Tax preparation franchises have recovered strongly from recessionary lows
Los Angeles, CA (PRWEB) July 15, 2013
The Tax Preparation Franchises industry has grown 5.7% on average annually over the past five years, resting at $1.9 billion in 2013 and recovering strongly from recessionary lows. Revenue grew marginally in 2009, during the tail end of the Great Recession. According to IBISWorld Industry analyst Natalie Everett, “As disposable income increases, consumers increase their use of professional service firms including tax preparers”. Since 2010, disposable income has been slowly increasing; this trend will continue through 2013 and result in a rise in this industry's revenue of 4.2%. Revenue in the Tax Preparation Franchises industry grew strongly in 2011 and 2012. That growth has been slowed by competition from consumer tax preparation software and increased federal government activities aimed at easing the tax filing process, which enables US taxpayers to file their own taxes. This adds to already strong internal competition. Tax Preparation Franchises industry operators compete among each other for clients. However, these companies have also traditionally faced significant external competition from other tax professionals, such as tax attorneys and accountants.
"Competition will remain a steady threat over the five years to 2018, going against otherwise positive trends that will result in increased demand for this industry's services”, says Everett. Revenue for the Tax Preparation Franchises industry is expected to grow over the five years to 2018, including an increase in 2014 as a result of higher disposable incomes and employment. Access to credit is expected to strongly recover from recession and post-recession lows over the next five years, enabling entrepreneurs to enter the industry with greater ease. The two major companies of this industry, H&R Block and Jackson Hewitt Tax Service, can expect to be major beneficiaries of new franchisees, because these companies benefit from strong brand recognition and a streamlined franchisee program.
The Tax Preparation Franchises industry has a high level of market share concentration. Overall, the tax preparation franchises market is dominated by H&R Block. The company has a widespread national reach, with shared-location offices located primarily in Sears stores and a small number also operating inside Walmart stores. Adding to the high level of market share concentration, the industry's second largest major player is Jackson Hewitt Tax Service. Like H&R Block, Jackson Hewitt has stores in Walmart and Sears stores, reaching customers all over the country. Concentration has increased slightly over the past five years due to the dominance of these companies.
For more information, visit IBISWorld’s Tax Preparation Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides tax-return preparation services to individuals, but excludes accounting, bookkeeping, billing or payroll services. Operators may use software to prepare taxes online, but the industry does not include consumer tax-preparation software. IBISWorld’s franchise collection focuses solely on franchise operations. Reports detail total franchise outlet numbers and revenue and average franchisee profit margins. Reports also show the largest franchisors by market share.
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