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LIBERTY TAX SERVICE Franchise Complaints

August 11, 2009

UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiarliberty_logo with the Liberty Tax franchise, please share a comment below.

Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind  McDonald’s & Subway.  However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.

BostonTax wrote:

I’m a former Liberty Tax Franchisee

I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.

Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.

Barbara Green wrote:

I too was a Liberty Tax Franchisee and I agree with everything you said.

The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.

Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.

At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2’s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.

It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.

WHAT DO YOU THINK?  DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE?  ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY?  WHY OR WHY NOT?

Comments

4,260 Responses to “LIBERTY TAX SERVICE Franchise Complaints”

  1. Greg says:

    Franchisee,
    When I first thought about eitc fraud it was pretty deflating to realize how much money goes out illegally……then as I thought further on the issue with eitc on self employment frauds I realized the refund was just the tip of the iceberg. Those credits “paid” into social security through the fraud business are going to result in tons and tons of money paid out in ss benefits to the fraud perpetrator. Lots of these folks file for disability at 45-50 years old and 30 years of ss/disability payments equates to hundreds of thousands of dollars generated by the years of eitc fraud converted into ss credits.

  2. Sad but true says:

    We know when we have touched a nerve – Barilla awakens from his dream world.

  3. Franchizee says:

    That is a point of view I had not yet thought of, but so true. I also like when you give someone EIC and it goes to pay their back taxes or child support. All illegal money. Basically it is money laundering.

    IRS should really require Anti-Money Laundering along with Ethics. Apparently the “Top Guns” are not paying much attention to their illegal money they are collecting by defrauding the government and the tax payers. They are no worse than Madoff stealing every day during the tax season.

    I hope Barilla checks his conscience while he is counting his 10’s of thousands of dollars, he will remember he just stole from himself and others who support the system.

    I like the back of the envelope, it has happened to me multiple times. Yup, you can’t sweep that under the rug. Barilla does not even do tax returns nor does any of the Top Guns, they just get the money and the accolades. They get the big trips and time at Hewitt’s beach house. They strut around like they have accomplished something and all they did was “legally” steal money that may or may not be due to a EIC person. Only due diligence would prove otherwise.

  4. guest1 says:

    Ha ha! Beautiful. Eitc fraud is an epidemic. The IRS is not trying to stop it. That’s obvious by how fast they send the refunds. No you can’t judge all by a few but I’m bettin liberty, hr block, JH, turbo will have new reviews for 2016.

  5. SanFranDan says:

    There is no question that the LTS of my day, not toooo long after the 1997 ‘beginning’ (in Canada), that several corporate dweebs promoted fraud. No question. FACT. Much of it was done in person in VA Beach at the dog & pony shows.They used it to their advantage as they have done many, many, many, many times over the past 18 years. They do whatever they can to roll over everyone else while ‘preserving’ their image. FACT. I can’t WAIT to tell my story someday.

    Fraud = LTS
    LTS = Fraud

    Run (don’t walk) RUN away. Do not sign. Do not pass go. You will end up in jail. Not THEM. You. The IRS needs to interview as many ex franchisees as they can to see the patterns. It’s much harder going after a corporate entity than it is a small franchisee.

  6. Sad but true says:

    IRS reports tax returns received at 50 million as of 2/20. This is up from 49.6 million last year on. So, Liberty’s loss of market share cannot be blamed on less filings.

  7. Horatio says:

    Whatever thoughts I had of starting a LTS for next tax season has quickly vanished. I am in awe and cannot believe what is going on with them this season. Just wow.

  8. Lucretia says:

    I have worked for Liberty Tax Service in three major cities in the U.S. Milwaukee, Wisconsin; Minneapolis and St. Paul, Minnesota and Tallahassee, Florida. I always received a bonus each year until I came to Florida. I went from senior preparer to office manager after two years, and am teaching the tax classes. BUT I have been consistently told that NO BONUSES are paid until the franchise reached their target number of returns for the year. That number increase each year, and I have not received a bonus in four years. As franchise owners, is this a true representation the facts?

  9. Out and glad says:

    Lucretia,
    The offices are owned by the franchise owner. It sounds like this one found a way to not pay bonus’. I paid people the bonus on that they wrote. The office manager would receive a bonus on office amounts.
    The problem the owner would find is that they will not be able to keep the best preparers.
    Can you let us know who the franchise owner is?
    I would like to know if is one of the big players or just a smaller owner.

    The final question I have is why are you still working for the jerk?

  10. bill says:

    Liberty announced its results today and during the press conference JH made the following points:

    Liberty had a decline of 100 stores from last year. But permanent stores increased by 100.

    Siempre Tax opened 60 locations in its first year, more then any others of the top three opened in their first year. He did indicate that over 50 were converted Liberty Tax office but would not give the actual number.

    Liberty can reach the 10,000 store mark if the current 2000 franchisees open 3 to 4 more stores each.

    Currently 1/3 of the 2000 franchisees own only 1 store.

    Of the 2000 franchisees in the system, 1/3 are great franchisees, 1/3 are average and 1/3 are poor franchisees.

    Before they take down the replay I encourage any former, current or potential franchisee to listen to the replay or view the webcast.

    A telephonic replay of the call will be available beginning shortly after the call and continue until Thursday, March 12, 2015, by dialing
    855-859-2056 (domestic) or 404-537-3406 (international). The conference ID code is 91108801.

    Buyer Beware!!!

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