JACKSON HEWITT Franchise Complaints
UnhappyFranchisee.Com – Are you familiar with the Jackson Hewitt tax franchise opportunity? What do you think? You’re invited to share a comment below.
According to the Jackson Hewitt website, Jackson Hewitt Tax Service Inc. (NYSE: JTX) is an industry leader providing full service individual federal and state income tax return preparation through more than 6,400 franchised and company-owned offices throughout the United States.
After its rapid rise to the #2 position in the industry, Jackson Hewitt has had some rough years and myriad problems. According to Wikipedia:
“The 2007 Department of Justice investigation, poorly constructed financial products, and a company-wide tax law compliance initiative that many insiders believe did more harm than good combined to erase nearly 50% of the company’s market share over merely four years.
“Additionally, the company negotiated out of a default on its debt in May 2009 and technically defaulted for several days in May 2010 (though an agreement with creditors was announced within one week of the ‘default’).
“During the 2010 tax season, Jackson Hewitt was not able to provide its flagship refund anticipation loan product in 50% of its stores, placing it at a operational and marketing competitive disadvantage. The company’s current agreement with creditors requires that it secure refund anticipation loan funding adequate for 100% of its stores by September 30, 2010 and that written commitments from lending institutions be made available to creditors by November 15, 2010. Failure to do either will place the company once more in default.
“Finally, in July 2010, the Internal Revenue Service announced its intention to discontinue the provision of the debt indicator to tax return preparers.
“The debt indicator is a significant part of the provision of refund anticipation loan funding and its lack of availability is expected to increase the cost of such products to consumers and decrease the level of their availability.
“This IRS change significantly reduces the probability that Jackson Hewitt will be able to comply with its renegotiated loan covenants as discussed above. The stock currently trades below one dollar*.”
* The Jackson Hewitt stock price is listed at $1.11 today
Unhappy Franchisee has received numerous complaints about the rival Liberty Tax Service (see LIBERTY TAX SERVICE Franchise Complaints).
Is Jackson Hewitt franchise have worse problems?
How is the franchisor doing in helping Jackson Hewitt franchisees weather the storm of operational & marketing challenges, and adverse publicity?
Is this simply a franchise (Stock? Tax preparer?) to avoid at all costs?
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Company responses, clarifications or rebuttals welcome. Contact the author/site admin at UnhappyFranchisee[at]gmail.com.
Mike Kolar,
Refunds did fuel growth of the efile which is why the IRS allowed the RAL for so long. But the IRS doesn’t need that promotion anymore hence the proverbial pulling of the plug. My business does just under 1000 returns and we efile every return unless the IRS does not permit. We have almost no exceptions. If you don’t efile then you are probably in your 80’s.
Herb,
I would be worried that now that the banks own this company they are not going to do what is best for the long term of this company, they are just trying to recover some of their bad loans and be making decisions that will not help the company or the franchisees in the long term.
There has neither been a long-term plan for this company nor has management (especially the former BOD) acted in the best interest of the company or the franchisees since Cendant acquired JTX in the late 90’s. The “strategy” has been to do more RALs, HELP loans and whatever loans they can think of, duck the regulators and screw their zees and their clients. Sadly, as a public company the thinking is always short-term because of earnings targets, etc.
Some of the biggest problem areas:
1) Interest alignment – JH doesn’t completely lose when zees lose because they suck money from the bank products that zees offer to their clients, thus forcing franchisees to have the highest priced bank products on the market. With the probable loss of the RAL, price will be king and JH will lose that battle hands down. Add the fact that zees pay nearly 20% in royalties and you’d be better off as a good-service, value price independent tax firm.
2) Poor financial decisions in the past that have forced the company to be unable to re-align interests (problem #1 above).
3) Poor business decisions like missing the largest changewave in the world in the last 15 years: the internet. JH didn’t even have an online tax filing presence until 2009. They didn’t even make a concerted effort to help zees collect and use e-mail addresses until THIS PAST SEASON…DUH, Losing.
Herb, will more offices be closing this season?
My suspicion is that another 300-500 net office closings between corporate offices (JH corp. can now exit bad leases via their pre-packaged bankruptcy), bankrupt zees, ailing zees and zees with leases expiring that will not be replaced.
RoniDeutch = Jackson Hewitt= Frustrated & Disgusted = Mike= Bankrupcty!!!!
Jackson Hewitt=Liberty Tax Service
Mike,
That is not fair. JH went bankrupt because of an non-competent management team. They took a loan for $300mill to buy its stock at $30. It later was trading for $2. Basically they lost their money because they thought they were in the stock buying business, not the tax business.
What business is Liberty in? They are in the business of selling franchises. If they were in the tax business they would have more successful corporate stores, tell me five corporate stores that have been in business for more than 3 tax seasons that do over 700 returns. No offense.
The truth is it is a REFUND business.
1800MrRefund.com has billion$ 4 millions.
EZ to market REFUND$.
Frustrated,
Don’t you understand that if Liberty is adding 1000 more franchisees, that is the best thing that can happen for the current ones. Imagine the name recognition improvement that would come with having a Liberty Tax in every territory. You just proved how you are not cut out for business. You get caught up in the insignificant stuff. YOu should just get a job somewhere, and work for the man, and whine about something else…..
Frustrated,
You are so predictable! If they had said they had a record year and will double the amount of offices, you would still be mad!!!
Jackson is supposed to emerge from bankruptcy in 60-90 days. Whether or not Jackson Hewitt is in Wal-Marts next tyear is another issue to be revisted at that time.
Rumor has it that Liberty is considering putting a bid in for Wal-Mart locations. Does anyone out there know if that is true or false?
Frustrated,
Then why did you make the investment? Did you know about the $40k and 19% royalties? You fell for the hype? That proves you are not cut out for business!!!That makes me doubt your net worth, unless you inherited it without having done anything, because you would then have known that 99.9% of people are in the business of selling you something for a profit, which is what Liberty did to you. Nobody forced you to do anything. Plus, if you are worth $3mill, why are you so angry and upset about a $40k investment.
That would be like most of us losing $2000 on a stock. We would just get over it and learn our lesson after a few weeks of being angry.
Go open your no name tax business and do your own advertising and if it is successful let me know, i might do the same but my business background and from what i have seen, that is not a better option. Come on, bring something more intelligent to this conversation, then the usual whining…. it is pathetic!
With Liberty’s new zero down franchise offer and Walmarts should get them the 1000 offices.
Dudes: MR REFUND is the best brand for 100 Million who get refund$.
1-800-Mr-Refund.com is the number you call to get a refund.
No RAL$ needed.
MR REFUND turns your W2 to cash with his iW-2.com app from your iphone.
What more can you say? Tax is dead. Refunds are fun!!!!!!
Mr. Refund,
Are you related to Mr. Frustrated an Mr. Mike?
MR REFUND will replace dead guy and former employee in WalMart
And be on WalMart.com.
John MR REFUND will do 1 million REFUND$ next year.
How are doing as John’s Tax?
Asif Jones seems to be Mr. Refund….
Rumor has it Jackson Hewitt will close over half of its stores this season? Has anyone heard this too?
I do not see this happening unless they lose the Wal-Mart contract.
Is the Wal-Mart contract up this season. I thought it was a 3 year deal?
John Barilla,
Why would Walmart renew with a bankrupt company?
Why would anyone want to buy a Jackson Hewitt Franchise if the are in bankruptcy? When is the Walmart deal going up or renewal? What is the reason Liberty franchisees seem to think Liberty Tax will buy out what is left over of JH?
Wal mart supposedly has a policy of not doing business with a company unless they have been out of bankruptcy for five years. I do not know if this is fact or a myth. I suspect Wal Mart is discussing their options with Liberty, H and R and Jackson Hewitt. I also suspect that given WAL Mart requires the $38 return the return on investment is not there. I did 1/3 of my return count last year as $38 returns. Don’t think Wal Mart is a tax return cash cow. Be advised Wal-Mart also requires a seven day a week staffing with over 60 hours- I was almost always over 72 hours a week.
Antonio/Mike/Frustrated,
Three losers or the same loser?
Most Franchise Concepts are scam. I would say a staggering 90% .Why on earth would somebody get into a retail business and only have customers from a radius of 2 km come to them.That is not the way you are going to make money.Anytime the radius of your customer is less than 20 kms you are never going to make money simply because of the law of numbers.
There will never be customers coming to you beyond the 2 km radius because
in a franchise system there will be another franchise location to service that area.Simply you have doomed yourself for paltry revenues if not failure.
Mr Sub,
I always thought Frustrated/Mike/Antonio would say the dumbest thing on this site but you manage to beat them. Congrats!!! Ever heard of McDonald’s, Subway, Burger King?
To ADMIN: please remove stugotz, since she participates in hate speach not supportive facts for JH and Liberty but instead she attempts to denegrate others for telling the truth. This should be a website with welcome dialogue for and against a franchisor as opposed to hatred.
awwwww…. Mike, poor baby, are your feelings hurt?
Stugotz, what is your entity number? How many returns (paid) did you do last season?
Stugotz, what is your entity number?
Mike,
What is your entity number?
3787 in LA over 1000 returns, done this year. your turn
Mike,
Why are you crying so much doing over 1000 returns? Obviously, it is not you.
I take it you don’t have an entity number or are too cowardly to reveal your results?
Mike,
Obviously i am not going to reveal my identity to a “mentally disturbed” individual who has nothing to lose
You are a coward that likes it, at the beach house!
Herb,
What is the latest with Jackson Hewitt Franchisees? Will 2012 be business as usual? Do you expect there to be many less offices than last year? What about Wal-mart deal?
I am a former JH franchisee that sold my operation in Dec 2008; read the “writing on the wall”. Timing was good, did well on sale however, sad for a company that had the potential to be a great. Sad in that, I really enjoyed and miss the comaraderie and support of my fellow franchisees.
The best thing for them is bankruptcy and go private again. Being a public company just further helped to alienate the franchisee. I think that’s why LT is able to perform better but are not without franchisee complaints either. See the “Liberty Tax” section on this website. Anyway, everyone from Henry Siverman (Cendant owner) to Mike Lister (former CEO and responsible for JH’s eventual demise,IMHO) raped JH and it’s ‘zees to no end. At no time did they give a crap about the franchisor/franchisee relationship. They continue to operate a broken model. With the RAL becoming extinct and the core clientele being low-income/EIC with no other services to offer, they have basically hanged themselves. The tax biz is ever-changing but the top brass was old-schooled and couldn’t or didn’t want to roll with the changes. Nothing more evident than to lose your major funding bank in Dec 2009 and NOT have a bank up plan!
I agree with some of the comments that a “tax-only” business is slowly disappearing. I believe that co-branding is what needs to happen. For many years I’ve being suggesting that JH develop or add tax planning and financial services to their business model but fell on deaf ears. It’s makes logically sense. You already earned the client’s trust in preparing their taxes. Why not provide other services that help them with their investments, save on taxes, etc.. However, the core clientele has to be centered around the middle-to-upper-middle income taxpayer. Kind of like being the “Edward Jones” of tax prep/planning, etc..
Since the sale, I have contracted myself out to other small CPA firms, etc and started my own small firm.. Many of them cater to the middle income taxpayer and provide these types of services and are successful at it. No reason why JH couldn’t use their “brand” to co-brand with others or create a whole new type of franchise that caters to these types of taxpayer/client. I’m in the process of getting my series 6 & 63. It’ll be a long road but tax clients are asking for these types of services all the time. It’s time to be able to deliver.
BTW, Allan, JH franchisees only pay on “net paid volume”. They don’t pay on discounts given nor do they pay on “deadbeat” returns that haven’t been paid do to cross-collection issues(back child support/deliquent student loans, etc).
Brian:
You speak the truth. The franchise tax only business is a disabled horse trying to run against 3 year olds. John Hewitt who helped create both JH and LT is the disabled horse. The day you give up changing with the market, you start on a downward spiral. RAL’s are gone, low income has more options, and JH and Liberty have no presence with anything but low income tax payers. I look at H&R and while some criticize their actions, I suggest they have a lot more market knowledge than the average JH or LT franchisee. They are closing stores and reorganizing. JH is closing stores and reorganizing. LT is just selling more franchise locations that will ultimately lose money. I suggest as you do, find an organization that is year round and caters to the low-middle income that needs financial advice and help.
Herb,
What is the latest Jackson Hewitt. I always love to hear your opinion.
John – I am no longer a JH Franchisee so I cannot really offer much of an opinion on the “latest.” I still keep in touch with some fellow zees and will pass along tidbits as I find them out.
Herb,
If I may ask, what caused you to leave JH? Are you independent?
Sound like what happened with us:
STAY AWAY. Don’t let their sales smiles fool you. Yes they will deny this but I wouldn’t take the time to write this if it wasn’t true.
They say it’s cheap to start a Smart Tax but don’t tell you about all the crazy over priced products they force you to buy. Besides every new store lately has been an outright failure loosing thousands and thousand with owners going bankrupt when they find they are money pits.
Their support sucks, when you call in the middle of tax season with a client in front of you and an important question, their “support” staff is actually doing returns for the main branch’s customers at the same time. Very often you her them say things like “sorry I’m with a client I’ll call you back” and they don’t even call back half the time.
It’s too new of a company and lacks the proper support especially since they spend their time and funds on selling more franchises and not helping the poor franchisees. Heck why should they care they get minimum fees from your office whether it gets a single customer or not. Plus they make you buy all kinds of Smart Tax crap at a premium like umbrellas, pens, envelopes, $1,000 plus murals, posters, mats, etc, etc, etc.
Very unprofessional and they control all the funds, always threatening not to pay or let you operate from your office unless you put up with their unethical ways.
When company decisions are made it’s not in the best interest of the clients and franchisees but the owner of the franchise and his main men.
STAY AWAY don’t let the small start up costs fool you, they will take you to the cleaners. If you doubt this you should call individual franchisees. Beware though the franchisees are cautious of the Smart Tax spies calling them. You should still be able to sense when you call, aside from his main men Joe and Jorge every one is miserable.
MIke/Bill/Frustrated,
Dumb, Dumber & Dumberer!!!!
Heard Jackson Hewitt just renewed contract with Walmart for 2 years. Jsut came out of bankrupcy with a lot less debt and is now privite. JH vs Liberty now humm
Maybe MIke and Frustrated should open a franchise with bankrupt Jackson Hewitt…
Testaiclepirate, or maybe everyone should open a Liberty and then go bankrupt?