Despite the uptick in company revenue, income from franchised operations dropped to $50.917 down 12.2 percent from $58 million in last year's corresponding period. However, the segment was much more profitable with before-tax income rising to $24.8 million, sharply higher than last year's $6.7 million. That came as the number of franchised stores dropped to 4,816 at the end of the quarter, down 11 percent from a year earlier. During the current fiscal year, Jackson Hewitt introduced a new franchise agreement, which it said most store operators had signed. Its terms included the elimination of fees for electronic filing.

However, the number of stores open fell only to 5,921, down from 6,376 a year ago, a decline of 7.5 percent. That drop came as the number of franchised operations open fell to 4,826, off almost 11 percent from 5,416 open a year earlier. A 15-percent increase in the number of company-owned stores held down the loss.

Like all other tax preparation organizations, Jackson Hewitt was impacted by the delay in the acceptance by Internal Revenue Service of some returns until February. The number of returns prepared fell to 875,000, off 3.2 percent from 904,000 in the third quarter of fiscal 2010.