPRESSTAX in 2006. The EXPRESSTAX brand attracted mostly early-season filers who also sought quick-paying financial products. H&R Block offered EXPRESSTAX franchises in locations where it had competitive and geographic advantages.
H&R Block is coming off one of its strongest tax seasons in recent years. In Tax Season 2011, H&R Block grew new clients by nearly 19 percent, saw client retention improve by nearly 4 percent, and gained market share in both its retail and digital tax preparation channels.
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About H&R Block
H&R Block Inc. (NYSE: HRB) has prepared more than 575 million tax returns worldwide since 1955, making it the country’s largest tax services provider. In fiscal 2011, H&R Block had annual revenues of $3.8 billion and prepared more than 24.5 million tax returns worldwide, including Canada and Australia. Tax return preparation services are provided in company-owned and franchise retail tax offices by more than 100,000 professional tax preparers, and through H&R Block At Home™ digital products. The H&R Block Bank provides affordable banking products and services, and McGladrey is a top provider of tax, accounting and wealth management services to mid-sized businesses.
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