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Hubbard married a staff member, 20-year-old Mary Sue Whipp, and the pair moved to Phoenix, Arizona. Hubbard was joined by his 18-year-old son Nibs, who had become a Scientology staff member and "professor". Scientology was organized in a different way from the decentralized Dianetics movement — The Hubbard Association of Scientologists (HAS) was the only official Scientology organization. Branches or "orgs" were organized as franchises, rather like a fast food restaurant chain. Each franchise holder was required to pay ten percent of income to Hubbard's central organization. In July, Hubbard published "What to Audit" (later re-titled Scientology: A History of Man), which taught everyone has subconscious traumatic memories of their past lives as clams, sloths, and cavemen which cause neuroses and health problems. In November 1952, Hubbard published Scientology 8-80, followed up in December with Scientology 8-8008, which argued that the physical universe is the creation of the mind.
In December, Hubbard gave a seventy-hour series of lectures in Philadelphia that was attended by 38 people in which he delved into the occult. In the lectures, Hubbard connects rituals and the practice of Scientology to the magickal practices of Aleister Crowley, recommending Crowley's book The Master Therion. During the Philadelphia course, Hubbard joked that he was "the prince of darkness", which was met with laughter from the audience. On December 16, 1952, Hubbard was arrested in the middle of a lecture for failing to return $9,000 withdrawn from the Wichita Foundation. He eventually settled the debt by paying $1,000 and returning a car belonging to Wichita financier Don Purcell.
In April 1953, Hubbard proposed setting up a chain of "Spiritual Guidance Centers" as part of what he called "the religion angle". On December 18, 1953, Hubbard incorporated the Church of Scientology in Camden, New Jersey. The religious transformation was explained as a way to protect Scientologists from charges of practicing medicine without a license. The idea may not have been new; Hubbard has been quoted as telling a science fiction convention in 1948: "Writing for a penny a word is ridiculous. If a man really wants to make a million dollars, the best way would be to start his own religion."
=== In the Church of Scientology era ===
By 1954, the IRS recognized the Church of Scientology of California as a tax-exempt organization and by 1966, the Washington, D.C. Founding Church of Scientology received tax-exempt status nationwide. The Church of Scientology became a highly profitable enterprise for Hubbard, as he was paid a percentage of the Church's gross income. By 1957 he was being paid about $250,000 per year (equivalent to $2.87 million in 2025). His family grew, too, with Mary Sue giving birth to three more children—Quentin on January 6, 1954; Suzette on February 13, 1955; and Arthur on June 6, 1958.
Hubbard was notorious for his policies of attacking his perceived enemies. Nibs recalled that Hubbard "only knew how to do one thing and that was to destroy people." Hubbard told Scientologists to "Don't ever defend, always attack", encouraging them to find or manufacture evidence and to file harassing lawsuits against enemies. Any individual breaking away from Scientology and setting up his own group was to be shut down. Most of the formerly independent Scientology and Dianetics groups were either driven out of business or were absorbed into Hubbard's organizations. Hubbard finally achieved victory over Don Purcell in 1954 when the latter, worn out by constant litigation, handed the copyrights of Dianetics back to Hubbard.
After dealing with Purcell, Hubbard turned his attention to attacking psychiatrists, who he blamed for the backlash against Dianetics and Scientology. In 1955, Hubbard authored a text titled: Brain-Washing: A Synthesis of the Russian Textbook on Psychopolitics which purported to be a secret manual linking Psychiatry and Communism written by a Soviet secret police chief. Hubbard founded the "National Academy of American Psychology" which sought to issue a "loyalty oath" to psychologists and psychiatrists. Those who opposed the oath were to be labeled "Subversive psychiatrists", while those who merely refused to sign the oath would be labeled "Potentially Subversive". Hubbard denounced psychiatric abuses, writing that psychoanalysis had been "superseded by tyrannous sadism, practiced by unprincipled men". Wrote Hubbard:
Today men who call themselves analysts are merrily sawing out patients' brains, shocking them with murderous drugs, striking them with high voltages, burying them underneath mounds of ice, placing them in restraints, 'sterilizing' them sexually and generally conducting themselves much as their patients would were they given the chance.
In 1956, Hubbard released Fundamentals of Thought, which teaches that life is a game and divides people into pieces, players, and game-makers.
The following year, Hubbard published All About Radiation, which falsely claimed that radiation poisoning and even cancer can be cured by vitamins. In 1958, amid widespread interest in the Bridey Murphy case, Hubbard authored Have You Lived Before This Life?, a collection of past life regressions.