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?




5,394 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • August 21, 2017 at 9:36 am
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    Too late for me. Was not able to survive. Had several stores but the bad publicity killed me. I was so in debt to Liberty I chose to walk away. You don’t need a franchise, do on your own!

  • August 22, 2017 at 8:44 am
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    I plan to reopen in two years once my non-compete expires and stick it to John Hewitt. You will do so much better without the tainted name.

  • August 22, 2017 at 3:37 pm
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    Screwed, that’s the spirit, don’t forget to print your client list so you can call them and tell them goodbye:) Also, the office phone number is yours! KEEP IT! Also, there is nothing in the contract that says you have to keep the clients hard copies in alphabetical order or in consecutive year order, have you ever played 52 card pick up? Make it a fun game for the new corporate manager that is TAKING OVER YOUR STORES! I AM SURE THAT HEWITT IS NOT WISHING YOU WELL and doesn’t give a RATS A$$ about your situation! IN TWO YEARS , DOMINATE!

  • August 27, 2017 at 8:10 pm
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    Anyone know if that young kid RJ is still around? joined at 18 or something a few years back, I met him at convention a few years ago.

  • August 31, 2017 at 10:38 am
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    I’m anxious to see how bad earnings are and how Screwitt puts a spin on it. Could be interesting!

  • September 1, 2017 at 10:29 am
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    I doubt you will see or hear much from John Hewitt, he has been put on the sideline until the Virginia Beach abuse case has been completed.

  • September 1, 2017 at 5:50 pm
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    ^^I hope he gets brought to the cleaners. Nothing will make us all happier than to see him squirm in pain when he has to pay out thousands. We should only be that lucky :(:( Fingers crossed :(:(

  • September 6, 2017 at 8:51 am
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    Liberty’s Investor Press release just announce termination of John Hewitt as CEO. Thought many of you would like to look that up!

  • September 6, 2017 at 9:54 am
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    Anyone with any details on what finally stuck to get him out?

  • September 6, 2017 at 10:40 am
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    Liberty Tax Service Announces CEO Termination

    Virginia Beach, Va. (September 6, 2017) – Liberty Tax, Inc. (NASDAQ:TAX) (the “Company”), the parent company of Liberty Tax Service, announced that John T. Hewitt, the Company’s Chief Executive Officer and Chairman, was terminated yesterday by the Company’s Board of Directors (the “Board”), effective immediately. Mr. Hewitt, who is the sole holder of the Company’s Class B common stock (“Class B Shares”), currently remains on the Board.

    The Company had engaged in a deliberate succession planning process, which resulted in Ed Brunot joining the Company as Chief Operating Officer as an interim step before assuming the role of CEO. The Company is currently finalizing its succession plans, however, the Board has determined that it is in the Company’s best interests to terminate Mr. Hewitt at this time. The Company intends to announce the new CEO appointment in the coming days.

    The Company has been in negotiations to enter into agreements for Mr. Hewitt’s separation and the repurchase of his Class B Shares, which permit him to appoint a majority of the Board. No such agreements have been reached, and whether the Company will enter into such agreements with Mr. Hewitt remains uncertain at this time.

    Vanessa M. Szajnoga

    Vice President & General Counsel

    Liberty Tax Service

    1716 Corporate Landing Parkway

    Virginia Beach, Virginia 23454

    (757) 493-8855 (ext. 8166)

  • September 6, 2017 at 12:47 pm
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    Yeah, heard all about it, but I thought I’d be overjoyed. It’s a start but I don’t think I’ll really be happy till he’s behind bars and paying restitution to all his “victims”, current and ex-franchisees. In the millions and millions. :(:(

  • September 6, 2017 at 6:49 pm
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    Well, I feel the same SanFran – I was hoping he would be canned for the millions of dollars and ruining of people’s lives, instead it looks like a domestic violence against a girlfriend is what will bring him down. Never saw this coming, this type of case would bring him down….

  • September 6, 2017 at 7:01 pm
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    Franchizee – from what I’m hearing I doubt that is the case as there appears to have been a house cleaning yesterday of other personal as well that would not make sense if it was caused by the domestic violence issues.

  • September 6, 2017 at 8:02 pm
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    Maybe it’s like Jackson Hewitt when he was ousted by the board too. I guess we will know soon enough if there is an actual shift in the business model.

  • September 6, 2017 at 9:29 pm
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    Not shocked because the company introduced Mr. Brunot earlier. Expected Mr. Hewitt to retire, so it must be something bad. I would think it may end up in a court fight. Maybe the courts will make them spend some money on a better marketing group and real advertising.

  • September 6, 2017 at 11:09 pm
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    You mean clown costumes and free donuts aren’t the best mode of marketing?

    Maybe now marketing fees will actually be spent on marketing instead of putting it all on the franchisees.

    No surprise Hewitt is gone, it’s been a long time coming. Now he rides off into the sunset with his million$ and goes down as the the man who started 2 public companies and is the granddaddy of tax preparation business. He’s a smart guy, now he just needs to fade away if Liberty wants to survive.

    If you are a prospective Z, get away now and don’t waste your time. Current zzz’s, just leave ASAP.

  • September 7, 2017 at 11:48 am
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    I’m going to put it out there, again: I think the main reason for Hewitt’s ouster lies in the fact that he was instrumental in the leadership that encouraged franchisee’s to cheat the Federal and State governments through EIC fraud. Too many investigations, huge legal fees and a worsening reputation for Liberty were just too much for the shareholder’s to bear. I’m sure the domestic violence charge has something to do with it as well and the steadily decreasing profits are what ” broke the camels back”.

    Hewitt has repeatedly proven that he is a scam artist and can’t even stay with a company that he owned and founded! (X 2). The domestic violence charge probably has more to it than we can see and will prove that he really is a big scoundrel. I really hope he gets what he deserves, as I have no way to recover my investment in the company. It would be quite ironic and fitting that Hewitt has to spend his retirement in jail, like so he helped so many others to do.

    Let’s hope one of his cellmates is a former Zee!

  • September 7, 2017 at 1:09 pm
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    Frustrated Zee: thanks! the article sheds alot of light on it. I bet the fight from Mr. Hewitt will be about how much he gets for the stock because now is the best time to take a buy-out.
    Looks like the new one knows the marketing sucks and that franchisees are’nt getting anything for marketing dollars. We’re supposed to be so stupid all you have to do is tell us how to go pay for the marketing ourselves, again – because we already paid you.
    I have to say, its hopeful. A fresh start would be welcomed.
    Some franchisees will try to sell, but waiting to see what’s comes out of it makes sense.
    It seems that if someone is thinking about buying a store, go carefully and watch out for seller’s motive. Get a tight non-compete from the seller.

  • September 7, 2017 at 1:32 pm
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    Texastee,

    I agree with your assessment. I think the board was done. Maybe the domestic battery was the last straw, maybe they found they found more that implicates Hewitt. If you check out the linked article there are links on the left with more interesting info.

    Guest,

    I also agree with you. I find it telling that the current director of guerrilla marketing is gone also. Let’s hope there are changes.

  • September 7, 2017 at 4:07 pm
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    He’s been “ousted”. Strong words. What took them so long? Guess they had to have things in place beforehand. Maybe they should consider changing the name from Liberty Tax.

    I’ll bet you one thing: All this ‘fraud’ will suddenly disappear without him at the helm. Good article in Accounting Today.

    Still nothing good will happen unless he somehow pays back all the millions he’s stolen and thousands he’s getting as a severance pkg. AND lands in jail where he belongs. Then it will be party time! ;) Someone should inquire about the supposed bank he bought in the Cayman Islands too.
    He was busy taking our marketing $$ and directing us into guerrilla marketing, what a sham that was and we believed it! :( NO nationwide advertising….better to change the name then to risk being associated with that man.
    So many things were rigged against the franchisee surviving and thriving. Who puts spyware into the store operating system of each computer? Back then you had to BUY the computer server from them that you used for tax prep. My eyes are wide open now. A lesson I never imagined going through, learned.

    Hope Jackson Hewitt executives talked to Liberty executives and told enough dirt on him to put him away. It’s great he’s been ousted, but it would be oh so sweet for him to land in jail, where he should be.

  • September 8, 2017 at 11:35 am
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    After what was reported about his time at JTH, I always thought that it was just a matter of time before he would get the boot. This is despite him holding the voting power to appoint the board of directors.

    I was enjoying the fact that he got canned until I read the Pilot article and saw that he would get a severance package of a lump sum payment of $801,005, $777,378 in unvested
    stock and $16,604.00 in benefits. Unbelievable!

  • September 8, 2017 at 3:15 pm
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    Screwitt still has a lot of control and power over the board, he may come back! I don’t think this embarrassment will sit well with him, and what else is he gonna do, he loved being the “dear leader?” I hope he does come back, more chaos the better!:) hahahahahahahahha

  • September 8, 2017 at 4:12 pm
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    If there’s interest, I will create a separate post with your farewell messages and best wishes for John Hewitt.

    To submit a farewell telling John what impact he’s had on your business and/or personal life, just post your message below with the salutation “Goodbye John Hewitt.”

    I’ll do my best to make sure he reads it.

    Thanks,

    ADMIN

  • September 8, 2017 at 8:30 pm
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    ^^^ADMIN:
    I love it! What a great idea! I’ll not be around tomorrow so I’ll most likely post something for him on Sunday. Awesome idea. Seriously now, hope anyone in the way of that terrible hurricane stays safe, except him of course!! ;)

  • September 9, 2017 at 10:24 am
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    Please do

  • September 10, 2017 at 2:23 pm
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    Dear Hewitt Idiot:

    I joined your franchise way back near the beginning. I thought it would be the key to owning my own business. You preyed on people just like me who weren’t confident enough to start on my own without relying on a franchise. I borrowed $40K against my house and set up shop. Because of my Accounting and Tax background, I succeeded ON MY OWN. There was not one thing that LTS brought to the table, except major headaches. The training was a joke. The ‘wavers’ all got high on drugs. Because of the clientele you told us to market to, my store was in a very sketchy part of town. You had some jackass territory site selector I dubbed “white bread”. He knew nothing about my town and I opened where there would be a lot of traffic and foot traffic. Complete opposite of where he suggested. I did well in spite of you. I opened up several more stores as the years went on. I paid exorbitant royalty charges, my own yellow pages ad, prices were marked up at least $3000% on promotional products…..for what?? It was a total nightmare.
    However YOU and YOU alone changed my view of this world. I was ‘wet behind the ears’ even though I had many years with corporations. I grew up fast and became un-ignorant. I learned about stuff I would only learn from YOU: Federal Court systems, the rocket docket court system that is rigged in the Eastern District court of Virginia Beach, the IRS and how they surprise raid your home, real grown up stuff. If there was a way for me to spit on you right now, I would. You single handedly are the worst excuse ever for a human being.
    You have ruined countless people’s lives and bankrupted thousands of others. You are the reason for people to have divorced, claimed bankruptcy, forced to foreclose on their homes, do jail time and worst of all, possible suicide.
    I am still paying back that original $40K, $100 at a time, and have nothing to show for it except that the stress of being associated with LTS is finally over. Talk about a worst nightmare coming true. You got exactly what you deserved by being “ousted” from your own damn company. Now you really need to pay by going to jail and paying restitution to all of us who bought into your dog & pony show pipe dream. You are the biggest scam artist on the face of the earth and what goes around comes around. I hope you rot in hell and pay dearly for your despicable actions. I loved to meet Tiffany Klein: I’m sure she couldn’t wait to get the hell away from you like everyone else. Mr. Loser. Piece of dirt. Rot in hell.

  • September 14, 2017 at 4:13 pm
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    ^^^Hey Admin:

    Did we scare all the posters away?!?

  • September 14, 2017 at 5:39 pm
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    Nope I’m still working on mine. I have so much to say. After 10 years of bull sssss its taking me a while
    I reall wish we could come up with a way to go after him and his cronnies.

  • September 20, 2017 at 7:56 pm
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    There is a way to go after Hewitt and his cronies, but thus far, the Department of Justice nor the IRS are interested…

  • September 27, 2017 at 12:07 pm
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    Since there hasn’t been any activity on this site since Hewitt was forced to resign, I guess that must mean there are no more “unhappy franchisees”! They must all be happy now! ;)

  • September 30, 2017 at 3:52 pm
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    Another unhappy 10 years franchisee who wants to leave. Unresponsive response from corp and the crazy 19% fee are the main issues I want out. 5% market fee never helped my location whatsoever. Recently received another 5 years to sign but now you can’t sue liberty in Califirnia. The only franchisee who got away from the lawsuit is Benjamin lee in San Francisco. I’m pretty much fucked if I signe another 5 years contract with them. I’m also fucked if I don’t sign. They will sue me for still being there to oprate a tax business . Any suggestion, anyone?

  • October 1, 2017 at 8:32 pm
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    Is your store making a profit? Will you lose customers if your sign changed? Did you lose alot of customers last year? Have you tried to sell.

  • October 1, 2017 at 8:45 pm
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    Don’t re-sign. Just quit Liberty and have a friend or family member open a tax prep business if you are worried about being sued. I am so glad I got out when I did, you will be glad, too. Time to quit answering to the ‘man,’ and do your own thing.

  • October 2, 2017 at 11:13 pm
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    Move your office 25 miles away. Talk to a franchise lawyer.

  • October 5, 2017 at 1:23 pm
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    No Name you would be foolish to sign up for another 5 years. Although I’m glad they got rid of John Hewitt that is not going to change the projection of this company. You will still be paying 19% out to a company who does not have your best interest at heart.

    When I turned the franchise over I didn’t solicit any clients to come with me. I went to a local firm in
    the same area and those Liberty clients followed me. My store was small but another franchisee in my area had a store doing over 400 returns when he walked away. He continued doing taxes but from his home and people just followed him. He told me he made more money doing it this way then when he had the store. No overhead, royalties or advertising fees. Liberty never bother him.

    Best of luck!

  • October 6, 2017 at 8:13 am
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    Thank you everyone for saving my future. Independent is the way to go.

    What is you opinion on these tax packages?

    1. TaxWise
    2. Drake
    3. ProSeries

    Thank you,

  • October 6, 2017 at 4:38 pm
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    Anyone have any thoughts about offering cash in a flash?

  • October 7, 2017 at 1:44 pm
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    I left LTS in 2013. I had an unapproved store front. I just started doing taxes at the unapproved location and had another number in place a couple of years in advance with advertising. It did not materialize until I did actual print advertising. I just would check my old phone number and return calls. LTS did not bother me because I never made more than $75K per location in one tax season, so they can’t go against anyone that does not make more than that number. So, I laid low for the first part of the tax season and the next year I hit is harder. I just started making money in the last two tax season. I planned many years in advance to leave. I could see it was not going to materialize as John stated it would with a ton of competition from other LTS store fronts.

  • October 7, 2017 at 6:23 pm
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    ^^They will absolutely come after you if you do not re-sign and stay in the same location. If they don’t you’re incredibly lucky. They have a long memory and whatever you do, they will act accordingly and come down twice as hard. They were complete jerks to me. They were incredibly obnoxious, and that’s the understatement of the year. Best advice: move the 25 miles and cater to new clientele and the old that travel to see you. Hewitt figured out a long time ago that the Liberty name means NOTHING at all. It’s the relationship you form with your tax preparer. If you do well by them, they should follow you. With everything being electronic these days, it’s so much easier to continue working with the same clients, even at 25 miles away, which is really nothing. You can do taxes for people anywhere………..across country, doesn’t matter.

    I used Tax wise, Main Street and H&R Block softwares…………..depending on what I needed them for. Each customer dictated what software I used.

  • October 10, 2017 at 11:52 pm
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    The Cash in a Flash is just a way to head toward financial ruin quicker, $50 at a time.

    If you are new to the system, I am curious to know how many returns you expect to prepare?

  • October 11, 2017 at 8:48 pm
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    Don’t Be Fooled: Definitely not new, actually I think the only thing that keeps some Liberty Tax offices in business is the $50 giveaway so they can charge 4-700 bucks, I met a Liberty client a few days ago and he said the $50 is what brought him in even though the return was several hundred. I know that Liberty checks the status of the client for child support etc. but just wondering anyone’s thoughts?

  • October 11, 2017 at 8:58 pm
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    The IRS stopped providing flags that a taxpayer’s refund might be held for unpaid child support, student loans, military loans, etc. years ago (about the time rapid refund loans started to disappear). The loans tax stores make now ahead of tax season are just that–bank loans that the taxpayer has to pay back just like any other loan. Of course, the stores make them after they do a quick calculation of what the refund may be. But there is no longer any way of telling if the client will actually get a refund or have it applied to past due gov’t debt. Cash in a Flash is nothing more than a gift to the client.

  • October 11, 2017 at 11:54 pm
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    Hi Sarah, yes the debt indicator has gone away, however there are other ways to determine if child support is owed, call FMS and see if there is a balance. Anyway the point is, cash in flash is likely the ONLY marketing tool that is successful and just wondering if anyone that has used it successfully?

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