Question: H R Block is by far the largest franchisor of tax
H&R Block is by far the largest franchisor of tax preparation services with over 4,500 franchisees. Startup costs range from about $35,000 to$100,000 and there is no franchise fee. But the royalty rate on all revenues generated by the franchisees is 30 percent—one of the highest rates in franchising for any type of franchise business. H&R Block franchisees are not permitted to operate from home or even in kiosks in stores and malls. Instead, they must operate from a store or office format. Franchisees receive substantial training from H&R Block based on the expertise and systems developed by H&R Block over half a century. Is H&R Block’s royalty rate too high? Why or why not? Discuss in terms of what support the franchisor offers to the franchisee, the nature of the service provided by the franchisee, and the franchisee’s obligations to the franchisor.
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