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?




5,494 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • December 11, 2017 at 3:37 pm
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    Liberty Taxes problems are continuing to grow:

    http://markets.businessinsider.com/news/stocks/Liberty-Tax-Discloses-Resignation-of-Independent-Accounting-Firm-1010936572

    Liberty Tax Discloses Resignation of Independent Accounting Firm

    PRESS RELEASE GlobeNewswire
    Dec. 11, 2017, 07:30 AM

    VIRGINIA BEACH, Va., Dec. 11, 2017 (GLOBE NEWSWIRE) — Liberty Tax, Inc. (NASDAQ:TAX) (the “Company”) today disclosed in its Current Report on Form 8-K that KPMG LLP (“KPMG”) has resigned as the Company’s independent accounting firm and that the Company will delay the filing of its Quarterly Report on Form 10-Q for the quarter ended October 31, 2017.  As detailed in the Form 8-K, there are no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Additional information regarding KPMG’s resignation can be found in the Form 8-K.  The Company has begun the process of selecting a new independent accounting firm.
    As disclosed in the Company’s Form 8-K, KPMG’s resignation is due to concerns around internal controls over financial reporting as it relates to the integrity and tone at the top set by Liberty’s founder, current Chairman and former Chief Executive Officer, John Hewitt. 
    Ross Longfield, Chairman of the Company’s Audit Committee stated, “We are disappointed that KPMG has resigned, however, we appreciate the long term relationship we have had with them.  The Company will work as quickly as possible to engage a new accounting firm and to complete their review of our second quarter results.”
    Hewitt was terminated on September 5, 2017.  The Audit Committee has high confidence in the existing management team and is confident that the management team will help to lead the Company through the resolution of the accounting concerns.
    The resignation of KPMG does not impact the normal course of operations of the Company.  Liberty management, employees and franchisees are focused on preparations for the upcoming tax season.

  • December 11, 2017 at 4:32 pm
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    NCHillbilly, thanks for the post! I was just about to do it myself. When an accounting firm as prestigious and large as KPMG withdraws from an engagement, there is something definitely wrong with their client. You don’ give up revenue flow from a listed SEC company lightly unless there are some very serious concerns. I wonder now if the DOJ will finally wake up and investigate Hewitt and Liberty? The IRS does not seem likely that they will. I think there is going to be some more serious stuff coming down the road.

  • December 11, 2017 at 5:48 pm
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    This may have an lasting impact on Liberty Corporate’s line of credit. Lenders become pretty nervous when there are not acceptable accounting practices being used.

  • December 11, 2017 at 8:50 pm
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    The resignation of KPMG now makes it obvious that the recent resignation of the CFO was indeed a big deal. Something was going on that made an early exit necessary. “Out” has been bringing up the point that franchising in general is good only for the franchisor, not the franchisee. Liberty will be a case study in the annals of franchising history.

    A potent point is that your franchise is only as good as the franchise itself. When the brand itself is sullied, you could run the best outfit in the group and still be dragged down. I remember being in a food court after a food poisoning outbreak at Taco Bell. I was a few thousand miles away from where the outbreak occurred, but there was not a soul in line at that store. By the same token, when the state of MD stopped accepting electronic returns from dozens of Liberty franchisees, I’m sure the ones who ran tight ships suffered even though they did everything right. (Still wish we could hear from some of them about their experiences then.) Something is obviously amiss with Liberty’s financials, and if lenders won’t loan franchisees all across the country will be unable to compete through no fault of their own. Something to think about before entering any franchise–the future is out of your control.

  • December 11, 2017 at 9:43 pm
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    TexasTee,
    There is a current grand jury investigation into John Hewitt and Liberty taking place in Downtown Los Angeles. I know this because I’ve heard it through the grapevine that after the IRS raid in Los Angeles and Orange County back in spring 2016, IRS investigators began interviewing employees that summer, and multiple subpoenas to testify were given out.

  • December 11, 2017 at 9:58 pm
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    Don’t forget there are thousands of franchisees in the system. There is value in the company because of it. Some investment group would buy it at a reduced price.
    Fortunately its close enough to tax season to get through without loans if something happened.
    The impact of the confusion will probably happen mid to next year. By then we will know what to expect from tax reform. A smart franchisee has a back up plan. In my state we’ve had multiple companies try to be a franchise and fail after about 2 to 3 years. Nobody remembers them.
    HR Block, Jackson Hewitt , Liberty are the biggest because of the people who own the stores. It will get sorted out, but it’s not going to be pretty. The results probably suck, that’s probably why the accountants are not happy.

  • December 12, 2017 at 7:40 pm
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    Lawsuits and investigations are beginning to pile up for the shareholders against Liberty Tax Corporate. Maybe some law firm should now look if it is possible now since it has been proven that John Hewitt was fired for favoritism towards certain Zees and employees, indicates that he practiced discrimination against those that he didn’t like or individuals that stood up to him.

    I suspect this should crack Liberty’s protective shell and allow a class action suit on behalf of past and current Zees and area developers. Thousands of Zees have and area developers have lost hundreds of thousands dollars individually to Liberty Corporate for a CEO that used people for personal use.
    John Hewitt destroyed and bankrupt thousands of Zees and area developers, some of the individuals will never be able to recover the money or funds that they lost to highly corrupted individual and the company he created.

  • December 13, 2017 at 7:07 pm
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    The law suits keep piling up against John Hewitt and Liberty Tax Corp

    https://pilotonline.com/business/stocks/group-of-liberty-tax-shareholders-suing-founder-john-hewitt/article_a4cf2ffb-3aa0-5bd4-8916-6737a9102c1f.html

    Group of Liberty Tax shareholders suing founder John Hewitt
    By Kimberly Pierceall
    The Virginian-Pilot

    A group of Liberty Tax shareholders is suing the company’s founder, chairman and ex-CEO John Hewitt for refusing to give up control after credible evidence of wrongdoing was discovered.
    The board of Virginia Beach-based Liberty Tax fired Hewitt from his chief executive position in September. Since then, Hewitt refused to sell back stock that allows him to pick a majority of the board, and replaced two of his board appointees. Two more independent board members and the company’s chief financial officer also announced their resignations.
    The Asbestos Workers’ Philadelphia Pension Fund filed its derivative complaint in Delaware’s Court of Chancery on Monday, claiming Hewitt “has used his power in a breach of his fiduciary duties to escape consequences for his actions that have done grave harm to the company and continue to do so.”

    Vanessa Szajnoga, Liberty Tax’s general counsel, said the company is aware of the suit but doesn’t comment on pending litigation. A derivative complaint essentially allows shareholders to sue on a company’s behalf when it can’t or won’t do so itself.
    Attempts to reach Hewitt were unsuccessful and a message left with his attorney, John Paris Jr., was not returned.

    The suit details much of what has been reported exclusively by The Virginian-Pilot, including the contents of an internal investigation by an outside law firm that looked into allegations of wrongdoing by Hewitt. That report concluded that there was credible evidence that Hewitt played favorites with franchisees and staff he was rumored to be in relationships with, was overheard having sex in his office, and used company resources for his personal benefit including arranging out-of-town meetings around the New York Yankees’ baseball schedule. The complaint also notes the recent resignation of the company’s internal auditor, KPMG, which cited Hewitt’s continued control as its reason.
    “Even by the standards of the recent deluge of sexual misconduct revelations, the situation at Liberty is shocking,” the suit says.

    The complaint blames Hewitt for driving down the company’s value and costing it money to investigate his misdeeds, as well as signalling “that he will not operate the company for the good of its equity owners, but instead for his own personal enrichment and gratification.”
    The group says it hasn’t gone to the board with its complaint because it would be futile: “A majority of the board is incapable of impartially considering whether to enforce the breaches of fiduciary duty committed by Hewitt because of their relationships with Hewitt.”
    One board member is Hewitt’s sister, another is his longtime best friend and two recent appointees are longtime franchisees, including one still financially indebted to the company.
    The shareholder group wants the court to find Hewitt liable for breaching his fiduciary duty. Any damages awarded would go to the company, not the shareholders.

    Kimberly Pierceall, 757-550-1903, kimberly.pierceall@pilotonline.com.

  • December 13, 2017 at 8:09 pm
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    Opens the possibility for franchisees to leave without issue. He should just retire if he really cares about the company. All of this is an opportunity for things to get cleaned up. Lawsuits probably just beginning. These shenanigans have killed the equity franchisees had in their stores.

  • December 15, 2017 at 2:53 am
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    I don’t believe John will leave because of ego and him being convinced he is the grandfather of tax preparation business. He might if it starts to look hopeless but as long as he believes he can retake control of the company he will fight. He believes he can turn this company from the damages that it has already suffered. It is ironic and fitting that a man who took advantage of the legal system and law, targeting individuals he believed could never afford to challenge Liberty and there abuses even though they were in the right, is now possibly going to be destroyed by lawsuits. But in the end John will maintain a more than comfortable lifestyle unlike so many he intentionally destroyed to build this kingdom that he believed he was absolute King of.

  • December 16, 2017 at 9:03 pm
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    Although John has a certain degree of teflon that stops a lot from sticking to him, he still has a nasty reputation around him. He was the the one out instructing franchisees how to maximize the EIC by encouraging taxpayer fraud by reporting schedule C Income/Losses. He and his cohorts were the ones teaching various methods of jacking up fees for the unwary. I would hope that now his wagon train has finally wrecked, but he seems to resurrect himself time and again. He is still messing with the Federal government and if the IRS is ineffective, maybe the SEC is.

  • December 19, 2017 at 1:31 am
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    None of this really explains what the board members object to. Opinion: lots of franchisees will just quit after tax season. Just change the sign and move on. They are breaking the franchise agreement. Too much instability. Time for him to retire.

  • December 22, 2017 at 12:32 pm
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    NASDAQ just sent Liberty Tax notice to cure for not submitting reports in a timely fashion. Likely this is the Last Season for Liberty because the money was already borrowed by John prior to his quasi departure. Liberty will owe mountains of debt after this season. With many Zees pulling out they will have a hard time going to the banks to for borrow hundreds of millions of dollars to finance next seasons expenses. All this combined with these scandals, firings, resignations, pending lawsuits, bad press and lack of communication to the Liberty network, and I almost forgot the lack of an Accounting Firm to review their books! Will it ever end??? Where is the Liberty Leadership?? They are in hiding. Tax Season will be a disaster as an AD assured me with John coming back after Bruno resigns in Mid February (after 1st peak) or he is fired by the Board. The John appointed Board members will re-elect John as long as he’s not it prison for Gambling on the company credit card. Last I checked that’s embezzlement. He will let his EGO be in front of Thousands of employees and Zees he doesn’t get it and will never step aside to the benefit of a host of Franchisees, Board members, Corporate Counsel, Banks, Investors, Friends, Girlfriends, concubines, ex-lovers, ex-wives, Family and yes you Danny! Please urge him to step aside! Urge him to sell his Class B Shares that is our only hope now for Liberty to exist. John, give us a XMAS present and resign your board seat and sell your shares and let go. Or in the words of a Child after watching Frozen: Let it go! Let it Go! Merry Christmas everyone!

  • December 22, 2017 at 3:54 pm
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    Concerned Zee, although I feel your pain, Screwitt is not going anywhere. He will get his company back. He doesn’t care about what franchisees are going to think or do, he can always get more of them. Liberty is the only thing that he is living for, he is too old to start something new and his reputation is too destroyed to work somewhere else, he will scratch and claw to get back control. I personally hope he gets it back for that is the only way Liberty will be destroyed!!!!!

  • December 27, 2017 at 10:34 pm
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    Anyone have an idea of what happens when you still have a pnote with liberty and would like to get out? Or any path i can take to get rid of the debt? Bankruptcy?

  • December 27, 2017 at 10:37 pm
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    Any idea of what happens when a pnote is in effect with liberty and i want to get out?
    Bankruptcy? I want to be freed from the pnote

  • December 28, 2017 at 12:21 pm
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    Concerned:

    Bk is an option depending on what you owe them, are you still a current zee? If you don’t want to file bk maybe talk to them now that Screwem is out, if he was in likely your only option would be bk, but with things in disarray maybe there are options, they likely want to get back on track I would try talking to them first.

  • January 10, 2018 at 11:59 pm
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    Any updates

  • January 11, 2018 at 9:01 pm
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    How does Liberty handle tax pro training? The new tax reform is massive and will change almost everything. Tax pros are going to have to learn a ton of new rules (and unlearn most of what they already know). Few of the tax reform changes will affect 2017 returns, but clients will be anxious to know how they will fare under the law, if they are having enough withheld once the new tables go into effect, etc., so preparers will have to learn enough of the new protocol now to advise people. Will Liberty’s tax projection software be up to the task? Will its training? Next year will be a disaster for any tax prep firm that hasn’t invested in training.

  • January 12, 2018 at 11:24 am
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    Most of the complications under the new tax law will be for those of higher earnings, not Liberty’s target market. With the increase in the standard deduction, returns might become a little less complicated in general which would lead to more on line business than someone going to a storefront. This could very well be the last year that Liberty exists in the form we have known. I’ll be at that funeral!

  • January 12, 2018 at 9:27 pm
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    More NASDAQ news another notice to cure because the Board is NOT independent as required. There are only 3 Board members that have been there for over 90 days Hewitt, His Sister, and his long time best friend. Liberty may be delisted before the first refunds hit. Not even disclosed on Liberty website but it is an 8-k on Nasdaq. Complete Hush Hush by Corporate.

  • January 29, 2018 at 5:49 pm
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    I passed by a Liberty store today. I saw a male statue of liberty clown smoking whatever and looking like he lives on the street. Some things never change ! What a brilliant marketing ploy: have the homeless bring in the homeless. I wish I thought of that!

  • January 30, 2018 at 6:48 am
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    As a tax pro who does superb work I make it a personal habit to have my due diligence, ability to discuss tax law changes (I’ve already began analysing the new tax law) be my key marketing driver as to why clients of all income levels want to work with me.

    I graduated law school and treat my job as if I’m the neighborhood personal banker that everyone knows me by name. I don’t engage in ghetto as guerrilla marketing, instead I hand out my personally made business cards with my IRS and State Tax Pro credentials. None of my clients come away feeling they got served by some illiterate GED holding pion that is is dishonest about fees let alone their own individual competency like most of the Liberties in my area hire to attempt to do the job I do.

  • January 30, 2018 at 2:12 pm
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    Dirty Ducker – Most of left LTS because of the lack of professionalism. They brought in many dregs of society or someone who does not want a personal relationship while doing their taxes. I’m starting my 5th season with out LTS and I’m making the same with two LTS offices, with very little overhead.

    Someone took over one of my offices, because home office said I was the worse franchise they ever had. My office ended up serving the unemployed and homeless people. I still made “money” but had the lowest numbers of my state and region. Well I kicked that location to curb and someone stole it, because I had it up for sale for 8 months or so. They failed for the last 4 tax season. Pawned to someone else, they pretty much are bankrupted. I still did double the tax returns than those other people.

    Both my locations have not been successful, because you have to be a skilled salesman in order to make them work. They don’t work on their own if they are difficult areas.

  • February 2, 2018 at 11:51 am
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    So, is there any word on how bad 4th qtr earnings really were? I understand LTS has given up looking for a major accounting firm to ‘bless’ their books and is looking for a small regional firm or a boutique firm. Anyone else heard anything?

  • February 2, 2018 at 1:28 pm
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    My other big complaint is that I as a tax professional, know more about accounting, taxes, law, and business than 3 of the franchisees I worked for. If you’re just a business person you shouldn’t be allowed to own a franchise.

  • February 2, 2018 at 1:45 pm
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    Less than 2 weeks and Liberty will be delisted from the Nasdaq. Major technical problems this year despite the slow season. Fee intercept is the one thing unaffected by all the technical problems. Another 400 offices didn’t open this year. Next year look for even more closures. Liberty is hanging by a thread. I’m hoping for an LTS B.K. it will save every Zee tens of thousands in Bank Fees and Royalties

  • February 10, 2018 at 1:33 pm
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    I just checked out Liberty’s stock price and it’s 9.95. It’s amazing how this company
    was initial viewed by investors as a great investment. Most of these investors are institutional investors and they helped propel the price of this stock upwards despite it’s overall cash flow issues
    and complaints by its franchisees. Now their filing a lawsuit and its based on the following:

    The lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) Liberty’s former Chief Executive Officer, John T. Hewitt, created an inappropriate tone at the top; (2) the inappropriate tone at the top led to ineffective entity level controls over the organization; and (3) as a result, the Company’s statements regarding its business, operations and prospects were materially false and misleading and/or lacked a reasonable basis.

    What irks me about this is they the investors understand the franchise model and how it exploits
    the franchisees. They know the franchisee is locked into a one sided contract that provides a steady stream of royalties. As long as the company can continue to sell franchises the investors could careless about the ethics of the company. The laws are written in this country to protect the wealth and big business. No wonder people think the system is rigged against the small guy.

    Buyers Beware of All Franchises!!!

  • February 13, 2018 at 7:17 am
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    Agree. Liberty Tax has taught me all about how one-sided the relationship is.
    They can’t go up in smoke quick enough for me – better for the Franchisees! They are being picked clean.

  • February 13, 2018 at 10:03 am
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    3 Days to delisting! I’ve received 3 emails and Zero calls from my AD this season same thing for all Zees? They will still collect 19% I could have bought software for about 1k and not be affiliated with this Ponzi scheme. When renewal comes I’m out. Hopefully B.K. will wipe out our Franchise agreement sooner than that. Liberty=Leech Fees, Bank Fees,Check Fees, Processing Fees, $178.50 ESF fees, CIF fees, 12% Interest Fees, Advance Fees, minimum royalties, back office fees, phone appt fees, transfer fees, 10% commission fees, 1k other business fees, 40k Franchise Fees, 14% Royalties 5% Marketing Fees, Training Fees, and I’m sure I left off lots of other fees. Amazing thing is corporate still wonders why no one wants to renew… Ha! Ha! Joke is on the 1500 + Zees and their clients. Liberty is toast!

  • February 13, 2018 at 3:16 pm
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    hr block charges 25% of sales as royalties, why dont you guys complain about them. 25 higher than 19%, both are crazy high, but its all about profits. i was with liberty up in Canada, same junk there. no one makes any money. recycle zee’s or anyone who wants to work for free. eventually we all walk away. one way or another. I was happy that no AD ever visited me, then one year they did, didnt like what they saw and i was gone, I learned a lot, how to deal with people, low end sure, but thats the market. We are not some high end CPA firm you know. I moved on, doing my own office, same work, more money, and no politics, but honestly , i never did have any politics with LTS, i think i was too small for them to care. but eventually, everyone gets recycled. The other Zee’s and regional only called when there was a problem, LTS was always a bucketshop even our clients knew they were not even on par with HRB. and thats saying a lot. Fold up, churn up, and the new LTS is done.

  • February 13, 2018 at 9:05 pm
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    To my knowledge H&R Block bought out most of its franchisees years ago and only has a few of the really large ones left (wanted all the profits for themselves). For a while they tried to sell their unprofitable Walmart locations but finally just exited the contract. A big difference from Liberty is that franchisees actually get something of value for the 25%–a good name, for one, and access to great training, backroom support, advertising, etc. Early in the season I actually heard some Liberty ads on the radio, not local ads franchisees paid for themselves but what seemed to be national ads. Maybe this year they actually spent some of those advertising fees on, of all things, advertising. Haven’t heard one lately though, even though it’s the height of filing season. Haven’t seen one on TV, but we record everything so we can zap through the ads.

  • February 14, 2018 at 11:46 am
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    Actually HRB still runs about 40% franchise and 60% company. They are still following their pattern of small towns are franchise and metro areas are company. That seems to be a big reason why the average HRB franchise office does about 3 times the returns of the average liberty franchise office. The offices have, in most cases been established for 30-40 years and have a loyal client base. They didn’t shop in out of the blue in the RAL heyday. They were there in the 60s and 70s and had established their reputation.

  • February 16, 2018 at 8:42 pm
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    Liberty is soon to be a dead entity. The management is still out of touch with their customers in that there is still a push for financial products on their clients. Most franchisees are fed up with the lack of concern by corporate to clean up their image. As usual with Liberty, its about how much money can be bilked out of the franchisees and their customers. The obituary is coming…

  • February 18, 2018 at 1:05 pm
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    T. EA
    IT is a pretty accurate figure. While H&R Block has been buying back some franchise offices (when the deal works and several offices are for sale at one time in the same general area to warrant the management expense for Block), they have also been aggressively marketing to existing accounting firms in metro areas and there have been quite a few independents “selling” their business then franchising it back as Block franchisees. There have been a lot of them in the last 3 years.
    The acquisitions by block are offset by the independents converting to franchises. In 2016 it was at 38% franchise, by 2017 it was 39.5% franchise. The last year was actually an increase in franchise ratio.
    The royalty is 30%. A bonus of 20% royalty on any money over the average of your prior 2 years revenue.

  • February 19, 2018 at 7:23 pm
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    The latest from The Virginian-Pilot:

    Liberty Tax has fired its CEO – in the thick of tax season and after only six months on the job – replacing him with a board member handpicked by founder John T. Hewitt, according to a company statement released late Monday.

    The ousted CEO, Ed Brunot, was a tax industry outsider hired away from a military commissary supplier to be Liberty Tax’s chief operations officer and likely successor to Hewitt. Brunot rose to the top faster than anticipated when the board voted unanimously to fire Hewitt in early September.

    An internal investigation determined Hewitt had likely engaged in multiple romantic relationships with employees and franchisees and given those women preferential treatment, among other complaints.

    Virginia Beach-based Liberty Tax is the third-largest tax prep chain in the country behind H&R Block and Jackson Hewitt. The company processed 1.8 million returns last year.

    Hewitt remained chairman of the nine-member board, with the ability to pick a majority of its members because of controlling shares he refused to sell back. In November, Hewitt ousted two board members with hand-picked replacements, including Nicole Ossenfort, a Liberty Tax franchisee and former executive with the company, who replaced Brunot Monday.

    In an email obtained by The Pilot and purportedly sent from Ossenfort to Liberty staff and franchisees, the new CEO notes that Hewitt will serve in an advisory role and remain chairman of the board.

    Read the full story here:
    https://pilotonline.com/business/stocks/article_aca42b52-4d4e-5a22-88ed-bddaa49a22e0.html

  • February 20, 2018 at 12:45 am
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    From the article: “At the time she was brought onto the board, Ossenfort and her husband, owners of Liberty Tax franchises in South Dakota and Wyoming since 2002, still owed the company $10,932 in royalties, advertising and fees.”

    Even the new CEO couldn’t manage to dig out of the hole after more than 15 years with the business.

  • February 20, 2018 at 7:50 pm
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    It looks like John placed cronies in as his CEO and COO. On Nasdaq, the stock 17.67%, and the price was $8.40 per share.

  • February 20, 2018 at 10:50 pm
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    I think the market reacted appropriately to having this group of hand picked clowns in the Executive Suite. I wonder when the de listing is going to happen? As I recall, Ossenfort was one of the ones who pushed the “aggressive” preparation of clients returns to maximize fees. I attended one of these meetings.

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