LIBERTY TAX SERVICE Franchise Complaints

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

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

BostonTax wrote:

I’m a former Liberty Tax Franchisee

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

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

Barbara Green wrote:

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

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

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

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

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

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




5,571 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • April 7, 2018 at 12:50 pm
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    ^^Out:

    Your posts are quite on point and I agree with almost everything you post. But I must disagree with regard to Corey Hughes. During my tenure as a LTS franchisee, he saw what was happening to me & with me & saw the crap I endured with JTH. He never called me, approached me, nothing to talk about what has taken place. If he reached out, he would have heard from me, my story. Instead he listened to and followed the guy who hands him his paycheck & ended up being a real a-hole to me, when it was so easy to see what JTH was doing to me. Corey turned a blind eye and I would never forgive them for what transpired. At the time, it was a very BIG deal.

    Corey may or may not have been involved in scams or tax fraud, but he certainly was a little puppet for JTH during the time I knew him. And probably still is. Smart? Not sure how smart you can be when you see what’s going on all around you in Corporate & with franchisees & the thousands of lawsuits and still stay the course just to keep your own reputation and job intact.

    Only time will tell. And hopefully their time will all be up soon.

  • April 7, 2018 at 4:54 pm
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    The key is to charge a low enough fee or just mark a return free when a discount on an RT will leave you in Red so that way you minimize the RTs, lower your payments to JTH, and only paying the 19/20% royalty. That means no SAF and no CIF and no other idiotic scam promotion.

  • April 7, 2018 at 11:43 pm
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    The real key is to exit Liberty when you can and stop paying 19% of your earnings to them. For anyone thinking about joining this outfit, don’t do it.

    Don’t worry SanFranDan, John will get what’s coming to him. He is probably most miserable right now. He has destroyed too many lives. When John looks in a mirror at himself, he knows what he is and what he has done for $$. So sad, but true.

  • April 8, 2018 at 8:40 am
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    John Hewitt is back at it again! Loyalty Brands

    We will be offering three business opportunities this spring. All are in final negotiations with experienced partners.
    The first is an accounting and tax franchise specializing in small businesses with revenues of $500,000 – $2,500,000. We’ll be preparing financial statements and tax returns. Additional services will be payroll and business consulting.
    There are over 200,000 mom and pops competing at this level with NO nationwide brand name. We plan to expand internationally and to be the largest international accountant (office count) within ten years.
    The second initiative will be a national business broker. This business is well developed and we will have customers in virtually all small business areas. Our focus will be the same level of businesses as in our accounting franchisor. Services will include advice on mergers and acquisitions, buying and selling businesses and business evaluations.
    With the aging baby boomers retiring at record levels and the new tax law incentives this is an ideal time to enter this industry. Also we expect 5-10% of our accounting franchise customers will be sold each year. Our goal is to be the largest business broker in the US within 5 years.
    The third exciting and synergistic business is bartering. I believe that bartering to be one of the oldest professions. Bartering can be an excellent vehicle for inexpensive customer retention as well as reducing overall business expenses. We are partnering with the best bartering business I have ever seen. Our goal is to be the largest barter organization ever within three years.
    We will have employment opportunities as well as franchise and area developer territories available for all three businesses.
    Having founded national companies twice, once in 1982 and again in 1997, I am excited to set a goal to make this the fastest growing of all!
    Next Steps: May/June Launch- 2 day event in Virginia Beach. Dates to be announced March 31st!

    -JTH

  • April 8, 2018 at 11:23 am
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    ^^He’s like a cat with nine lives :( He just keeps going and going and going……..

    He keeps reinventing himself and doesn’t care one iota about anything except money & a name for himself. And buying awards. After all these years the IRS ‘should’ be able to hang him and they’re not. Why? Hmmm

    Whatever happened to Siempre Tax? Is there any national presence there? Haven’t done any research….not really interested………just want to nail HIM once & for all. He’s defied so many people, why? H& R cannot stand him, soooo many others cannot either. Anyone have a crystal ball what’s gonna happen next? :(

  • April 8, 2018 at 9:50 pm
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    In my very humble opinion, all three new ventures will be duds. Any business making one-half to $2.5m is not going to be attracted to a place best known for costumed clowns trying to draw business curbside. HRB has been on and off buying small accounting practices for years and has a somewhat respectable name to buy into. Liberty just does not have the reputation to attract small accounting firms and to attract clients to them. (Many mom and pops have more business than they can handle, thank you.) Payroll is a real headache. Lots of small firms don’t want that business, so the big payroll companies are the competition. Good luck beating them.

    Financial services and business consulting are services many businesses need, but they seek these services from trusted advisors, i.e., people who come highly recommended. Our CPA firm is inundated with offers to become financial service advisors, and we don’t want it. Let the pros have it. Too many licenses to obtain, too much risk, and if the market tanks too many angry clients.

    As for bartering, in all the years I’ve been in the business I’ve had two clients who bartered and actually reported it. Not much opportunity there in my experience.

  • April 9, 2018 at 10:09 am
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    I agree with SarahEA, so you have to ask what is Liberty trying to accomplish with this? It may be another way to scam unsuspecting investors to line little John’s pockets.

    John, if you have not noticed, is delusional. Both personally and professionally.

    The Liberty train will come off the tracks and crash and burn. He knows it and we know it.

  • April 9, 2018 at 1:50 pm
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    Loyalty Brands Discovery Day is Thursday April 26th at 12:00pm at Sweetwater Cuisine in Virginia Beach.

    Wonder how many fools will be there? Will Screwitt tell everyone that he has been fired twice by the same companies he founded? I guess third time is a charm…hahahahhahahaahah!

  • April 9, 2018 at 2:29 pm
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    SanfranDan in no way was I trying to portray that Corey was not anything but 100 percent Liberty. Corey would never go against John. John has taken care of him and I believe Corey has lied to himself as far as John’s Character and credibility. There are several people at Liberty that are like Corey. Corey is a poster child though that never was destroyed though and that is amazing and shows he figured something out that so many others never were able too. I just never saw or heard of Corey encouraging tax fraud or anything that would be considered illegal. Corey I knew was always 100 percent Liberty but when he spoke about the business and marketing side. He was cautious to never cross that criminal line. Also what I know about when he did run his stores he never crossed that line during that time either.

    As far as The new offerings they are trying to do a few things here. They are trying to divert attention away from them being a company that targets the poor and least educated in our society. By making these offerings, t enables them to at least have an argument against those who say Liberty won’t change. It also enables them to get some desperate franchisees and there’s many out there, some false hope that there may be a way to be successful at Liberty. I’m interested to see what the extra charge to the franchisee is for these extra services or opportunities.

    To me its revealing that they now want to get into business returns and preparing financial statements. If not for there stock price being in the toilet and the word getting out about the type of Franchise they operate I doubt they would do any of this. Needing to stop the bleeding and also the need to once again show some growth is vital to them surviving.

    I do see why they are stringing these services together though. This will give Liberty Corp a fresh new audience to market Liberty Franchises too. The number one thing that is scaring Liberty Corp is there inability to sell new territories or sell the many stores and areas they have been forced to take back. Without the ability to sell to fresh franchisees they are in serious trouble and now I would say the majority of there prospects have spent some time on this site and they are sick of fielding questions raised from reading the many many posts.

    The fact still remains. There is no logical reason for anyone wanting to start a Tax Preperation Business to purchase a Liberty Franchise! Paying a franchise 40k to completely handcuff you and hold your professional, Business, and Financial life hostage is insane. Plus then pay them royalties, advertising fees, and let’s not forget about double digit interest rates makes the decision to purchase a tax franchise suicide. But if someone reads these posts and decides to purchase anyway then I doubt they had much hope anyway.

  • April 9, 2018 at 4:55 pm
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    I am sure this new venture will not be related to Liberty.

  • April 9, 2018 at 5:35 pm
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    ^^Out:

    No problem. We’re all in this together. Anytime I have persuaded someone to NOT invest in this dumb ass franchise I get the biggest satisfaction of one more person HE cannot manipulate or take money from.

    Your last paragraph is 100% true, not to mention that when you leave you have to hand over YOUR client data base so THEY can take it over. It is a win-win-win-win for THEM. The poor franchisee gets nothing. It’s a sham, a shame, a scam and worse. Those fee intercepts used to drive me crazy. And if they didn’t like something you did that month, they used to come & audit me as punishment! Even though I brought them in thousands through multiple offices.

    The bartering thing is ridiculous. No right minded individual would ever go down that path.

    Sad but true: Thank you. We all can’t wait for him to get what he deserves. What’s the latest with his son, Danny? Not sure I really want to know. And ex-girlfriend lawsuit? Yeecch………

    Maybe the female reporter of the Virginian Pilot can come back on here as she did recently and post more garbage on him. The more the merrier! LOVE to read about his WOES! They need to keep piling up! ;)

  • April 9, 2018 at 6:17 pm
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    Sanfrandan the bartering thing I’ve always expected. Danny was and may still be in with that company. After doing some investigation it appears to me as though Liberty is going to make a huge push at getting mom and pops to convert to Liberty. Which of course follows the pattern they have always followed. Sell to people who do not have quite enough capitol and are forced to borrow from Liberty Corp at high interest rates so Liberty can have complete control over them. Then by going after mom and pops once the owner walks away or they are terminated from Liberty, Corporate is hoping to have a market to sell the conversion operations that fail under Liberty to other franchisees. Plus by adding services they can collect royalties on accounting services along with other services. They are desperate to show growth and the many struggling mom and pops is low hanging fruit.

    Guess we will watch and see. I don’t think the future of the tax preparation business and the accounting business is not traditional retail storefront locations. Barring some unforseen circumstances, Storefront locations are going away in large numbers.

    But I also don’t believe that the tax preparation business is dead either. It will be the ones who can understand what the market is wanting and being able to deliver it the most effective manner who will thrive

    Before anyone enters the industry they best know the route that the IRS has chosen to take, if you plan on entering the business you better understand what the IRS is doing and design a business that does not put you directly in their crosshairs. Marketing to low income bank clients and marketing to the micro small business or even the smaller self employed is a dangerous venture. The IRS now puts the responsibility on the tax preparer and/or the Owner of the tax prep business and you could easily be facing prison time if you fall into the desperate tax customer trap because your financially desperate. This trap is all the people in this country who will do anything possible to either get a larger refund or get out of paying the IRS via inflated deductions or made up deductions. Many of these tax clients search out tax preparers or offices that they can convince to do there returns. If the client is ever caught or audited by IRS they will turn on you instantly and swear that they had zero knowledge of what was going on. The tax preparation business is a dangerous one at present. Preparers are facing many years in jail. You need to be smart and see the many pitfalls and traps!

  • April 9, 2018 at 9:13 pm
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    I forgot to comment on the plan to become a national business broker. “Services will include advice on mergers and acquisitions, buying and selling businesses and business evaluations.” This is a highly specialized area of accounting and not many firms do it. Those that do command BIG bucks. I can’t imagine a single one of them wanting to share all that income with a franchisor.

    Out, tax prep is not that dangerous if you follow the rules. I just had a client hand me a list of expenses that include a fairly large amount for travel (not mileage, but airfare and hotels). He works on land parcels locally. You bet I’ll ask questions before that goes on his return. We regularly have IRS agents conduct audits in our office. They admit that they are auditing the preparer as well as the client. We keep copies of client records, questions asked, etc., and they usually leave satisfied with our work. The preparers who are going to jail are those who do funny stuff.

  • April 10, 2018 at 3:23 pm
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    January 22nd, 2016

    Bartercard USA is delighted to announce the appointment of Chad Corman and Danny Hewitt as new franchisees of Bartercard Hampton Roads. Hampton Roads takes in the cities of Virginia Beach, Chesapeake, Norfolk, Portsmouth, Suffolk, Newport News, Hampton, Williamsburg and the Outer Banks area of North Carolina.
    “We are very excited that, after nearly 25 years of operation in other countries, the Bartercard franchise concept has finally been released in the United States and that we were able to join the Bartercard USA team on the ground floor. We believe that Bartercard offers a unique value proposition that all business owners who want to increase their cash profits and take their businesses to the next level will find extremely attractive! ” said Chad Corman.

    Chad Corman is an entrepreneur, franchise consultant and strategist, who owns several franchise concepts, has built franchisors, and spearheaded dozens of successful multi-million dollar projects. Chad is an expert at creating joint ventures, building strong teams and driving solutions from concept to market in a way that maximizes value for all stakeholders.

    Danny Hewitt is a best selling author who is highly motivated, dedicated and an energetic professional with a strong background in guerrilla marketing and franchising. Danny played a pivotal role in the explosive growth of one the largest Tax franchises in the US and Canada, he inspires companies to reach their full brand potential and communicates their value to key audiences through public speaking, corporate training, partnership development, social media and guerrilla marketing.

  • April 11, 2018 at 12:06 am
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    It never ends…scammers that is. They are “excited” and “believe” they can dupe businesses to take their businesses to the next level…whatever that means? When you read that Danny played a pivotal role in the explosive growth of Liberty, they don’t mention the deep, deep trouble Liberty is in now. Must be because Danny left them and long ago and now he gets to work with Chad the wonder boy. Can’t wait to see how that works out.

    These people live out their days trying to figure out ways to get other people’s money. Sad, but true.

  • April 12, 2018 at 9:11 am
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    Did anyone see the article yesterday written by the Progressive Accountant about Steve Dolesky (sp) of Fanatical University. That was a scam from the beginning. Our AD wanted us to attend, but told him, there is no way in Hell we were going to be associated with people who promote FRAUD in preparing tax returns and definitely did not want to be listed anywhere as an attendee of such event. I did advise my person with IRS about them and someone in the DOJ back in 2013. Took awhile, but finally that scambo is going down. Awesome work from all the LTS people who helped point in the direction!

  • April 12, 2018 at 2:02 pm
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    http://www.theprogressiveaccountant.com/Tax/feds-sue-florida-three-liberty-operators

    ^^Here’s the first article franchizee mentioned

    http://www.theprogressiveaccountant.com/Tax/suits-against-liberty-pile-up

    And here’s another one. In the Steve Doletsky article, they spelled his name wrong at least twice………..but to say that JTH touted Steve’s classes: OF COURSE HE DID THAT!! Knowing full well what was taught. A thousand reasons HE needs to be behind bars :(:(

  • April 16, 2018 at 5:10 pm
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    It’s about time for one of NC Hillbilly’s articles! ;)

  • April 18, 2018 at 2:17 pm
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    I know Steve was an Area Developer but never heard how he left. I’m wondering how long he owned his DMAs or DMA and I wonder if he ever paid it off to where he actually owned it not just having the title with short term financing and all the money going back to Liberty. I’m willing to bet not even he was able to complete Liberty’s ultra short term financing and inflated sales price.. From what I have seen most in his situation get hooked on being the company’s Golden Child and get hooked on the salary they are paid. But eventually they realize that they must be able to back up all there claims and that’s what kills them in the end. Liberty sells DMAs with the intent of taking them back in several years, or they extend that by a few years with finding a partner for a AD and doing another short term financing deal. Either way Liberty never intends the financing to be completed. Cheaper for them since they don’t have to hire an employee to do Ads Job and Liberty gets much better growth numbers when a owner of DMA is the AD.

    Normally at first franchisees that are being paid a corporate salary and still running stores, startnto pull stunts and do a ton of free returns so they can appear to be a success. But then the financing and over stretching there operations size and growth force them into the situation that so many fall into and that is at some level, doing returns that should never be done. But in Steve’s situation it would appear he went all out with committing fraud. I’m sure Steve feels different now about Liberty then he did when leading franchisees down a path of trouble.

  • April 24, 2018 at 4:10 pm
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    Steve Doletsky was, and probably still is, in cahoots with Hewitt. They were what I call the masterminds behind the taxpayer EIC filing fraud as well as the promoters of the sham Liberty has now proven to be. What is keeping the stock prices up for Liberty is that there is a whole lot of stock manipulation going on which is easy to do for a low cap, tightly held entity. The dividend is high as well which causes a high return percentage on investment. This is to lure some unwitting outsiders to buy stock at an inflated level so that the major players (Hewitt) sell off something pretty worthless. What is underlying (no pun intended) about this company is that they produce their own set of lies and even start believing them. Make no mistake, this is an extremely toxic company that, in all rights, should be in its final down slide.

    There is still widespread fraud being conducted in the Liberty stores that is encouraged by management through high royalty fees which lead to high consumer costs. We all know this, yet this company still bumbles on. The IRS could care less about the root cause and pattern of fraud perpetuated by Liberty Corporate and continues to target the individual franchisees since they can ill afford an attorney to defend them properly. Liberty knows this and still preys on many unsuspecting individuals. Always stay aware and steer real clear away from these clowns.

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