H&R Block Franchisees – I C U

There is something in the pang of change
More than the heart can bear,
Unhappiness remembering happiness.
~Euripedes

It looks like suddenly the franchisees for H&R Block have woken up and realized:

I’m seeing a horde of visits from a message board that appears to be a vehicle for the franchisees to let each other know what’s going on. They have been very interested in my articles about Richard Breeden, KPMG and their company.

Franchisees make up about 36% of H&R Block’s tax offices and that percentage has stayed steady over the last few years. If growth occurs it occurs evenly between company-owned and franchisee outlets.

This reminded me of my talk with Roy Katzovicz of Pershing Square Capital. He had found a neat accounting hole dug by McDonalds with regard to how they had they erroneously undervalued their franchise locations (or overvalued their company-owned outlets) by not including some costs in the company outlets when analyzing their returns. I turned him on to Manpower’s historic disdain for their franchisees, where they make up 59% of their locations in the US, for example, but only generate 52% of the revenue, and that’s including the measly 2.2% of revenue franchise fee they collect…

Maybe Mr. Breeden sees some things others see?

In any event…

To HRB Franchisees on the Boardhost message board:
Don’t be afraid of Mr. Breeden. He’s one of the good guys. And if KPMG quietly falls on its sword, given that they might not want to spend any more time with him than they already do, well, it can’t get much worse with any of the other three. Embrace change!