LIBERTY TAX SERVICE Franchise Complaints

UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiarliberty_logo 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?




5,304 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • May 18, 2017 at 9:37 am
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    I was a Zee for 4+ years and proudly never wasted a dime attending one of those dog & pony shows!

  • May 18, 2017 at 4:39 pm
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    ^^Actually, Texas: I don’t think they actually believe their own crap. I think they just know how to impart it on others very successfully.

    ^^Yeah, Tom: You were so smart. They were a waste of time & money. I felt my brain cells just rush out of me as soon as we arrived. I didn’t stop at one, yeah, I had to waste time and money three years in a row. :(:(

    Anyone that’s a new franchisee that is getting ready to head to their “dog & pony” show convention: use the wisdom that you read on here. Save your $$ and don’t bother. In fact, don’t bother SIGNING a franchise agreement with these scoundrels in the first place! Talk about saving money…….. and time and headaches and stress and, and, and, and, and………..the worst possible choice in your life would be to join these greedy creatures.

  • May 18, 2017 at 6:11 pm
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    I talked to one zee last week, they definitely are NOT going to the convention for the first time in several years, as a matter of fact they are likely pondering an exit strategy. Unfortunately this person did not heed the warning to purchase because the fell hook-line and sinker.

  • May 21, 2017 at 9:44 pm
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    It needs to be reiterated to a lot of franchisees or potential franchisees that Liberty Tax is not in the tax business but in the franchise business. That being said, Liberty earns its revenues through franchise fees that are at startup(territory purchase) and on continuing royalties. The customer is not the taxpayer, but the franchisee. This causes Liberty to only be interested in its royalties that are generated by the large fees that the franchisee charges. Liberty deliberately encourages high fees by any method possible. This includes showing the franchisees illegal and immoral methods of preparing taxes, thus raising fees or outright creation of fraudulent tax returns. Inevitably, the scammers and the schemers get caught, but not Liberty, just their franchisees! To make matters worse, Liberty has been known to turn in franchisees that it has a dispute with (always over money), to the IRS. Liberty provides the IRS with the details on how the questionable returns are prepared, since Liberty would know how it was done, after all, they taught these methods to their franchisee’s.

    There has to be a deal between Liberty and the IRS that allows Liberty to stay in business as long as it gives the IRS enough names of its franchisees to prosecute. I’m not saying all the franchisee’s were innocent, some were as big a crook as John Hewitt himself, but I have observed that the fraud perpetuated by Liberty and its franchisees fall into several patterns: Creation of a small business to reduce taxes of increase earned income credit; Filing of false tax returns with other peoples social security numbers; and, Married spouses filing as if they are not married and splitting up the dependents to get 2 payments of EIC. These are methods that ere clearly expressed to me and some other zee’s when we were with this franchise. This was part of our training by Liberty. Again, Liberty will retaliate in any way the can from excluding you on conference calls to calling in off season “corporate audits” to setting you up for investigation with the IRS.

    This is why Liberty Tax is so disreputable. If you haven’t figured it out by now how bad this company really is, then you deserve your fate with them.

    I would like to know if there is a way that a lot of ex and current franchisee’s can get together to put our heads together and finally defeat the Liberty Tax criminals? Any ideas?

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