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.
John – I am not an independent since I am under a 2-year post-term non-compete covenant. I left JH because I see little opportunity left in the industry as a Jackson Hewitt Franchisee. Lucky for me, I had a decent exit path but some of my friends in the system are sadly stuck there. Other friends are doing okay and didn’t get beaten up as badly as others.
Without all of the debt, JH will overcome LT. They still have a much better name recognition than LT. John Hewitt thinks if he opens 9,000 stores, he will become a household name. Got bad news John, read through all of the franchise horror stories on this site. You will see all of the other franchisors who thought like you do. Most cannot sell a franchise for anything, nor will anyone think about buying one.
I am an independent office with 6 preparers. We prepared over 3000 returns in 1 office in a small size town in the MidWest. Most of our new clients come from Jackson Hewitt and H&R Block. Our marketing is very simple: we offer to prepare a return at half the price charged the prior year by JH or Block. We can do this because we do not have to pay out a 21% to 30% royalty. The ONLY thing that kept the National Chains in business was RAL’s and now that they are gone the Independents will prosper because they give better service at a lot less cost. If you are considering investing in a tax business, I would strongly suggest going on your own. The cost of good commercial software is $1000 to $1200 and there are numerous banks out there who offer Refund products. Why pay thousands in Franchise fees and royalty’s?
Hey John:
What software package do you use? I was a former JH franchisee and have been on my own for the last couple years; farming myself out to other firms(even an HRB franchise office) while building up my own practice again. I’m in the process of evaluating different tax software. I am using Drake but not a real fan of it. I’ll have to say, I really like how JH & HRB have designed their tax software. I haven’t found anything out there that makes preparing tax returns in volume so easy; especially when you have multiple employees with varying experience. Both JH & Block’s software is extremely user friendly and real easy to use, albeit not perfect, even for someone who has no experience working with the software. The learning curve is quite short. If any of you who have used JH’s ProFiler or HRB’s TPS, you know what I mean. Their programming architecture is very unique. Do you or anyone else know of any tax software that is similar in design?
Liberty Tax Service Files Registration Statement for Proposed Initial Public Offering
That’s interesting news. I usually get alerts on the big “Three” when news of this nature occurs but have yet to receive any. In any event, sounds like John wants to cash out on his investment. Wonder what his thinking is? Is this a retirement move? Or is it that he doesn’t like the direction “retail prep tax” is going and wants to cash out before it’s too late? Can’t say if this will be a positive event for the franchisee. If it is to happen, only time will tell. I was with JH when they were part of Cendant and a publicly traded company. I can’t really say either one was a positive move; at least from the franchisee standpoint; although Cendant did infuse money into the technology part of the business.. Be it private equity owners or public shareholders, they want a quick ROI however usually at the expense of the franchisee. I figure it’s only a matter of time JH goes public again. Bayside Capital will want to recoup it’s losses due to loan forgiveness.
So what do others think about this news?
I’ve been busy the last month between NAEA convention and setting up my own business; Its been a lot of work! Don’t know if I will succeed or fail but I’m putting as many horses in this race as possible. JH’s only horse in this race is the eic market. Liberty is trying to market by a using a Halloween costume and that won’t work with an the upscale markets. H and R pricing is more than CPA’s charge.
I’ve seen nothing over the news wires that JH has signed the extension with Wal-Mart and I could care less. With the new circular 230 requirements I think the EIC market is a time bomb for the paid preparer’s and I look for a lot of them to get fined. At the Naea meeting one of the big wigs from the IRS said ” you (paid preparers)are the IRS’s first line of defense” to me that means we must, at bare minimum, do a elementary audit.
Its starting to be ridiculous that preparers should do the work the IRS can get done more effectively. They should build the proper cross checks between IRS social security and the state assistance programs. There was a national news story about major fraud in Florida using at home self prepare software.
This past week that story came out. Millions of dollars on debit cards again.
In the long run paid preparers will have to get out of the EIC return business.
That will concern both Jackson Hewitt and Liberty.
Guest 2, please explain why you think in the long run paid preparers will have to get out of the EIC return business?
Allan H.:
According to my JH sources, JH has secured a two yr deal to be the exclusive tax prep company in 2700 of their locations. That’s a positive (I think). Without the WM agreement, JH would be in a lot of trouble. But I agree, that they need to “expand” their business model to the middle & upper-middle income taxpayer and offer them other “financial’ (co-branded) services that these types of taxpayers need’ i.e – tax planning, retirement/financial planning services, business/fudiciary return prep, bookeeping(can be outsourced).
Allan, just curious, what software package are you using this coming tax season?
There are many good commercial softwares. Three that are good are TaxWise by CCH ($995 to $1595), ProSeries by Intuit ($750 to $1500) and Drake ($1195). All provide excellant service and very easy to use E-Filing. They also offer Bank Products if you serve that type of market.
As long as you can get a REFUND online, the world can end. Anyone with an internet connection can steal from the the Treasury Billions of dollars and not get caught for 15 months.
A fake W2 and a live social is all you need.
Eliminate the Online Refund now.
Do you really know anyone who has $400 a month to spend on an investment that costs $500 a month?
Financial services as we know it is dead. Obama USA can no longer afford to pay people who do not work.
I am now using tax slayer pro which is the highest rated (NATP) software.
Your market is your market; that means within a radius of 10 miles is your entire tax market clientel- the big firms know this and sell franchises by zip code. I’ve spent 75K on my education and I have to pitch that as a marketing strategy against the “six week wonder experts” the nationals firms create.
How long before the IRS goes to using the SEE1 as a basic standard for tax preparers? If this was done the quality of preparers would improve.
How about telling self pre parers they must use a “professional” if they make a 1K error in their return? It would stop the self preparer fraud
Big Al:
I did not send in my $150 to the EA crowd in Wisconsin. Rather take the kids to the park then give a penny to those Education morons.
No one cares what software you use. I love the double ply however for my a$$et.
I must show the world that your EA kool-aid is tainted.
Forget any EA crap and get yourself 1 million paying customers then you have something to talk about in you basement operation.
There will always be criminals, but – in the long run I think :
The IRS will have to depend on software to do cross checks – avoid sending out fraudulent refunds. Preparers can only get answers to the questions. The systems should know if someone is dead or did’nt work, or if ‘you are not the father’!
I’m guessing the EIC & other credits will shrink low enough to reduce refunds by 2013 / 2014. That will ‘dry-up’ the large tax prep fee.
The exam is going to be hard to pass. That will decrease the number of preparers.
Franchised stores will need to get people who can past the test or pay for EA’s.
Unhappy franchisees will be glad they got out, because making a profit will get more complicated.
The test will be so easy, any Junior College dropout could do it at lunch.
If IRS wanted to, they could eliminated all EAs and have just CPAs do the work, the correct way.
If you are a CPA got nothing to worry about. It was fun taking the 3 day CPA Exam and passing it.
Hard to be a pretend CPA in the hood.
Quite frankly, I believe all paid-preparers should be either a CPA, EA or Attorney. I realize the RTRP (Registered Tax Return Preparer) that the IRS has established is trying to eliminate some of the “riff raff” but doesn’t go far enough. That may be considered “protectionism” and may or may not increase the cost to the end consumer but I like to think, as a CPA, it would bring back respect to our profession. Can’t practice law without being admitted to the bar or practice medicine without going to med school and residency. Just my two cents worth.
There seems to be many other “income tax prep” franchises available and wonder if any of you have any insight on Tax Centers of America out of Russellville AR or Pro-Tax out of Charlottesville, VA? Both seem to be family-owned operations. Anyone know the good, the bad and the ugly on these companies?
Brian:
You need to consider online refunds.
You are in the refund business.
Not the tax business.
I am not “in the refund business” and do not pretend to be those people who talk about a one man shop preparing over 3k total returns in a year better get a themselves piss tested!
As for EA NTPI education, it is worth every dime I spent on it; the opportunity to meet over 600 of the sharpest tax minds and network with them is definitely a chance you should not miss. Also NAEA’s headquarters is not in Wisconsin.
I believe in the proverb that ” a wise man takes not the counsel of a fool”!
Figures don’t lie but liars can figure; until I see audited statements of tax return prepared by one individual over 2k total returns I will remain skeptical.
Hello All,
First of all, thank you all for your help, it’s great to see such input so easily, for which even money couldn’t buy.
I have an offer to buy a JH from an acquaintance, who has shown me his financials, which states that in the past years, and even the 10-11 tax season he made an average $200k consistently.
If he has made that much money, how much do you guys believe will be lost based on the new developments in the tax preparation business. I understand a lot of websites are now filing online and JH has been hurt, but i assume JH will still be in business for at least the next few years. As long as they have wal-mart backing them i don’t think they will go under.
Their will always be a market that doesn’t want to prepare their own taxes or don’t have the time or education to do so.
Any help would be HIGHLY appreciated.
Alex
all tax businesses are based on the individuals trust in the preparer- how much of your volume is the man’s long term clients?
My location (a walmart) was 45% returning clients, and my returning customers were virtually all home owners. Transits are difficult to make money off of.
Everybody- CPA, EA, and franchisees are expecting a major fight for customers- look for major price chopping! Next year (2013) the paid preparer exam will knock out a lot of people so I suspect price erosion will halt then- for 2012 I’m not so sure.
What is your customer base? (take retention and multiply % times gross sales) That is your anticipated revenue base
What will Jackson hewitt charge you for posters and other worthless crap they say you must buy- I’ll bet its at least $10/return.
Your own local advertising will be huge and you need to push YOURSELF as a tax expert- don’t expect JH to co-op you unless they used canned ads which lists you and every other JH office within 20 miles. I figure it will take me $50 per return in advertising just to get started. That means on the $38 returns you stand to lose at least $20.
200K sounds like a lot of $$; my wal mart only did 77K on 383 customers.
Without a ral product I don’t know how you can possibly charge $300 for a return when CPA’s and enrolled agents charge $175-200.
Big Al brings up some big problems.
He has 45% retention? He does a couple of hunded of balance due 1040$.
No he does 90% REFUND$. Home owners are in debt and live REFUND to REFUND.
30 million REFUND$ are done online. MR EA has yet to get off his EA A$$ets and realize it is the REFUND people want. The BIGGER the better.
Wal Mart has a year to year agreement with JHTS. I have a real shot at being there next year. I could buy JHTS out of BK and be there too. Not a good buy.
Just wait till the iW-2 kills every non registered ghetto preparer.
REFUND$ is where you want to be.
Never ever associate with a retail TAX firm when you can be a REFUNDER.
As EA AL where on his EA website you can do your REFUND online?
McDonald’s 400,000 employees are owed $1 Billion from IRS.
Wal-Mart employees are owed $3 Billion.
So EA AL how many balance due returns did you do and get paid for TAX EA?
Mr. Weagle,
What is a $38.00 return?
$38 REFUND???????
Jackson Hewitt charges $38.00 for a simple 1040EZ . Be careful with these- remember “assisted refunds” your ($38 fee taken out of tax payer’s refund) result in 12-30% of these returns (my average was 16%) the IRS keeping the entire refund. If an individual has child ordered support payments statistics say 78% will have at least part of their refund confiscated. If it was a partial you usually will still get paid.
In a walmart I did 383 returns and about 90% were assisted refunds.
Those are extremely high numbers. Our tax practice is an independent in a middle-class neighborhood. Our assisted refund rate was 18% and the non-pay due to IRS keeping the refund was about 2%. 1040EZ’s are less than 10% of our business. It all depends on your target market.
Mr. Weagle,
What % of your returns are prepared by Feb 15th?
Buying someone else’s business:
I would hire a professional to review his financials and to get advice on how to best protect yourself if his fees fall off in the first 2 years.
One more question on the $38 return:
The $38 return. Is that all a customer pays?
I have seen ads for the free 1040 ez from Block, but I have never seen ads for the $38 return.
Sounds like that’s where a good price challenge could come from. Major ads to bring in people on free or cheap.
McRefund is a product for McDonalds 400,000 employees.
$49 gets their returns done.
There is a web site McRefund.com and toll free 1-866-McRefund for fax support.
Mike-tard,
If you were promised a get-rich quick scam and actually believed it and are angry now, whose fault is that? Why don’t you grow up and take responsibility for your actions! I told you you should make a profit in year 3. If you expected to make a profit in year one, I really think you were just naive.
What is the story on the 300 office H & R Block is opening in the Walmart stores? I though JH had exclusive rights to Walmart.
Since they filed for bankruptcy that might have ended that agreement….
H&R is going to hit the season kicking and screaming. They have to get their profit up and bring in more customers. They already have some pre-season marketing in my area.
But I would say it’s not being handled right.
No one is talking about Jackson Hewitt.
Maybe Walmart looked at Unhappy Franchisee and saw that it is near the top of complained about franchises. Even as bad a shape as JH is, they are not even close to the 900+ complaints about LT. Even the worst H&R marketing is a ton better than LT could ever hope for.
I’m sure Walmart could figure out that 95% of the complaints are Mike and F&D (same person). Don’t give yourself too much credit.
Mike,
If you keep re-posting under different names as you have you will easily get to a 1000. Had you been putting your effort on doing 1000 returns, you may not be filing bankruptcy…..
Testaipira,
Not worth trying to prove a point to Mike and his different alias. He is will never get it.
I recently talked to a Jackson Hewitt franchisee that bought his practice back from JH and is opening up as a mom and pop. Business is down 50%…. He is now thinking of switching to Liberty Tax as they are up and coming and have 4000 offices. Growing fast!!!
Testaipira;
How did he hear about Liberty? Why if your already established and just left a franchisor would you turn around and sign up with Liberty. What would be the benefit? You already know how to run a tax business, you have a base of clientale, You can buy good quality tax prep. software. There is no product that Liberty can offer that you can’t offer. RALs are over for everybody at the end of Feb. Why incur a 19% royaly and advertising fee and be told how to run your business and incur additional cost that you don’t have right now. i.e. pay a waver. Maybe it’s for all the good tv ads and the strong on-line presence that Liberty has. Oops I’m sorry that’s H&R Block.
Liberty is not going to have a successful IPO and most likely will be having to borrow on that credit line. Next year will be an interesting year for LIberty tax and will see how loyale twiddle de baumgardner and twiddle dum vanderpool are.
Testipira;
I seriously question the validity of your post. While it may have been a passing conversation among competitors, no good businessman would buy out a franchise agreement, then turn around and buy another. Especially a Liberty, and for the reason you stated. Hopefully he looks further into it and realizes he will get nothing for his money, especially additional business. I am sure his business dropped if he thought the only thing he had to do was reopen as an independent and spend no money on promotion or advertising, but thinking he was going to get clients because he had the Liberty name above his store would be a huge mistake on his part. Go out and run your stores, and get off a site that is called Unhappy Franchisee. Of course your plan would create more legitimate posters for the site, so continue to do what you are doing.
I was wondering if there is a possible law suite against JH Corporate from the franchise community. The franchisees were sold a franchise territory with the agreement that these territories were exclusive to the franchiseees. Now the corporate office has opened corporate own stores in the Wal-Mart’s with in franchisee territories… any thoughts?
Jackson Hewitt company owned stores in Florida are passing out coupons “Any return maximum rate $125.00” I’ve seen several of the flyers. I suspect several of the franchisees are bull shit over over this- I’d be.
My start up is going and growing slowly; I am agressively marketing the S corporation and LLC business as Jackson Hewitt, Liberty, and H and R shy away from that niche’. I can not compete with with free, or RALs, nor do I want to.
I agree with the posters who say the cost of a franchise is not worth the investment.
Advertising is not cheap- I figure it costs me $100 for every new customer it generates, and it is a year round process. People now need to see your name 10-12 times before they will call you, its a little less if they see your name in different media. Radio has a better impact than TV and it costs less.
F&D,
Why is it that all Jackson Hewitt near me are closing down but I see a Liberty Tax popping up everywhere i look?
Testaipira;
Don’t worry, in a couple of years they will be doing the same as the Jackson Hewitt’s. Selling franchises is one thing, keeping them open is a totally different issue. What I experienced was that the size of Liberty’s pie is pretty small, and all that happened was that is was just cut into smaller pieces. When the dust settled, the pie was a little larger, but still not large enough to support more locations.
i would say Liberty can handle about 7000 locations. HR block will probably close more stores and JH will be gone….
I suggest you take some time to read about the Edsel.
Testaipira;
It is interesting that you have moved your discussion from the LT complaints, to the JH complaints. Unfortunately neither you or anyone else has given any reason why LT will survive any better than JH when they are based on the same failed model, nor has anyone given any proof that purchasing either a JH or LT franchise creates any better ROI than a Mom and Pop. Until you can prove that, people might as well hang out their shingle and save the 19% royalty. They can buy software for less than $1000 that does the same thing.