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?




5,325 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?

  • May 25, 2017 at 2:51 pm
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    The only reason Liberty Corporate has been safe so far is they completely corporate with the IRS and with the states where accusations are made. They do not back the Zs they throw them under the bus and claim that they were bad people. The IRS and States are not going to try to bring Liberty down now because they are too big have too much money and it would take a huge budget to fight them in court. So much easier to get Liberty to roll on any franchisee that the IRS or State wants.

    Unless the model changes Liberty is in serious trouble. And for the model to change it requires a ton of retraining and a huge effort to train Zs how to hire professionals that can be trained to complete the more complicated returns.

    Liberty right now does very little in the way of complicated returns as a whole. Their end of season business rush consists of low income filers for the most part still. There are some franchisees who understand how to build a tax practice but few. And those few are not celebrated they are looked down on more than anything.

  • May 25, 2017 at 8:21 pm
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    ^^Bingo. You are 100% correct. Well said.

  • May 26, 2017 at 4:42 pm
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    I wish I would of been so right before I got involved with Liberty…lol…But after very costly lessons I have learned. Honestly there is no way I would suggest anyone buy into a Franchise Operation of any kind. Sooner or later there is going to need to be protections for franchisees, but I fear like always it will come way too late and help very few. The truth is that not only is our country pretty messed up with corruption so is business and franchising is without question.

    With lending starting to come back I am afraid many will end up borrowing whatever equity they may have and many will choose to buy a Franchise of one kind or another. And as before, up till 2007, most who choose to buy a franchise will end up loosing the equity with a failed franchise operation or a franchise business that barely pays to keep itself afloat. But now more than any other point in time the information is available to people if they want to do some simple research. There may not be proper protections from government but the information is still out there to inform people what franchising is really like and what they can expect overall. If people will research it and heed the warnings it will save many.

  • June 4, 2017 at 11:24 am
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    Hi, I have been watching your posts for a couple of years now and I wanted to say what was on my mind. A few years ago, I signed up for Liberty Tax . They were teaching me how to file wrong tax returns for poor people. This was done by making up tax returns for people who claimed to be babysitters or Carpenters on a schedule C. By changing the income and expense numbers around, they showed me how to get the most money back from the government. Liberty said that this was the way to get more money from customers and more money for me and them. I felt this was wrong, but they kept telling me that it was no big deal. I read these posts and sounds like it is a big deal. Now I am getting IRS letters to my old company that had the franchise for Liberty and they want to see me. What I have seen on this site, I am afraid to respond to them. This is scaring me to death.

    Liberty asked me to do a lot of things that are illegal. I have closed my tax company and Liberty is looking for more money from me too. What should I do about Liberty and IRS?

  • June 5, 2017 at 3:58 pm
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    Hello Liberty Fool,

    We’ve done some research on the company and would be willing to talk to you about your situation. You can call our office (no obligation) – 314-522-2312

  • June 11, 2017 at 2:44 pm
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    I am not sure I can afford legal expenses. Liberty Tax has made me very poor, in fact, they have all of my retirement money. I can’t believe that they are still in business doing what they do to us franchisees. Is there some government agency that should be looking into how Liberty takes advantage of their franchisees? I have hired too many lawyers because of Liberty tax and have not had any success. Will they continue to steal from more people?

  • June 11, 2017 at 8:02 pm
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    Do not blow off the IRS! They will NOT go away. If you knowingly filed false tax returns, you will be held accountable. There is no way out. That said, if they are on to Liberty teaching franchisees to do the wrong thing, they may offer a plea deal if you can provide them with proof. I wish you good luck.

  • June 12, 2017 at 4:58 pm
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    SiempreTax+ Named a Top New Franchise by Entrepreneur Magazine! Different name same old game. Hopefully someone with one of these franchisees will write into this site and post about
    their experiences with this company. Hate to see this company take more peoples’ money.

  • June 13, 2017 at 9:44 pm
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    ^^Hi Bill:

    It is extremely obvious to anyone that knows LTS that Siempre Tax’s new status as a top franchise was BOUGHT by the man himself. No question in my mind. You are right. Nothing new. Different name, same old game. This company has taken way too many people’s money in the last 20 years they’ve been “in business”. Franchises in general are awful, awful, awful, but this one is at the head of the class, in a category of it’s own. Someone may want to research why Franchises can get away with being so one-sided and how much money it makes for our government. There is a reason the “little guys” are prosecuted, not the big guys. The whole thing stinks. :(:(

  • June 14, 2017 at 8:04 am
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    Results for 2017 are in. Liberty is way down in Return count and lost over 100 zees and over 400 stores. Keep listening to John? John needs to retire! Oh wait he can’t if he does the credit line that floats the company disappears.

  • June 14, 2017 at 9:24 am
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    The company needs to develop some updated marketing and spend money on advertising. Hire an outside marketing firm that’s in touch with the real world. Their stuff is outdated and they did’nt see the competition coming.
    Zees who are loaded with bad returns will continue to drop out of the mix, but there is no point in saying you did’nt know the returns were bad. The IRS has training and they warn you before hitting you with the penalties brick.
    The strong stores will survive but maybe under a different logo. The question is why are you surviving?

  • June 14, 2017 at 10:17 am
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    Liberty would make a profit if they only had 1000 stores. It is the individual Zees that continues to pay the 19% fees and eventually go out of business while making John richer. John can supplement his retirement with just a few Zees contributing to him. If you like spending your money on a company that is faltering, go ahead, you have been warned – this message is for those of you whom may have found this site and are thinking about boarding a sinking operation – buying a Liberty territory.

  • June 14, 2017 at 12:14 pm
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    At this point anyone seriously thinking of investing with this company has not been on this website.

    If you look at this year’s 8-K you can see the company’s priorities. the company’s net income is down 33% from last year. So their cut “Advertising” expense by $5,437,000.00 and issue a dividend of .16 cents per share to shareholders of record as of July 14,2017. Total amount of dividend will be around 2,222,750.00.

    Buyer Beware!!!

  • June 14, 2017 at 12:47 pm
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    HR Block had a good earnings report. Everything was up where it counted. Liberty reporting is down,a reflection of really bad management.Its time to close down this company and show the public what it really is: a front for John Hewitt to scam as many potential franchisee’s as possible. Maybe the market is finally getting wise? Stock price is down about 10% on High volume. Looks like stock could be headed to the $10 range. I wonder how that will affect insider options?

  • June 14, 2017 at 12:48 pm
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    Good points by Bill about advertising and dividends. It just proves that Liberty, VA Beach is out to enrich themselves. I would guess that outstanding stock is owned mostly by the company’s current and former executives.

    When you think about Liberty as a whole, the poor Zees work to hopefully have a successful business but too often only the home office prospers.

  • June 14, 2017 at 1:50 pm
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    Siempre, Liberty and now 360? Hmmmm, sounds like more competition for the individual zees, or maybe,,,,,,,let’s open a new brand so people won’t realize that it was us that committed all the fraud????? Any thoughts?

  • June 14, 2017 at 2:00 pm
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    It sure would make sense to open a new brand to disguise the failings of Liberty and to bilk more franchisees and investors. It’s still lipstick on a pig!

  • June 20, 2017 at 9:33 pm
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    Liberty Tax : CEO sued by ex-girlfriend claiming he shoved her down stairs

    https://pilotonline.com/news/local/crime/liberty-tax-ceo-sued-by-ex-girlfriend-claiming-he-shoved/article_1af7fb4f-d4b8-5745-a071-43241099f230.html

    By Kimberly Pierceall
    The Virginian-Pilot

    Liberty Tax CEO John Hewitt, seen in August 2016, is being sued in Virginia Beach Circuit Court by an ex-girlfriend who claims he shoved her down stairs and grabbed her by the face and neck.
    A lawsuit filed against Liberty Tax CEO John Hewitt claims he shoved a woman down the stairs and threatened to throw her dog in the lake outside the Virginia Beach home they shared.
    Tiffany K. Glenn filed the lawsuit in Virginia Beach Circuit Court, nearly two years after the night of May 26, 2015, when she claims Hewitt grabbed her by the face and neck and shouted: “This is my house. Get out!”

    Glenn claims Hewitt shoved her down the stairs from behind, threatened her dog “Gucci” and threw her boots into a lake on the property, according to requests for admission filed by her attorney.
    Calls and an email sent to Hewitt at his Liberty Tax address seeking comment were not returned. His attorney, Larry Woodward, declined to comment, but said he would be filing a response to the complaint in the next few days. Hewitt founded the Virginia Beach-based tax prep franchise company.
    The lawsuit says Glenn was left with “numerous bruises and marks on her face, neck, arm and other places.”

    Glenn’s attorney, Kevin Martingayle, said Hewitt was arrested and criminally charged at the time, but his client dropped the charges at the urging of Hewitt and his then attorney. She and Hewitt had been in a relationship for a significant period of time and she believed they might reconcile, Martingayle said. The relationship, though, ended.
    Glenn is seeking up to $700,000 in combined compensatory and punitive damages.

  • June 21, 2017 at 3:08 pm
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    ^^Wow, NCHillbilly, that’s awesome.

    I’m glad that a—— is getting the negative press he so deserves. Hopefully someone along the line needs to know that money can’t pay your way out of everything and put him in jail already.

  • June 21, 2017 at 4:06 pm
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    If he slaps around his girlfriend (allegedly), what do you think he would do to his franchisees? This should definitely be a warning to all current and possible new zees! WHAT A POS!!!

  • June 25, 2017 at 5:50 pm
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    We all know that Hewitt is a moral degenerate. Look at how he treats his family. Look at how he treats his girlfriend. Look at how he treats his lawyers (note that this is not the original lawyer that represented him when he was arrested). There is a certain arrogance with this guy, how he treats his girlfriend as a piece of property that he can do whatever he wants to.How he treats his companies to make sure shareholders pay for his extravagances. How he treats his franchisees as dirt once he has their money. I can’t believe that shareholders are actually tolerating his behavior domestically as well as corporately.

    It just goes to show that you can fool a few people all of the time. Hewitt uses his corporate resources for his own personal vendettas. Look at the size of the legal team he has on the corporate payroll. Look at the number of lawyers he has hired and fired privately. There is more to this story than meets the eye.

    Since Hewitt has to go through a state court for his domestic malfeasance, he will not have the control he has over the Federal District Court in Virginia. I could be ironic that his lack of morality would be punished by the state instead of the feds. I hope they find him guilty, as he surely is, and award him the time in the State pen that he so richly deserves.

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