As of this writing, two UnhappyFranchisee.com posts have 60+ comments on Liberty Tax and founder John Hewitt:

LIBERTY TAX SERVICE Franchise Complaints

Are LIBERTY TAX SERVICE Franchise Owners Happy?

We received a recent comment from a “Mario” who claims to be a first-year Liberty Tax franchise owner.  Mario states that he converted his existing business to Liberty Tax and his numbers shot up 40% this year after converting our business to Liberty.  According to Mario, “We are first hand proof that the system works.”

Here is Mario’s posted comment.  What do you think?  Share a comment below.

2010/05/11 at 5:12pm Mario wrote:

“The problem may lie in the people making these postings. I am a first year franchisee of Liberty. We converted our existing tax practice into a Liberty Tax and are very satisfied with their support and service. Owning a business is not for everyone. As an owner of up to 5 business at any given time, I have to work harder than most people who have jobs. I don’t complain about that, I am happy to work harder because my family and I are the ultimate beneficiaries of the hard work and long hours. People who have jobs and work for others mostly work harder for the benefit of their employers with no real job stability or appreciation. If you like working 9-5, owning a business or a franchise is not for you. If you don’t want to risk the money you are investing, owning a business or a franchise is not for you. Keep it in a savings account earning 1/2 a percent per year interest. There are no free rides. If it were easy, everyone would be doing it. Liberty provides an excellent system and backend that if executed properly, works. There are over 2000 franchisees in the Liberty system. Most are very happy and profitable. Obviously the ones that are unhappy and/or didn’t preform well in their endeavor have posted here. Is the system perfect? Absolutely not. Is it much better than opening up a business on your own (as I have done many times both successfully and unsuccessfully)? It absolutely is.

“John Hewitt successfully founded and ran Jackson Hewitt which was sold for hundreds of millions of dollars. Liberty Tax is the fastest growing tax franchise ever. He has over 40 years experience in the tax industry. With that comes some people who weren’t a good fit for franchising, or for the tax industry or for owning a business in general. You have seen their postings above. Take them with a grain of salt. If you are interested in franchising with Liberty Tax, inquire with Liberty and you will get a chance to talk with John Hewitt himself. Opportunities like that are rare. He is a hands on CEO with a wealth of information and knowledge that he isn’t afraid to share (to his franchisees). If you have questions about the postings above, feel free to present them to John directly and he will give you the other side of the story which is not represented here.

“Goto Jackson Hewitt’s website and goto their investor relations section and listen to their conference calls and look at their financials. Better yet, search them on Google News and you will see that they are on the verge of failing. Then do the same on Liberty’s website. You can see the financials posted (even though they are not a public company, they still release their financial performance). You can listen into John Hewitt’s investor conference calls. He has a wealth of information about the tax industry as well as competitors H&R Block and Jackson Hewitt. During recent years, Liberty has increased market share each year while it other two national competitors (H&R and Jackson Hewitt) have lost market share and their client base. Don’t let a couple of disgruntled franchisees sway your decision before getting all of the facts so you can make an informed educated decision about joining a great company like Liberty Tax Service.

“Our numbers were up 40% this year after converting our business to Liberty. We are first hand proof that the system works.”

More posts and discussions on the Liberty Tax franchise:

LIBERTY TAX SERVICE Franchise Success Story

LIBERTY TAX: Should Franchisees Call Customers Crackheads?

LIBERTY TAX SERVICE: Unhappy Franchisees Need a Reality Check

Are you familiar with the Liberty Tax franchise or other tax franchise opportunities?  What do you think?  Share a comment below.

Here is Joey Black’s comment, posted on LIBERTY TAX SERVICE Franchise Complaints:

The comments here from people who did not make it as Liberty franchisees are frankly over the top. I spent $70k on each of the offices I’ve started, and that was it. Why someone would expect to spend three times that is beyond me. People complaining about the royalty are particularly suspect. Jackson Hewitt charges more, and H&R Block charges its frachisees a whole lot more. Same for the ad fees. And this year, Liberty gave back half of the ad fees to the franchisees to spend on marketing materials. They paid for my yellow pages ad. They produce all the ad copy, graphics, etc.

But none of this was hidden when I signed the contract. It was all right there. And what franchise business doesn’t charge royalties and advertising fees? And interest on notes you’ve signed? Didn’t you read what you were signing? Again, it’s all there in the contracts you sign. Good grief, at least complain about legitimate things. Otherwise you end up looking worse than you’re trying to make Liberty look. You didn’t know what the interest structure was on your note, but you wanted to do peoples’ taxes?

Now, most people who fail as franchisees are people who are not suited to own their own business. And they could be identified up front, but Liberty will accept your money and sell you a territory if you can fog a mirror. They pretend theirs is an exclusive club and you’re lucky to be let in, but that’s a lot of hype. They have a large tax department to support franchisees, software development, technical support, operational support, marketing, etc. to the idea that most of the company is the legal department is ludicrous. I know their VP of legal and corporate counsel. It is not a big department, but yes, they are very willing and eager to litigate. You need to know that going in. That’s why it is important to talk to real franchisees, both current and former, successful and unsuccessful. I make good money as a Liberty franchisee, but I have had to learn what is real and what is BS. They leave me alone for the most part, which is all I want now that I understand the business.

Yes, the franchised business is harder to sell than Liberty would lead you to believe. Yes, buy one and run it for a year before buying multiple units. Yes, 12% is a very high price to pay for money. If you have to use Liberty’s 12% money you probably should not be going into business. Most financially sound people don’t have to pay 12% to borrow money. Yes, many of their Area Developers are useless and you just want them to stay out of your way but they are your only conduit to the corporate office for support sometimes. You have to deal with that. And yes, if you are profitable at all, just a little bit, in your 2nd tax season you’ve done very well. If you have to have profit to sustain yourself in tax season #2 this is not a business for you. These things are true. But there’s a lot in this thread that is not true for most Liberty franchisees. A lot of it is failure looking for something to blame.”

Joey Black’s Reality Check:  Main Points

Startup costs:  “I spent $70k on each of the offices I’ve started, and that was it. Why someone would expect to spend three times that is beyond me.”

Royalties & Fees:  “Jackson Hewitt charges more, and H&R Block charges its frachisees a whole lot more. Same for the ad fees.”

Advertising:  “…this year, Liberty gave back half of the ad fees to the franchisees to spend on marketing materials. They paid for my yellow pages ad. They produce all the ad copy, graphics, etc. “

Due diligence:  “…none of this was hidden when I signed the contract. It was all right there.”

Franchisee failure:  “…most people who fail as franchisees are people who are not suited to own their own business.

Sales hype:  “Liberty will accept your money and sell you a territory if you can fog a mirror. They pretend theirs is an exclusive club and you’re lucky to be let in, but that’s a lot of hype.”

Franchise support:  “They have a large tax department to support franchisees, software development, technical support, operational support, marketing, etc. to the idea that most of the company is the legal department is ludicrous.”

Litigation:  “…they [the  franchisor] are very willing and eager to litigate [franchisees]. You need to know that going in.

Profitability:  “I make good money as a Liberty franchisee, but I have had to learn what is real and what is BS.”  “if you are profitable at all, just a little bit, in your 2nd tax season you’ve done very well. If you have to have profit to sustain yourself in tax season #2 this is not a business for you.”

Financing:  “12% is a very high price to pay for money. If you have to use Liberty’s 12% money you probably should not be going into business. Most financially sound people don’t have to pay 12% to borrow money.”

Area Developers:  “…many of their Area Developers are useless and you just want them to stay out of your way but they are your only conduit to the corporate office for support sometimes.”

Blaming others:  “…there’s a lot in this thread that is not true for most Liberty franchisees. A lot of it is failure looking for something to blame.”

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

On the post LIBERTY TAX Service Complaint, all you need is cash! complained that when she went to her Liberty Tax Service after receiving a call her refund would be ready, she and others arrived to find the doors locked.  The delay, she claimed, made her default on payment commitments. 

  When she complained to the franchisee and demanded a refund of her fees, she claims she was told “YOU MUST BE A CRACK HEAD B$%&@ FOR WANTING YOUR FEES BACK.”

While calling customers “crackheads” probably isn’t recommended in the Liberty Tax Service customer service manual, commenter Ed was unsympathetic.  Ed wrote:

Ok, a couple things stood out in this post that I have to reply to. It appears everthing was done great all the way up to the point of picking up your check on Saturday.

First of all the office manager is not the cause of your collection from what I see. We have all been there before, at least most of us, and we are down to the last second to pay and if everything lines up correctly and everything in the universe is alligned we will be able to pay a bill. If the post man failed to deliver your check that day would he be responisble and would you want to sue the post office? Yes you should of got your check that Saturday from the way it sounds but if you would of filed 2 weeks earlier you also would have gotten the bill paid. If it was such a crisis and you were getting a refund why didnt you file earlier? Then the bill would of been paid in plenty of time and there would of been no collection. So I do not see where the tax office is to blame for your collection. You have to be willing to take responsiblity for your actions and realize that if you would of acted in a timely manner you would not be in collection.

Now if the office said they were going to be open and wasn’t then there is a problem. It sounds as if there is a customer service issue and I see every reason for you to be displeased about that. Now, when there is a customer service issue I think the first thing we need to remember is calling a company that has wronged you and berating them usualy is not a good way to get what you want. I can only guess but it appears that some things were said by you before the manager told you to “call any lawyer you want”. I could be off base a little but that comment would make it appear you threatened legal action when you called. If so, that is a huge lesson to be learned. I am a business owner and as soon as someone threatens legal action I shut down and tell them that the conversation has ended and that our attourneys can now speak because we no longer have anything to talk about.
Never threaten a lawsuit unless your serious because it does no good. Business owners hear that so many times and it does not scare them and you are not doing yourself any favors as a consumer.

Lastly this was the office manager who was rude to you and if I was in your shoes I would of politley ended this conversation with her and attempted to contact the owner. Once again if your plan is to call and berate people and expect them to give you what you desire then you will most always be dissappointed. If I am upset at a company and I want some action I go by this simple rule. If what I want is action then I give them every opportunity to give me what I want by being professional. If I want someones head and I am just mad and want to “go off”, I realize that I probably won’t get anything except the peace of mind of “going off” and letting them know how I felt.

Yes there is a huge customer service problem with what happened to you but its just that a customer service issue. I think there is just as big of a problem of a customer trying to blame items that were not the companies fault on them in an attempt to make the story look better and more in the customers favor. Also at the end you talk about ongoing poor customer service at Liberty Tax which confuses me a little. You said the taxes and the preparer were great?

There is no doubt there was bad customer service that took place here. I also think the situation was handled incorrectly by both parties.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy?  If you’re familiar with the Liberty Tax franchise, please share a comment below.

Entrepreneur magazine has ranked the Liberty Tax Services franchise #3 behind  McDonald’s & Subway.  However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.  Read their comments at:  LIBERTY TAX SERVICES Franchise Complaints.

However, one commenter on the same forum claimed to be a successful and happy Liberty Tax Services franchise owner, and shared his thoughts and financial details. He rebuffed the detractors and defended the Liberty Tax franchise opportunity.

Bubba wrote:

Good grief, people, just listen to yourselves. Entrepreneur magazine, independently of any of us here and our personal axes to grind, ranks Liberty as the #3 franchise opportunity in the country. Best in their category and better than any other except Subway and MacDonald’s. So, if you don’t want to cook food for people, it’s the best franchise according to them.

Yes, there are some franchisees who don’t make it, and when they violate their contract Liberty will sue them to enforce their rights under the contract they both agree to. Yes, Liberty charges a franchise fee and royalties – just like any franchise organization. Compare their royalties to Jackson Hewitt or H&R Block for a real eye opener, folks. They’re lower.

And no, the franchise fee is not pure profit, much of it goes to their area developers who provide the franchisee with direct operational support.

Reliable managers? If you are not a good business person you may not find good people. I have good solid managers for my two Liberty locations. My revenues are up 18% right now from last year, when my profits from two stores totaled $75k. I expect profits of at least $90k this year and upwards from there. Two territories.

But yes, some people fail. Liberty can tell you what you should do, but you can decide to do it your own way. If you know better than them, then by all means do it yourself. You’re a fool to pay for someone’s brand and system and then not use it.

For a total investment of $100k I have a business that will provide me with $90k a year in income for as long as I care to do this. I could expand, and Liberty would be very happy if I did, but I don’t want to. Other do, and make more. Some cannot run one store. But whose fault is that?

WHAT DO YOU THINK?  DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE?  IS THE LIBERTY TAX SERVICE FRANCHISE A SOUND OPPORTUNITY?  WHY OR WHY NOT?

UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar with the Liberty Tax franchise, please share a comment below.

Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind  McDonald’s & Subway.  However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.

BostonTax wrote:

I’m a former Liberty Tax Franchisee

I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.

Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.

Barbara Green wrote:

I too was a Liberty Tax Franchisee and I agree with everything you said.

The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.

Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.

At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2′s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.

It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.

WHAT DO YOU THINK?  DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE?  ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY?  WHY OR WHY NOT?

Are you familiar with the Liberty Tax Service franchise opportunity? 

Are Liberty Tax Service franchise owners happy?  Why or why not?  

Please share your thoughts and opinions below.

*     *     *    *    *

In 2009, Entrepreneur magazine listed Liberty Tax Service as the #3 franchise, surpassed only by Subway at #1 and McDonald’s at #2. 

It was quite a leap, since Liberty Tax Service had never made the top 10 (Subway had been named #1 16 times, McDonald’s 8 times). 

Previously, Liberty Tax Service franchise had ranked #23 (2008); #17 (2007); #10 (2006); and #15 (2005).  We don’t see any explanation by Entrepreneur for the sudden ranking surge.

Could it be Liberty Tax Service’s cutting edge branding & marketing programs that vaulted them to the top?  (See picture, left)

Entrepreneur’s listing is fairly generic, “In 1997, after selling Jackson Hewitt Inc.–the tax-preparation service company he founded 15 years earlier–John Hewitt acquired a Canadian tax franchisor and established Liberty Tax Service. A year later, Hewitt expanded into the U.S. with five offices; at the close of 2008, the number of U.S.-based Liberty Tax Service franchises had grown to nearly 2,500.”

Is Liberty Tax Service such a great investment opportunity that it deserves to be listed as #3 in the nation?  Does it provide superior training, guidance and support to its franchise owners?

WHAT DO YOU THINK?  DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE?  ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY?  WHY OR WHY NOT?

Photo credit:   January 25, 2009 by Brent and MariLynn Taken in Smyrna, TN  License:  Creative Commons