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LIBERTY TAX SERVICE Franchise Complaints

August 11, 2009

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?

Comments

4,568 Responses to “LIBERTY TAX SERVICE Franchise Complaints”

  1. Franchizee says:

    @Greg – I was thinking the same thing. John Barilla and has morphed into Henry Bloch. He must have a new office with a new IP address.

    People need to keep in mind, there are many abusive people associated with LTS like Henry. If you question anything, they will abuse you for asking.

    With this company, Henry is the typical person you will encounter.

  2. SanFranDan says:

    Thanks, Greg.

    People like Barf villa Bloch are just company shills. They think they can get away with saying such negative stuff toward posters on this board like me because they know I completely speak the truth and that’s got them worried.

    All I or anyone on this board can do is educate the potential Liberty Tax franchisee and let them know the real story and let them decide for themselves. If they do their homework properly, they will walk away with their hard earned money in their pocket and go elsewhere.

    This company is being investigated for a reason. They are slime balls. Rip off artists. What goes around come around. Now it’s time for JTH to get his. The most awful, horrific experience of my life. Lasted waaaaaayy longer than a 5 year contract. They get you in their grip and squeeze as hard as they can in a choke hold position. Many, many franchisees have just walked away over the years. Just think about how much $$ they collect for a new person to come in and run the same 2×2 territory.

    There is nothing in it that’s positive for the potential franchisee, only good for LTS.
    Walk away and don’t look back. The contract is so slanted, it reaps of slime.

    ADMIN: Please make sure they cannot hack this website! They are capable of the very worst in human beings. I have to take a shower just when I realize I was part of this disgusting company for 5 long years.

  3. Sad but true says:

    I have an offer for potential investors of a Liberty franchise territory. Instead of buying that territory give me 100k and after 5 years I will give you back 80k. Sound absurd? Not really. If you buy that territory, you will probably spend at least that much in five years and will want out from this company. You will find no buyers of your so called business and the clients YOU created will be Liberty’s.

    Better yet, just leave me out of it, don’t buy into this system, and keep your 100k for yourself. You will never be able to thank me and others for this advice but trust us, you will be saner and richer to opt out of your potentially bad decision.

  4. NCHILLBILLY says:

    Another Liberty Tax Franchisee involved in tax fraud case.

    An Ohio man was charged this week with bilking the IRS for years through a franchise of Virginia Beach-based Liberty Tax Service.

    Towhidul Hussain, a 36-year-old Middleburg Heights, Ohio resident, ran a Liberty Tax Service franchise from 2011 to 2014, receiving more than $20,000 in kickbacks from clients for artificially inflating their returns, Northern District of Ohio U.S. Attorney Steven Dettelbach said in federal court documents.

    The conspiracy included at least 40 taxpayers, Dettelbach said.

    Hussain had no training or experience in preparing tax returns before opening the Liberty Tax Service franchise, he said.

    Hussain, who ran his Liberty Tax Service in Cleveland, Ohio, was charged Tuesday with conspiracy to defraud the United States and three counts of assisting with the preparation of false tax returns, Dettelbach said.

    Hussain hired a woman to manage the franchise in December 2011, and she showed him how to file bogus medical and education credit claims, Dettelbach said. They would direct clients to take their tax refund check to check cashing stores, and would then take a cut.

  5. Mike says:

    Awesome!!!! Love to see them get the publicity they deserve! Also, I am pretty sure that Barilla is from Cleveland…hmmm? Could it be the same guy?

  6. Franchizee says:

    It seems the Feds can’t touch Hewitt yet, so they are going to the Franchisees. Some day they will be able to connect the dots to Hewitt. Just a matter of time.

  7. SanFranDan says:

    ^^Franchizee:

    Now that I’ve been through what I’ve been through for so many years, I am absolutely convinced that the feds are working with Hewitt to catch the ‘bad guys’. They’ve already connected the dots to Hewitt. He is either paying them off or/and deflecting their own fraud by pointing out others, small franchises that do something out of place. I know this because 1) it happened to me and 2) it is way easier for the IRS to go after little guys like me and others than it is to go after an entire entity like Liberty Tax and the “grandfather” of Tax himself, JTH. In my case, it was so small but yet it has turned my world upside down for YEARS and has cost me a couple of hundred thousand. Something that Liberty verbally taught to me and thousands of others. EIC – Bingo

    Maybe one day in my lifetime I will actually see justice happen and JTH finally brought to his knees (like Madoff).

    My life was perfectly normal before I joined this hellhole franchise and it has been so amazingly stressful, thanks to Liberty Tax and JTH, that my life will never be the same again.

    Something is not adding up right. No one should be allowed to get away with what they’ve gotten away with for so long. It makes me convinced he IS conspiring with the federal gov’t.

  8. SaraEA says:

    SanFran, are you saying you were involved in fraudulent EITC filings? And you’re blaming Liberty for having taught and encouraged you to do this? In other words, you cheated every taxpayer in America by filing fraudulent EITC claims they had to pay for with their hard-earned money, and you’re blaming someone else?

    This puts an entire new light on your postings. You come across as so ethical and moral and complain constantly about how you were wronged by Liberty. YOU are the one who wronged your clients and fellow Americans. Oh, but it’s all Liberty’s fault? Sounds like you’re the one who sold your soul. Please leave this board. Let the franchisees who were truly duped by the company’s false promises air their grievances and warn others to do their due diligence. Your own nightmare is self-inflicted.

  9. mike says:

    Gotta agree with Sara EA…I hope it was not like that though, San Fran…please enlighten us.

  10. SanFranDan says:

    Clap, Clap, Clap!

    SaraEA:

    What an idiot you are! Just go ASSuming things! My case is so incredibly complicated, you really have NO idea. This has been a struggle of a lifetime. If you really have NO idea, because I am certainly NOT going to go into detail, then you really can only wager a guess now, can’t you? Believe what you want, honey. It’s not at all what you think. But you go and make sure you come to your own conclusions and bash me on this forum.

    This is and has always been an incredibly dysfunctional franchise. I do know. I was one of the first.

    Liberty is 10000000000000000000000000% behind my woes. You can guess all you want. But I am not at Liberty (pun intended) to give you ANY information that would lead you to believe I’m at fault. FAR from it lady!

    If I didn’t just lose a couple of hundred thousand I would sue the living daylights out of them. In fact, that’s how I lost so much $$ to begin with. They will sue you and make sure that you have NO chance in winning or even get a fair trial with the rinky dink rocket docket Eastern Virginia court system.

    This entire franchise is rigged. Don’t for one minute think that anything they do or you learn is honest. Maybe they’ve cleaned up their act in recent years, but I’ve been fighting and struggling against them for years.

    Don’t you DARE tell me to leave this board. You can tune me out if you want to come to your own conclusions on what happened. They are manipulating and fraudulent on ALL levels. No doubt in my mind. I now have the proof I needed. I have met with the appropriate officials who know all about my case and many others similar.

    Your last comment is comical. “Your own nightmare is self-inflicted”. There is nothing that I can say to that stupid, stupid comment. If only you knew the real truth. Say what you want, missy. I don’t give a shit about you.

    This franchise sucks royally and I have all I need to carry on with the proper authorities. Looking forward to the downfall of Liberty Tax and JTH.

  11. Sad but true says:

    Please, please understand one thing potential investors in a Liberty Tax territory or territories; The troubles Boston Tax, Barbara Green, (see top of page for these posts), and SanFranDan have had might be yours too.

    Gone for now are John Barilla and Henry Bloch. My gut feeling is that these two people are John Hewitt or someone John Hewitt is instructing to post messages on this site. Investors; Barilla and Bloch try to minimize the really negatives new investors will most likely encounter if they buy into this system. The majority of the posts are negative and true statements of the difficulties good people have had trying to make a go in the tax business with Liberty Tax.

    Liberty’s quarterly report comes out soon. Look closely at the number of stores that they have now compared to last year at the end of the same quarter. I will be surprised if the number has increased. Even if it has, that means nothing but more failures for more franchisees. We will see.

    You pay 40k for a territory, start-up costs, and do all the work for this business you might buy into. You pay 14% royalties and 5% ad fees. Minimum royalties start your first year you open a store. No national ad program and no local TV or radio unless you pay for it. It is a win-win for Liberty Corp. and you pay for their salaries and rich living. You have a slim chance to succeed. By success, that would be measured by a return on your investment and profits. That is such a pipe dream with this outfit that I have a hard time even considering it happening. Even if you do succeed, 19% of every dollar you make is a tough nut to swallow.

    You are better off considering banking your money at 1/2% interest.

  12. Bill says:

    SanFranDan: Take a step back and read what you write.

    “They’ve already connected the dots to Hewitt. He is either paying them off or/and deflecting their own fraud by pointing out others, small franchises that do something out of place. I know this because 1) it happened to me and 2) it is way easier for the IRS to go after little guys like me and others ”

    Its your post and the above statement clearly sounds like you did something out of place with EIC and Liberty reported you to the IRS. I know your passionate about your feelings towards Liberty and I’m sure you didn’t intend to have it come off that way but unfortunately it did.

    This franchise is a nightmare. The decision I made in 2005 still haunts me to this day. My goal and most everyone else on this site is to help you avoid this nightmare.

    Buyer Beware!!!

  13. SanFranDan says:

    ^^Bill:

    I was NOT engaged in fraudulent tax returns. Period. Unfortunately there is much more to this than was said. When I was there very early on, there was an official training that not only showed us how to construct and maximize EIC but encouraged us to do so. We were invited to “private” cocktail hours after training classes and told how to maximize our fees by way of being aggressive on the EIC.

    I never said I personally OR anyone in my offices engaged in anything fraudulent. What I am saying is that I personally had many fights with Corporate & the AD’s and they escalated those argument issues to JTH himself. At that point is when all the harassing began. Many, many, many issues were experienced by me at their hands, for example: AD audits constantly, notices to cure for the most mundane things, corporate telling me to spend my own $$ on marketing instead of using my advertising royalty for these purposes. Those I’ve listed are the most calm part of what I experienced next.

    I regret it was misinterpreted that I was doing anything fraudulent. That has NEVER been what I’m about. At one point during the years of harassment, the IRS audited a great number of my clients. It is my “guess”, and a very strong one, that Liberty was behind these audits. Since so many of Liberty’s clients are EIC, it stands to reason that the IRS would see a pattern in these types of Tax returns that they would interpret as questionable. The minute there is more than 3 of this type, the IRS assumes that there is a pattern of fraud, even if there isn’t any. My guess is that Liberty is behind this because they want to eliminate dissident franchisees.

    Bill: I agree with your last sentences. This franchise IS a nightmare and the decision I also made many years ago still haunts me to this day as well. Not to mention all the harassment, stress and money I lost in fighting a Goliath.

  14. SaraEA says:

    SanFran, I’m sorry if I misinterpreted what you said. This is YOUR STATEMENT that I was responding to: “In my case, it was so small but yet it has turned my world upside down for YEARS and has cost me a couple of hundred thousand. Something that Liberty verbally taught to me and thousands of others. EIC – Bingo.” You must admit, that sounds like you were engaged in fradulent EITC filings. Please tell us what you really meant.

  15. Bill says:

    SanfranDan: If you had tax experience prior to becoming a liberty tax franchisee then you understand the rules as outlined in IRS publication 17. There is no way for individuals who’s only source of income is a W-2 to constructed and maximize EIC after the tax year has ended. The credit is based on earned income/AGI and number of dependents, both of which can’t honestly change after the year end. I understand in the real world there legitimate situations that do effect the credit such as taken care of a niece or nephew but these are events that are out of your control. If you follow the regulations for EIC the taxpayer’s situation dictates the EIC, you should not be constructing or maximizing anything with regards to the credit.

    My only purpose here is to help potential franchisees avoid the mistake that all of us made.

  16. SanFranDan says:

    Bill:

    I had corporate tax experience, not individual. In these “cocktail parties”, Liberty trainers suggested that the creation of a side business can manipulate the EIC through the profit or loss on a Schedule C. They called it “optimizing”. I call it fraud. Liberty was giving me bad advice and I was not following it so I got into trouble with them. I will not be specific.

    Liberty and JTH harassed me constantly, many issues I cannot say here because they would identify me. When I went on zeenet questioning them on several issues, I was shut down from posting on zeenet in the future. After that, I was subject to all kinds of stress and harassment, some small, most large and all to squeeze me tightly and quiet me down. Honestly you would NOT believe some of the things I’ve lived through from them.

    It has lasted way longer than my 5 year contract. I have felt the repercussions for years. They are very good at what they do. They hire the best lawyers and the nastiest people in corporate. It has been a very long time since my 5 year contract has ended so I have no idea what they are telling people these days about anything.

    Frankly I am exhausted with this discussion. So please move on from me and discuss ways to warn potential franchisees. The everyday headaches are bad enough to warn people to stay away and go elsewhere. Everything I’ve talked about is true: from wavers selling drugs on street corners to employees stealing from me to not able to be in each office at the same time so many dishonest happenings occurred with employees and with clients. Clients are pretty brazen people and are very vocal as to what they want and don’t want.

    The bottom line is that this experience has been wrenching. My case is probably unique enough for me to try to remain anonymous as much as I can. I don’t trust anything about that franchise. I, along with you, Bill, plunked my money down on something that I thought would build for my future. That was so far from reality. I lost it all and then plenty more.

    I warn potential franchisees any opportunity I get to do their homework about this franchise. Talk to many franchisees, both current and ex. Come to your own conclusion. However, if your conclusion is to go ahead and sign a contract with Liberty Tax, good luck to you. I can say you’ve been adequately warned.

  17. uphillbattle says:

    Lawyers are gathering information from clients (e.g. Tycko & Zavareei). They are seeking people who were allegedly overcharged or allegedly charged a higher price than quoted.

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