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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

4,324 Responses to “LIBERTY TAX SERVICE Franchise Complaints”

  1. Sad but true says:

    Number 1 by 2020 was only an illusion perpetrated by those trying to convince potential new franchisees to buy territories. Try getting to number 2 first. Don’t invest in a company that spews idiotic statements in a rah, rah way. What a joke.

  2. Jimbo says:

    John Hewitt set the goal of being #1 six years ago. Did folks think it was a guarantee? Have none of you worked in companies that set goals? The fact that someone cannot tell the difference between a goal and a promise tells me they are also not discerning enough to own their own business.

    All the present and former franchisees are in the franchise disclosure document. Yes, people should call them and do their own due diligence. Then decide if you are more like the successful people or the failed one. Then make your decision accordingly.

  3. bill says:

    JH goes on Bloomberg what good does that do his franchisees. All the interviews and press releases are just fluff to suck in investors. Look at the most recent press releases all of them on Marketwire. Not one of these releases or interviews will send a customer to a Liberty Franchisee’s door. The whole point of this rues is to keep Wall Street believing that this is a viable public company. It amazes me how JH is never challenged on his positions.

    Buyer Beware!!!

  4. SanFranDan says:

    ^^Mr. Jimbo:

    How about successful franchisees that were successful in their own right and that it had nothing to do with being a Liberty franchisee? How about successful franchisees that couldn’t stand the “rules” and AD’s and “notices to cure”? How about successful franchisees that couldn’t stand to see all of THEIR hard earned money going to Liberty for nothing in return? How about successful franchisees not being able to be in different successful locations at one time and had their employees rip them off? How about successful franchisees that watched their wavers deal drugs on the street corners? How about successful franchisees that are MORE successful now owning their own business now that they are away from that crapola company?

    Huh. You can’t get it into your thick head that people that were successful also couldn’t stand working for that company and can go ahead & go on to other, just as or more successful than giving all your money to away to a bunch of bozos.

    Your post reeks of ignorance. Keep your lousy comments to yourself unless you know for sure WHY people leave. People posting here were not and are not failures. They only had a momentary lapse of judgement when signing on to this pig hole franchise to begin with.

  5. Greg says:

    Jumbo,
    Goals are great things to have. It gives you a marker of success.
    It’s a good thing to set goals that are reasonable, attainable, and in line with reality.

    So if you are telling everyone that the biggest by 2020 was just a goal….well, I have a bridge for sale you might be interested in.

    It’s one of two possibilities if that statement was truly a goal.
    1- it was so wildly unattainable that setting it was a dream more than a goal
    2- john Hewitt was stupid if he thought that was remotely a possibility.

    My thoughts? Well, I don’t think john is stupid. I think that it was a statement designed to get more people to give him $40,000 and then a minimum of $11,000 a year after that. Heck, he might even loan those people money at high interest to boot.

    See, after that time frame to attain the “goal” has expired, liberty will most likely be still in third place and need 50% increase to tie for second place. Much less the 800 to 900% increase to reach the top spot.

    See, when you are off by 800 to 900% is that really a realistic goal? We both know the answer…..its was a marketing ploy that misleading and intellectually dishonest

  6. Mary Smith says:

    I got in and out without an appointment but very disappoint in the cost of service. I have no itemized forms, just EZ and the cost was ridiculous. Unfortunately I do not recommend and I am one and done with Liberty Tax.

  7. Mario says:

    This office at 132nd is closed now it was taken over by the location at 12944 Hawthorne blvd, Hawthorne ca 310-355-0511

    In March of 2015 this new office was advertising free tax service for the month of March. I called and was told by the person who answered the phone(Alice) that if I wanted my taxes done for free that I should come in immediately which I did. I sat down with Alice and for the first 20 minuted I kept on asking why was it free the answer I got, was they were doing a (promotion) for the new location.

    We proceeded to do my taxes and at one point I might have gotten on her nerves because I kept on asking why was it for free. She soon found out I was a repeat customer and said I’m gonna run you through as a new person. I gave her my pay stubs and she organized my taxes and after 45 min of sitting in front of Alice I was signing the electronic pad to send them to the IRS. I was informed to come in to the office after 3 weeks to pick up my refund check I thought this was strange but she was in control and had me signing and approving so I didn’t think to long about this.

    In 3 weeks I get a call from this office to come and pick up my check, I go in on Friday before Easter. I’m handed a check I sign for it put it in my wallet and leave. On Monday I go to chase bank to cash it while I’m in line I look at the check again and I see that it is drawn on a US bank check, I found this to be strange and not normal. I was expecting a IRS check. I left the bank without cashing it and immediately called the office which gave me my check and asked what this was all about. I was informed by Nikki Hartfield that I paid $400.00 dollars to have my taxes done and this is a check from Liberty Tax which is the left over.

    I was beside myself and the volume of the conversation went up. I explained to Nikki that I was under the impression that I was getting this done for free. She said I sorry, I think the agent dropped the ball here and did not make it clear to you Mario that it was not going to be free. Well your damn right because she had 45 minutes to tell me in person that, Mario this is not going to be free for you and the first thing I would have done is get up from the desk and walk out. I was never given this opportunity because this Alice person made be believe that I was getting this done for free. Never did I here the words from her lips saying this was a charge to you Mario.
    Never did she explain to me that she could not help me in preparing my taxes for free. She mislead me to think that the service was free. I was blind sided by this practice of free tax preparation from this office in Hawthorne, Liberty Tax service.

    When I called the manager On Monday after Easter in the heated phone call she told me to calm down and that she would contact me in 2 days. I knew if I didn’t calm down I would have a yelling match with this Nikki. Today is Wednesday the 9th of April and no phone call from NIKKI. I believe that they just want this to go away.
    Sorry you ripped me off and very likely you ripped off many others who came during March.

    I have filed for small claims court and we will have our day in court. In the mean time, People who have read this, Don’t even consider this place for Tax service they are dishonest and don’t know how to correct false advertising when they are wrong.

    I’ve never been ripped off like this before and this office will never get my business. I give them a Big F for failing to treat the public honestly and with respect. I hope this helps who ever reads this in deciding that this is not the place to

  8. mike says:

    If you want to make a complaint about a tax professional, go to http://www.irs.gov and in the top right corner in the search box type in form 14157, fill it out and fax it to 855-889-7957. That is the official IRS website and complaint form. Good luck, I can’t stand preparers that take advantage of the public.

  9. mike says:

    If you feel that you have been to a Liberty office and are not 100% satisfied you should get your money back, they have a satisfaction guarantee, call 800-790-3863 and talk to John Hewitt, he is in charge of customer service. You must demand to talk to him, he will make sure that you are taken care of, good luck.

  10. Up Hill Battle says:

    Mario, I am sorry to hear about your misfortune. CA has laws against tax preparers. So, call the State Attorney’s office. What allegedly happened to you might be criminally prosecutable.

    Good luck to you.

    Fortunately, these laws will be available in all states very soon.

  11. SanFranDan says:

    Happy Tax Day, NOT.
    Oh boy, look for the return of Barf villa at a theater near you :(

  12. Frustrated and Disgusted says:

    Classic picture last night. HR Block at 9:45 PM had a couple of customers in it working on their last minute taxes. Liberty across the street, lit up like a Christmas tree, no cars in the lot except for the preparer. Of course the Liberty opened well after February, was seldom open past 6-7 at night, and was not busy most of the season. For those of you out there considering this worthless franchise, go buy a hot dog stand and stand on the street corner. At least you will be busy.

  13. Out and Glad says:

    In our area only one of 6 offices was considered successful. One zee owned 5 of the offices. Most of the offices only had 3 to people come in during the off season. In second peak, they were trying to charge $450 for one W-2 and one state.

  14. Sad but true says:

    I feel bad for the franchisees that have had bad years, the minimum royalty bill will be coming soon.

  15. Sad but true says:

    So, you bust your tail for 4 months, lose money, then lose more when you pay the minimum royalty. How painful!

  16. Trouble says:

    THIS IS A LETTER HUNDREDS OF CURRENT FRANCHISEES COULD WRITE;

    Dear John, Liberty execs, and shareholders,

    We are in trouble, we cannot pay our royalties because we did not make enough money this year. Could you forgive them?

    Also, please stop suing people that paid you a lot of money to give your business a try. When is enough enough?

    Maybe you will be blessed if you do what we are asking, and things will turn around for all of us.

    Struggling Franchisees in trouble – may have to close down

  17. SanFranDan says:

    ^^^Dear Trouble:

    I feel for you. We’ve all been in your position. :( It sucks. You ask when is enough enough? Unfortunately they will continue to sue and take and take and take until you are bankrupt and worse. It is David vs. Goliath continuously. Best thing is to cut your losses and walk away if you can. No one wins except them when they sue you because they make you go to their court in VA, which is already slanted toward them. They will then take your territory and re-sell it for twice or three times the price. I cannot tell you how evil they are. We have paid the price of joining and signing one 5 year contract. It has ruined our lives totally. You are unfortunately not alone. This has happened and continues to happen to thousands of unsuspecting people each and every year. It will only stop when the CEO is arrested, in jail and the company is shut down, god willing. Sooner rather than later. :( And by the way, I was ‘successful’ by their standards and hated every minute of those 5 years.

    Anyone looking to join this dump for next Tax season: read through these posts and maybe you’ll knock some sense into yourself by walking away.

  18. BILL says:

    For any struggling Liberty Tax Franchisee I encourage you to post on this site. Your story is important. While it won’t change your situation it will help another person or persons avoid making the same mistake.

    In September it will be six years since we exercised our mutual termination agreement with JTH. I found this site in 2010 and have been consistently posting here ever since. The Liberty bashers will say its because I have some sort of mental issue. But the reality is, thanks to this site, I along with many other x and struggling franchisees think we are providing a valuable service by presenting our stores and by providing fair and accurate information to those considering a Liberty Tax Franchise.

    Tax season is over now JTH will get back to selling Liberty/Siempre Tax franchise.
    It’s our job to see that they are unsuccessful in doing so.

    Buyer Beware!!!

  19. Trouble says:

    Does anyone know how I can get a list of current lawsuits Liberty has against former franchisees?

    I cannot tell you why I need this.

    In the future, I also may need the help of some of the former franchisees that post on this site.

    Will keep you guys posted but I need to be discreet about what I am doing.

  20. guest says:

    I just finished my best season with the Liberty franchise. We had a big last minute rush. By the way, I only did a couple of newspaper ads and our average net fee is reasonable. We don’t get involved in fraudulent returns either. I had a customer come in at 11:45 p.m on the 15th.

    First time that’s happened in 10 years.

    It’s the other franchisees that make the difference. Some bad ones in the bunch, but most of our locals are doing the job.

    Sorry about your experience, but that’s not the case for us.

  21. Trouble says:

    To guest, and all other successful Liberty franchisees;
    Good for you that you made enough money to cover 19% paid back to Liberty. For those people who need to see something visual, see below;

    19% on $100,000 = $19,000 – 500 returns if average net is $200

    19% on $200,000 = $38,000 – 1000 returns
    etc, etc,

    So, for those doing 1000 returns at $200 average net (which is high), you get to pay $38,000 for your software,yearly post card mailing, and tech support (minimal). Let us not forget that marginal customers that get the post card, may call the toll-free number and get another Liberty office. You could lose a former client.

    Congratulations to those successful franchisees! But guess what; you still are paying way too much in royalties and ad fees to work your guts out.

    Trouble is always brewing for those whom are greedy!

  22. Franchizee says:

    I just finished my second year without LTS. I made 20% more than last year. I got rid of some of my straggler LTS cr@ppola customers. I have a bad feeling, I will see them next year, because they will love me all over again!

    With that being said, I get to keep all my money. I am not hurting without LTS, I am gaining in a whole another direction. I have been making my little niche in my community and the surrounding communities. Plus writing people in other states who have moved.

    I have many more extensions to do for the next 6 months and will write more people, which rarely happened with LTS.

    I just need to rest for a couple of days and hit it again! I would be $11,000 down by May 5th when the rest of my royalties would of been due, instead, I get to pay my bills all year with a couple of bucks left over.

  23. bill says:

    Franchizee: The most important lesson potential franchisees should take away from your post is you never needed Liberty to be successful but some how they made you believe you would be better off if you where a franchisees. Now, after realizing it was a mistake, you relied on yourself and are slowly & steadily building a successful tax practice.

    Most if not all former franchisees’ realize that their biggest mistake was not believing in themselves. This self-doubt played right into Liberty’s hands.

    Buyer Beware!!!

  24. Franchizee says:

    Thanks Bill – That is correct.

    The only reason I stayed as long as I did with LTS was due to being in Leases with the commercial locations, or after 2 seasons, I would of kicked them to curb right away.

    LTS wants you to get locked in a lease of a minimum of 3 years or at least 5 years. Once, I was available to walk away, away I went.

    Most people only stayed due to leases, nothing to do with this “terrific” franchise. I am noticing it being a common thread in most business dealings.

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