LIBERTY TAX SERVICE Franchise Complaints
August 11, 2009
UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
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?
I am also a former Liberty Franchise owner. I would agree with everything in the other two messages and add, they missrepresented not only the number of tax returns I would do but vastly understated the cost involved in getting into one of their franchise’s. I tried to stick it out for four years but by then they had wiped out my life savings and there was no way I could continue. Rest assured they encouraged me to continue to throw my good money after bad right up untill the end. If any one gets a class action Law suit going against them please post it here, I personally know two other former owners that Liberty helped drive into bankruptcy in less then two years of doing business with them. The problem is none of us have the finacial resources to get one started.
[...] LIBERTY TAX SERVICES Franchise Complaints (1) [...]
I have to agree with a previous statement: Liberty will sell ANYONE a franchise……even a person who was CONVICTED of FRAUDELENT INVESTMENT SCHEMES…… I’m sitting with tons of unpaid fees now, and this loser is sitting in jail and most likely will never have to pay for what he did…..and even if he does have to pay, I’ll probably be so far down the totem pole, my grandkids will never see the money…….and I don’t even have KIDS old enough to have kids yet!
Agree all you want. You are stupid
Wow Bill what an intelligent response! Too bad for you I have the proof to back up what I say!
I thought about opening a Liberty office but after reading how much money it cost for a buy in and all the other start up costs, I thought it was easier to keep that money and continue to work for myself and use my own name. If anyone wants to know how to operate a tax office less expensive I can help.
all your comments are enlightening. Just returned from an open house and they made it seem simple…seems like you could save yourself operating expenses by doing it yourself….any insights taxlady
There is a case currently going through the courts that is challenging the Liberty Tax Franchise agreement. The guy who is being sued is a former Liberty franchisee and is willing to talk! He is in Springfield , MA and has had some success in beating Liberty. Most notably, his lawyer successfully argued a vast reduction in money damages due Liberty which could and should make any lawsuits in federal court too small for them to consider. His lawyer will be happy to accept more Liberty clients (of course!). Talk to this guy, he is listed as one of the current lawsuits on their prospectus. I won’t list his name here, but he is easy to find and has some success in litigation against Liberty. Good Luck! As a result of our conversation, I would not even think of being a franchisee. Call him-his name is John.
Thanks for the advice…in the process of doing my due diligence so I will be sure to talk to John…appreciate the insights
If you want info on the former franchisee that John Palmer referred to, contact me at biz.tax@hotmail.com and I have permission to provide you with his contact number! You will be asked if you are with Liberty Tax since they have been calling him to try to entrap him because of the current lawsuit. The information will be helpful and I only wish I had this resource before I lost my money to Liberty Tax!
Look for the case of JTH Tax vs. Fein
If someone will email a pdf of the complaint (in confidence) to unhappyfranchisee[at]gmail.com I’ll post it.
What is the current cost of purchasing a Liberty Territory? It seems to me they might be very expensive compared to others like Jackson Hewitt or Colbert Ball. Any body know?
To the taxlady:
I would like to take you up on your offer to provide insight into opening up a tax office for less than the franchisors offer.
I would like to be a part of a class action lawsuit. I also feel that they misrepresented the oppertunity. I bought 3 territories. Invested my life savings and filed for bankruptcy last year. I was lied to from the beginning.
Customer service did not exist from corporate to the franchisee
Anthony,
Please remember that your franchise agreement may preclude you from filing a class action suit against Liberty. If you e mail me I can give you the contact info of someone who is in current litigation with these crooks and has had some success.
[John: We don't allow posting of personal contact info or email addresses in comments. Feel free to share your information here in the forum. Thanks. ADMIN]
Anthony — I’m sorry you lost so much and had to go into bankruptcy but be sure and study the history of “class actions” and franchise litigation. Now that class actions are usually removed to the federal courts, franchisees will be even less successful than ever before in litigating misrepresentations and fraud.
Franchising was regulated my the federal government in late 1979 in order to take franchise contracts out from under the provisions of state law and to protect franchisors from “fraudulent inducement to contract” claims in the state courts according to Robert Purvin, an attorney, who wrote the book Franchise Fraud and who was Chairman of the American Association of Franchisees and Dealers (AAFD).
If a Class Action Attorney doesn’t explain this to you and tell you the odds, run fast! There is tension between state law and federal law and the courts are under siege by failed and failing franchisees who believe that they were defrauded by promises made in the presale process. Franchisee attorneys do not work on contingency, of course, because the odds of recovery are so slim —and the odds of being made “whole” as to your losses are practically “nil.”
Now and then a franchisee does get a small judgement if they can hang on through the years and the appeals, etc… but, of course, the attorneys don’t lose on either side and don’t take franchisee lawsuits on contingency. Notice that “the promises about “customer service” are probably not very specific in your written contract and the UFOC/FDD and breach of contract is very difficult to prove and even more difficult to prove was proximate to your damages, etc…
LET THE BUYER BEWARE OF FRANCHISORS AND ATTORNEYS!
http://thegreatfranchisingrobbery.blogspot.com/
This is very scary stuff!!! I am on the brink(or I was) of purchasing either a Liberty or Instant Tax franchise. After reading some the these responses I am truly becoming frightened of the whole franchise idea.
To Nancy Jones:
Save yourself money, effort and trouble. Don’t even think about getting involved with Liberty Tax. There is enough input here to help you with your decision ! Look up the list of former franchisees in the Northeast and you will find former franchisees that can give you an honest evaluation!
JP
I am pursuing the due diligence of being a Liberty Tax franchisee and came across this forum. Thank you all for sharing your experiences. The franchise seems to be very successful in my area ( Dallas) I attended the first seminar where other franchisee owners were there and claimed to be very happy. I have an existing client base to start from and have been in accounting for years but am not a CPA and need a year or two of more classes to get my CPA. With the Liberty Tax I wouldn’t need it and can make the same money. How could I do this without having a franchise? Thank you.
gried:
Talk to the former franchisees that ahve been listed in this forum. There are several that had pre existing clientele that were burned by Liberty. Did you know that Liberty would have the right to exclude you from servicing your old clients if you should decide to leave them? How would that affect the business you worked so hard to establish?
The short answer to your question is that there is a myriad of people out there that actually make a living setting up people like yourself for this type of business. Look in the Northeast, where I personnally know 3 of them! Liberty will not offer you an honest shortcut to expanding your business. the truth is that you hold the key to expanding your business through your own clients and their happy referals.
To Gried:
I am a former Franchisee with these less than honest people! Do not ever let them get a hold of your private client information because they will innundate them with advertising and try to lure them away to other Liberty Franchises in the area. They have no real marketing prowess and are really good at taking our royalty fees with no support. They developed a large group of franchisees here, in Florida, and not many are profitable and most are very disappointed with the lack of support they offer. Their software is unreliable, especially at tax time (when you need it).
To answer your question, you do not need a franchise to grow your business. You need to service your existing customers well so that they will give you referrals to their friends. There is no marketing magic bullet that Liberty offers that can possibly offer you the same degree of success as you can yourself.
As for the meeting you went to, I also attended on of those and was reeled in by them. It turned out that most of the franchisees were not at all from my area nor even from my part of the country! Most were from Virginia (where Corp HQ are) and were specifically shipped in for the show. The Liberty Franchise owners that you probably saw were new to the system or part of Liberty’s sick corporate structure. Do yourself a favor, call the ex franchisee’s, call the ones that are being sued by Liberty and call franchisee’s with more than 3 years in the system. I think you will get a better picture of what the Liberty Franchise is all about. Don’t let them separate you from your money-They managed to bankrupt me!
For any of you that are still even considering Liberty tax as a possibility, why don’t you do a little searching on justia.com which is a search site that lists legal cases that have been initiated by Liberty Tax. Search by typing in JTH Tax on the search screen and a whole list of defendants (ex franchisees) are listed. Ask any one of them hoe they would rate their experiences with Liberty!
I thought it interesting that this was a very large list that seems to keep the Eastern District Court of Norfolk, VA fully employed! Coincidence?…
The Liberty comments about losing all your money are accurate and not just disgruntled people who didn’t know what they were doing. I was sucked into buying franchisees and came out losing more than 200k after 3 years. Due to franchise laws Liberty can’t tell you before you buy how successful their franchisees are, because if they could you would never buy. The success stories at the pre-training sales pitches are corporate owned stores and maybe 1% of the population of franchisees (a dog and pony show). The other 99% will lose their money, have their franchise taken back, maybe get sued, and then Liberty will sell the franchise to someone else all over again.
run away wrote: …Due to franchise laws Liberty can’t tell you before you buy how successful their franchisees are, because if they could you would never buy.
They may have told you that, RU, but it’s not true that laws prohibit them from disclosing sales and profit numbers. Franchisors often state that they are prohibited, but actually they can provide financial performance data to prospects as long as they disclose it in Item 19 of the Franchise Disclosure Document. They must, however, provide the basis for their numbers.
Most franchisors, for various reasons, do not provide financial performance info in their FDD. One would assume that if it furthered the sale, they’d include it.
Ha! Ha! Run Away told the truth! I read the other day where Mr. Franchise says that 90% of franchisors DO NOT DISCLOSE “earnings claims” — and I say even “earnings claims” aren’t actually true disclosure of the unit financial performance of the systems because they may be averages that can be skewed.
What are the various reasons franchisors don’t disclose earnings claims, Sean? l. Because they don’t have to, under the FTC Franchise Rule or the State FDD, and this protects them from lawsuits from franchisees who don’t thrive and can’t then prove they were fraudulently induced to contract by misrepresentations or omissions, etc. in the forming of the contract. 2. Because if the disclosure reveals low or no profitability of units, this would kill the sale of the franchise. 3. Because even if the earnings claims were currently good, they might not remain good, and then it would sure look like “fraud” if the franchisor stopped making earnings claims to hide from new buyers the fact that the earnings were declining.
The original lie of the FTC Rule lives on — i.e. that the purpose of the FTC Rule was to mandate that “essential” information be disclosed by franchisors that would enable prospective buyers of franchises to assess the risk of the investment in the franchise and compare it with other investments. The real purpose of the FTC Rule, as indicated by experts and attorneys, is to protect the franchisors from fraud and to deny a “private right of action” for franchisees even when there is a violation of the FTC Rule.
http:..thegreatfranchisingrobbery.blogspot.com
Carol – see you next Tuesday.
John S.
Carol,
Is there a way to contact you?
Yes! John! You can E-mail Admin at unhappyFranchisee[at]gmail.com and tell him that you have my permission to access my Email address.
I don’t know how I could help you but I do feel that you are honestly trying to help the Liberty Tax franchisees who are failing and don’t know what to do when Liberty Tax demands a “failure” fee that is obscurely defined in the terms contained in the contract the franchisee has signed in good faith. The good faith franchisees don’t understand that the franchisor has premeditated their failure while at the same time they have not disclosed the odds of failure. Too bad! So sad! —So many have been had!
Here is the problem as I see it. Some Liberty franchisees make money and are happy with their business. Some fail for what ever reason, and they blame the company. I’ve never heard of one blaming themselves for their failure.
Now, Liberty does have a habit of treating its franchisees as if they are morons. That is frastrating to franchisees who are not morons. The company oversteps its authority under the franchise agreements in myriad ways. They litigate way too often, having sued so many of their franchisees and former franchisees. The list of failed franchisees is enormous. I don’t believe they intentionally lie, but one person claiming to speak for the corporate office will say one thing and then another person will not abide by that commitment leaving franchisees always wondering what they can depend on. They do many things that stupidly damage their relationships. However, as I said, some folks do well. If that was not the case then the company would not continue to grow.
The best advice for prospective purchasers of a franchise is to compare yourself honestly with those who succeed and those who fail. Are you more like one or the other? Personally, I would not purchase a Liberty franchise again because I know the tax industry now. If I move to another area I am perfectly capable of building a local mom and pop operation that would likely do better financially. If you don’t know anything about a business then you need to buy someone else’s system. Be prepared to be treated like you are stupid, and be prepared to act as if you are if you wish to be in the company’s good graces. Liberty doesn’t pay its corporate employees very well so they also don’t get the best and the brightest. The people who are highly compensated are the ones to watch out for, though.
By the way, I believe it is time for Liberty franchisees to consider forming a franchisee association to represent their interests similar to what Jackson Hewitt franchisees did. Right now all franchisees are at the mercy of the whims of the corporate office. They have no power because they are not organized, and the company will always place its own interests above that of franchisees.
Have to tell you, when there is a posting that says “the list of failed franchisees is enormous” it says alot. Obviously there will always be franchisees that fail due to their own workings, but when failure is more the norm than the exception, there is something wrong. I have run successfully a small business in the past, and followed the liberty system more so than a lot of other franchisees who I knew during the past few years. Part of the flaws are you purchase a franchise to rely up systems that work, an organizational structure you can rely upon, and a brand name recognition that will bring people in. Liberty advertises this to their potential franchisees, but in most cases does not deliver. I firmly believe after being involved that the successful franchisees are either lucky, or hand picked to succeed by the corporate office as they get better development assistance than others. The area developers, who are one of the keys to the store’s success, are in it to flip territories and not for the franchisees success.
Joey,
Liberty’s main business is litigation. That is where the largest number of their corporate employees are. There is a distinct reason why prospective franchisees are not invited to the corporate office: It is because it is such a small operation that is disproportionately driven by its legal department with John Hewitt at the helm.
I am a former Texas franchisee that has had litigation from Liberty against me. This is not at all an exclusive club. The reason for Liberty’s growth has been the fact that they prey upon the unemployed and will sell the sizzle instead of the steak. The company never gave a care about the franchisees-ever! Just ask former franchisees and litigants. the answer is the same. I believe that they will continue to dupe unsuspecting people into their very expensive system just so they can establish their brand at no cost to them and the sweat of others.
The AD’s are only in the business of flipping territories. When I left mine, I understand they sold it for six figures! I guess there are people that are still unsophisticated in spite of the fact that there is a lot more former franchisees out there sounding a warning. Buyer Beware!
As a Liberty franchisee with multiple offices for several years I have to agree with most of the negative comments listed above.
FACT: You CAN make money as a Liberty franchisee based on the following (and you MUST have four of the five criteria listed):
1. You have three times as much money as the start up fees state.
2. Your Area Developers understand the tax business (this is tricky). My AD’s are deceptive individuals who stack newly opened offices with free tax returns then sell them to buyers who are informed the “FREE tax return program” generates new paying customers the next season! Less than 10% of customers who paid zero return, and even then they expect their returns for $20-40! Part of the Liberty franchise agreement is that you MUST prepare 100+ free tax returns.
3. You have a business background – understand cash flow, budgeting, payroll management, purchasing, marketing to designated markets and excellent time management and people skills.
4. You can survive working sixty to seventy hours per week for 14 weeks during the first two tax seasons with little to no income.
5. You have an office with EXCELLENT visibility (Liberty generates more than 40-50% of it’s customers from their Liberty wavers), excellent staff prepared to work for minimum wage and $$$$ of direct mail, door hangers, coupons and roadside signs.
If you can handle all this… well, you’re a better man than I was.
Liberty will make you a “TOP GUN” a term they offer to virtually any franchisee who prepares over 500 returns AND is a suck up.
To these and others like them, they also offer the rent to buy or “try before you buy” program where Liberty allows the franchisee to open a second office with only 20% down. Followed by 12% interest on the balance. Not from the beginning of the tax season, but from the date the agreement is signed!
So you learn in January when you are opening your second territory office that you have been paying 12% interest on $32k or thereabouts since last AUGUST!
As far as the franchise agreement goes, have you or you wife or son or daughter sign it. So when you have spent your 14% franchise fee every month to a corporate body that does nothing to support you with the exception of commercially available software (Taxwise up to 3 years ago), and 5% advertising royalty which comes in the form of cookie tins, t-shirts in XL and XXL and hispanic radio marketing (my territories are predominantly all white/black!), sell for what is the higher part of pathetic and start your own no-name office.
Finally……. try selling your office for half of what you spent trying to build it up.
And to that poor uneducated, inarticulate, unschooled Liberty franchisee in GA who I spoke to numerous times trying to help…. I wish you well.
Liberty Tax should NEVER have taken his money. He has virtually lost everything.
Good to see franchisees sharing THEIR performance statistics with each other and warning off new buyers. As long as franchisors can hide the risk and the actual performance of units from new prospects, they will continue to line their own pockets at the expense of franchisees who lose everything. http://thegreatfranchisingrobbery.blogspot.com
The Internet will change the face of franchising for the better because HISTORY is repeating itself.
Thought I would share a quote from the Nov-Dec Franchise Times where Julie Bennett, in her article about the Minnie and Micky fiascoes in franchising said they were a part of a May 1970 front-page article in The Wall Street Journal that said: “Once considered the darling of Wall Street and the savior of the small businessman, franchising is spurned on Wall Street and cursed on Main Street.”
Carol –
The internet will immortalize your stupidity.
See you next Tuesday.
John Savitch
Who is this John Savitch? And what is this “See you next Tuesday.” Is this some kind of threat? Should I call the FBI?
Apparently, the “powers to be” are frightened that their “assets” (their franchisees) are talking together on the Internet about “encroachment” and “churning” and bad performance of the franchised business plan, etc.. because this will warn off new prospects.
“John Savitch”:
There aren’t a lot of restrictions on comments here other than no disclosure of personal contact in and no threatening language.
What DO you mean by “See you next Tuesday.”?
Please explain.
It does sound creepy and vaguely threatening.
Your comments are being held for review pending an explanation.
If there’s no explanation, I’ll make it a ban from future commenting.
ADMIN
I am not John Savitch but I know what the “See You Next Tuesday” comment means & it is a way to say a nasty word for a female body part …. John Savitch should be ashamed of himself for using such a vulgar term & he should be banned from posting on this forum in my opinion.
Savitch meant C U (N)ext (T)uesday.
Trace the IP address. Send it to me and I will find him.
And unless the comment at 1:47 is a cryptographer, that “may” also be “Savitch”
Boy that’s the last time I try to help…no I am NOT Savitch as I stated. I was just trying to help Carol. I thought what he said was disgusting. I have posted here before because Liberty ripped me off as well. I hope you DO trace the REAL Savitch & get him to stop posting such vulgar things. Sheesh!!!!
Admin -
Had no idea the phrase was so insulting, rest assured it won’t happen again.
Mea culpa
John
Moneypit/Unhappy Customer: Thanks for the explanation. FYI Moneypit is not Savitch, and the term has made the Urban Dictionary.
John Savitch: You are claiming that you were using an incredibly vulgar term but didn’t know what it meant? That, I believe, would make you either a 4th grade boy or a complete moron. In your words “The internet will immortalize your stupidity.”
The other option is that you insulted a grandmother in her 80s (sorry, Carol) with the most vulgar term possible because she dares to have an opposing opinion.
Mea culpa?
Go away.
Gee Sean! Telling my age again! Guess I will have to forgive Savitch. Maybe a little “sex” would help me get my message out there. I’m thinking about writing a book entitled “What do the Joy of Sex and the Joy of Franchising have in common?” — but, of course, the answer is too obvious.
http://thegreatfranchisingrobbery.blogspot.com
Carol: Sorry for the vulgar comment by John Savitch. He has been shown the door.
Maybe we can get the discussion back on topic now: The Liberty Tax franchise opportunity.
Moneypit has it right, for the most part. My experience based on Moneypit’s five criteria:
1. 100% correct-you need at least 3x start up fees.
2. Area developers in my opinion, are the downfall of most franchisees. they are not familiar with tax industry and make money off of churning your franchise. so if you succeed or fail, they still make money. My AD was useless and only took a stand for something when it benefited him. He has another full time job and preached what you were doing wrong instead of helping. i followed the system, took their advice and then was thrown to the curb when you can’t bring in the number of returns they want because the AD does nothing for your area.
3. A business background helps, but don’t rely on it thinking you can make it work with a strong business background. there are too many other forces as work where the business background won’t do the trick.
4. do not plan on making any money the first two to three years in this business. one of the successful owners i knew of lost $200,000 before making his first dime back. I didn’t believe it until I lost about the same but didn’t have the funds to continue.
5. Excellent visibility is key, but even with that, customers are more loyal to block and JH than you think. You know the old saying, nothing worthwhile is free. Those free and reduced price returns do nothing for you. if you are buying the franchise thinking the liberty name will bring people in, you are wrong.
If you still want to buy a franchise, don’t buy multiple units up front!! Don’t believe the sales pitch that someone else is ready to buy…they are not. Even if they do, you can most likely buy it from them next year after they lose all their money. If you are successful, there will always be an opportunity to purchase another unit after you have made money with the first one. In my opinion, one of the biggest reasons for complete failure is purchasing multiple units up front. You pay high interest on the loans from corporate, and then have to give them back for nothing when you can’t afford it anymore to avoid litigation from corporate.
The comments here from people who did not make it as Liberty franchisees are frankly over the top. I spent $70k on each of the offices I’ve started, and that was it. Why someone would expect to spend three times that is beyond me. People complaining about the royalty are particularly suspect. Jackson Hewitt charges more, and H&R Block charges its frachisees a whole lot more. Same for the ad fees. And this year, Liberty gave back half of the ad fees to the franchisees to spend on marketing materials. They paid for my yellow pages ad. They produce all the ad copy, graphics, etc.
But none of this was hidden when I signed the contract. It was all right there. And what franchise business doesn’t charge royalties and advertising fees? And interest on notes you’ve signed? Didn’t you read what you were signing? Again, it’s all there in the contracts you sign. Good grief, at least complain about legitimate things. Otherwise you end up looking worse than you’re trying to make Liberty look. You didn’t know what the interest structure was on your note, but you wanted to do peoples’ taxes?
Now, most people who fail as franchisees are people who are not suited to own their own business. And they could be identified up front, but Liberty will accept your money and sell you a territory if you can fog a mirror. They pretend theirs is an exclusive club and you’re lucky to be let in, but that’s a lot of hype. They have a large tax department to support franchisees, software development, technical support, operational support, marketing, etc. to the idea that most of the company is the legal department is ludicrous. I know their VP of legal and corporate counsel. It is not a big department, but yes, they are very willing and eager to litigate. You need to know that going in. That’s why it is important to talk to real franchisees, both current and former, successful and unsuccessful. I make good money as a Liberty franchisee, but I have had to learn what is real and what is BS. They leave me alone for the most part, which is all I want now that I understand the business.
Yes, the franchised business is harder to sell than Liberty would lead you to believe. Yes, buy one and run it for a year before buying multiple units. Yes, 12% is a very high price to pay for money. If you have to use Liberty’s 12% money you probably should not be going into business. Most financially sound people don’t have to pay 12% to borrow money. Yes, many of their Area Developers are useless and you just want them to stay out of your way but they are your only conduit to the corporate office for support sometimes. You have to deal with that. And yes, if you are profitable at all, just a little bit, in your 2nd tax season you’ve done very well. If you have to have profit to sustain yourself in tax season #2 this is not a business for you. These things are true. But there’s a lot in this thread that is not true for most Liberty franchisees. A lot of it is failure looking for something to blame.
[...] Here is Joey Black’s comment, posted on LIBERTY TAX SERVICE Franchise Complaints: [...]
Joey Black’s comment above has been upgraded to a full post. A lot of points here to be discussed & debated:
http://www.unhappyfranchisee.com/liberty-tax-services-unhappy-franchisees-need-a-reality-check/
Can someone tell me if this is true?
I heard that Liberty Tax has the right to revoke your franchise, keep your franchise fee and resell it to someone else if you do not achieve something like 1000 tax returns by your 3rd year in business?
Additonally, I was told that the majority of Liberty Tax franchises that have been open for 3 years or longer do not do 1000 returns per year, making the majority in violation of the agreement.
This sounds a bit far-fetched but maybe not. Anyone?
The number is 1000 returns and it is by the end of the fourth year, not the third.
It would be good to see other former or current zees confirming this.
Although there were 3002 offices in 2009 (62 company owned) in or so Liberty franchisees, many may still only be approaching their 2nd, 3rd or 4th tax seasons. So it is closer to 1700-2000 who have not achieved this 1000 returns number by the close of tax season four.
Although Liberty has the RIGHT to terminate the agreement, it is unlikely they would if the office is preparing 600 paid tax returns @ $200 whereby the franchisor still manages to receive ~$17,000 in franchisee fees.
It is more a threat to have more control of the franchisee who would after year four be required to “pull their head in” and toe the company line if they didn’t want this clause enforced against them.
I would like to see any other former or current zees post to confirm what is in their franchise agreement.
So if a Liberty franchisee is not doing 1000 returns by the end of the 4th year, Liberty has the right to pull their franchise – or not – and resell it at their own discretion?
Has anyone claimed that Liberty allowed defaulted franchisees to operate until they had a new franchisee for that market, then terminated them?
Can they legally exercise that clause in the contract if they don’t apply it consistently and diligently (allowing some to continue in default but not others?)
Why is 1000 returns the magic number? Is that breakeven for most offices?
There is much more involved but effectively yes. I have spoken with several franchisees across several states who actually handed their territories back as they could not afford to pay the franchise fees, could not afford to pay the off season rent (common issue), could not afford to open the second or third territories they purchased originally and are NOW required to open regardless of whether they can afford it or not, were unsuccessful in selling it or Liberty determined they were in default and the territory would be recovered in some way and resold. In one instance, the franchisee purchased three, handed two back, could not afford to continue in their original territory, was offered a position to manage it and then repurchase it (or something akin to this through financing but after another year the office had grown in volume and the zor increased the cost of the buyback due to the added return count).
Why is 1000 returns the magic number? Is that breakeven for most offices?
- Break even is dependent on several factors… Rent, Net fees, payroll and marketing expenses among others factors.
Eg.
Average office size: 800-1000 sqft
Average Rent/Utilities: $2000 per month
Employee Payroll (includes tax preparers and wavers) : $25,000-40,000 per tax season
Marketing Expense (Direct Mail etc..) : $5,000-10,000
Office expenses (printer cartidges, client envelopes, copy paper): $1,500
Total annual expenses: $76,000 (worst case)
$76,000 / 0.81 (after 19% royalties and advertising fees) = $94000 in net fees (after any discounts).
Assuming average net fee is $180 then $94,000 / $180 = 522 paid returns PLUS 100 required free prepared returns = 622 total returns.
There are other miscellaneous expenses which include but are not limited to: tax classes, newspaper ads for these classes, coffee, donuts, cookies, cups, new costumes, coloring books for play area, popcorn, pens, inhouse forms, travel/accommodation to meetings, which may amount to an additional $3000 or 20 more paid tax returns.
So 652 would generally be a safe break even total.
Now factor that you received no income during this time. And a new office preparing 652 returns would rank in the top 20 new offices in the country and yet you produced no income for yourself.
So the simple math is if you prepared an additional 348 paid returns at $180, deduct the 19% royalties and fees you would make $50,000 or thereabouts before business taxes and income tax.
1000 returns = 900 paid + 100 free returns.
Unfortunately, most franchisees don’t actually have net fees of $180. Some do, most do not.
If your net fee is $145, you require an additional 125 paid returns to arrive at the same place.
Getting $180 in year one is almost impossible unless you have a state and local tax return which increases the net fee. I would say that most offices take until their third or fourth years to read this amount or higher. This would mean the break even would not be met and the office would make a loss resulting in more financing or inability to continue.
Hopefully my math is close.
“moneypit” excellent comments and all accurate. In 2006, my expenses were were about $95,000 and in 2007 my expenses to run a liberty store were $98,000. I am in a high cost of living state, so maybe more than the average listed by moneypit, but on target.. First year store did less than 150 returns averaging $135 per return, which includes about 20 free. Alot of the $95,000 in expenses was for liberty advertising (remember, corporate doesn’t do it for you) and payroll, wavers etc. Funny as it may sound, I couldn’t give away free returns. Most people were suspicious of free returns because nothing is free. Second year got revenue up to $35,000, but with $98,000 in expenses, that’s $143,000 lost in 2 years. Add in the cost of the franchises (i purchased 3…don’t ever buy multiple units up front) and having to open another one….had to give it back to liberty so that they would “forgive” my debt. It’s not as easy as you think to get to 1,000 returns in 3 or 4 years. So “JoeyBlack” i don’t think it is over the top as you mentioned. You may be one of the lucky ones who did okay, but you are in the minority.
I’ll get back later but as a former Zee with five territories I totally agree with everything I have read. Stayed at JH’s house in V Beach and the snake oil was stacked 100 high. You cannot imagine the losses, lies, deception and garbage I was sold from LTS.
Boston Tax got it right. Liberty tax and Hewirr are predators in the first degree. Hewitt is the best used car salesman I ever saw. You can’t believe a thing he says and is clearly out to rip you off.
I was in his franchise for a couple of years and received no return on my investment nor any help from the corporation ar the area developer. I even had a successful operation in the sense that I was able to generate 630 returns by my third year. After Hewitt and his cronies got a hold of my franchise royaties, I had very little left to pay for such things as rent, electric, A/C and payroll.
My only comment here is to warn anyone that is even considering joining this group of clods, not to do it. Consult a lawyer, consult other franchise owners, especially those that are out of the franchise. Keep away from these clowns!
MoneyPit, wow you are pretty right on the money.
Because my business was new and seasonal no bank would approve a business loan for me (and yes I had really good credit at the time), so I did have to borrow money from Liberty not because I wasn’t credit worthy or a bad business person, unworthy of a loan but again the business was new and seasonal. In the end I took from my retirement and home equity to supplement what Liberty didn’t finance me (keep in mind Liberty didn’t approve or authorize me to pay myself a salary therefore I had to take some of my money to finance my salary)…
That I was able to hold on for so long on a shoe string budget and absolutely no cash flow is a testament to my commitment to make it work and my business and accounting background.
Again, despite my financial woes I was considered successful because I grew my office every year by huge percentage points, but being successful for Liberty is not how much profit you make but the number of returns you make. So I was successfully poor (I had growth but I couldn’t profit).
I tried for 4 years unsuccessfully to sell my territory and couldn’t because of their 1 1/2 times net revenue rule. Basically they tell you your franchise is only worth 1 1/2 times your net revenues. So if you do 600 returns less 100 free for a net 500 returns at an AVN of $180 your Net Revenue is $90k x 1.5 means you can sell for $135k, from that you have to subtract the money’s you owe them first, this leaves many Zee’s with zero money to recapture off their investment or in some cases still owing other creditors. Unfortunately most take from their home equity or their retirement funds so when they sell (out of desparation) or from need they are left starting their lives from scratch.
For anyone considering buying a Liberty Tax Franchise, keep in mind despite what some former and even existing franchisee’s tell you all is great in the land of Liberty, each Zee’s Franchisee Agreement states that if you are a franchisee or even a former franchisee you can not talk bad about them. If you do they can come after you and sue you, so most current and former zee’s will either not tell you the truth or avoid you completely.
Personally I have many greivances about Liberty, they made a lot of promises to me some personally by John Hewitt (which if I were to disclose here I would give myself away as to who and where I am). My advise to you is don’t trust anyone over there. It took me 4 years to figure out that the ones which preach how great and wonderful Liberty is the loudest and the fondest are the ones that either get paid by John Hewitt or are shareholders or are both.
Those which respond to this thread insulting other’s postings and comments are Liberty plants. John Hewitt and his minions really “hate” people talking or posting anything bad about Liberty; of course it doesn’t help them any to have bad publicity. The thing is the more people they screw over the more enemies they make and the more enemies they make the more people are willing to talk.
Finally, buyer beware. Don’t do it! They will make all kinds of promises to you and then break each and everyone one of them and then accuse you of being ungrateful or my personal favorite under performing or just a plain bad leader and manager.
Bankrupted is correct on all counts in my opinion (and of course, these are all my opinions in case “big brother” is watching as Bankrupted mentioned. Liberty is a marketing machine for itself as the franchisees are only there to make money for jth corp, the parent company of liberty, and not the franchise owners. take a look at the financial statements for the last 3 years for jth tax inc and subsidiaries, over 40 million in after tax profits on the backs of all the franchisees losing money. i agree that you would want to be involved with a franchisor who makes money, but the franchisees will never see it and the 40 million in profits is from all of us who went bankrupt or are paying off the loans for the next 10 years. liberty constantly takes back franchises that can never be successfull and then resells to another person. i have heard all the comments that former franchisees only lost money because they are bitter or didn’t know what they were doing. i’m sure there are a few out there who didn’t know what they were doing and bought the lines liberty sells that you can make 50 to 100k working only 3 months a year (what they don’t tell you is that probably means gross, not net after your expenses). however, like others on this thread, most of us are hard working, successful business owners who made a bad choice getting involved with liberty. Buyer beware is an understatement. If you like working hard for nothing and then losing your investment, then jump in. Its really unfortunate that this franchise is or was rated as a top franchise.
Almost bankrupted —We too avoided bankruptcy but are still subsidizing our franchisor with the payment on startup debt for a UPS Store that a stand-by franchisee got for pennies on our investment.
Wow! you say Liberty realized “over 40 million in after tax profits on the backs of all of the franchisees losing money.”
Can’t you see that this business model “franchising” is protected in the status quo of regulation and the law because it allows those on the top of the pyramid to maximize their profits while the franchisees on the bottom of the pyramid “buy the risk” when they buy the franchise.
How do you former franchise owners feel about the cost to your customers. My d-in-law went to a liberty, asked for an estimate, they said they couldn’t give her one, depended on how many forms, etc. (which I totally agree with) and when her simple taxes were done – they charged her $350 (gave her $50 cash back)…..I’ve been paying someone to do my taxes for over 30 years and NEVER paid more than $125 for all the necessary forms. Plus they wouldn’t give her her w-2′s etc. back until after her payment clears. I cannot believe they can charge her $350!!!!!!!! Do we have any recourse?
Liberty uses the “Closing the Sale” technique. DON’T drop your fees. Increase the service to meet your price. Pricing is discretionary. If the client is stupid.. charge more, discount less. That’s why Liberty targets AGI (Adjusted Gross Income) territories which are the lowest in the nation or $35k and under. Very much a sales oriented trick and the $50 Cash in a Flash gimmick is targeted at the lowest income earners in the nation who jump at the chance of walking out with $50 cash! when in fact many franchisees ADD $60 to the invoice. John Hewitt has little concern for HOH filers who get a $6000 refund (and need it) and don’t blink at a $350-400 fee. My average net fee was $200. John Hewitt is the lowest form of predator who also claims to be a “christian”. Oxymoron to say the least.
Honestly, owning a Liberty is a lot of work during tax season. It is probably better for a single person than someone married with kids. Truth be told, I’m a second year franchisee and I’m not that disappointed. The thing is, you really have to work hard, on season and networking off. Like any franchise outside of fast food, it requires lots and lots of work. It’s not easy. Picking up the right location and office is a big part. You are lucky to break even your first year. However,there are many success stories.
Most Liberty franchisees reach their point of disillusionment after their 3rd year.
All businesses require a lot of work, but Liberty, in particular, demands the same amount of work as if you were on your own without their help. It seems to me that if I am paying about 20% of my gross income to them, I should have a little less effort to make the business run. I’m paying them for their expertise to make my life easier, not harder.
As for location selection, Liberty really has no clue as to local needs or traffic flow. My AD not only did not know my area, his first trip to my state was to help me with site selection. This is not a real boost for my morale.
The point here is that if you are going to work hard, network in the off season, and generally do what it takes to run a business, why do you need them?
No business is worth it’s salt, if its not a full service business. I am glad to know that I choose the right tax franchise that allow expansion, and not just a popular named business.
What is this “Try it before you buy it” crap. They mean buy it so they can charge you 12% on the balance and then intercept your fees to pay themselves back. I’m down a $100K and trying to find a way to get out. They won’t even let me give it back to them unless I leave the system all together.
The “try it before you buy it “crap is that…just crap. Liberty wants to trap you even more financially so that you are literally their slave. It also shows that they are having difficulty selling territories and are trying to do an apparent discount. Don’t forget, you are still liable for the royalty fees anyway which includes their marketing fees. This includes the $5000 minimum for a first year territory. Yes, they intercept their fees first so you will have little to show for your effort. Some deal.
Even if you leave, they will most likely sue you.
Please READ VERY CAREFULLY (from Liberty Tax Intranet 2/22/2010):
“Are you ready to expand your Liberty franchise operation by purchasing an unopened territory? Would you like to finance up to 80% of the $40,000 franchise fee through a loan that is interest-free until January 2011, and make interest only payments for the first three years? Then take advantage of this unique offer to grow with Liberty, and secure your additional territories!
Expansion Special Details:
Completed paperwork and a 20% ($8,000) down payment must be sent to the National Office no later than March 31, 2010.
Liberty Tax Service will allow you to finance the remaining 80% of the purchase price over the following four year period by signing a promissory note.
o ***Interest will not begin to accrue until January 1, 2011***
o Make Interest only payments by February 20 in 2011, 2012, and 2013.
o Make the final payment (principle and interest) no later than February 20, 2014.
The Expansion Special is limited to the first 100 territories to close.
You must open an office in your new territory by January 8, 2011.
This offer is good through March 31, 2010.
Program is open to existing Franchisees in good standing.
Contact your Area Developer to start the process today!”
Upon signing an agreement in July, interest was charged from that time on the ENTIRE BALANCE. Even though the office was not opened until the following January and the first 20% was not due until the end of February, the interest of 12% was applied from the date the Spring Espansion Special agreement was signed.
Think how you feel paying 12% interest on $32k ($3840 interest per year for four years) from the day you signed an agreement (in this case the special is open to March 31st!) But you won’t find an office until October because you don’t want to pay rent unnecessarily)
John Hewitt and his cronies are bottom feeders preying on people desperate to own their own business and too deep in debt after their first tax season to be able to get out. God help them all.
As a former employee, I have seen the crap that a particular franchisee gives the employee (I do not believe all franchisees are like that!) and the taxpayer:
Promises of a good income. What they don’t tell the employee is: The fees to a taxpayer for a “simple” return is $400 -500. Add a Schedule C because the taxpayer was given a 1099 instead of a W-2 and add at least $100; as much as $200. When a customer walks-out, the bonus is zip.
As a former employee of an EA, I saw him charge $175 to $250 for the same returns. And he was living comfortably!
These taxpayers are mostly Hispanic, many African Americans. Charging for a Schedule M or EIC is unconscionable! Charging for a Schedule C at all, at those rates, when the taxpayer should have had a W-2 instead of a 1099; immoral!
MANY taxpayers walk-out when they learn (not “told” because we were NOT supposed to tell them!) of the fees. My employer could have 5 times the number of returns with few walk-out if they would have charged 1/3 the fee!
Greed supersedes logic…
[...] LIBERTY TAX SERVICE Franchise Complaints [...]
New post on the Liberty Tax franchise. LIBERTY TAX FRANCHISE: Praise from 1st Year Owner.
Your comments invited.
This site and these comments are just downright sad. For anyone looking to purchase a franchise please do not listen to these people because these same people will fail at most things they try in life. I am a Liberty Franchisee and have been for 6 years and here is what I have seen with so many franchisees. They buy a Liberty Tax Franchise and somehow they confuse all the hype for an assurance that because its a franchise you are guaranteed to make money which is not the case and not what they are ever told by anyone. Every franchise has its hype and as with any franchise unless the franchisee buying the business takes the responsibility and actualy learns the business side of the business so they know exactly what it will take to be profitable there is a very good chance that this franchisee will fail.
Liberty has never been at fault for me loosing money or making a profit. That responsibility falls on me to determine what actions are necessary to maintain my profit margins. The better understanding I have of this the better job I will do maintaining my profitablity and positive cash flow. Libertys system is very large and and there are many of items to choose from when it comes to marketing and focusing on items that works for you is very important and imperative you figure out quickly. Even if Liberty says I should do something, I will not do it unless I know that it will produce the right results, so I choose the items I do that get me the greatest success for the least cost. Liberty has never forced me to do anything that would make me loose money that I did not have 100 percent control to change. This is called personal responsibility. Blaming Liberty for items like this is just called foolish. Sure Liberty is not perfect and sure I even am not in 100 percent agreement with everything they do. But I chose them and I chose them for a reason and I can honestly say that I made the right choice and even though we do not always agree it has been a very positive relationship on both sides and a Win Win deal.
If your going to buy a franchise or if your going to start your own business the best advice I can give you is not go out and talk to failures. Go out and talk to the best of the best, which that could be in the franchise world or in the Mom and Pop world but I promise if you search the best people out you will find plenty that will be more than happy to let you learn from their mistakes rather than you having to pay for your own which is very expensive. Understand what it is going to take to become profitable and understand how the figures interact with each other. If you educate yourself as much as possible and seek out success and do everything you can to learn from their mistakes you will be well on your way to succeeding no matter if its franchise or other.
Do not seek out the failures and people who spend their life blaming everyone else for there weaknesses and there failures. These people never do the things necessary for success and always have a great reason why someone else cause there problems that led to there failure. Its the same way in every franchise and in every business. Failures always have an excuse and they always have plenty to say but when it realy counts they never have many positive actions which causes them to repeat their failures over and over.
Rob says “For anyone looking to purchase a franchise please do not listen to these people because these same people will fail at most things they try in life.”
What does this say about the Liberty Tax franchisee selection process? Are you saying Liberty recruits people with a record of failure?
Rob says “They buy a Liberty Tax Franchise and somehow they confuse all the hype for an assurance that because its a franchise you are guaranteed to make money which is not the case and not what they are ever told by anyone.”
Wow! I wonder where they got that idea?
Here’s what Liberty says on its franchise website: “If you have little or no experience running a business, a small business franchise opportunity will give you a step up on the competition. You’ll be allowed to use the franchise’s trademark. That’s invaluable in starting a small business franchise. Customers will know who you are as soon as you open your doors. And they’ll be more willing to use a brand they trust. You’ll also get a proven operating system to follow. You won’t have to worry about the pitfalls usually associated with start-ups. You’ll have a ‘how-to’ guide at your fingertips.”
Rob says you need to learn business on your own in order to be successful. But Liberty says they give you all you need:
“Your support team provides the system, tools, and concepts you need to be successful as a franchisee. At Liberty Tax, we are a family. Together we accomplish the Liberty Tax mission.”
Rob says “Every franchise has its hype and as with any franchise unless the franchisee buying the business takes the responsibility … this franchisee will fail.”
Rob, I agree with the last statement, but when a franchisor tells people no experience is necessary, that they meet all their criteria and they will receive everything they need to be successful for their franchise fee, I don’t think that’s hype. The word “fraud” seems a little more accurate, IMHO.
“Rob” – “Koons”
Only ROb I know is Rob Koons who writes so much like you do on the discussion board but your spelling and grammar is like Steve Tyler.
Rob, I suggest you look at the top 100 offices list. Note the 100th office has completed 1145 tax returns. Accept that at least 100 of those are free to meet the franchise requirement of a minimum 100 free returns.
Hence, office 100 of 3000+ offices just exceeded 1000 tax returns.
And we all know the percentage net profit for Liberty offices is 30%.
1000 paid x ANF $200 (check the top 350 entity report to see the ANF$) = $200,000 @ 30% = $60k
office 1 making $200k
office 100 making $60k
Liberty has now been around more than 12 years.
where does that put offices 200-3000?
Yeah Rob….. we are all failures. We always have an excuse. If any financial analyst worked the numbers you might understand the model is a failure itself unless you have LOW LOW rent, operate in a sub $7 p/h min wage state.. blah blah.
I question your sincerity but congratulate you on your success. Most of which is not duplicated by others who don’t have the knowledge to do so.
Once again nothing that is being said on the website is fraud. Franchising does give you a leg up and Liberty does bring a ton to the table. No where does it say that by joining Liberty that because you have no or limted business experience that you do not have to ever learn the actual business side of the tax business. You do not need to have tax experience or business owner experience to succeed but as with any business you better hire the tax knowledge very quickly and also you better take the time to learn the business side of the business.
Liberty also brings another thing to the table that in todays world is just not out there any longer and that is the financing they offer to there franchisees. I would explain further but I understand that the readers of this website will find anthing positive being done completely negative and part of a conspercy theory.
I sold a new franchisee one of my offices and he paid full price which means 1.20 times net fees. He was 100 percent financed over 4 years and after his first season he had all the money needed to get into next season, he paid all of his bills, and still took a 40k profit. He was 25 but knew what taking responsiblity was about and instead of depending on the franchise to make him succesfull he spent long hours learning and executing.
I still go back and say the comments here are not based in fact, they are nothing more than mob mentality attacks where everyone feeds off of each others failures and blame someone else.
Oh yeah by the way the franchisee I sold my office to had a bad credit when he purchased and after just 1 season was able to raise his score by 90 points because of his hard work and dedication.
In response to Rob: your assumption in those who failed are at fault is incorrect.
I will admit some individuals spend there lives blaming others for there failures, however I am not one of those.
Liberty failed me! Period! I was top 3 in my DMA. I knew the business inside and out, I knew every aspect of it, otherwise I wouldn’t have been top 3 in the DMA (and the DMA is large with many offices, so don’t think i’m talking about a DMA that has only 3 or 4 offices either).
Perhaps you are from a small town and fixed expenses such as rent are small, however in large metropolitan areas, rents are high (yes, even in this ecomony) additionally the wages are high too, where we are the state minimum wage is considerably higher than the federal minimum wage. Insurance is high too in our area! You start adding all these factors in there is no way you can make a profit. There is only so much you can charge a customer, Liberty insists on retail locations which in large metropolitan areas will run you at $3k-$5k a month (yes that’s right $3k-$5k a month even in this bad economy right now)
Finally, for the record and again for those of you who may not have had the opporturnity to read my comments from last year; I was profitable my situation was that I was cash poor. I had very high bank product clientele and since I was financed Liberty would fee intercept all our revenue and release very little.
However I was such a good business person I was still able to be on top year after year for 4 years. When Liberty told me I had to put in more of my money in after I had already put in all I had and everything my family had, I just turned the territory back to them; my family and I had no more money; I didn’t get a paycheck for 4 years; Liberty wouldn’t allow it, yes I was profitable and I could’ve gotten a paycheck, but since there was no cash in the bank to pay me, well then, for those of you who know how cash flow statements work and financial statements you get the picture.
After soul searching for weeks and discussing the matter with my family, I made the decision to turn the territory with 3 stores in it back to Liberty, only to have them (Liberty) sue me and spread malicious lies about me.
So Rob you keep dreaming on about how wonderful Liberty is, your probably a plant anyways and a Corporate employee or a former corporate employee who was given the territoy. Whatever the case, as nice as Libery is to you right now they will turn on you quite suddenly and unexpectedly and when you are only trying to do what is right by you and your family.
By the way, all I asked Liberty was to release the fee intercept for one tax season.
I had only one season to get cash flow positive. They said no! Which is why I walked away.
So in essence I did what was right for me, disassociated myself away from a company that refused to help one of there top frachisees in the DMA. Liberty for whatever reason found it necessary to aggressively lash out against someone who posed absolutely no threat once I had closed the nightmareshly chapter in my life.
For those of you reading this blog… Just remember, the only ones that make money in a franchise is the franchisor, Franchisees have little recourses and are not protected by the regulators who are suppose to watch after predatory franchisors like Liberty.
Rob, Rob, Rob… you’re clearly not paying attention.
Instead let’s talk about the number ONE Entity.
Khalid Baste of Chicago.
Three years ago he owned 10 territories. I expect he owns more now but let’s say he still owns just 10.
Net Fees – $ 2.5M – Total Returns – 9800 – Average Net Fee – $305
If you work the numbers you will see 1600 returns were free. Or an average of 160 per office.
The NUMBER ONE office in the country is his with 3500 returns.
160 free.
So 3340 returns multiplied by the ANF of $305= $1,020,000
That leaves $1,480,000 from 9 offices or $165,000 per office.
But then again he appears to own two other offices in the top 100 combined for 3200 returns (less 320 free) @ $305 ANF = $880,000
Summary
$2.5M – total
$1.9M from his top three offices
$600k from the remaining 7 or $86,000 per store before royalties ($16,000) rents ($12,000 minimum), payroll ($25,000 min.), utilities/phone/internet ($3,000 min.) and marketing/paper, printer carts, food, etc…. ($5,000 min.) Leaves you with $25,000 before payroll taxes, income and business taxes, going to the convention etc…
Not everyone is a Dan Castellini but they hope to be.
Not everyone is a Rob Koons either.
Just accept the fact that although we might all be able to read John Hewitt’s biography, most if not nearly all, will never reach his success or come ANYWHERE near it.
GO CAVS!
My intent here is not to attack you or try to convince people you or anybody else is bad. I have no doubt that you ran a good operation and also that you experienced cash flow issues while running a decent profit margin. This happens very easily when all the financing is short term and you have either not been able to or do not have the credit to obtain outside traditional financing. I am not sure where 800 to 1200 square feet of retail space runs 3k to 5k a month. I am in a major city and rent runs for my 5 offices 1300 a month.
We live in a country where we have freedom to say what we want and we also can come on forums such as this and tell our side of the story which usualy does not include all the facts. This is not to say that this is being done on purpose but I could spend many hours pointing out where the items being stated on this board are not the entire story just based on my knowlege of how the system works and there were other avenues that could of been taken instead of quitting or filing bankruptcy.
I am not a plant and I am not a blind numb robot willing to agree or back Liberty no matter what. I have had my disagreements and have chosen a different route of solving them. I invested my life savings and put everything I had and then some in what I currently own. I also have never failed in business mainly because I have never quit. I could of very easily had nothing but failure stories except my dertimination kept me from ever walking away.
Your opinion is that Liberty caused this to happen to you and I will never change that no matter what kind of proof I bring to the table. My comments are more for the prospective business owners and to guide them down the right road so they do not have to make some of the same mistakes I did. Inside of Liberty I have been very succesfull at doing this and the Liberty Model can produce great successes and has produced great successes. When getting into business seek out the successfull people and find the ones who are willing to let you learn from the mistakes you made. You will be amazed how many business owners out there will freely give their time to try to help you. I failed to do this a number of times and I have had regrets not doing it because it would of saved me a ton. But I do spend a great deal of time working with business owners showing them my mistakes and guiding them down the road where they can learn from my mistakes rather than their own.
I wish you nothing but the best in the future and have no doubt you are very talented. I imagine if we were to sit down and talk while we would have our areas of disagreements I think we would also find that we would learn alot from each others experiences.
John Hewitt- Read these postings and know that we no longer thing you are a “demi-god” as all of your minions make you out to be. You have done not one think to make me think you care about them. You give unknowing fools, like I was, lofty expectations, poor business advice and then offer to lend me money at gangster interest rates. Does it make you sick to know that hundreds of potential loyal followers are embarrassed to been have been bamboozled by you? It should. You could fix this by changing tactics but you won’t. It’s in your nature.
And what was the $29.00 Liberty Tax Fee that you charged on all bank products about? I didn’t see any emails about that. Money grubber.
I am not going to argure figures pulled out of the air with assumptions pulled out of the air for well know franchisees. Different franchisees have sat down and have different plans and different goals and have different amounts of cash reserves and credit lines. Once again the only reason to attempt to do that is to prove your point using half of the information or half truths.
If you were working at a factory making 80k a year and I gave you a choice between buying 2 homes and I was going to finance either one for you which one would you decide to purchase. One home is valued at 100k and I am going to sell it for 100k and the other is valued at 1 million and I was going to sell it for a million. We could argue all day that if I sold you the house for a million that I was not doing what was in your best interest and that I was setting you up to fail. Only till the true facts come out will we be able to honestly say which made more sense. I was going to sell you the 100k home and was going to finance it over 12 months. The 1 million dollar home I was going to finance over 200 years. Now with all the facts its clear which one was the best deal and there probably was no way you could of bought the 100k home but you could afford the 1 million dollar home easily. If you do not have the full story making a judgement on a situation is almost impossible.
I started with Liberty my first year with 4 stores. In reality 1 was an existing store and 3 were new. I was well capitalized for 1 maybe 2 stores but was not for all 4. I messed things up and made so many mistakes the first year that most would of never made it. After 6 years of owning a total of 8 Liberty Stores, I have sold several, I finaly figured out the entire picture and figured out what it took to dig myself out of the hole and have not only the Profit Margin but also the Cash Flow needed to make this work.
You state the model does not and will not work, You are wrong and it does work but it does take hard work and execution. It just is not a select few who figure out how to make it work either. I worked with alot of franchisees this year and everyone of them have been able to do the same thing I am doing. I saw more first year franchisees reach profitablity this year than I have ever seen before. I saw second year Zs who struggled greatly last year able to turn it around and either reach the break even point or turn a profit.
I have made a bunch of mistakes since I started with Liberty but can sit here and tell everyone that the mistakes were mine not Libertys. Liberty has afforded me the financial backing to live through those mistakes and press on. Not only me but they provide this financial backing to most Zs who operate within the system. Yes it is short term financing but it is better than having to shut your doors as you would with many other franchises.
Since many of the Zs I know and have worked with do read this discussion thread off and on I imagine we will at least get a more balanced picture of what is realy going on.
To all the prosepctive franchisees of any franchise and after reading a site such as this you start to doubt if you should consider a franchise let me share what I have learned from my personal experiences from all the businesses I have been in. This is not Pro/Con anyone or any company but something that all people considering buying a franchise or going into business needs to look at.
Before deciding to buy and brand new territory or area you need to see if that particular franchise has any existing stores or locations for sale by existing franchisees. Opening a brand new location in any business can be a ton of work and while it is the best option alot of the time there are alot of opportunities to buy an existing location and work the terms of the sale out to your benifit increasing the odds you can become profitable quickly. Remember price is not everything so be sure to evaluate everything as a whole. Terms of the sale sometimes can be a very big motivater to buy an existing operation.
First you have to develop your skills at evaluating an existing location and what you will have to pay. In so many instances I hear people say that they considered buying an existing location but since the current owner owed 100k and was not able to make it there was no way they was going to pay that much because it was overpriced and way too risky. But in reality as I stated in previous post unless you know all the facts and have the ability to evaluate the facts you may miss an opportunity. If the current owner owes the franchisor 100k this year and cannot refinance or spread these payments out. But since you purchasing the business would allow you to finance the 100k out over 3 to 4 years you need to evaluate how that would effect your profit margin and even more importantly your cash flow based upon those terms.
Many times a business owner can be in a tough spot owing money as in the example I just stated. While it could take the current business owner 2 to 3 years to reach the point of positive cash flow (You have to know the difference between Cash Flow and Profit) with the terms you would be able to get on the purchase you would be able to achieve positive cash flow first year.
There are many more reasons to consider and evaluate buying existing or new. If you do your homework and seek out the people who can answer your questions or teach you items that you do not understand, you can avoid the fear your going to be taken advantage of and be confident that you are doing the right thing.
Rob:
Reading your story, it’s clear that 1) you had a lot of prior business experience and 2) that you went through an incredible period of trial and error with multiple stores before you actually mastered this business model, and 3) you were well-capitalized enough to survive #2.
People usually buy franchises because they don’t have extensive business experience and they want to eliminate the trial and error of a new business start-up. That’s what Liberty Tax promotes and that’s what franchisees pay for. If you reread the excerpt from the Liberty website I posted and compare it to your account of what you went through as a franchisee, it’s clear that franchisees are being recruited with unrealistic expectations about how easy this is and how comprehensive the support is.
It makes one wonder why you aren’t upset that you paid for a plug-and-play system yet you had to go through years of trial and error. It makes me wonder why you are happily paying LT fees when you clearly could be working as an independent and pocketing the difference.
My guess is that you’re actually an Area Developer (or franchise salesperson) and that you make money not only from tax returns, but when people buy franchises. Good guess?
Once again your assumptions are incorrect and it seems like anything that is being said will be turned around to prove your point of view no matter what.
The reason I struggled the first couple of years was not because of a flawed system. Plus to add to that my business experience did not help me the first year or for that matter the second year as you try to imply. My business experience and my choice to follow my own way of doing business is what caused the vast majority of my issues. Yes Liberty provides a track to run on but it is still up to the franchisee to either stay on that track or venture off and try their own way of doing things and that is what I did.
My first year I was supposed to open 3 offices and the 4th was an undeveloped territory that I had to open within 2 years. I was advised by my Area Developer not to open an office in that territory because I had enough on my plate. I chose not to listen and located a location and made my case that it should be opened that year and it was approved but it was approved because I pushed the issue.
Looking back at that year I made multiple decisions when it came to pricing and to promotions along with other items that were not part of Libertys system and I was advised strongly against but because I thought I understood the marketplace better than anyone else, I went ahead and did things my way and it cost me alot of money, not only that year, but also several years after that. There were several different things that I did which looking back if I would of slowed down and read the operations manual and focused on it and not my gut feelings that would of saved me a ton of money. As with any franchise the franchisee is still the business owner and with that allowed to make certain decisions that may turn out to be very wrong and will cost them money.
What my business experience did allow me to do is to sit down and evaluate Libertys system and realize that I could follow the system and I could make a profit. I could do this even though I made a ton of mistakes of my own making at the beginning. Over the past several years I have seen many new Zs come in their first year and avoid the mistakes I made and either reach the break even point or make a profit.
As far as the accusation that a Area Developer is nothing but a salesperson and shouldn’t be trusted is just once again throwing facts out the window to try to damage someones character to prove your opinions. There are 2 types of Area Developers. One is someone who has invested their own money purchasing a region and in return for that investment, and that investment can be very very large, they are responsible for the marketing and sales of the remainder of the territories and also the support of all franchisees in that area. It is a business like any other business and there are different levels of talent among Area Developers. But I will say this, that they have put up a sizeable investment and the idea that all they have to do is sell territories to anyone who fogs a mirror to be succesfull and make money is just wrong because if the area they own does not perform it will hurt them tremendously financialy. The other type of Area Developer is an employee of Liberty who is in charge of a number of franchisees and who are required to follow very strict guidelines set forth by coroporate. Neither are just “salespeople” .
I will let other franchisees who have suceeded and happen onto this site explain their experiences with Liberty. There are plenty of happy franchisees out there and there are plenty that are very glad they made the decision to buy.
Rob,
I am a former HRB supervisor/tp and I have also been a Sch C entrepreneur. I believe what you are saying is true. HRB wasn’t “that bad”, but I didn’t know it specifically from an owner’s point of view. I do know the tax biz from an owner’s/entrepreneur’s point of view and after receiving my degrees in ACC and BUA, I am very intrigued by LTS. The company is growing, when the “Top 2″ faulter and LTS is growing, I have to wonder why… but I think I know.
This blog has been very helpful, but I agree that the majority of the complaintants on this blog are simply “passing the buck”. Perhaps they didn’t have experience or adequate counsel regarding the legalities of their contract. I will try not to make the mistakes they made, and I will consult legal advise with an open mind.
Thanks for the input,
llm
llm,
I think you pretty much nailed it. After being an entrepreneur for 18 years I believe that it is very easy to loose track of what is important in running a business and start to focus on all the extra bombardment of information you receive and instead of executing the plan that should be executed, you start to drift here and there letting things distract you from what you need to do.
I know if I could go back and uncomplicate my view of the business and just focus on the few main points I should focus on that I would of seen success much sooner. The tax business is fairly simple business and if you look at Libertys model and break it down, it is not that difficult to hit profitability and have success. I say this after 6 years of doing this so I understand it is much easier to say now. But I know for a fact that the tax business and that includes Liberty is a great business and the profit margins are there and compared to other industries are great.
I wish you all the luck in the world, no matter where you are or what company you are with, you experience success and you are able to pass that success on to others. Having the ability to help others succeed is what makes business so much fun and worth all the headaches.
On a site like this it is difficult to separate the bs from facts. The truth lies somewhere between the nuttier criticisms and the kool-aid drinking fluff.
Anyone who only charged $135 average in a high cost-of-living area (or any area for that matter) was not following Liberty’s recommended pricing. That’s a fact. And as far as the EAs and other firms people say chaged $125 on average, so what? H&R Block has the pricing power in this industry. Their average net fees are public record. A Liberty franchisee would be a fool to set their pricing lower than Block. Even in rural areas the average net should be at least $175, in average areas $200+, and in high cost areas like NY or Chicago, it should be over $300.
There is a fear new franchisees have that they will charge too much and get no business. It took me three years to figure out that I had to follow the company’s advice. Everyone thinks they know better. It’s human nature. And it causes failure. People who have to change the system according to their own thinking should not buy a franchise, they should just hang out a shingle and go on their own. To buy a franchise and not follow their advice is just foolish.
The person who claimed $350 for a “simple” return is nuts. No business could survive if it did that. Even in the highest net fee offices I’ve never heard of $250 for a “simple” return. Block charges 1/3 that for a “simple” return, so when you read nonsense like that just understand that it’s inflated hyperbole from a very disgruntled person. I’m happy to share honest information, but I have no patience for nonsense.
Joey you speak the truth, but I’m not sure your info regarding the price structure at HRB is accurate. As a former HRB Sup/Tax Preparer, I work for an accounting firm in MI where times have been rough. My experience over the past 5 years with this firm has been that the new clients that who have come from HRB are amazed that we charge 1/2 or less than they paid for their tax prep. Not to mention the extreme additional fees they pay to get RR.
I am in the process of acquainting myself with LTS, so I will judge them as I learn more. I’m not yet a franchisee, but I am interested. LTS has something the other 2 major brands are waning on or even lacking based on the recent reports.
HRB charges outrageous fees based on the expertise of their staff. Yes, patrons can request experienced tax preparers, but the “average Joe” who walks into HRB gets “part-time Patty”, who works nights at the local gas station. The hefty fees for “part-time Patty” do not correspond with her expertise or training. That’s what I know.
I just got back from Virginia Beach and the annual LTS convention. I have been a franchisee for 4 years, and worked for another LTS franchisee for 2 years before opening my own office.
I currently have 3 opened territories, 2 of which I started as undeveloped territories and one that was purchased from another franchisee who needed to downsize.
This was my first venture into franchising and I am extremely happy and glad that I chose LTS for my business.
I have been doing taxes for a number of years (having learned from my father in my teen years) and was planning on doing taxes as my “retirement” job. I could never just retire and sit around all day. This was very well thought out on my part. As I was approaching retirement I decided that taxes would give me what seemed to serve best for me….part time job leaving the rest of the year free to travel and do what I wanted to do.
I live in CA so I was required by the state to take a 60 hour course which I took through HRB (I had never heard of Liberty Tax at the time). HRB didn’t hire me (although I had the top score in the class) because I also held a full time job and couldn’t give them the number of hours they wanted me to work. It just happened that a friend of mine brought me a flyer from LTS as a new office was just getting set up next to her office. I called the number and the rest is history.
I tell you all of this because I was originally thinking of just doing my own gig. Hanging my own shingle as they say…but being a female, was not all that comfortable going to “strangers” homes to do their taxes, and even more uncomfortable with having people come to my home for me to do their taxes. I had not even begun to do research of opening my own office (non franchised) when I discovered LTS.
As Iook back, I can see I would have failed without the structure of LTS. Yes, I will admit it took me 4 years to actually have a net profit, and the cash flow is still the toughest part of this seasonal business, but I have a pretty good business sense, and treat my clients and my staff fairly.
I haven’t yet topped 1000 returns as I read in prior posts here, although with just under 900 returns in year 4 at my first office, I have been able to pay myself a salary (Liberty has never told me I cannot pay myself!) and pay all my bills.
I will agree that the 12% interest that LTS charges is a pain in my bank account, but I only use them to finance new territory purchases. I have decent enough credit that I was able to secure a small line of credit from my bank which gets me through the off season. I usually have it paid off by the end of February.
Other posts in this forum have mentioned “big bad John”. If it wasn’t for John’s experience in the tax industry and entrepreneurial talents, LTS would not be well on the way to being the #1 tax preparation company in the world.
Given the changes going on with the IRS and the upcoming requirement for all tax preparers to be registered, and testing and continuing education requirements it only points to the difficulty mom and pop’s are going to face in the future.
I am glad to pay my royalty fees to be on the cutting edge of what is happening and being in compliance with these changes. I figure if I didn’t have LTS Corporate on my side to assist me with keeping up with all of this, I might have to spend far more than 14% of my net fees to an attorney to make sure I was in compliance.
I realize this thread was started by “unhappy franchisee’s” but agree with some of the other comments from happy franchisees. If you fail at this, or any other business, take a look at what caused the failure. Is it because you EXPECTED to just throw your money at a franchise and it would be GUARANTEED to succeed no matter what you did (or didn’t do). Success takes work, success takes knowledge, success takes time. Take responsibility for what really caused you to fail, and stop blaming everything on LTS. LTS gives you the tools to be successful, what you do with the tools will determine your success.
I’m a 5th year zee with Liberty Tax. I have 2 offices, one is a 5th year and the other is a 3rd year office. Bought a 3rd territory this year to open a new office. All offices have been in undeveloped territories. Back when I started I had all of $500 saved up in a checking account. Other than that and good credit, I had to rely on a lot of determination and grit. I wear the costume just about every day from Jan 1 through the first peak. At least I didn’t have a life savings to lose.
Negative Nancys will certainly scare you off. You just have to realize that some of those folks will either always be a negative nancy, didn’t have it in them to wear the costume, or in some cases, just didn’t make it and want someone to blame for their failure. Granted, I don’t know what it’s like to throw in the towel and accept losing my life’s savings. It would be a bitter pill. And then to be sued to boot.
Yes the LTS system is far from perfect. Even John Hewitt has flaws, and he’ll even admit to having flaws if you ask him. AD’s can be a limited resource. As soon as I realized that I moved on. Even after finding myself crying under a desk at 2am during my first tax season and asking myself what had I gotten myself into, I still love every moment of my experience. It’s been worth every penny.
I’ve enjoyed reading this forum. This past week marked a pretty big shake up in the LTS system with a top franchisee being forced out. That’s what brought me here. I hope and pray the best for her.
As for the miserable, well, they love company. I’d rather not join that club. My business is good. I never could have 0succesfully started this buisness on my own without Liberty Tax.
Twelve percent simple interest? Crying the blues over 12%? It’s the transaction fees that will get you, not the 12 percent simple interest. Hopefully you can figure out what that equates to in an APR calculated daily.
If you can do things better, than by all means.
I’ll just drink some more of the Kool-aide.
Good luck.
P.S. – if you’re wondering if I’m profitable. The answer is yes. I’ve been profitable since year one. Year one was rather modest, and wasn’t enough to live on or pay all bills, but we’ve made it even with all the mistakes I”ve made. One mistake I made was I didn’t start taking corporate financing soon enough. It was after our 4th tax season that I was able to take home the same amount I took home from my old job, which was $40k/year….and I’m talking my net check. My household runs on $2500 per month. We lived paycheck to paycheck then, and live paycheck to paycheck now…..and it’s hard when you only get paid once a year. But that’s what has made us that much better. My next goal is to completely pay off our house in a tax season and then live on a home equity line of credit the rest of the year. We’d save about 6k in interest alone on the first year.
There’s no such thing as a sure thing. Plug and play? Now that was funny.
PPS – I’ve been doubling my AGI for the last 3 tax seasons. I’m hoping to continue the trend. It’s easy when it goes from 15 to 30.
“This past week marked a pretty big shake up in the LTS system with a top franchisee being forced out.”
What happened? How can they force a top franchisee out? Why would they want to?
JDogg: you’ve so contradicted yourself on how wonderful Liberty is. I mean if they are so wonderful then why in the World are they forcing their top franchisee out? It makes no sense to get rid of your top producing franchisees.
Anyone with any shred of common sense knows you don’t get rid of your top franchisees, then again, I heard that this year although Liberty may have grown in number of returns there offices didn’t generate the kind of revenue they were once known to do and in fact there once top producers were down in revenue. Again this goes back to Liberty is only concerned with # of returns and not necessarily the franchisees making money. Afterall, John’s goal is to be the” #1 tax preparation company in the Universe” notice how nowhere in his goal does it say “#1 profitable tax preparation company in the Universe”.
But like “Guest” I am curious to know what happened, how they forced this top franchisee out, and why they would want to. Additionally, why don’t all franchisees know about this and how do you know about it? (I mean my sources didn’t know about it, and they are usually very well informed).
OMG! It’s Annie Fuller!!!
She is/was a Top Gun Franchisee. She was paraded around as the most successful franchisee in Liberty Tax Service. The would have franchisee send there staff to train with her.
Why in the World would you force out your Top Gun Franchisee? Come on Annie Fuller! She was there best marketer and franchisee. I don’t understand.
How do you know it’s Annie. Not mentioned above.
There is a ton of information being said that is all just guessing and assumptions. No one will ever know what the real story is because Liberty will never speak about it.
Annie had the potential to ge a great Z but to say she was the most succesfull Z ever is an overstatement of gigantic proportion. Annie had a ton of potential but that potential was never allowed to grow into anything because she was contracted by Liberty to promote and train. Instead of being a Z she never was able to do what a Z should do and thats run their business. She was expected to say certain things and do certain things to maintain her posistion which in the real world she would of done differently especially when it comes to her business.
The people stating that no one can make money and stating that any one who claims to make money is lying is just old. Liberty Tax is one of the best opportunities out there today and the positives far outweigh any of the negatives. Now being honest there are a ton of Z who have not got the ability to capitilize on the tremendous opportunities because they are compeltely lost with all the drama and story lines. They allow all the talk to confuse them to the point of ruining their own buisiness.
Liberty Offices can ahcieve very nice profit margins and just as nice Cash Flow. Liberty is one of the few franchises that offer financing to its Zs and while it is a little high considering business loans are not available anyplace especialy if you need the money, it gives Zs who understand business the ability to grow without putting their own cash in the game.
Everyone can sit around and create a stir about things they will never get the full picture on or they can determine to run their offices and figure out more and more effecient ways of doing business. All the drama and all the stories will get you no place and will do nothing but confuse you and ensure you never reach the success that you could.
Her name as well as what happened is being posted on other websites by existing franchisees whom ate upset the darling of LTS has been forced out.
How did Liberty Tax force franchisee Annie Fuller out?
Have they done this before to others?
This was posted on the everyjoe.com website 3 days ago:
I just learned of Liberty tax services #1 Record holding, top gun most outrageous marketing queen who was super successful, taught thousands of us to do what it took to be successful is getting out. She is spreading the truth about John Hewitt and Liberty tax. DO NOT BUY, DO NOT EXPAND.
I am a current zee who was about to open up 2 more offices and use Liberty;s financing. I now am goin to do everything I can to get away from this company after listening to Annie Fullers story of how even SHE, this most giving and positive person has been treated by John Hewitt. They lied to her, stole from her, and are now forcing her to either take Tiny Peanuts for her valueable stores (liberty says you’re always building equity, but apparently only if john hewitt agrees), or go into more debt.
If you’ have ever read John Grishams Book “The Firm or seen the movie.. Annie Fuller is the John McDermont of Liberty tax. as the one they paraded around, used and used for her talents, which they naver even THANKED her for, sent thousands of people to shadow her every day for two years, cost her money out of her own pocket, was never paid or reimbursed.. they are now treating her like garbage and I for one find it repulsive. John Hewitt. Pay attention. I am one of MANY people who are grouping together to stand up for her. She will not stand up for herself, so we will.
The stories on this and many other websites are true. John hewitt you need to do the right thing, you need to listen to myself and everyone else who will soon be writing all over the web.
We are contacting the national media to give them the truth.
Others who fail in this company are told they didn’t follow the system, they didn’t market etc etc.
Well John, Liberty, you all can NEVER say this about Annie Fuller. She is what we ALL strived to be like.
How DARE you treat your best people like this.. for us small time zees who aren’t Annie Fuller we have NO, ZERO hope of ever making it.. I KNOW what you all offered her. Pathetic. John you are a theif, a user, a womanizer. You took a talented girl, used her up burnt her out, and she still gave more. Now you throw her away. This impacts us all. she was and IS an inspiration to all of us and now she’s gone thanks to you’re unethical and immoral ways. Shame on you. wake up Liberty zee’s The real truth is scary. We have all been had.
I’m getting out too Annie. I hope you read this and know you’re not alone, there are many of us here to support you and stand up for you!
Thanks for aLL your help over the last few years, you are truly one of a kind.
SteveG: it is obvious from your responses you are a plant from LTS. I mean to say that Annie Fuller is not/was not successful is an understatement.
For anyone in the LTS circuit, who knows. Annie Fuller was the darling of LTS. She was paraded around as one of the successful franchisees and AD. What I know is that Annie’s stores where high RAL (just like my stores) and that as such if she took any financing from Corporate that would mean she had very little cash to go around because alot of people chose this season to have there preparation fees deducted from there refund. Especially now in this economy and I’m sure LTS withheld alot of her money and questioned them on it. She grossed over $700k in revenue not bad huh? But when LTS withholds a chunk of it and you still have to pay your bills and staff and other things, and then find out LTS won’t finance a whole lot for you anymore, you start running into cash flow problems. No one can say she didn’t follow the system, NO ONE!!! She not only followed it she perfected it!
But as I said before and many of us here in this forum the minute you start questioning John Hewitt and his minions and their business practices, that’s it you are out… And look how quickly and quite suddently LTS turn on you, then when the true story starts to come out they start sending people like SteveG to say that nope it was the franchisee not John or his minions.
I feel for Annie Fuller, I truly do; the fall is always harder the higher you’ve climbed and she was up there. She was on every single conference call this past tax season, speaking about how to market, when, where etc (EVERY SINGLE CONFERENCE CALL) that she is now being labled “not as successful” and “she had potential” is truly a shame. Because for 4 yrs she was labled by John and his minions as successful and not just full of potential she was the potential this is the person they (John and his minions) wanted each of us Zees to emulate. To see her start the same journey as those of former Zee’s is really truly sad. I really feel her and her family and for those remaining Zee’s that will undoubtly be shocked and suffer the loss of Annie Fuller in the LTS system.
John and his minions are selfish and are only interested in one thing and one thing only. THEMSELVES!
Everybody says she’s such a super marketer. What accounts for all the consumer complaints about Annie Fuller on the Internet?
http://www.ripoffreport.com/income-tax-service/liberty-tax-annie-fu/liberty-tax-annie-fuller-ow-2d95f.htm
http://www.ripoffreport.com/income-tax-service/liberty-tax-annie-fu/liberty-tax-annie-fuller-is-4668m.htm
Are these her Liberty Tax locations with a BBB rating of “F”? And the same Liberty Tax location is listed on the TN state attorney generals “Buyer Beware” list?
http://tn.gov/consumer/documents/BuyerBewareList_004.pdf
http://www.bbb.org/chattanooga/business-reviews/tax-return-preparation/liberty-tax-service-10009-in-chattanooga-tn-40050203
What am I missing?
I have been out of LTS for a few years now, but the negative information posted here still rings true. All of the people who post that the failures in LTS didn’t follow the system, or weren’t good business people, or didn’t put effort in are dead wrong and full of garbage.
I bought in and followed the system (despite my AD not doing a thing), had my waivers, did marketing constantly and even got free radio ads for my area done…lost over $250k in running the business and my initial investment over 3 years. I am currently a successful business person that runs a small company and is not afraid of hard work, so don’t give me the stuff about you can succeed if you try and follow the system.
Sure there are a few success stories, even a blind mouse finds cheese every now and then. John made a lot of personal promises as did his AD, but when I needed help to try to make it work, his manhood seemed to escape him and I never heard from him again. His is not a man of his word and I have no respect for him.
In the real business world, deals are made and discussions are had to benefit the whole company. LTS will throw you away as quick as possible so they can re-sell your territory to the next wide eyed person who buys the snake oil. They like to tell you in the sales pitch, work 4 months out of the year and make $100k. If you want $200k, then get two territories and so on. I knew coming in that it was a gross number and not a net number, but alot of my fellow trainees didn’t. I came in expecting to net about $25-40k per store (after two or three years, not up front) and build up a few over a 5 to 10 year period. Problem is it cost so much money to run the store, after 3 years my losses were to big to recover from, especially owning multiple territories up front (which was a big mistake I made thinking that would work).
The only people making money off LTS are the corporate executives. Look at the past 3 years jth financials and you will see net income of over $44 million along with stock options being granted to executives. Get the picture that execs are making money off the zees backs (which is why you are responsible for marketing your own territory, no out of pocket for the corporation). You can be more successful by getting a job, working hard, and climbing the ladder the old fashioned way. If you invest your money with LTS, you will be regretting it for years to come.
Come on “Curious” even Hewlett Packard is listed on that Buyer Beware List along with other very large and well known companies.
In the retail tax prep business (in any business in fact) your gonna have customers complain, most of them are going to want there money back or say you didn’t disclose proper information thus wanting there money back. And most of them will want there money back after they find out that their friend got there taxes done cheaper by someone else. And personally I don’t believe in getting your money back or a free anything for all complaints. Some yes but not all especially in the tax business.
Finally, this forum isn’t about whether or not Annie Fuller was a good franchisee, or for that matter whether any one of us was/is a good franchisee. It’s about whether or not Liberty Tax Franchisees (former and current) are happy.
And as a former franchisee I can tell you I was never happy with Liberty Tax Service they lied from the start about everything, and then tried to say it was me that I misunderstood, well I know for a fact I didn’t misunderstand because other franchisees (current and former) have told me that they were told the same things.
All I know is that Karma is GREAT.. She will one day appear to collect her debts. And John Hewitt and his minions have there fair share coming to them, because she (Karma) knows all they have done.
Bankrupted:
Did you read this complaint on Rip-off Report? It’s one of three specifically about Annie Fuller
http://www.ripoffreport.com/liars/liberty-tax-annie-fu/liberty-tax-annie-fuller-o-26edf.htm
The customer alleges that Annie Fuller’s Liberty Tax filed her tax return without her knowledge or signature. After she complained, a company investigator named Amy called her. The customer found out later that “Amy” was allegedly Annie Fuller posing as an investigator from corporate.
Two others allege overcharges and deception. Check out this one because it appears she humorously (unintentionally) proves their point by posting comments as both herself and happy customers attesting to her honest character – only it appears she didn’t realize her screenname (Getyurgun) would appear on even the phony comments.
http://www.ripoffreport.com/income-tax-service/liberty-tax-annie-fu/liberty-tax-annie-fuller-ow-2d95f.htm
Comments under that complaint also include one from an alleged ex-employee describing how they hid deceptive acts from corporate at her direction.
Could it be that Liberty Tax was not forcing out an innocent blue-eyed darling but was cleaning house of someone using deceptive and fraudulent practices? Just curious…
Looks what’s happening in Pittsburgh, terrible, absolutely.
Like most of the people on here I was envolved with Liberty Tax Service for 4 years and have had a similar experience. It was my decision to purchase the franchise and I failed to take into consideration that there was no brand recognition ( in my region), no corporate commitment to any regional or national advertising campaign, and their business model was modeled after Jackson Hewitt and better suited for the urban enviroment not for the location I was planning to open in. While my business did fail, I showed continued growth in both number of returns and net fees each year but just not enough to overcome the expenses and the built-in royalty fees associated with being a franchisee. My point on posting here is to let other potential franchisees know the truth.
As stated, the corporate office does not believe in a national or regional advertising campain. So I find it somewhat hypecritical for the company to run ads on CNBC hawking the purchase of a tax franchises, when they where unwilling to do any advertising for their franchisees who pay them a royalty and advertising fee. The company is dependent on the sale of franchises to provide needed cash flow. evident by their financial statements.
I don’t know if Rob, Jdogg and Dawn are company plants, but the timing of their comments and how their comments read like infomercials leaves me suspicious. Remember that during the off season is when JTX Inc. markets and sells its franchisees. Also Rob never answered the question whether he was an AD and in one of his first post states: “This site and these comments are just downright sad. For anyone looking to purchase a franchise please do not listen to these people because these same people will fail at most things they try in life.”
For anyone looking at buying a tax franchise pay attention to moneypit’s comments and analysis. He is giving you an accurate read of what is needed in terms of tax return volumn, pricing and the cost of running a seasonal tax office. If you already have the tax preparation knowledge you might ask yourself why you would need a tax franchise, if you don’t have the tax knowledge or don’t thing you have the ability to market your self then you should ask yourself which tax franchise gives me the most for my money. Who has the most brand recognition, which one is right for the demographic I’m trying to market too, Do they have any kind of regional or national marketing campaign. .
What’s happening in Pittsburgh?
Anyone who listened to (wish I had taped) any of the Liberty Tax conference calls with Anna Fuller speaking about marketing tactics knows she is a loss cannon. But this kind of agressive marketing behavior is encouraged by Liberty. On one such call Danny Hewitt talked about sneaking into a hospital to hand out coupons in the Liberty custom.
When you have this type of corporate culture encouraging franchisees to challenge and even disregard rules, would it be a suprise to anyone if there is some sort of IRS investigation going on regarding her tax practice. Liberty is dumping her so they can protect themselves. Currently the laws are written to protect the franchisor from liability resulting from franchisee behavior.
bill wrote that “Anyone who listened to (wish I had taped) any of the Liberty Tax conference calls with Anna Fuller speaking about marketing tactics knows she is a (loose) cannon. But this kind of agressive marketing behavior is encouraged by Liberty.”
Here’s Annie Fuller explaining how she sneaks brochures into schools by acting as if she was expected:
“My method I used successfully was to walk in looking worn out and say “I’m sorry I’m so late with these, I didn’t realize how many kids were in our neighborhood”. I then drop a stack of the well designed booklets on the counter at school, daycare, church, the Ymca, etc. They will have a bewildered look on their face and will say something about they dont know what you’re talking about. ACT SURPRISED! “Oh gosh, its a city wide contest for all children, and we promised we wouldn’t leave anyone out, I’m so sorry again for getting these to you so late I know we were suppose to have had them to your kids yesterday, last week something…” http://www.shoppfm.com/MDFA
While this might not seem like a huge deception, where do you draw the line? When you do business as if the truth is just a tool to be bent and shaped to get a sale, doesn’t the line gets blurrier and blurrier til its impossible to find?
Do you think Liberty Tax corporate is to blame for encouraging franchisees to do whatever it takes to get the sale? Or did Annie Fuller just take deception to the extreme beyond what LT condones (or says you can get away with)?
La Libertad: Your questions are where the problem lays in… Liberty DOES ALLOW this behavior, otherwise she wouldn’t have been on practically all their conference calls. Now that she’s had a falling out with them over financing (money), now the Corporate plants come out that she was a deceptive marketer and this shakedown isn’t about money (but you know its always about money, ALWAYS)…
I’m of the Common Sense philosphy, so common sense tells me this: Liberty lost there deceptive law suit in CA on or about Dec 2009, if Liberty was so concerned over deceptive marketing practices why put her in practically every conference call from January 2010 to April 2010 and then have her be a guest speaker (or so I was told) at this years’ convention? Makes you wanna go hmmm doesn’t it?
Also, why would Annie not fight to keep her territories if all we are talking about is marketing practices, nah, this shakedown smells of money to me all the way. I don’t care what the plants say…
For anyone wanting to buy into the Liberty Tax franchise I say WALK AWAY. Don’t listen to what they tell you, if you do I we will see you in a couple of years in this forum saying what some of us here say “They told me not to do it, I still did it, and look at me. Look at what John and his minions have done to me.”
I too have the same issue. Pretty much bakrupt after trying to make this franchise work. I know 3 other franchisee’s in the same cituation. For years the only ones that have made money is LTS and the people I hired to work. My losses are big and I have lost all my investments.
Annie Fuller got everything she deserves. She is fake, pretend, a scam artist, disloyal, dishonest and truly a crook. If you feel sorry for her, you are sorely mistaken.
… and then they started to eat their own. Fact is that LIberty in its desire to sell more franchises built Annie into a great success story. She has become the face of Liberty to many franchisees- so when you speak of her you speak of yourself.
Bottom line. This is a franchise that does not care about it’s existing franchisees. John Hewitt said towards the end of last year that he wanted to work with our existing franchisees but he has not changed anything. They still lie or mislead, still put their franchisees in a position where they have to borrow more, still won’t let franchisees out from unopened stores. He is a fraud until he convinces me otherwise and he has not done ONE THING to give us any indication otherwise. 90% of the franchisee base would likely leave if given the opportunity to recoup 50% of their investment. I know I would.
I’m a 1st year Liberty franchisee….just finished my 1st tax season. I was laid off by my prior company after 20+ years May 2009. After realizing I couldn’t find the same type of employment in the IT world, I started investigating small business & franchise ownership. I researched 8 franchises and with the help of a franchise consultant chose Liberty Tax. Using much of my severance $$ from my prior company, I signed last September for 1 territory. I didn’t require any financial assistance from Liberty.
Obviously, being new to the Liberty culture I can only offer a 10 month evaluation. But so far so good….. I’ve been pleased with my experience. My 1st year I will turn a very small profit with $80k net revenue and am very encouraged about next season.
Some observations:
1) Research, research, research your territory / store location. The #1 success factor in my opinion. Understand your demographics backwards & forwards. I spent 3 months & drove over 2000 miles (seriously) before deciding on the right territory & location. I know a couple of new franchishees who did not fair quite as well their 1st season & believe it may be due to their location not their abilities.
2) Attach yourself to the top franchisees and become a sponge. Every top franchisee I spoke to was ALWAYS willing to share their successes and help me succeed. I called a couple more than I should’ve especially during tax season.
3) Follow the system. It sounds cliche but utilize your AD, the corporate manuals, conference calls, processes, intranet, etc… I didn’t know any better, so I tried my best to do exactly what I was instructed to do.
4) Hire strong people. I was a manager in my previous life and building a strong team of preparers, marketers & wavers was crucial.
5) Embrace the costume. There is strong brand with the statue of liberty costume at least in my territory. I often wear the costume and sets the tone in the office….not only with my employees, but with my customers as well.
Overall I’m hoping to expand after next season. We’ll see. I may be naive and impending doom is ahead. All I can say is that I don’t see the stormy skies yet and will head down this path as long as possible.
To Rob et al;
I currently own a franchise territory in a major city in the south. I went into this with a wealth of experience in marketing and sales, including real estate. I too got laid off, and decided to be my own boss.
Here is what I experienced. Hopefully it will give better insight into why some fail and others don’t. In the city where I am located, you can get to any of 5 other Liberty stores within a 10 minute drive. The rents are between $2500 and $3000 per month for store front locations. The average # of returns for the Liberty offices in this area is around 300 with the average fee at $210. Figure it out for yourself. $60K in net revenue, less $15K for wages, less $15K for marketing, less $30-36K for a location. Liberty’s answer is to resell the territories to someone else. The fact is, as Liberty has added new locations, the number of returns has not increased, essentially dividing the pie into more pieces. There were stores doing 900-1000 several years ago, and those same stores have dropped to the average 300 level.
If that sounds like viable business to you, I have a territory that you are welcome to purchase. I suggest that there are significant management issues in this organization, the first being that they have allowed their Area Developers to get too big and are afraid to challenge them. Second, the customer base that their advertising appeals to which is the EIC customer, is also being hit from all sides by a ton of competitors making it difficult to get the message out. The third is that they consider their franchisees a curse rather than embrace them and help them grow. I think with proper management, this organization could grow and succeed, but it will not happen with the current regime.
Just finished my 4th tax season with Liberty, 5 stores all profitable. I am starting to see that some new Zees took financing to buy multiple territories right from the get go then had to make huge interest and principal payments over the years. If that’s true then how can you blame LTS for that terrible financial decision.
I bought one territory and built up from there, only using financing for short term gaps in cash flow.
I hope that if you are paying 2500-3000/mo for rent the store front location you are in is A+ in terms of parking, location, and visibility because if not you made a poor decision in renting it.
The other funny thing I read was how people are mad Liberty corporate doesn’t kick in more advertising money, find me a franchise out there that the franchisor puts money in the advertising fund.
All the advertising you see from the big franchises are contributed from the franchisees, I can tell you for a fact Subway doesn’t contribute a nickle to help build awareness or drive customers to their doors, its the franchisee’s money.
And lastly, Liberty Tax is what you make of it. I have on multiple occassions bought out an existing franchisee, stayed in the same location or moved within the territory and had results of +101% and +42% respectively. Obviously there were some flaws in the previous Zee’s methods.
To NJ Zee: you must be one of the lucky ones in NJ. Much luckier then the two franchisees who’s territories you took over. .
Your comments:
;”I am starting to see that some new Zees took financing to buy multiple territories right from the get go then had to make huge interest and principal payments over the years. If that’s true then how can you blame LTS for that terrible financial decision.” and “I hope that if you are paying 2500-3000/mo for rent the store front location you are in is A+ in terms of parking, location, and visibility because if not you made a poor decision in renting it.”
The idea that LTS would sell someone more territories then they can financial afford, speaks to the fact that Liberty is in the business of selling franchises and doesn’t have the franchisees best interest at heart . The comment about store location, isn’t your Area Developer suppose to guide you with your site selection? Unfortunately the support from the AD is non-existent with the exception of trying to get a location near an H&R Block or Jackson Hewitt Franchise and to tell you how your not following the system.
All these franchise owners that say LIberty has been good to them or it’s a great franchise are all liberty employess people!! liberty is a bunch of bull! they lie to you at the convention to make you think this is great! What about gorilla marketing? bunch of bs! Rob telling everyone it’s great! yeah right! they say you’ll make a fortune.. after all the expenses and obligations your left with squat! don’t do it! I wouldn’t recommend it to anyone!!! the worse franchising company in history! charging you marketing fees? FOR WHAT? I HAVENT SEEN THEM IN ONE NEWS PAPER OR TV AD OR EVEN RADIO! HR BLOCK AND JACKSON HEWITT DOES IT! #3 BEHIND MCDONALDS BECAUSE OF SWINDELING PEOPLE INTO SIGNING UP AND GIVING THEM WISHCOME! (NOT REAL INCOME) THEY SHOULD BE CALLED SCAMSATIONAL TAX SERVICE!
To NJ Zee:
It is good to see someone who has done well. Fact is, LT has a huge franchisee fallout. Right now they are offering an $18,000 referral bonus. That tells me they are struggling, and for good reason. They are an immoral organization. John Hewitt wants to be #1, and is willing take any or all of his franchisees to the cleaners to get there. Read your franchise agreement. LT can suck you dry, and owe you nothing. You are required to be open their defined hours even if no one comes in, you cannot close a location even if it is losing money, you are required to pay their minimum royalties, even if you have to move a location and start over, you are required to pay IRS fines and penalties even if they were created by a former franchisee owner. If you finance through them and fail, they will come and take everything you have even if you declare bankruptcy. This is a one sided agreement that has no upside. As others have said, this is not a good organization to be connected with.
All franchise agreements are one-sided.
The referral fee is $3000 for referring someone who becomes a franchisee. Where do you get your facts from?
The problem is that every year more people do their taxes with TurboxTax and other online software so the retail offices are competing for a shrinking pool of customers
Sure some have went to Intuit or free file programs but there is no mass rush where the paid return market is shrinking where it is going to put all tax preparers out of business. The industry is changing but with change also come opportunities.
Depending on the tax code and current IRS conditions along with economic conditions will affect these trends and they will go both way. If you are operating a strong tax office and providing professional services these ups and downs in the industry will not affect you or if it does it will not be to the point of putting you out of business. But if you have depended on nothing but gimmicks and lets take JTX as an example put all your eggs in one basket and depend on “Money Now” products and not professional tax preparation than you set yourself up to be impacted much more.
Also as regulation comes into the tax preparation business their will also be consolidation and a shrinking number of preparers so anyone who is able to offer their services and provide the right value proposition to their clients will be able to not only make it but will be able to excel.
NJ Zee;
I have an email in my inbox that shows that you will receive $18,000 if you get someone to purchase new not existing territory.
Rob:
The fact remains, you are being robbed by an organization that is doing nothing for you. The software is difficult to use and prone to preparers making mistakes, technical support is tasked with getting rid of questions rather than answering them, the one size fits all marketing program is good for very small segment of the population, and there is no support in your local area for anything. And for that you pay 19% of your gross, not to mention if you finance with Liberty, they charge you 12% interest. And you call that a quality organization that is looking out for their franchisees, you must be kidding.
Why do people continue to see the need to blame Liberty? Doesn’t each person make a decision prior to paying Liberty a dollar whether or not they want to open their franchise? Everyone (prior to signing the agreement) is aware of the 19% royalties, so why do people choose to complain about them after opening their store? The same is true for the 12% financing fees. I am going into my third season next year and am going to operate at a 30% profit margin. To me, that is a pretty succesful operation and I am certainly not losing money. I believe there are over 3,000 Liberty stores in the United States. If people weren’t making money, there wouldn’t be that many stores!
You know Mike trying to point out the obvious here and trying to speak and be a voice of reason is not what some of the people who are complaining wants to hear. They want justification that it was not their fault they failed and they do not want any kind of evidence anyone has succeeded because it ruins their conspiracy theories. Yes their are some who failed and they are truly seeking answers but others just want to drag as many down as they can.
NJ Zee has laid down the facts that I am a victim and I am getting ripped off…lol…yet very few complaining here have taken the time that those of us who have made it took to actually learn this business.
This business is getting ready to enter one of the most exiting times since the Block brothers started doing taxes!!! Yes I pay 14 percent royalties and yes I pay 5 percent Advertising Fee and I am not complaining even a little and paying them does not stop anyone from attaining 30 percent to 40 percent profit margins. It is a business and as with any and especially with ones that grow quickly some will fail and some will excel. But anyone here can attack me if they want and honestly I am used to it. I have never received a paycheck as an employee or contractor from Liberty Corp. and I have been there for almost any Z who has came to me for help and a great many I have supported throughout the year are well on their way to being a huge success!!! I helped them because that is the culture I believe in and a culture that a ton of other Zs believe in.
Mikes post is dead on and he is as honest of a guy as your going to find!!!
Let’s be REALLY honest here.
1. When you sign up as a franchisee you virtually don’t hear from Liberty!
The sales people have done their job and now you have to wait for Liberty. Calls to them or your AD’s will cast you as a troublemaker. Let’s face it. You signed the paperwork and now you have little recourse. If it wasn’t for the help of several other nearby franchisees I would have been toast!
2. Rob and Mike are lovers.
Rob:
Are you telling Mike you don’t want suggestions, just a BITCH session. That’s what I’m hearing and that’s why I put the site to my SPAM. (I can monitor the situation, but I’m checking it less & less often). A Victim…wow., are you like a
“mooney” that blindly followed some wayward evangelist? Really? At what point did you become unable to chart your own destiny? That would be helpful to me. I’m a new zee. I haven’t officially chosen my territory, just got back from EOT.
So Rob, please, in this unhappyfranchisee.com website, explain to me what you believe was wrong with the system and how it can be improved. Please admit your shortcomings and teach me, if you want to make this a reputable site. I truly am only gaining info. I am not judging you for your failures, simply seeking information. I wish you success in life and in the future too.
Thanks,
LLM
Frustrated and Disgusted:
Wow, that’s a horrible story. And you were in the biz for some time. Share with me your suggestions about B2B and your experiences. Seems you have alot of experience. I would love to hear your ideas of the best of Liberty, along with what appears to be the worst.
Thanks,
LLM
LLM, I am completely lost at what your question is and what you think Mike or I was speaking of? Both Mike and I are very succesfull Zs and your attack on us on what you think your reading is quite funny yet still scary. I was rebutting NJ Zee statement that I was being ripped off and was not agreeing at all. Hint….Not everyone posting here is unhappy some are attempting to get the truth out….Light Bulb Moment? Where did I give you the idea I failed? Someone forgot to tell me? If I had knew I failed I wouldn’t be expanding…..Trust me Ive made a ton of mistakes and I take full responsibility for my mistakes and furthermore my mistakes have gave me the ability to be succesfull in this company.
I suggest you go back and read my previous posts and if Mike had posted any other. I am guessing you have misread or misunderstood both posts and are attacking us for misguided thoughts and because of a lack of understanding of what is being said. Trust me LLM, Mike is not a follower and neither am I and I suggest you need to work on understanding and putting post in contexts before attacking people, especialy ones who are as pro Liberty as they come!!
Rob,
Can you please read my post and point out where I said you were being ripped off. In fact I wrote my post about the success I have with Liberty and about the realization that some people make terrible choices and then blame LTS.
Rob I think you wanted to rebutt Frustrated and Disgusted and mistook his post for mine. Please refrain in the future from lumping me in with the people who post their failures on here. Truth is I don’t care if any new Zees ever join Liberty, I am growing my business one new office at a time.
LLM, ok I re read your post a couple more times and I now understand that you thought I was disagreeing with Mike….LMAO….The first two paragraphs of my response was sarcasim!!! Mike understands very well what I meant and Mike and I are completely on the same side. And no I did not fail..lol…and no I am in no way a unhappy Z, I am one Z who thinks this industry is going through the most exiting time ever.
NJ Zee you are correct and I misread because of the way the post read. That is my bad and I do appoligize. Frustrated had responded to both of us and I mistook it to be your post. My Bad.
Rob,
You have been forgiven.
Thanks Rob.
People trust you guys to do their taxes? Seriously?
LLM:
It has been pointed out to me several times that Liberty is not interested in changing their way of doing business. It works for enough franchisees, that they have no interest in other points of view. Unfortunately Liberty will continue to see fallout in many areas because they are not willing to adapt to changing conditions, or other types of areas that do not fit their “mold”, so you will continue to see the postings like the ones above. All I can say is you can either go to Vegas, or buy a Liberty franchise, as your odds are about the same.
Tony – To be honest I would certainly have to disagree with you on Point # 2 as it doesn’t even make any sense. As to Point # 1 part of the reason that I have been successful is the fact that I have met may great Zees that have been willing to help me along the way. I wouldn’t have received that support if I opened up an independent shop and to me the network I have developed with other Zees is invaluable to me. As to your comment that Liberty Corporate provides no support I would have to disagree with that as well. In fact, I have had multiple dinners with John Hewitt (the CEO) and I only own one store at this time. People at Corporate are responsive, you just need to know the right ones to reach out to.
As far as other comments about Liberty being like going to Vegas I would again respectfully disagree. Too many people want to blame Corporate for their failures and fail to take their own responsibility to not performing well. Rather than complaining about how you have not yet succeeded I suggest you spend some time focusing on your business.
Troy:
We need to stick to the point here. Are there successful LT’s out there? The answer is yes. But there are a ton that have failed. If you are reading this and thinking about investing in either LT or some other franchise, what are your chances of success ? Not high. The idea behind franchsing is to lessen the chance of failure. LT’s philosophy is like yours, you must not have followed the plan. Well I can show you four stores, owned by four different franchisees that are for sale because they cannot get enough business to continue. Are you going to suggest that none of them followed the plan? I can also show you failed stores that were owned by Top Guns who couldn’t make it. Are you going to tell me they too did not follow the plan? The issue or point here is that too many fail, and all LT does is resell the territory. The next franchisee fails and they sell it again. Does LT do a good job of understanding why, NO. There are some very fundamental issues that need to be addressed at LT to make this a good investment. Right now it is not. They understate the start-up costs, they overstate the number of returns to expect,, and give little to no support from corporate or otherwise. Look through these postings and read the thousands of $$ that have been lost by people trying to run these businesses. The losses are staggering. Are you going to tell me none of them followed the plan or were all poor business people ? Give me a break. Stop drinking the kool-aid and the next time you have lunch with JH, ask hiim why LT is not addressing the high failure rate of their franchises. His answer will be they didn’t follow the plan. Well I can suggest that there is a lot more to it than that.
You need to put things into perspective. The failure rate on small business owners in general is extremely high. When someone opens up a business there are clearly risks involved in it, whether it is a franchise or not. The bottom line though is that the business owner chose to open up his/her business. Nobody forced their hand to open their business. Just because you open up a franchise does not mean that you won’t fail – like any other business you are responsible for achieving success with that business. The same goes with Liberty. As it relates to Liberty it also depends on where the owner decides to open up their store which encompasses many factors (demographic opened up in, proximity to other tax stores, visibility of the store, etc). In addition to these variables however is the owner himself. Can the owner deliver exceptional customer service, did the owner hire the appropriate staff, is the owner properly executing the marketing plan. To single Liberty out doesn’t make alot of sense as their are failures every single day for all small business owners including franchisees. People need to take responsibility for their actions and stop blaming Liberty for their own failures and shortcomings.
Mike, You are missing the most critical element in your comment.
Small business owners open an independent nail salon, hardware or tanning salon. Sure they risk it all but those of us ALSO paid a franchise fee up to $40,000 ON TOP of our set up fees to receive the support and expertise to be successful. In addition to that we also pay 19 percent in royalties. That’s a BIG chunk of change that should at least ensure some high level of support. 19% DOES NOT PAY FOR THE BRAND NAME of LIBERTY. Which in itself is higher than most franchise fees. Please don’t compare to HRB or JH or Instant Tax as franchisee fees are based purely on the franchisor and clearly there is a sense of collusion here.
If my office makes $200,000 (making my one of the best offices in the country then I pay $28,000 in franchise fees to Liberty …. FOR WHAT?!! The software? Buy it direct for $1200-1900 for as many computers as you like. Apply direct to River. Chase etc.. for bank products.
5% for advertising? What frikkin advertising? Most pays for the marketing team at Liberty or Valpak/Advo which is just as cheap if you advertise with them yourself! I did!
What this forum is about is the INTELLIGENT decisions made by prospective franchisees to purchase a Liberty Tax territory. Both sides have to agree to that.
The following two tax season determine if that decision was a GOOD one or a DISASTROUS one. Hence the two sides to the argument.
Liberty can help you sell your business for a premium. Then there’s the transfer fee of $5000 per territory in addition if you sell.
If you have seen (as I have) how many territories are listed for sale with Liberty, you would be alarmed as at my last viewing I saw at least 200. And that was when there were less than 2400 stores. Says something don’t you think.
Right buy you were aware of the $40K prior to purchasing the franchise correct and you were aware of the royalty percentages correct? So why did you choose Liberty over opening up an independent store then?
So as long as this site stays completely negative and suits your special interest, you are agreeable, Mike. You certainly do not appear open to discussion, which I thought this site might be. Mike, Liberty sucks and anyone who invests are being foolish with their funds. There is no way to make it and it’s truly a waste of time. Thanks for the advice. Have a great life! I’m opening Newbee Tax Service next week with a BEE costume in a strip mall next to WalMart and across from HRB. Thanks for the great advice….Mike. This site rocks!
Some people are hopeless, I would HOPE that before any of you bought into this business that you did some analysis using Excel to get an idea of what volume is needed to break even and eventually turn a profit.
Here is some figures so you can wrap your head around how to make money in the tax business:
Stan Malizewski
2010-08-11T02:10:12Z
2010-08-11T02:32:20Z
The Briad Group
11.5606
YEAR 2
Paid Returns 330
Avg Fee 245
INCOME $80,850.00
Guerilla Marketing $650.00
Expenses
Preparer Wage + Tax $17,143.70
95 days of 18 hours coverage @ 10 & 9 per hour + Payroll Tax
TP Bonus + Tax $2,710.50
3% + Payroll Tax
Waver + PR Tax
$6,794.40
95 days of waving @ 8/hr 8 hours a day
Utiltities $2,400.00
More during the season way less in off season
Phone & Internet
$1,320.00
Comcast Phone & Internet @ $110/mo
Office Supplies $445.00
Customer Envelopes, Customer Folders, Paper, Toner
Postage $88.00
200 stamps used
Insurance $350.00
State Farm
LTS Royalty $11,319.00
14% Royalty
LTS Advertising $4,042.50
5% Advertising
Local Advertising $650.00
Misc flyers, coupons, candy, soda, water
Marketing Supplies $650.00
Direct Mailing $1,400.00
8.5×5.5 Early Season Postcard mailing 5000 @ .28 each
Rent $18,000.00
1500 a month Rent
TOTAL EXPENSES $67,313.10
NET INCOME $14,186.90
% Profit 17.55%
YEAR 1
Paid Returns 301
Avg Fee 200
INCOME $60,200.00
Guerilla Marketing $650.00
Expenses
Preparer Wag + Tax $15,221.85
95 days of 16 hours coverage @ 10 & 9 per hour + Payroll Tax
TP Bonus + Tax $2,018.21
3% + Payroll Tax
Waver + PR Tax $6,794.40
95 days of waving @ 8/hr 8 hours a day
Utiltities $2,400.00
More during the season
way less in off season
Phone & Internet $1,320.00
Comcast Phone & Internet @ $110/mo
Office Supplies $445.00
Customer Envelopes, Customer Folders, Paper, Toner
Postage $88.00
200 stamps used
Insurance $350.00
State Farm
LTS Royalty $8,428.00
14% Royalty
LTS Advertising $3,010.00
5% Advertising
Local Advertising $650.00
Misc flyers, coupons, candy, soda, water
Marketing Supplies $650.00
Direct Mailing $1,400.00
8.5×5.5 Early Season Postcard mailing 5000 @ .28 each
Rent $18,000.00
1500 a month Rent
TOTAL EXPENSES $60,775.46
NET INCOME $74.54
% Profit 0.12%
You know everybody says they want discussions which means they are allowed to spew statements with no facts to back them up. I sold one of my offices to a fellow that paid the full price for the office and he was financed 100 percent over 4 years at Libertys current interest rate, paid all the royalties, paid all the advertising fees, was completely current on his debt, royalties, and Advertising fee, plus prepayed rent all the way through Feb on his store at the end of the season and put approx 40k in his pocket. Now if all the items that everyone tries to lay the blame on was factual then their was not way for him to do that. For some of the failed Zs or even better struggling Zs lets take a look at the last Profit and Loss or the past couple years and see where the real problem is. Thats not being nasty, thats not putting anyone down. If the true existence for a discussion board like this is to spread truth so people can make an educated choice when purchasing then I think the truth should be analyzed and then all the insults and nasty comments can end and we will only deal with facts.
And I am 100 percent serious about it not being about pointing fingers or making anyone look bad , thats not what I am about, I just want a factual look to answer why some make it and others fail. If it is impossible to succeed then simply analyzing Profit and Loss statements will clearly show your point. Unless facts are going to be intelligently discussed without the hatred and damaged egos this board will be nothing but “Jerry Springer”. I know for a fact that several of you are not like that but having discussions based on opinions or on limited amount of facts is useless. I also understand anyones reluctance to risk having flaws exposed and I really do not like that word but could not think of another. Unfortunately doing this in a venue like this is not feasible but I would love to see what the results would be.
Yes you can be profitable and obtain positive cash flow owning Liberty Offices. Does it take super human powers, does it take that special person that only 1 in a million would fit, and the answer to all of those questions is no. It can be done by anyone and has been done by quite a few and the talent level between all of the successful ones is quite different.
Rob:
I think Stan’s numbers give a great basis for discussion, but Stan did not follow the Liberty plan, plus he has not factored in anything for his time or investment. He would have been just as well off working for McDonalds than owning a Liberty Tax franchise, worked less hours, and with half of the headaches.
Sorry for the spew of numbers it looks prettier in Excel. I think the comment about my time and working for McDonalds is a bit far fetched. Each year my numbers and profit grow, I made sure of it before I expanded and invested any more time and money after year one.
I suppose you’re right in that I didn’t follow the system 100% in the beginnning, each season I make adjustments and try to execute better. I do know for a fact that my first store I opened I did terrible in year 1, 30k in net fees, didn’t wave, terrible b2b marketing, no parking (downtown location). Year 2, No waving, no marketing, did 36k in fees Woohoo. Finally in year 3 got my head out of my ass and moved the store to a small strip center 1 mile away on a secondary highway (7-14k cars daily) and made the committment to have wavers every day and do couponing and did 76k net fees.
Obviosuly doing 76k in net is not going to make me a milionaire but at $900/mo rent and 4 months of a season it does just fine.
I don’t want to give my whole LTS life story today but I will also add:
I took over 2 existing franchisee’s offices throught my 4 season history and these are the results from me owning it controlling costs, spending on valuable marketing, waving consistently etc..
Store 1:
I took over for the 3rd tax season, previous owner did 88k fees. Very busy highway location. I took over December before the season, $135k net fees about a 40% jump. It was simple really the previous owner couldn’t get out of his own way, slashing prices, playing lets make a deal, etc.
Store 2:
5th Year store I took over from the 2nd owner who was getting destroyed, I’m surprised he’s not on here telling the world how much money he was losing. It’s pretty bad when you only do 23k in fees and your rent for the year is over 24k.
But I digress, took it over did the marketing and got the fees to 52k for the year then pulled the store out of the current horrible location and I am relocating to the main highway about 1 mile away and will end up paying less rent for more exposure.
Being sucessful and making money with Liberty is just about handing out doughnuts or throwing a party in your parking lot. Yes follow the system/plan I agree but there are managerial and bigger decisions that get made over the course of the years that will ultimately affect if someone makes it or loses it. I takes calculated risks in buying new territories or buying out existing franchisees, I make models in Excel to make sure I can make the numbers work before any money is invested.
Any of the naysayers are welcome to come by NJ and take a tour of the operation and see for yourself how you run multiple offices at a profit.
“Sorry for the spew of numbers it looks prettier in Excel.”
You should’ve seen it before I cleaned it up.
If you paste it first into a text editor like Notepad or WordPad you can format better before you paste it in.
Thanks for the numbers.
The comment about Stan would of been better off just working at McDonalds shows that this isn’t about the truth or reality and makes me question why some ever attempted running their own business or what their real motives on this board are. It appears that it needs to be called the “Smear” Board” in alot of cases because the objective is not about truth. Most of Stans stores are fairly new and he is in the early stages of growing his business. Stan is doing what every succesful business owner does and that is learning from his challenges and mistakes each year and making adjustments and improving every season.
It is real easy to make things sound bad if (you) mess things up the first year or two and quit but most do not quit and most learn from their mistakes and improve each year. My numbers today look totaly different than they did year one or year two. But it is that way with any business, it is always tough at the beginning and very seldom are their over night successes. Not sure what some people think when they buy territories. I have seen people cry and moan about not making money yet when you look at their labor, they work in the office 24/7 and take no pay yet still run 40percent to 55percent labor numbers, and you can’t make money doing business that way.
Another thing for anyone looking for the truth, is Stans profit margin jumped 17 percentage points from year 1 to year 2. Because Stan understands his budget and understands what needs to be controlled and improving every year on where he spends his money he will be able to easily reach 30 percent profit margin as the return count grows.
Stan was paying $1500 a month in Rent and able to break even with 300 paid returns!!! I am sorry that is talent any way you look at it. I want to thank Stan for standing up and going through the effort to put his numbers out there for all to see. I am not going to do it, at least on a budget form, but if you calculate Stans profit based upon his numbers today and he grows to 800 returns he will show a profit of around 60k plus and could be higher. As the office continues to grow and reaches 1400 returns, Stans profit will well exceed 100k per year.
Stan had a choice he could of quit the first year and used his numbers as an excuse to smear someone else and financialy damage himself or he could do what so many other succesfull business owners do and work through things and improve. I think all of this is so simple to see.
That was years ago (2006), I have since found very favorable lease terms for all my offices and run 25-40% profit margin depending on the office (labor can kill you). With that being said I add 1-2 new offices on each year either through acquisition or opening a new territory.
My goal early on was to minimize damage from opening a new store and it didn’t take long to realize that each year you build on top of last year’s numbers. I always tell people do the best you can in year 1 because year 2 is always soooo much better if you execute.
Also McDonalds wouldn’t hire me
Okay peoples….. Time for some truths.
Anyone with access to Zeenet can see for themselves that what you are about to read is correct. I am not saying I downloaded these figures and manipulated them, they may have arrived in my inbox from a friend but you work out the viability of being a franchisee.
FYI:
fran·chisee [fran-chahyzee]
Definition: A franchisee is an individual who purchases the rights to use a company’s trademarked name and business model to do business. The franchisee purchases a franchise from the franchisor. The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an ongoing franchise royalty fee to the franchisor.
I guess we agree on that. Emphasis on
“rights to use a company’s trademarked name and business model to do business”
Clearly the “business model” is what the focus should be on because we’d all agree, without that, we wouldn’t have signed the frikkin’ franchse agreement or thought the tax business was as cool as it could be.
Report ZPR07 details the top 350 Entities (franchisees with at least one territory.
Report ZPR03 lists the top 100 office in the country.
Office 1 = 3,573 returns
Office 100 = 1,160 returns
Corss referencing both reports you can notice 41 Entities in the top 350 report prepared less than 1,160 tax returns or less than what the 100th best performing office prepared.
It’s believable that some or many of those Entities which appear in the top 350 report that prepared less than 1,160 tax returns actually had more than one office. Which suggests that each of their offices prepared on average 580 tax returns.
To appear on any report is a target for any zee but more importantly it is the $$$ which matters most and the 350 report is very detailed in that area listing also the prior year results.
Office number 346 had net fees of $218,200 with 1461 tax returns prepared.
This office location and return count does NOT appear in the top 100 offices.
So it is obvious this franchisee owns two offices.
$218,000 – gross income
$41,0000 – Royalties
$43,000 – Rents (2 offices) $1800 per month (I know of no zee with 20 miles paying less than $1800 a month in rent. Several pay nearly $3,000)
$50,000 – Payroll + taxes for preparers (2 preparers for every hour to up to 4 + receptionist during both peaks
$28,000 – Marketing/wavers (one waver for every hour open x 2 stores + additional during both peaks+everything from IIP etc..)
$7000 – Utilities = (~$300 per month per store for internet, gas/electric, phone etc..)
$5000 – Office supplies – stamps/folders/envelopes/business cards/tax school books/Coffee/Cups/Popcorn/toys/coloring books for two stores
_________
$174,000 – Expenses
=========
$44,000 – Net Income from two stores
Perhaps this franchisee had cheaper office rent, spent less on his marketing and understaffed. THEN he would NOT be following the Liberty MODEL especially on the marketing.
Possibly his net income before taxes was $60,000 but the work and stress from two offices for only this much is only benefiting the franchisor.
You only have to look at the royalties to see that the franchise fees are almost as much as the net fees.
Sure you can make money.
Sure. $10 profit is making money.
The point is.. is the franchise model going to make you $100,000 a year. And dont accept the BS about the PART TIME crap. Not too many of us can get 3 months off work to run a tax season and have our jobs back on April 16th! And if it’s so darn good then why are SO MANY zees responding to the ads in the zeenet marketplace about making money during the off-season. Why stay open for 40 extra hours a week to earn $40,000 in insurance etc.. when it’s just (based on Entity 346 at $200 per return) just another 200 tax returns to stay closed 32 hours a week! Isn’t the whole point to have a different lifestyle? Didn’t we buy a business NOT a job!
In advance of Mike or Rob’s responses….. This information was not available to me BEFORE I opened the first office. In fact most franchisees are so focused on their own success, extraploating figures from the reports menu and realizing that most Entities work DAMn HARD just to get a reasonable income. Only RICH guys here are in the top 100 Entities.
Last point. I made money every year from year two. Best year made more than $250,000 from two offices but netted only $60,000. Not what was alluded to.
Which brings me back to the line from marketing/sales who said IF you don’t reach 1000 returns by the fourth year Liberty may opt to take the territory back which was only stated to imply you must be a moron if you can’t reach 1,000 tax returns!
My office average was 925 returns (paid and free). After several years.
I prefer not to provide details of my store but next year (my third year) I will operate at a 30% margin or more and will do 1000+ returns. My rent is $1,000 a month. Therefore I will make a nice profit on my one store. I am also highly considering expansion. If three years from now I duplicate the success of my first store and have two stores each doing over 1,000 returns and operating at a 30% margin, well I assure you that will be well over the $100K that you seem to think is not possible. And then what happens when I have 3 stores, 4 stores, 5 stores, etc. My wife runs the store FT and I work FT elsewhere.
Mike. Not questioning your personal success. Just consider if 2900 stores AREN’T doing 1000 returns then making 100k isn’t a possibility. Think if you rent was $800 more. Month you would be making $20k less. That is what most of us details with. Try finding an office in LA for under. $2000 a month and wages are more.You are not thinking about other sees. You are trying to use your example as the template. A zee I know in NY pays $5000 a month!
Apples with apples my boy.
Again, many Zee’s on this site are not disagreeing that making a profit is not possible. I am in the boat with money pit. I cannot rent a place that Liberty will accept for less than $2500 per month in my territory. My houly wage is $10 per hour, which includes decent marketers. My wavers go for $9. To get my 300 returns this year cost me over $25,000 in marketing costs. You may ask how I know it takes that much, because I tried and failed in years one and two with less. My gross was $69,000. Doesn’ take long to do the math. I recently tried to sell one of my franchises to an individual who has been interested in Liberty for a long time. Knows the score has he has been doing taxes on his own for several years. He made a lot more in his personal shop than I am making at Liberty. He said, why should I buy a store for $40K and do all the work when I can do my own thing and make more money. The point is, Liberty produces part time income but expects a full time commitment. Add to that the lack of local support, poor software and support and you have what you have. A poor investment.
To potential Liberty franchisees:
Brand recognition and strength of brand are a big part of what your buying along with that franchisors system they developed. This brand recognition is what is suppose to drive customer to your store vs you opening your own named business. This brand recognition is especially important in the tax preperation industry because your season is so short. However, while the other two major tax preparation services do have a large national advertising program Liberty Tax Service does not. This is a major disadvantage and one of the reasons I believe that so many Liberty Tax franchisees struggle.
I know current franchisees will talk about how wonderful gorilla marketing works, but what is the point of paying a franchise fee and an advertising fee to Liberty if gorilla marketing works so well. Just open your own tax business and market your own skills.
It’s funny how John Hewitt doesen’t believe in national advertising. Did anyone see the commercial last fall with him touting the benefits of owning a Liberty Tax Franchise. Talk about a face made for radio.
The answer to why you may be unhappy, in this or any franchise, lies within what was expected of the franchisee in the first place.
I expected a brand throughout the life of my offices, a basic idea of how to operate the business, within a correct and legal nature, support until I understand it, as well as some financing, when needed. I got exactly what I expected and more with Liberty. I never changed my expectations of the company as I was learning how I would perform as an individual. I cannot blame Corporate for my performance while my own personal faults were unveiled. They kept their promises and I continue to have an open sign hanging. I have to make it brighter and more noticeable and make the right choices.
What is great about this particular franchise is that we have 8 months to regroup and work on our issues to get it right! You can’t just close a Subway down until you figure out how to control payroll or market effectively. When kids go back to school from a break, they are fresh, new clothes, new style. Get your style together and quit wearing the same shoes every year…you outgrow them or they go out of style. Just look right now at your shoes, if they are beat down…then work on yourself before getting into any business. A person who won’t go to the shoe store suffers his look to spare a little time…not realizing that it has made 1000 impressions on people just today. If your shoes are worn, you may be unhappy in any business as you would let your image (brand) change before taking the time to make a small change which was long overdue.
To 5yr.improvingzee:
First of all I doubt you paid $40K for your franchise, I doubt you have 6 other Liberty Tax locations within a 10 minute radius of your office, and I also doubt the IRS was giving free returns to those whose income was less than $57K. Read the notes above. These are not whackos. These are intelligent business people who poured their hard earned money into a franchise and were promised decent returns. What they got was far from that. The fact is, most franchisees are averaging somewhere in the 300 return range, not the 900 to 1000 they talk about at the Liberty Tax meet and greets. Most are struggling to make ends meet, and most thinking they were sold a bill of goods by John Hewitt who is still thinking/wishing that it was like it was 5 years ago when you bought your businesses. This is a part time business with full time responsibilities. Unless you can combine it with other accounting and tax products, you cannot make a business out of it, pure and simple. Good luck with your stores.
I have to agree completely with Frustrated and Disgusted.
I introduced four people to Liberty and all but one has either sold their business or has it listed. All are intelligent business people with other businesses but ran their Liberty offices full time.
Most exceeded 700 returns after 3 years. And still they needed financing from Liberty or did not have the funds to continue.
Consequently, I speak to only one of them nowadays. Don’t blame them as I was a second year zee with hopes and dreams and my excitement at my second year growth was a turning point for them.
Sadly I should have waited two more years before mentioning this “opportunity”.
If you’re making money then woohoo. But there’s a scam here that only mature zees can understand. Newbies don’t have a clue and are swept up in the buzz.
God help those in Jackson Hewitt whose dreams were just as real with a share value of $0.85 cents. Down $6.50 from a year ago and from a high of nearly $20.00.
Well this thread is going nowhere so I will end with this. Yes the Z who posted does have 6 Liberty Locations within 10 minutes which amuses me like Libertys are really competing with each other and that their is a limited number of clients that Zs have to share when 98 percent of returns filed are non Liberty returns. Sure clients move around but I have never felt like I was competing against other Zs for clients. Also the Z you know so much about has a free tax prep office one of the bigger ones 2 doors down from the Liberty Office.
I think we know both MoneyPit and Frustrated see a conspiracy theory here and I imagine you have black helicopters flying over your house every night….lol
Is Liberty perfect….Nope…But no franchise is…..Has John Hewitt ever lied to me?….Nope not once….Has John ever not answered one of my questions to my satisfaction?…..Nope, he has answered every one….I feel Liberty is a better opportunity now than it was 5 years ago. Mainly because of lessons learned and now those lessons are being passed along much better just because of the increase in numbers of franchisees. So the opportunity has stayed the same the increase amount of Zs and the increased communication is what has made it better.
Go talk to some mom and pops and see what kind of profit margin they are running!!!! I know many of the ones people think have to be doing great are not doing anything close to me!!! I know of a large one who has since sold out that everyone would of thought was crushing it because of no royaties or ad fee but in reality they were running around a 11 percent profit margin.
If your interested in Liberty do your homework and do not be afraid to go to Va Beach and ask John himself your direct questions. The next 5 years are going to one of the most exiting times we have ever seen in the tax business in my opinion. Now I know MoneyPit and Frustrated has a story of doom and gloom on what the future holds, so I will just acknowldge their gloom in advance. Have fun all and it was interesting posting here sometimes but I think all that can be said has been said.
Just a question…keep in mind I’m researching this as I type…but has anyone considered the revenue an accountant could generate running their own shop and pumping $56k into their own buisiness? This is what I’m deciding between: paying Liberty $56k or taking that money and building my own practice….just wanted to see what y’all thought..
Mike
I think we need to put things into perspective here for Rob’s sake.. For someone who has no business accumen, wants to start a business, and wants a better shot at being successful, a franchise is better than the alternative. Where Liberty fails is the attitude of their organization. They are so focused on selling franchises, especially their AD’s, that they forget they need to support them after the sale. John Hewitt wants to be the biggest tax preparation franchise in the country, and he is going to do it with your money, not his. So when you go to Va. Beach to learn about LT, they trot out their Top Guns who tell you that you can do 800-1000 returns a year. Fact is you would be in the top 5% of all franchisees if you can. Most are doing 300 or so a year. In many areas you will be lucky to get that many. Add to that, their marketing system is inefficient, ie; if they took the money all of their franchises in an area spend on marketing, the number would be staggering. So what you end up with is a poor investment because you will spend thousands of $$, lose a good portion of it, sell your territories, the next person will do the same, and the cycle continues. That’s why it is like Vegas. You keep thinking you will win the big prize. My opinion for what it’s worth, if you are looking to build a good tax business, park yourself in a low income, high EIC area, market yourself well, and give good service, you can do as well as LT does in the same area without the hassle of their ridiculous demands.
Mike,
I have a background in tax and small business accounting but I didn’t have a client base and I didn’t have any name recognition. For some reason I thought I would have a better chance with a Liberty Tax Franchise. However, I didn’t take into consideration that they had no name brand recognition in my area. The fact that they don’t do any national TV advertising and that their business model was best suited for a low income urban setting. I am no longer involved with Liberty Considering you already have the knowledge and experience of working in a tax office, what would you need a franchise for unless its your concern about developing business and if that is the case, the only tax franchise that has true national recognition and is considered professional is H&R Block.
I was going to stop posting but this last topic seems to of turned to real conversation and not just a smear campaign. I have no problems with people disagreeing as long as the conversation is about facts and an exchange of ideas but too many times it becomes a smear campaign. While I disagree with some of Frustrated and Disgusted post I commend him for the way he worded it and his attempt to address the issues without smearing.
The question that was asked is a common one out there and one that does not have an easy answer. If you take out all factors and you do not take other circumstances into consideration the answer is sure doing it on your own would be great. The only issue with that is their is other circumstances and they have to be considered when making the decision. What appears to be an easy answer and easy situation is fairly complicated and will depend allot on the individuals talents and skills.
I know quite a few accountants and tax professionals that have decided to do it on their own and try to save the money that it would cost to buy a franchise. The majority of them do not end up as huge success stories and struggle financialy as much if not even more than a Franchise Tax Office. The tax business sounds so easy and getting clients appears to be so simple but in reality it is not. I hear allot of talk about national advertising and national presence yet Block has both and last year could not take advantage of any of the turmoil and huge amount of Jackson Hewitt clients left out in the cold on RALS? If national advertising works so well and is the answer to drive people in the offices than Block should of had the biggest year of its entire existance? Yet they did not grow their early season at all and spent millions on national ads? Jackson Hewitt has a fair national advertising program yet they have been going backwards over the past 4 or 5 years? If national advertising is the answer both should have no problems crushing Liberty?
Liberty is evolving year after year. As the market changes and things happen things are learned and passed on from Liberty Corp and from Z to Z and these lessons learned are whats enabling Liberty to experience growth while others stay stagnent or go backwards. I know my operations is completely different now compared to 3 years ago and the difference is for the better!!! My results if comparing 3 years ago to today are night and day!!! I have been able to learn from my mistakes and by communicating with other top business people I have been able to learn from theirs and implement items that have made me drop every other business venture and focus 100 percent on Liberty. No, I did not have to listen or change and could easily still be struggling but I did what any smart business person would do and that is learn from my mistakes and seek out other top business people who made mistakes and come up with solutions to solve those mistakes. With Liberty the ability to not only learn from a solid system you also if you take the time are able to develop relationships with other talented franchise owners and learn very quickly avoiding costly mistakes.
Building a solid profitable tax operation is not easy. The industry is now changing quickly so it will require changes to either stay succesfull or become succesfull if you are just opening an office. Buying a Liberty Franchise can be a very good profitable decision if the opportunities are taken advantage of. If a Z only focuses on the negative and lets what is wrong in their opinion stop them from taking advantage of all that is right then they will usualy struggle. Most independents starting out do not see the huge profit numbers one would expect with the absense of royalties and advertising fee plus Franchise Fee to start with. Why? Their business model is usualy flawed and what they think they know usualy blocks them from any future learning. So they save the 40k only to spend it on mistakes. Of course there will be the few that go on their own and do very well. But if you look at the financials of independents they are not running great profit margins as you would expect. Typical margins I have seen is 15 to 20 percent.
I know looking back if I would of went out on my own and started my own I may have been succesfull but it would of been extremely limited and I would be no where close to where I am today. Liberty has gave me the opportunity to develop and learn and with that I understand this industry as good as anybody I know. The key was they gave me the opportunity, I had a choice to take it or I had to the choice to ignore it. Libertys system (Operations Manual) is one of the best I have ever seen!!! It still takes execution on the part of the franchisee to turn a good system into a succesfull profitable business. I could of easily of been one of the unhappy Zs but I decided to take a different route and learn from my mistakes quickly and focus on the answer not on any problems I felt was out there in the Liberty system.
As I stated Liberty is not perfect but their is no company out there that is. It is a viable business model that can produce amazing results. Its not guranteed and it takes work and it takes a dedication to learning and exeucuting. Yes you can fail but you can fail going out on your own.
I was just in Vegas for a convention. Looking to buy multiple locations. Sounds like a bad idea according to both happy and unhappy Zees. I am sure some may even work for Liberty on here but that’s beside the fact for me. For those that are happy what’s the demographics you operate in? Cause the locations i can choose from vary greatly. For those of you that are unhappy, thank you for sharing, but after you sold it or gave it back, did you stay in contact with the buyer or find out from whoever acquired it what happened from a growth perspective? I am interested in knowing all of this cause from what I have gathered it seems easier to purchase existing locations versus a start up. It also seems in order to make any real money you need multiple stores. I have not finished reading the FDD and will later this week, so as far as the 1000 returns by year X or the store goes back to Liberty, does anyone know a Zee that’s happened to?
Thank you for your time and help,
Wondering
Of course no one has ever had a store taken back for not completing 1000 returns, practically every single store would be returned. That 1000 return number is pure sales hype. If you do your projections/budgets, 1000 returns will have you making money on paper, and you will assume (because it is in the FDD) that you will be doing 1000 returns in ‘X’ years. You won’t and you will have lost money at every location, be it one or ten stores.
Multiple stores just means multiple ways to lose money. Listen to most of the honest advice found on this site and keep looking for an opportunity, Liberty is not a good choice.
Wondering, no I know of no one that has had a store taken back for being under 1000 returns. As far as the need for multiple locations to make money that is not true. Sure if you have a strong organization and have built it the right way multiple locations are great and can multiply your profits. Where most make their mistakes is expanding before they should. You need to have positive cash flow in your first store before you expand. There are some execeptions to the rule and it is possible to expand and help cash flow. One of those ways is buying existing stores. Key to making the purchase of existing stores is the terms that are agreed upon and the office you are buying itself. Many office can be purchased and with a few changes the profit and cash flow and be dramaticly inreased. I seriously doubt their is one employee of Liberty Corp posting on this board!
Wondering
I started writing a long response to your question, and instead decided that it would be better just to say that I would not invest in the tax business right now, particularly Liberty. Read through all of the responses on this site and realize that they were written to help people like yourself understand the pitfalls of this organization. Rob has done well, but he probably would have done well in any franchise. He is a very committed individual. There are successful Liberty territories out there, but I am watching as each one sees fewer and fewer returns every year, their revenues are going down not up, more and more people are getting into the business. You spend more to get new customers and in most cases less than 50% of the poeple you saw last year return. While Liberty would like to think you can out hussle H&R or Jackson Hewitt, you most likely cannot. Also look at H&R and Jackson Hewitt and see that the actual number of returns are going down. People are using Turbo Tax, seniors get help from AARP, you can go online and get it done free if you have less than $57K in income etc. etc. In my personal opinion, there are better places to spend your hard earned $$.
As far as “Dont be Fooled” comment about making money on paper but not in reality that is not true. Except if he/she is referring to making a profit but having negative cash flow? Sure its possible to be profitable and have negative cash flow depending on your financing and other factors. This is where understanding business and understanding how business works is crucial to anyone going into business. This is also where Zs planning to expand need to understand what expanding will do to their cash flow. Negative Cash Flow is something that many businesses run up against and something the business owner needs to understand and plan accordingly. If memory serves me right and I will check, most small businesses go out of business because of negative cash flow not because of profitablity. I am pretty sure the last study I read was a majority of small businesses shut down or failed were profitable but negative cash flow caused there failure. I will double check that and post the statistics.
Liberty has given me the opportunity to build a very profitable business. I had to take the opportunity and run with it but I can assure anyone looking at Liberty that it does not take someone special to succeed. It can be done and the model that is offered is solid. It is up to the Z though to execute and ensure profit margins and cash flow. I see so many times Zs who are upset with Liberty and say they cannot make money yet when looking at profit and loss statement they run 50 percent plus labor and have not been able to control costs? With the best model in the world if a business owner cannot execute and control expenses or prices their product too low, failure is a possibility.
Rob:
I respect what is clearly a good business intellect. My suggestion is rather than posting on this forum, you have a chat with JTH and discuss with him why he thinks having raving fans is so important, but having disgruntled franchisees isn’t. Seems somewhat counter to his whole philosophy. Let me give you some ammunition. I have yet to have a one on one conversation with my AD. He has not returned my calls since I purchased my franchise. The person who came out to do my site surveys for my locations did a horrible job, gave me no guidance, and hence I lost a ton of money on one location, and the one he thought was a poor location turned out to be better than average. I spent a ton of money on door hangers, no results, B2B was average, never got nofified when they were sending out direct mail pieces in the neighborhoods next to my location which I could have done more marketing for, there is no cohesive marketing campaign for the 12 locations in the city I have my franchises in, and my AD gave me no guidance on my budget. Maybe there is truly a reason some of the above franchisees have a gripe. Did you ever consider that ?
I have never judged you nor would I question anyones reason for being frustrated. You will also never hear me say that Liberty is perfect or that every Z has gotten the support they should have. But instead of being frustrated and disgusted venting on here and allowing someone else decide the fate of your business have you sought out help from the many Zs who would be happy to help? In every franchise system there are franchisees that do not get the support they should, not on purpose but just because of the circumstances that are present in the area.
What I am trying to say is anyone can be succesfull with the system. It does not take someone with special talents. It does take someone who refuses to let any frustrations or circumstances stop them from reaching the level of success they should. I would be more than willing to speak with you and help you confidentialy. I just think it is a shame letting your frustrations get you down when the answers you need are out there for the taking and there are plenty of people who you can communicate with who would be willing to share all with you. I have always been willing to put my money where my mouth is and the offer for help stands, and will be confidential.
To Rob:
Your recent couple of post makes me wonder why your spending so much time on this site. Are you really a franchisee or are you and area developer or more likely a corporate employee. Could you tell us where your stores are located so we can get a better understanding of the demographics.