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.
Funny how Rob didn’t respond. Also interesting how there hasn’t been any new post.
Bill:
Whether Rob is or isn’t an AD or corporate employee, the unfortunate fact is that Liberty is just a poorly managed organization. What’s worse is that they would rather be deaf, dumb and blind to that fact rather than fixing it. I would be very interested in knowing how many franchises are really for sale, how well they are doing at selling new ones, and what the turnover ratio is. I recently heard that they were trying to sell one new franchise a day. That is clearly down from their projected 400 that they talked about before.
You guys also need to put things into perspective regarding the economy and Liberty’s competitors. The economy is in tough shape right now, yet Liberty continues to obtain market share from both HRB and JH. Go back and listen to the most recent conference calls for the quarterly reports for both HRB and JH the past two weeks. Certainly the one for JH was pretty bad in my opinion, yet Liberty continues to grow. I am opening up a second office this year (it is an existing office). My goal is to double revenues in that store and I am confident I can do so.
Anyone ever looked at the number of offices by year at Entrpreneur.com
Wonder why the number of Liberty Canadian franchises has dropped about 20% the last five years? (about 50 offices)
In the last year H R Block added new offices in Canada.
Also, Liberty added about 600 new franchises last year.
And if office 75 did ONLY 237 returns:
75. King NC-1 (15945) 75Eric MoserGreensboro-High Point-Winston Salem, NC – 237
What does that say about the other 525 new offices??!!!
Explain that one Rob?
Mike:
I do put things into perspective. I was sold non-performing asset. I have recently had the opportunity to talk with a couple of poeple who went up to VA Beach to hear the song and dance Liberty puts on. That confirmed that what I came back with from my visit was reality. They trot out the Top Guns who claim they did 700-900 returns the first year. Fact is, almost all offices do less than 300. I was told I would get support. Fact is,there is no local support for any franchisee. H&R and JH advertised all through 1st peak steadily, iincluding radio, TV , direct mail and inserts from financial institutions. Liberty did none. JH may be in financial trouble, but they will probably go into bankruptcy and come out with a lot less debt. They are not going away. Liberty says their system works, yet of the 7 stores that I know of, most use very little of the “Liberty system”. Fact is, it is too combersome to manage. They talk about all the support you get from VA Beach, fact is, it is more trouble than it is worth to contact them and get a straight answer. Unless you know the tax code pretty well, chances are you will make mistakes with the software. And last but not least, it is impossible to make a business case for many areas of the country due to rents and other costs involved. None of this is ever mentioned in VA Beach. I rest my case.
Frustrated and Disgusted:
I am based in Massachusetts where rents are pretty high and I agree that this does become difficult to some extent. In my first year we only did 350 returns, but then last year (in our second year) we did 775 returns and increase our revenues by 170%. It is possible to do. Yes – I had to change many of my strategies and learned a great deal from talking to other Zees. Yes, there are plenty of Zees that struggle but there are also plenty of Zees that do well.
I appreciate your concerns with Liberty and it appears you are a smart, intelligent individual. Do you still own your franchise or did you end up selling out? I’d be happy to talk off-line from this board if you ever wanted to.
Mike:
That’s an impressive improvement. Could you tell us about the demograhics of your area, what was the single most important factor in increasing your return volumn i.e. more business to business or ability to provide rals vs JH? What was your retention rate and how many free returns did you give in each year?
Thanks
If an unprofitable McDonald’s or Burger King is closed, the franchiser does not reopen the store with a new franchisee in place. The franchiser realizes the area is not a good location, and moves on.
Why does LTS continue to resell locations that have not worked for past franchisees, if they really care about a franchisee becoming successful? The only reason I can come up with is that another $40,000 plus goes into LTS with no concern for the success of the new franchisee. There is no concern of success, only of profits at the franchiser level.
Thanks to all who have taken the time to post here. I am proud to say doing my homework helped me make the decision NOT to pursue the opportunity with LTS.
Sammit:
Congratulations on your decision. What is telliing from all of the comments above is that no one has denied LTS shows no concern whether their franchises succeed or fail. That to me speaks volumes about this organization. Just sell, sell, sell. and certainly don’t worry about supporting them after the sale. Let me see, make sure your customers are excited about the service you provide as a tax location, but it is of no concern to us at the corporate level, you are just another means for us to build our empire.
What is more telling is that you are still allowed to own your location or locations with all the whining and crying you do. When you fail and loose all your money make sure you blame someone else, which is almost a gurantee. No wonder your frustrated and disgusted. I wonder if any amount of support would help since you seem determined to fail and determined to do anything you can to bring down anyone you can while you do so! Good luck, signing off for good.
Rob:
I have attempted to keep my comments on a professional level, and suggest to anyone who is looking at purchasing a franchsise, that LTS is only interested in their own development, not their franchisees. If you can give some facts that counter that arguement, I would love to hear it. All I have heard is that there are successful locations, most of which can be credited to the hard work of the franchisee, not LTS. Meanwhile JTH continues to promise gold while the franchisees get straw. I would really love to hear from anyone where someone from LTS has actually spent either time, effort or money to help a franchisee be successful.
Rob:
And oh by the way, Entrepreneur magazine now rates Liberty at #28 (in 2009 they were #3), below H&R (#6) and right above Instant Tax (#29) on the top 500 list. JTH needs to wake up and realize you can only screw your franchisees so much before it comes back to bite you.
Entrepreneur magazine means very little too me. Thats fine if you want to spend all your time letting Liberty frustrate you no matter if its true or false. It sounds like you need a “Job” not a business. When buying a Franchise you are not buying a “Parent” or a “Big Brother” who is going to hold your hand and ensure you do everything exact. The largest issue with Franchising is too many prospects do not understand their role as business owners and too many is expecting the Franchisor to hold their hand and give them a succesfull business. Not only have I become sucessful with Liberty I have developed quite a few succesfull Zs. I practice what I preach and I have always been willing to put my money where my mouth is. Liberty has a solid model and will be even more succesfull in the upcoming years. You will never agree and it appears you have decided to dedicate alot time blaming them instead of growing your business. Thats your right and in a free country thats the great thing you have the freedom to do what you want and I can do what I want. If you ever decide to take controll of your business and come up with solutions I am always available and would be happy to speak and do what I could confidentialy with growing your business.
I think this thread is way past dead and at an impass so I have decided to focus elsewhere. There are a group of people who are so focused on convincing anyone and everyone that Liberty is bad and no amount of evidence or proof would stop that. My goal here is not to do anything except try to be as honest as possible and possibly help several people and show that this is a great opportunity. I fully understand your posistion and the only thing I would suggest quit giving anyone this much power over you when your success and falure is completely up to you? I do wish you the best and everyone else but I see no need to continue a discussion that will never end and that will always be at a stalemate.
Not only am I convinced Liberty is a good opportunity I think its a tremendous one over the next 5 years and plan on expanding much more!!! I made that decision because I can find no other business that gives me the opportunity and reward as Liberty does. Good luck to all!!
Rob,
“It sounds like you need a “Job” not a business.”
So unfair. My top 100 office prepares 1300+ returns and after discounts nets $180,000. Liberty suggests you net 30% of that. I work about 100 hours in the pre-season and 1000 hours during the season plus DMA meetings etc…
The average person works 1800 hours a year and get 401k + vacation time and paid public holidays.
So you think my $60,000 for 60% of a “normal” years work is a better lifestyle. I earned over 100k + perks before I got a “job” with Liberty. After 6 years I also have a huge debt of $100,000+ I’m still paying off and a “job” would have saved me that.
Don’t kid yourself that owning a Liberty franchise is a lifestyle change for the better..
In your best year with one office you could net $100,000. Even Corey Hughes who prepared 1600 returns in his first year had more than 500 free returns or so I was told. And he was almost the best first year store EVER.
Having a job is not so ignoble as you allude to. I could be earning $100,000 and not be carrying a massive debt and worry for nine months of the year.
And at least wth a job you aren’t concerned if the IRS, banks and the franchisor is going to screw your business so you lose a large chunk of your revenue as was the case with many zees this last tax season.
Just worth thinking about.
If you only net 180k on 1300 returns and you are a 6th year store, you have a problem. Sell me your territory and all your debt will go away and you can go land your 100k+ per year job.
Funny. 340 free returns due to the economy (trying to help out as Steve Tyler would say – usually minimum 120-150 to meet franchise agreement and bank products rebate) and 970 paid. In a state with no state return so my net fee was $185+
And btw there aren’t any New Jersey zees in the top 100 offices report so who are you to talk? Office 100 prepared 1166. Which means…. that’s right.. you’re not even there! So keep your comments to yourself okay rookie.
And have you every heard the story on how to start a NJ zee in a small business?
Give him a big business and wait.
I must of struck a nerve. Offer still stands to buy your fledgling office. If you hate it so much just sell it and move on?
Rookie, that’s funny. I suggest you refrain from name calling when you are admitting to the world you left a “high paying” job with benefits to be miserable in your Liberty business. No matter what names you call me, I don’t have 100k+ debt from my Liberty business, actually now that I think of it I have $0 debt with Liberty.
I won’t play into your disgruntled attitude, my offices fair just fine in terms of returns, profitaility and cash flow.
With all that being said I commend you on 1300+ returns, with that base I’m sure 1500+ is in your sights.
My goal with Liberty is to make much more than $100K a year. I currently make well in excess of $100K a year in my day job, but my goals are much loftier than that. And yes it is very possible when you own multiple stores. This upcoming season will be our 3rd year with Liberty and my wife and I are opening up our second store this year (she runs Liberty full time for us). By the way, JH has helped us tremendously and given us a great opportunity to purchase an existing store, so yes Corporate does help Zees. If I didn’t think it was possible, I would just stay with my day job and continue to make more money every year and get paid a good salary. Your opportunity to significantly increase earnings with Liberty with multiple stores is a great opportunity in my opinion. Once you have mastered how to sucesfully operate one store the opportunities are endless.
To NJ Zee could you please tell me what demograhics your store is in? It must be a major urban area. I was in the same general area as most Philadelphia and NJ Zees, and with the exception of 1 zee in the Philadelphia market, I knew of know one in the SJ area that was pleased with the technical support or the ADs. At the time I was involved (4 years) there where maybe 13 stores in SJ this includes 1 store in Burlington and the rest in Camden, Gloucester & Atlantic County. Of the 13 stores in this area 4 closed completely and 1 became a company store. This total does not include the store owned by a relative of JH who just walked away or the store in the Vineland area that was open for all of about 4 weeks. .
To Mike, I agree that the way to go would be with multiple territories if you can duplicate the success you are having in your first store and be profitable. Again I would like to ask you what are the demographics for both stores? How many returns did the 2nd store do last year? What was that stores retention rate? How many free returns?
As for corp. helping you. I would be glad to lend someone money at 12% rate of return knowing that it will be you expending your money to promote the business and based on the terms of the contract if your not successful the store comes back to me. On top of that there is a minimum franchise fee of 5,000.00 1st year 8,000 2nd year and 11,000 3rd year.
It is my personal opinion John Hewitt’s main goal is not just to sell franchises but to surpass H&R Block as the biggest tax preparation service. However I do think it is interesting when you google the name of any of the three tax services only with Liberty does Liberty Tax franchise appear ahead of the tax preparation service.
Bill – To answer your question. The demographic for the first store I opened up (just finished its 2nd year) has a household AGI around $50K-$50K which is actually higher than your typical Liberty store I think. Our 2nd year store did 775 returns with 90 of them being free (including those that defaulted on bank products). Our store retention rate was 43-44%.
I agree some NJ Zees are absolutely brutal running a Liberty Tax. I did find it funny when the Vineland Zee opened for all of 4 weeks and disappeared.
5 Year Office – AGI $80,000
5 Year Office (Acquired Jan 2010) – AGI $41,936
4 Year Office – AGI $73,000
1 Year Office – AGI $55,394
1 Year Office – AGI $28,130
I have a good mix of demographics, I attract lower – middle income taxpayers in the first peak and I then turn my attention to bringing in higher income earners for March and build up for a strong April.
I will say that because I like full control, I explore towns and evaluate sites based on criteria that I believe is a winner. I read and digest all the information from Liberty Corporate, Zeenet, Discussion Boards and my own business acumen to make decision on expansion, staffing, advertising, etc…
I never expected nor wanted Corporate or my local AD to hold my hand or get in my way, but I know they are there if I needed tax support, tech support or procedural help.
As I’ve stated before I take very calculated risks before I open a new office. I budget so my break even is at the lowest possible level without sacraficing the core marketing techniques that bring in business.
And by being apart of another large franchise system, I think it’s funny how much hating goes on against Liberty for support, royalties, advertising, etc. Liberty Tax is there to provide the framework and system to run a Tax Preparation business, it’s not their job to run it for you or spend their money on advertising. All big franchise systems have franchisees pour advertising dollars into a fund, with no help from the franchisor.
People need to take some responsibility for picking a terrible location and/or territory, negotiating a bad lease, over spending on payroll, furniture, computers.
NJ Zee Out.
MIke
Congratulations on your success but I’m a professional skeptic. Could you please give us a little more information like the state and maybe the City you where located in? Could you tell me how many returns you did in your first year and what was your net fee in year one and year two. I know that these may be invasive questions but everyone on here who is a former franchisee is willing to be upfront about their experience and is only limited in what they can say based on the stipulations that Liberty imposes on them. Many of the individuals who speak about their success with Liberty do so in general terms. My purpose here is to provide fair and honest insight into owning a Liberty Tax Franchise.
To NJ Zee
Thank you for breaking down the number of offices you have and there respective ages. Since you own 8.5% of the NJ stores and I know who the main store owners are in SJ area then you must be located in the North Jersey area. Would you mind telling us the number of returns each store did? Also, how did you arrive at AGI (adjusted gross income)?
AGI can be found by looking at the IRS efile statistics for a city/town. I have a spreadsheet with all my offices and all the potential towns I might want to expand to.
I am in the Central – North Jersey area.
Bill considering you seem to know my area so well can you share your experiences and level of volume you were able to achieve?
Mike is from Massachusetts and the statistics he states are true and not exaggerated in any way.
I am going to decline to post my office returns counts and net fees on this message board because frankly it doesn’t benefit me to share my numbers at this time.
To NJ Zee:
I think this is where you and I differ. I expected when I purchased my franchise to get a least a little help understanding the business in my area, what locations would work out better, what marketing techniques have worked in the past for the demographics I had in my territory, and for the most part, what numbers to really expect based on others in the area. I ASKED FOR THIS TYPE OF INFORMATION AND NEVER HEARD A WORD. I GOT NO ANSWERS. If you think it was just me, it wasn’t. There was another franchsiee who bought and started at the same time who spent over $30K on marketing the first year and did less than 300 returns. We are both struggling because we now know what we didn’t know then. The season is so short, and the window so narrow, you have to have a good year or you will go broke unlike other year-round business opportunities. Do I expect Liberty to run my business for me or hold my hand like a child. No, I expected to be able to talk to someone who knew the business and understood based on demographics what may work best. Also, if you have new franchisees, what does it hurt to help with doing some local advertising so that they have a better chance of success. This is the kind of help I expected, needless to say I didn’t get it.
I’m sorry to hear you did not get the support you needed. You are right this is where our perceptions differ about Liberty.
Curiously how did your 2nd year turn out?
Frustrated and Disgusted,
If you want to talk outside of this forum I would be happy to talk to you. We disagree on here but I think by us speaking one on one and finding the common ground that we do agree on I may be able to share some things that will change your business. I have always been willing to put my money where my mouth is and I would be happy to speak to you confidentialy and would be happy to help increase your business no strings attached.
I have never said Liberty was perfect but no company is and I am willing to bet my first year was as challenging if not more challenging than anyone out there. There is no Franchise out there thats perfect or that does not make mistakes. The difference is I refused to quit and I refused to be average even though my first year was a disaster. It is up to you but I am willing to talk one on one and my only intention is to see if I can help, our conversation will never go any farther than you and I. I can tell just from the posts you have natural talent and your name Frustrated and Disgusted describes more of how your feeling than your talent level.
NJ Zee
My experience was after I bought my original territory in November., none of the sites I had chosen were considered acceptable locations by the AD/Corp office. Because the tax season would be starting soon and because we couldn’t agreee on my site locations I was (foolishly on my part) persuaded to swap my territory for one with the right type of location i.e. urban/poor AGI 28,000. Didn’t get approval for the Certificate of occupancy until Feb. 3 so my first tax season was a bust. Never got over 100 returns. The following season I moved to a different store location and after 3 seasons finally had to call it quits. In talking with other franchisees my situation is not unique. My only motive for posting on this website is to offer insight to potential franchisees and maybe help them avoid the type of mistake that I made.
The tax prepartion business is more complex then Liberty makes it out to be. The system that they developed works best in urban/poor areas where you can get low rents and maintain a high net fee through bank products. However, this area of the tax business is starting to change as fewer banks are offering this product, The IRS is doing a way with the debt indicater and is working on a new program to speed up the refund process. Also due to the economic downturn there are less people filing and the biggest group hit by unemployement are the poor. No wages no EIC.
Liberty Tax does not do any national advertising… You can talk all you want about guerilla marketing but it does not build brand recognition as quickly as a national marketing campaign. Just look at “AFLAC” for an example of how well national advertising works. The reason Liberty doesn’t have a national TV campaign is because it’s too expenses and JH doesn’t want to spend the money. Is it any wonder why the online tax service e-smart failed. Who would know it’s available if the company doesn’t advertise it.
I could go on but I’ll wait for the usual comments from you about how I didn’t follow the system.
If this is the way the Liberty zees talk TO each other… have fun with yourselves. I’m outta here.
Bill:
Over the last couple of weeks, I have made several phone calls and done some significant research. Situations like yours are not unique by a long shot. I have also found out through the same research that a significant number of stores and owners are in deep financial trouble. Much of what you discuss is the issue. Strip mall store fronts in many areas are very expensive, add to that the significant cost of marketing, and you have an unworkable business plan. For Liberty to survive, they need to bring down the costs to a sustainable level. Some of that needs to be national advertising, some needs to be additional support for services that will bring in revenue off season, and to your point, realize this is a much more complex business because the revenues from EIC and RAL’s are quickly going away. It is unfortunate that they have their heads in the sand thinking that this will all go away and be good again when the economy improves. I have serious doubts.
Frustrated and Disgusted
I don’t know how long you have been a franchisee but I know from my own experience that I wanted it to work and didn’t want to admit I made a mistake.
I was warned in my 2nd year from another franchisee that I should get out and not waste any more money. Another Zee said if your not at 400 returns by the end of your 2nd year you need to get out. I choose to ignore those warnings along with my own early results, the result, after 4 years I nearly went broke.
Liberty the corporation is in the business of selling franchises 1st and tax preparation 2nd. I don’t beleive in the long run this is the best strategy but maybe their long run goal and the franchisee’s goals aren’t the same.
Current franchisee who would like to be happy. Besides the bad advice, ridiculous requirements, and over bearing expense I would like to make this a success. Will John do something to make this work for us? If you google “liberty tax franchise” this page pops up on the first page. One would assume that this is hurting the abilitity to sell new franchises.
Justwatchin
If you google Liberty tax service the first site listed is Liberty Tax Franchise and the next one listed is Income Tax Prep – Liberty Tax Service. This shows you the company’s priorities. If Liberty sells a franchise at $40,000.00 and can sell 200 a year that’s $8,000,000. To receive this much money in royalties (14%) these 200 stores would need to have total net fees of $57,142,857. Everything is in the company’s favor. The franchisee pays the fees, absorbs all the cost and if the franchisee fails their still contractually obligated to pay at least the minimum franchise fees for the years they where in business. $5000 1st yr, $8000 2nd yr and $11000 for every year after.
No wonder you guys are struggling and failing. I will challenge either of you to call me and learn. There is no reason for this kind of hand ringing. Liberty is in the business of selling territories and in the business of collecting royalties thats their business. Now with that they have created a brand and a track for Zs to run on along with tax and tech support amongst many other important items such as banking relationships. Liberty is not showing any disloyalty or showing lack of interest in their current Zs by selling territories. National Advertising will do nothing to bring costs down and you are allowed to do a number of things to create off season revenue if that is a priority. Or do you want them to hand it to you on a silver platter with guranteed income and guranteed profit margins because thats not owning a business thats being an employee. Of course Liberty wants final approval on Zs putting other businesses or services in operating in the same office that bears there name, any franchisor would, but they are completely reasonable and I have never seen them turn down anything within reason.
Zs job is to build their business and attain profitablity. Liberty system is a great system and one that profit margins can be attained in that very few other franchises can come close too. I know you want to talk about the first and second year and how its impossible to build without all this outside help. I will make the offer again, call me. You can continue to ring your hands and see black helicopters over your house or over the hilltops or you can get the support you say you want and the success you say you desperatley desire!! No one will come in and do this for you. You can make this hard or you can make it easy, it is realy a choice you make, especially today when we have so many talented Zs willing to take the time to share and help.
I sold one of my offices to my Manager last season. He put no money down was financed 100 percent over 4 years plus had additional financing for start up costs. Oh yea he paid 1.20 times net fees!!! First year he still attained profitablity putting 40k in his pocket with all the money needed to get into the next season in the bank! He started the year with a bad credit score and ended with a good credit score! he was well under 30 years of age also. He paid every singe red penny of royalties and Advertising Fee all of his note payments and banked enough to get to next season and put 40k in his pocket!
Guys take the help that has been offered by several on here including myself or post your profit and loss and prove the imposiblity of making money which is impossible because it cannot be proven. What usualy happens is the P$L shows where the problems are and gives a ton of clues to what needs fixed. I know the numbers and percentages as well as anyone out there and this opportunity is not only rock solid its extremely exiting. I am more than willing to speak to you confidentialy or refer you to somone closer to you that can help with the road map to become succesfull that will do the same. Opportunity is too good to self defeat yourself. All I can do is make the offer. You can try to destroy your investment or try to make it work for you.
Even though your doing everything possible to damage yourself further by the constant attacks against the company you invested in and doing the same to mine and many others also. I am still willing to help no strings attached and not a word will ever be said about it unless you say something. I am willing to spend my valuable time to back up what I say and what I know to be the facts. The choice is 100 percent yours and you have nothing to loose. Only thing I require is if I help, you have to concentrate on becoming profitable instead of this destructive behavior.
Rob:
Don’t you think it’s deceptive for you and NJ Zee not to disclose that your both area developers and that you get a percentage of the franchise fee when someone buys a franchise in your territory.
I’m glad that you have been successful but as you know that’s not the case with many of the franchisees. What you are referring to as attacks I view as providing interested parties with valuable insight. People should be aware that Liberty Tax the corporation does not have regional or a national television campaign. That their marketing stratagy is based on the book “Guerrilla Marketing Handbook” That their system works best in high density, low income neighborhoods where rents are low and fees can be high due to a transit tax client base who relies on bank products to get their refunds. That the franchise agreement is for 5 years and there is a minimum franchise fee of $5,000 the 1st year 8,000 the 2nd yr and 11,000 for each yr after. That you pay a 5% royalty fees that then gets allocated back to your territory based on the wants of corp and the AD. That your site selection needs to be approved by the AD and corp. That rents vary depending on the area of the country. In Ky it may be 11.00per sq ft while in NJ it might be $23. All of this is relevant information in helping someone understand the true cost of doing business before they put out the $40,000.00 franchise fee.
As for your reviewing someone’s P&L what areas would you suggest I look at?
Why would it be deceptive to not focus on being an Area Developer? None of this conversation has anything to do with anyone owning a DMA? I honestly do not think you have any clue on the real business behind Libertys DMA process. Fact is that if I have a group of franchisees who are not profitable and have debt issues then I am going to not have very good if any real income at all depending if any of the DMA is financed. I paid allot of money to purchase the DMA and it is not near as easy as most think. But none of that matters one has nothing to do with the other and if you think Area Developers are out to somehow steal from Zs than your sadly mistaken and do need to look into the “Black Helicopters” chasing you.
I have no clue what your P&L looks like nor has any complaining Z who swears no money can be made doing this, have posted their P$L In the past what I have seen in others in these spots is overspending on Labor plus an even worse level of productivity from the staff that was working. I have also seen off the wall spending on different marketing items where nothing really fit together just a bunch of individual actions thrown together (No Focus). Also I have seen a total lack of sales skills evident by avg net fee both early and late. I did over 30 percent of my entitys total returns in the month of March and those were paid returns not free and deep discounted!!!! On top of those few items the overriding problem was a total ineffective job of executing anything at a high level.
All of your points about National Advertising, minimum royalties, site selection, advertising fee are all pointed out very clearly when a new Z purchases a territory. Tell me the Z who was told they should join Liberty because of their National TV Campaign? Anyone who just slightly studies Liberty knows their take on national TV advertising!!! None of which are issues anyway. And your lease is a fixed expense and yes it can have a slight impact on your profitability and cash flow your first several years but in no way will it ever be a huge issues in 99.9 percent of the cases or be such that it will keep you from positive cash flow or profit margin. Within 3 to 4 years it should be a non issue. I guarantee lease rates where I am are not that much different than where you are and once again even if yours are 25 percent higher your lease payment may slightly effect your margins in the long run but typically in areas that are high rent the fees are higher also which usually puts it back in the favor of the local Z.
Lastly I want you to forget everything you think you understand so well about Liberty and go back and read the operations manual word for word being as objective and taking it for what the words on the page says not what your concept of what Libertys system is. Do that then call me and turn things around. Not sure how much more I can offer and how much more plain than I can be, I have done everything I can to maintain my patience. I have offered with no expectations in return to help you turn your business around. I have many success stories and references from Zs I have helped that will flat out tell you what I am saying is the truth!! Up to you. If not i wish you luck. Your best bet is to email me or text me. If you call and I do answer leave a message and or text me.
Rob
The fact that you are not up front about being an area developer is indicative of the culture Liberty Tax Service encourages. They where fined in California for false and misleading ads about refunds in 24 hours and then there is the misleading ads on career builders, The ad looks like a job with pay ranges from 56k-69k but it’s actually an advertisement to purchase a franchise. The ad is in direct violation of the FTC see: http://everyjoe.com/work/liberty-tax-deceptive-franchise-ads/. Just like a real estate agent is required to disclose that they are an investor in a piece of real estate you should be required to disclose that you have a financial interest in the sale of franchises in your territory.
When I asked you about the P&L I knew the only items you could come back with is labor and marketing. But the fact is a new franchisee has no clue what his labor cost is so he relies on the information provided by corp. That information ” the Liberty system” says you must open by the second week in January and maintain hours from 9 to 9 Mon. – friday and 9 to 5 on saturday. You are to keep these hour all through tax season closing on April 15,. All new stores receive a staff budget from corp. based on 600 returns. The marketing is also a result of following the system. The system says you are to spend x amount in my case I budgeted $6000.00. Because your a good franchisee you follow the system but because must 1st year stores only do somewhere between 125 to 200 returns payroll is much higher as a percentage of revenue then what was budgeted. The result is your AD says its “BECAUSE YOU DIDN’T FOLLOW THE SYSTEM”.
As for national advertising I am stressing to potential franchisees to ask them selves what are you buying when you purchase a franchise. The most important element is brand recognition. Of the three national tax prep services only Liberty Tax Service doesn’t have a “National Advertising Campaign”. In the beginning you might have been able to justify not having a national marketing campain but now with 2500 stores and a franchise fee of $40,000.00 this argument just doesn’t hold any water.
Rob regarding rent, thanks to the internet I can check commercial rates for different areas and the rates I gave are accurate.
Unlike you Rob, my goal on this site is not financial. All I’m trying to do is simple present the facts about Liberty Tax Service. But regardless of what is said on these sites people will continue to buy “Liberty Tax Franchises” because, like I did, they want to believe they can make a year round living working only 4 months. Greed is part of human nature.
Bill:
You make some legit points. As for your “not following the system” point, watch this little video if you want a laugh. It’s just what you’re talking about http://www.unhappyfranchisee.com/certapro-painters-certapro-sucks-the-movie-the-gripe-site/ Change Certa to Liberty and painting to tax prep and Liberty could have a new franchise sales video.
As for national advertising, who do you think pays for the national advertising of franchise chains? Franchisees! Just saying, watch what you wish for. If you get it, be ready for another hefty expense on that P&L.
Rob: I don’t think that being an area developer discredits your opinions or advice, but Bill is right that you should disclose it. You make money from the sale of Liberty franchises, right? Prospective franchisees read this thread, and what they read impacts your ability to sell them, right?
So it is in your best financial interest to defend Liberty system and to argue that those who are struggling or failing are simply not following the system. In weighing motives behind viewpoints knowing that you sell franchises is relevant. It seems weird to me that you referred to being an AD as purchasing and owning a DMA. Seems like an awkward way to avoid saying you are a commissioned franchise sales person.
Again, I don’t think that fact makes some of your points less valid. but less than full disclosure is just fuel for the black helicopters
(that line was pretty funny).
In my first year I did 359 returns, in my second year I did 775 returns. I am expecting to do over 1000 returns in my third year and through the help of many succesfull Zees including Rob, I plan on significantly raising my ANF this year. With all of that I plan on operating at a 30% margin this year on my store, which includes paying a GM to run my store. In addition I am buying an existing store this year to expand. All the naysayers on here keep saying you cannot make money doing this. I broke even in Year 1 and ran about a 23% margin in Year 2. I made a ton of mistakes in my first two years, yet I took responsibility for it, and reached out to the many helpful Zees out there to improve my operations. In my first year I did not blame Liberty at all and realized that I had made a ton of mistakes and needed to learn from it. And that had much greater success in Year 2, but still realized that I need to improve going into my third year. I don’t view this business as rocket science and as Rob says if you follow the Operations Manual and take ownership of your business the opportunity to be very succesfull is out there and very achievable.
Mike:
In 2008 and 2009 an average 1st year Jackson Hewitt Store did 234 and 205. Their 2nd year stores did an average of 273 returns in 2008 and 235 returns in 2009. Which is roughly an increase of 15% from the prior year. It’s a complement to you to do 359 returns your first year and it’s almost unbelievable that you increase to 775 returns your second year with only 95 free returns. That’s an increase of over 115% at a time when the economy was down and most individual stores saw tax return volumn decline.
As an accountant it’s being my experience that most client’s are loyal and the higher the income of the client the more stable they are and the more likely they will continue to use your services. So for someone in an AGI demographic such as yours to increase business so dramatically is impressive. I know your store
location is in Mass. What do you credit as your reason for such a marked increase? Please don’t say following the system. What was your average net fee? What was your retention rate? What size population do you draw from?
I am also an accountant, a CPA by background. The demographic in my store is actually higher than most Liberty stores, I believe the average household income is around $55K, which I think is quite a bit higher than most stores. I believe my success was a result of certain early season marketing techniques as well as an effort to develop my late season and provide excellent customer service. I was able to increase my business due to developing relationships with my clients and they they referred their family and friends to my office. I strive on hiring prepares that provide excellent customer service, are intelligent, and have a drive to succeed. This year, per the advice of several other Zees, I am hiring employees for which their compensation will be tied to their volume and production and if they succeed they will make good money during the tax season. And I will be okay with paying them if they suceed because in turn that increases my revenues. Developing relationships with both clients and businesss will create success. We are members of our local Chamber of Commerce and actively involved in our territory. Going into our third year we are pretty well known. And we don’t have a good visible location at all. It is probably a “C-” location yet through relationship developing we were able to suceed.
To all those people who have been or are considering purchasing a franchise, see what lengths the JTH kool-aid club will go in the posts above. It is very clear to me how corrupt this entire organization is from the top on down. They will hide the truth so that you will never know what you are getting yourself into, until it is too late. I am talking to more and more franchsiees every day and getting horror stories about their financial situation. Most are up to their ass in debt, and would get out if they could, but with the personal guarantee that Liberty requires (and again hides), most would have to declare bankruptcy. So again, do so at your own risk. You have been warned.
NJ – I don’t receive any sort of compensation whether someone decides to join Liberty or not. There is no financial motive in me describing my success. You speak of all the negatives, but obviously there must be people suceeding as well, right?
Yes Mike. There are people who have success with Amway too. Interested?
Mike – I never made any such comments. I am too busy running tax school to argue with people on this message board.
As I’ve said in the past, if you buy into a business without running different scenarios in Excel to determine your risk then how can you complain and blame the franchisor.
I agree with Rob, running a business at a high level is not easy. Making important decisions and not procrastinating is not easy. Do your homework and if you are an entrepreneurial person this is a great opportunity. If you are not comfortable running your own business then you run a high risk of failure and losing money.
I make decisions that maximize profitability, that’s why when a good Zee takes over an underperforming store the metrics explode. We can see where the franchisee is missing opportunities and wasting money on expenses.
And finally I think discrediting Rob because he is an area developer is doing yourself a huge disservice. Rob made an investment to develop new great franchisees, he needs them to be successful to reap any rewards on his investment. He is not on this board advocating buying territories from him, just to look at the facts and decide if this business is for you.
I havent’s posted in a while because it was pointless to argue with failing franchisees that are hemmoraging money.
Sorry NJ – that was directed to Frusturated, not you. My fault. I agree – this site is no longer adding any value to me – talk to you all later.
The reason this site does not add any value to you is because its called unhappy franchisee. Nothing can be solved when franchisees are left with a bad rates in their mouth. Certainly not by ADs masquerading as a see when in fact many ADs open new offices giving out free returns to boost the numbers and sell them off to unwitting new business hopefuls. Why bother costing. Need to bolster your own lack of confidence in your own operation by dictating to good business minds who made unfortunate bad decisions by buying into a franchises selling operation.
Rob:
It is clear to me that you have been successful in your business. I have nothing against you being successful. But here is the issue that you and Liberty seem to ignore. The major metro area where my stores are is not doing well. The store ages are between 2-5 yrs, and the average for all stores is under 300 per store. Many stores are below 200, a couple under 100. Are you going to blame all of the separate franchisees for not knowing how to run a business ? Libertys’ answer is business as usual, spend more money on marketing and make sure you make your royalty payment.s. And by the way, the turnover has been significant.
I am curious to know if you have a plan in place to improve for the upcoming tax season? If not, why not just call Rob and talk candidly about the problems and challenges you face and get a new perspective of things that may help boost your numbers.
It is clear to all why some are unhappy. They do not want help they just want to cause trouble and complain. I was accused of being less than honest which is funny yet I have offered time an again to help. This would not benefit me financialy or in any other way. No matter what is said he finds things to be distrustful of and make accusations of never once trying to improve. To answer NJ question he plans on doing the same thing and then complaining!!! Because thats what he does!
Another issue I never blamed you or anyone for not knowing how to run a business. I blame you for not taking help and turning on people who would help you then blaming them and everyone else for your issues. It is clear that you enjoy this and you somehow convinced yourself that failing is ok as long as you have someone to blame.
So I guess the hand ringing continues and we will leave you to your own destruction since that is what your determined to accomplish. There is only one Kool-Aid club going on and its not the 3 or 4 of us offering to help, its the ones who see the Boogey Man arround every corner. I do wish you well and if at anytime you decide lashing out this way is not the answer and you want to succeed I am available.
Rob,
You say “It is clear to all why some are unhappy. They do not want help they just want to cause trouble and complain.”
That sounds like Totalitarianism to me . Perhaps a little communist and fascist too!
Keep your mouth shut huh?
You say “I blame you for not taking help and turning on people who would help you then blaming them and everyone else for your issues….” When AD’s send you thirty candy tins with no candy, hispanic marketing when you have no hispanics in your area and allocate the majority of the DMA marketing expense in the territories with the highest return count… well yes, I complained, to the corporate office. Who passed my complaint to my AD’s, who berated me and several other nearby zees. Well that helped. And these were the people who I turned to for help.
My business did not fail because I lacked support. I sold them all.
I am on this board to warn potential franchisees on the pitfalls, not of buying a franchise (because the premise is good) but of purchasing a “Liberty Tax” franchise.
And what is the deal with your preoccupation with “Kool-Aid”. If anyone is Rev. Jim Jones…It’s John Hewitt and his cronies.
Focusing on the low end income earners in the worst demographic who for the most part cannot work the basic math on why they should wait 8-15 days to save $100+
I got involved in a leech business, the opposite of a Robin Hood. I stole from the poor to give to the semi poor (me).
I wanted to buy a business where I could prepare taxes, help people and make a reasonable living. Instead I “nearly” went bankrupt by following the “plan” almost to the cent. Gave out thousands of free returns, limited discounting, always had multiple wavers, had two dynamic EA’s and one CPA working for me and delivered donuts by the thousands.
Had it not been for my spouse working we would have lost it all.
Don’t lecture any of us on why we failed. Lecture your franchisor on why they are failing you.
And what the hell is this unhappyfranchisee.com website for, to explain our failures or share our grievances?
If you are so happy and busy with tax school, why do you bother visiting this site? Because you may not be as content as you wish you were.
I guess when facts are not on your side name calling is the only option. Fact is I do over 30 percent of my returns in March and those are paid returns and I run professional tax offices. I did not come on here trying to tear anyone down instead I have been more than willing to help and I along with others have offered to help. And no one is failing me. Sorry but Candy Tins without candy has never been one of those things that I would let hurt my performance. I do understand what your trying to say but I don’t think you realize how it sounds.
I know you would rather be able to say whatever you want unchallenged and you think that the creator of this site made this for people to make any type of accusations without any challenges but if you read what the goal of the person who created this was to attempt to find out the facts.
Honestly my post was not directed at you nor was I thinking of you at all. I was speaking to the current franchisees who are on this board but since it is an open board you can jump on and scream and yell and revert to name calling if you want.
It is funny that I offer help and get nailed with all sorts of accusations and insults. My offer to help was sincere and still stands. I am not a corporate employee and my willingness to help has been the way I have operated for years. I would much rather see a franchisee turn things around and eventualy sell and make a profit than to go down the path of letting their frustration block them from any kind of success. But those are individual decisions that people must make for themselves.
Ive done all I can and will leave the board to other people. No reason to continue since it has gotten to name calling and smears. Good luck to all. Signing Off
Rob::
Fact: Liberty Tax franchise cost $40,000
Fact: Liberty has no national television advertising
Rob:
Fact: Liberty least known tax preparation service of the top three
Fact: Taxes are much more complicated then most franchisees without a
tax backgroung realize.
Fact Business model is best suited to high density low income neighborhoods.
Fact Tax preparation industry down over 6% do to economy in 2009
Fact On-line tax preparation is continuing to take market share from brick and morter stores.
Fact Rob and NJ Zee are Area Developers and have an incentive to promote Liberty more then just a regular franchisee.
My whole point of being on here is to point out the facts.
Bill – Are you still a Zee or did you sell your store(s)?
Rob:
You clearly have a much better business skill set than my AD. How do I get someone who understands Liberty Tax and the issues the region faces.
Bill, I have no incentive to come on here financialy. I have helped many many Zs that have called and asked for help nationwide and when I do that their is no financial gain or motive. I do it to continue a culture I believe in. We understand you think everything at Liberty is bad and you are not interested in any help. The tax business is changing rapidly. The opportunity is huge right now for those able to see it. I wish you well and my offer will always stand.
Frustated,
I will not get into other ADs. You do have someone who understands Liberty and for the regional issues their is not much difference when it comes to executing in regions. Yes their is some but overall the region is not that much different. I can explain that later. All you have to do is email or call and I would be happy to speak with you confidentialy. I know with the level of distrust you have that may be difficult but all I can do is offer and give my word its confidential. I have a track record and I think that should give you an idication on my word.
Mike:
The territory was turned back over to the company. As many former franchisees have experienced there was no re-sale value. As you know there is a transfer fee of $5,000 and any potential buyers have to be approved by the company.
Rob:
Your and area developer with stores to sell in your territory. The fact that you and the NJ Zee don’t disclose that fact makes your comments suspect..
Potential Franchisee:
Please read all the post on this site. There is a lot of good information/experiences posted here.
Keep in mind everything that is being said on this site has to do with people who made a financial commitment to LIberty Tax Service. The ones who are still involved whether their successful or not ‘want to succeed.”. The frustration for those who/or have followed the system and struggled is that their AD and JTH continue to insist that they really didn’t follow the system. It’s a “catch 22″.
Unfortunately, the ones who are speaking out so strongly against the struggling franchisee’s are individuals who paid Liberty Tax Service a fee to have rights to sell individual stores in a defined area. Rob and NJ Zee are two such individuals but for some reason they don’t want to acknoweldge or in Rob’s case don’t want to believe it’s necessary for potential franchisees to know that they have an additional motive for talking “positively about Liberty Tax Service.
As I have stated in my earlier post, my whole reason for posting here is to present a fair and honest view of being a franchisee with Liberty Tax Service. I encourage potential franchisee’s to write in and ask questions. This will give everyone an oppurtunity to respond.
Well said Bill.
Proceed with all caution.
I would like to join any lclass action lawsuit being taken against LTS, for ripping off those signed uo and didnt even open, and still cant leave until they sign off and give up their entire money, its a very different scenario considering those that did open
Sunil sapra,
I am confused, why did you not open up as the agreement you signed said you should? Why you you expect to be able to leave an get your money back without them signing off? Just not sure i understand, please explain.
FYI. Comments invited. New Liberty Tax post:
LIBERTY TAX Offers Franchise Test-Drive Opportunity
“What do you think? Is the Liberty Tax “Franchise Boot Camp” an innovative, risk-free way to enable franchise prospects to make more informed decisions regarding the Liberty Tax franchise opportunity?
“Or is Liberty Tax “Franchise Boot Camp” simply another slick franchise sales ploy meant to turn employment seekers into Liberty Tax franchisees?”
A friend and fellow franchisee was encouraged to purchase three territories. He opened the first but with the heavy financial burden and a store which only prepared 600 returns (100+ free) he struggled to open the second and was in a worse state after the second year with two offices (the second prepared 400). He was unable to open the third and was forced to pay minimum royalties regardless. Needless to say he was unable to open the third territory the third year, his first store in fact dropped from 700 (second year) returns to 550+ in the third. He sold her territories to a local CPA who planned to pay $50,000 by the end of the first tax season. Which he didn’t. In fact I understand he did not even pay his royalties and the territories were taken back by Liberty and my friend lost everything.
MoneyPit,
He did 600 returns his first year with his first office? That sounds really good!
I am not sure I understand how anything that happened to your friend was anyone else fault but his own. Why buy 3 territories right off the bat, especially when you are not well funded. The fact that he sold his business to someone that didnt pay him and he lost everything shows that your friend is not a good business man, and would have failed at any business he would have gotten into. Sorry but that is what i get from your post.
Barilla,
You just said:
“He did 600 returns his first year with his first office? That sounds really good!”
And you followed that up with:
“The fact that he sold his business to someone that didnt pay him and he lost everything shows that your friend is not a good business man, and would have failed at any business he would have gotten into”
His AD encouraged him to do this and said if he wasn’t paid he’d just get his territory back. He had no remaining equity in his house due to falling price of housing and this was his only offer made late in the year. The result was that he wanted the territories back but corporate said they were no longer his because he signed them away.
No emails concerning the AD/zee were made. All by phone hence he had no recourse.
Yes, he made this error. But as you cannot understand, the point is that he was not singularly responsible.
The drop in numbers of office one was based road works.
Never recovered and was approached by a CPA. The rest is history.
And you’re a dick…
Money Pit,
I am a dick to you because the truth hurts. Your friend sucked at owning his own business. I am sure that friend is you and that you are mad you lost all your money and want to blame anyone else but your self!
i sold my territories for a profit.
Anyone who know me knows this is true.
And anyone who knows me also knows who this other franchisee is and how they got screwed.
You on the other hand, we don’t know. No franchisee by that name appears anywhere.. Google… zeenet etc… An AD maybe?
More importantly, it looks Jackson Hewitt will only have RALs in half of the stores this year. Do you think this finally puts them in bankruptcy?
Bought JTX @ $0.7645. Hit $1.21 yesterday after 4 weeks.
” it looks Jackson Hewitt will only have RALs in half of the stores this year”
Where the heck do you get your information?
JTX will announce by late October they have 95% RALS.
Stock will rise to $3-4
The comment about Jackson Hewitt going bankrupt describes Liberty’s culture. I noticed it when I did my trip to VB but it didnt register.. No one heard Ford gloating that GM was going out of business.. And the attitude against HR Block is worse. I understand having a fierce competitor but who cares about what the other guys are doing when most of your aren’t profitable? This type of culture is exactly what is the root of 90% of the problems I have with the brand. The focus should be on the success of its zees.. not how many HR block stores are closing.
I get my info from Yahoo Finance News. Where do you get yours? You are sure confirming that you are an idiot!
Yahoo Finance has no news on JTX.
News of partial RAL funding was expected to see the stock drop to less than 50cents.
Since the phone hook up four weeks ago the stock has risen 50%.
So unless you know something the rest of the planet doesn’t.
Clearly you didn’t check Yahoo Finance before you decided to try and sound all intelligent.
The article “Entry into a Material Definitive Agreement, Termination of a Mater” which is dated Oct 6th is clearly too complex for you to understand.
Now go and tell your boyfriend todefend your honor! lol
You’re a joke.
p.s By way of forum courtesy, would you please commence your rebuttal with “No…you’re the joke..” Thanks
Money Pit,
You must be a Sarah Palin supporter, because you are just not too bright… I don’t think you quite make it to the 2nd floor….
Unfortunately this discussion has gotten off track. The question is, whether this is a good investment, ie; I will purchase a territory and be able to not only pay back my investment, but also make a profit and sell my territories if I so desire for what I have invested, or potentially a profit. I will give you a fact that is unfortunate but true for where I currenly have my franchise. All but 3 of the many franchises in this area are for sale. All are hoping to get their $40K investment if they are lucky. Most are willing to take whatever they can get. Most will have to open again this season, as there are no buyers for these territories. All did less than 300 returns even after being open for 2-5 years. The area has been oversold, Liberty is unwilling to admit they oversold the potential. There are even unsold territories that Liberty is peddling that will further put pressure on the already low volumes that are being experienced. H&R has announced that they are closing 400 stores. Liberty has announced that they want to open one store per day, or 365 stores this year. Why shouldn’t they. There is no downside for Liberty. If you fail, they take your house, your car and all of your belongings. If you win, they take their 19%. Had most people realized this, why would anyone want to buy from these crooks.
FACT: During tax season, Liberty Tax Service advertises their expertise with homeless people dressed up in Statue of Liberty costumes. The welcoming Lady Liberty look-a-likes listen to their iPods while dancing around with signs reading “Have Fun & Get Your Taxes Done” and “Fast Accurate Professional.”
James on October 7th, 2010 12:31 am
“FACT: During tax season, Liberty Tax Service advertises their expertise with homeless ”
Are you mad because it works and you did not think of it?
John B.,
Quote:
“FACT: During tax season, Liberty Tax Service advertises their expertise with homeless ” Are you mad because it works and you did not think of it?
Advertising Liberty’s “expertise” to the homeless exemplifies what Liberty is all about. WTF??!
REAL FACTS:
1. Target lowest demographic (people without computers or unintelligent enough to tackle basic tax return).
2. Exploit those with little alternative – homeless, single parents.
3. Exhaust guerilla marketing tactics on local businesses until they kick you out.
4. Poach competitor clients through devious (storefront and in-store waiting areas) coupon hand outs rather than preaching the benefits of the franchise.
5. Remove competitor coupons from all local business notice boards and waiting areas.
6. Display “Free Food” signs. Just nonsensical.
Many Liberty franchisees are honest business people who promote their businesses by offering discounts of various amounts and have quality preparers who encourage repeat business.
Regrettably, the retention rate for Liberty is probably the lowest in the business. At 60%+ I was informed my offices were ranked in the top 10%. And I was disturbed because I wanted 75%+
A local franchisee who is in his seventh season, acknowledges he uses unconventional methods to achieve 1000+ returns a season with a retention rate of less than 40%. His ANF is way higher than mine and yet he doesn’t care about his retention…just his net fees. And he’s a Top Gun Zee.
COMPARATIVE FACT:
NetFlix (online) have grown from 1997 to a $1.06Bn business. Blockbuster have dropped from $6Bn to $4Bn these last four years.
See a trend? With the closure of so many HRB’s this year and Jackson Hewitt potentially falling over, the future for Liberty as a “How to Win Friends and Influence People” business rather than a “7 Habits of Highly Effective People” model, growth should halt very soon and volumes drop rapidly in the next couple of years. Add to that the Debit indicator having gone and many banks no longer offering RALS, the end demise is obvious.
But to you JB, it’s still such an exciting and lucrative opportunity… yes?
Money Pit,
You really should split the Prozacs in half!!!
“FACT: During tax season, Liberty Tax Service advertises their expertise with homeless ”
Are you mad because it works and you did not think of it?
I don’t think Liberty Tax can take credit for inventing the exploitation of the down-and-out. In fact there was already a term for it: Bumvertising. You all just brought it to a new low by dressing up homeless people in humiliating costumes.
Seriously, doesn’t Liberty have ANY guidelines for who you dress up to represent your company? Do you hold job fairs on Skid Row? Or is this some kind of ironic statement or performance art: dressing up the tired, poor & wretched in a sad, silly Statue of Liberty costume.
Or are those actually ex-franchisees who lost their homes after investing with Liberty Tax?
Money Pit:
I was just reading about these TimeShare scams on the news. Lets start a business where we charge a couple of thousand $$ to sell Liberty Tax franchises by telling the seller we have an immediate buyer. Six months or a year later when they figure out we are a scam, we have already collected the money and gone out of business, much like many of the franchisees have. I figure if JTH can do it, why not us.
F&D, you read my mind. But I think a better idea would be for Barilla to buy a Liberty Territory from us, let him open a store and six months later he discovers it was actually a Jackson Hewitt. He gets sued by Jackson Hewitt for being an idiot and Liberty breaches him on his franchise agreement. We then take back his territory and charge him $5000 to transfer the territory back to us.
I suspect with his poor command of the English language and general lack of intellect and using a Liberty tactic to repeatedly sell an existing territory to individuals without a clue, we could sell him the same territory at least four, maybe five times over before his mother suggests he should have been smarter in the first place………. and bought three territories before they were scooped up by other smart people.
Instead of keep on complaining, why doesn’t those folks that are Zees put more of their efforts to concentrating on improving their stores, rather than just complaining on this board.
MoneyPit, as usual you go on and on and make no sense!!! Please stop smoking that $5 crack… I am not surprised you are a failed business man!!!
It is disconcerting that you know how much “crack” is and that it’s something you smoke……and why you’re paying way too much for your habit.
Must be cheap in NJ.
Pro Liberty Goons- Get the hell off this site. I am sure that your intentions at the personal direction of Mr. Hewitt himself is to fillabuster the site, change for focus of the site, and frustrate others who have a right to vent or who are looking to see if Liberty is for them. I cannot imagine why the host of the site puts up with your bullshit. Is John going to give people the ability to freely speak on his site? Hell NO! This site is called Unhappy.. Not “Unhappy and in bed with John”
Deal is this. If Liberty would stop lying to prospective franchisees, stop gouging his existing franchisees, and started caring about the sucess of his existing offices Liberty would do great.. regardless of what H&R Block and Jackson Hewitt do. The only way for this to occur is for this site to begin to hurt him financially and I think it is beginning to do this. The more comments the higher the page ranking.. if only the press would pick it up… Fairly remarkable that a Franchisor gets such a flood of negative feedback its on franchisees. I have been involved with other franchises and I have never, never seen anything like this.
So John.. when are you going to start working with us and not against us?
Obligated:
Well said. I cannot stress enough that potential franchisees to realize that there those here who are preaching how wonderful LT is, that most struggle, many fail. It is not your business ability that will make you successful. Most successful Zee’s have low rent high visibility locations, high concentrated EIC populations to draw from, and can use the system. There are many areas where zoning laws will not allow you to make your location look like a French whore house, and many areas where finding all of the right ingredients are impossible. LT has one system that fits about 5-10% of the areas in the US. I could go on and on, but I think you made the point a lot better than I.
I have low rent yes, but my zoning laws do not allow me to even put a traditional lighted sign in my window and therefore my sign doesn’t even look like a Liberty sign. I can’t have any banners in my town either and no other traditional items that you speak of. The average household income in my territory is around $55K which is much higher than most other locations. My visibility is probably a C- and I am set off the main road in town. The reason my rent is less is because of my poor location and the fact that the landlord did not allow me to put up the large box lighted sign that most Zees have. Yet somehow I was able to make it work and be succesfull. I am building a full season business at my store, just not an early RAL and ERC season and I am doing this by delivering exceptional customer service and expertise which allows me to compete with the CPA firms and other firms in March and still compete with the Blocks and Jacksons during January and February.
Mike:
You made mine, and a lot of other negative comment writers point well. Had Liberty not forced expensive storefronts and expectations that I would do 600+ returns the first year, I would have been a whole lot better off. Instead I spent like I was going to see that many customers, and am still deep in the hole after 3 years. My first year was not that bad, but when you get horrible advice from an organization that is supposed to be helping you, how else would you expect someone to react. I recently had a discussion with my AD on that point ,and his reaction was basically screw you. Hence my continued negative comments on Liberty.
[...] Unhappy Franchisee has received numerous complaints about the rival Liberty Tax Service (see LIBERTY TAX SERVICE Franchise Complaints). [...]
Comments, input invited:
JACKSON HEWITT Franchise Complaints
MIke,
The more I read your comments the more I doubt your results. As I stated in my earlier post, Liberty will not provide potential franchisees with what the average 1st year store does in volumne or in revenue. As I pointed out Jackson Hewitt (similar model as Liberty) in their financial statements state that in 2008 their first year stores averaged 235 returns. According to you, your first year store did 375 returns and your store was in a low visability location. Add to that that your store demograhic “income earners making an average of 55k”, something just doesn’t smell right.
You may not be an area developer but I know your store and your results are being held out as the kind of results other potential franchisees in the CT Mass. area can expect..
Why don’t you tell us what City your store is in?
John Hewitt told me face to face in our meet and greet to alter my 1000 expected first year returns to 600 as that was a more likely minimum. He said thus before two other corporate employees who did not challenge this target.
And I might add my AGI for my demographic was $60000+ in a B location. Thank God I exceeded my target but I was still in the top 10% and financially it was a failure.
Moneypit
“That’s funny he told us the exact same thing”. You think he could at least personalize his predictions when you consider how much your paying for the “franchise system”.
The “franchise system” = 5 boxes for processing tax returns, processing area ( a section seperate from the tax prep area), 800 sq ft retail location close to an H&R Block or Jackson Hewitt location, tax software, floor plan for 4 desk with chairs and a reception area. Guerilla Marketing & hours of operation, tax school, a Lady Liberty custom ( not included in fee). An Area Developer (very little business value). All for $40,000.
If anyone is serious about opening a tax preparation office in NJ I will be glad to provide you with the training you will need to get started. My fee would be based on a negotiated hourly rate.
I think Block only charges a $2500 deposit upfront. But, they also have a 40% royalty. I’m not sure what the breakup fees would be if it doesn’t work out and you’re responsible for find the location and furnishing it.
Having read all of these posts, I wouldn’t trust Liberty. Having said that, most franchises are tough to get to work out unless you pay the big buck for a Mcdonalds or something. As you all know, the real money is being the franchisor not the franchisee.
I once bought a franchise (5K) that sold photographic business cards (back before computers made it easy). That was the easiest $5,000 I’ve ever lost. The main company was out of business a couple years after I threw in the towel.
There doesn’t appear to be just a whole lot that a Tax franchise offers that you can’t do yourself. At least Block has a Brand that most are aware of and they do a ton of national advertising. I imagine you can go to a party supply store and pick out a liberty costume and pay some homeless guy to wear it. Professional tax software is easy to find and there are still companies out there that off RALs and Racs. Not sure what the 40K is for, really.
I am in the process of seeking a LT franchise but after reading these comments, I think I will pass. I would like to speak to a couple former Zees to get personal opinions in real life if possible. Does anyone know how to contact and find a former Zee? Thanks.
Vernon franchise companies are required to give anyone seriously considering their franchise a document called an FDD franchise disclosure document. In that document they provide a list and contact info for all franchisees who recently left the system. They are required to provide that so they can be contacted by prospective franchisees.
why do you want to speak (and model yourself) to someone who failed perhaps miserably. Speak to franchisees who have mad eit work and model yourself after them
JMHO
You would be smart to talk to both successful and not. Find out what went wrong and then see how the successful overcame it. No way would I only talk to the successful.
Vernon:
You are smart to talk to other franchisees. Unfortunately when I had my discussions, I talked to both successful and less successful Zee’s. I asked several questions. Unfortunately the successful Zee’s told me that the less successful Zee was a poor manager and I shouldn’t listen to him. The less successful Zee was the most knowledgeable and gave me the best advice of any of them. Be open minded, make sure you add up the positives and negatives. Be careful.
Anyone have an opinion on the Roni Deutch Tax Center franchise?
Comments welcome here:
http://www.unhappyfranchisee.com/is-roni-deutch-tax-center-a-great-franchise-opportunity/
I could write a book, but won’t. In my quest to find the “happy” Liberty Tax franchisee, I am coming up empty. It is amazing what BS you get from Liberty corporate that the world is beautiful all of the time, and the franchisees who when I really press them for their opinion, think this franchise SUCKS. Most would sell in a minute if someone offered them a fair price, and strangely, there is very little market for used LT franchises unless they are sitting in a “goldmine” EIC area. The problem, few if any have ever reached what they considered the promised return on investment. Many have stores are 4-7 years old, most have done what they could to develop business, and most are saying it isn’t worth it. A lot of work for little return. None have ever come close to what the local H&R does, few have been able to move people over from the Mom and Pops as JTH suggests, and most are just doing their thing trying to survive, as this has become their livelihood. Kind of like realizing you have a bad diseas and have given up rather than do something about it. If you call this success, the everglades are still For Sale.
Frustrated and Disgusted,
We are all getting tired of reading about you crying all the time… File for bankruptcy and get over it…. Face it, your not cut out to do this.
To Frustrated and disgusted. Most here agreement with you. If barilla was a country he’d be North Korea. Enough said.
moneypit on November 25th, 2010 4:58 pm
MoneyPit, i guess you would be Greece. Spend all your money and then ask others for a bailout and when they tell you to cut your spending, you get all upset and protest on the streets.
by the way, i ma sure moneypit and frustrated are the same person using the same name.
John Barrilla,
I see that you are also making posts on JH site and trying to drum up disgruntled franchisees there… Out of 44 comments a third are yours. Not having much luck? You are a plant.
The bad faith of Liberty Tax (and I think John Hewitt) is what is drving this site, not their Zees trying to cause trouble. If he would only focus on making his zees happy and successful rather than lining his pockets.
John Barilla,
Where is your Liberty store? I’d love to see how you do…..assuming you are cut out for the tax business. Let us know…
If you don’t own a Liberty, you have no idea whgat it takes to make it work, none.
John Barilla:
Money Pit and I are not the same person. It is unfortunate that you are refuse to see reality. I have worked with and for businesses who were great at their business. They understood their value proposition, knew their customers, created a good product and were able to make it happen. Liberty is nothing but a poorly managed business that has figured out how to scam people into purchasing territories whether they work or not. They were successful when tax refunds took weeks to get, people were afraid to do their own, and there was plenty of money to go around. Since then, software like TurboTax, organizations who do taxes free, and the IRS sending out checks in 8-15 days have totally changed the business. Liberty is still selling the same old concept to a smaller and smaller audience hoping for a different result. Even you would have to admit that the average for Liberty at 300 returns per year is not a winning strategy no matter how you slice it. Liberty says they are increasing the number of returns, but if you look at how many stores they open, you will see that they are only growing by adding stores, their same store sales are not increasing. That means a ton of stores are not doing well. H&R even with their decrease over the last couple of years still does more than 2.5-3 times what Liberty does per store. I suggest you spend a few minutes calling some random stores and I can pretty well guarantee you will get the same responses I received. Not a good picture.
John Barilla:
Ran into another franchisee the other day. He was one of the “I love Liberty no matter what” crowd like you. Carried the Ops Manual in one hand just like a bible. He was one of those who when a territory failed, he purchased it thinking it was just the owner/manager who didn’t follow the system. His numbers have dropped ever since he started and he is getting rid of stores left and right. Last year his average was less than 300 per store, and had a couple that are doing miserably. I can guarantee the stores followed the system. It’s time for you to see the light.
After reading so many posts, including some planted positives, I would like to say Thank you to all.
While trying to become a LT franchisee, I have been in touch with several current LT zees, who are decent, hard working people.
Almost all of them are clearly following the “system” and yet struggling to keep one store profitable, never mind opening another location or even living off that one income.
I wonder how many wealthy business people are in LT system who ventured to develop a large region (like upstate NY or state of MD etc…) similar to Panera Bread or other successful companies, when a minimum of 10+ or more offices would be expected within a short period of time.
Investing a million into 10-12 locations, running by site managers and generating about $15K+ clear annual profit may reach 12-15% ROI.
Is that realistic?
Even if that’s a reachable level after the second or third year (!), why would that type of a business-investment of one million cash make better sense than any other higher ROI?
TG
You make an interesting point, and have struggled to understand the same issue you present. I know several people who have several stores, all doing modestly, and are hoping to do more. Unlike most companies, Liberty makes little to no effort to “maximize” ROI. They have no concept of efficiency or how to help their franchisees’ ROI. Their concept is based on the franchisee taking all of the risk, doing both local and Liberty’s advertising including their name recognition, and in return offering software and a basic marketing plan that fails in many locations. After a couple of years dealing with them, I would seriously suggest you look for a franchisor that not only has a good marketable concept, and also one that knows how to grow and innovate as the market changes. Liberty is stuck in neutral, is still selling the stale business model they have had for years, and are unable to realize the entire market has changed. I should have known when I asked JTH what his plan for the future was and his comment was continuation of the same plan, that this was a loser from the get-go. There are some great franchises out there, and ones that will change, grow and get better. This on is down for the count.
I launched my own mom and pop last year and prepared just 400 tax returns. Average net fee just under $200. Made $18k net after full years expenses. Not alot but a tidy profit after paying back my startup.
Cannot use my regular username because that would give away too much information. Hasten to say I was a former Liberty soldier. Loved the concept. Liked the Clients. Handled the yearly changes (staffing/payroll/marketing). Hated the net profit.
Without the franchise fees I expect to make $40-50 thousand net this year (my second).
Now no-one tell me Eagle Tax Service, Busy Bee Tax Service, Iron Man Tax Service won’t work! Any tax office with a mascot and good marketing and good staff plus low rent and good parking can’t make money!
Scary fact… JTX (Jackson Hewitt just got 80% RAL approval through Republic bank. Stock went up nearly 100% in two days! They also announced 100% RAC funding. Scary days ahead when the LTS people had JH going out by the years end.
After the months and years of dealing with this organization, while I originally thought they were morally corrupt, instead I now think they are just terribly mis-managed, and with Danny Hewitt as the heir apparent, the future looks really bleak. The organization thinks JTH walks on water. Maybe it’s time he went under. The industry is changing as we speak, and he is stuck in the same rut that he has been for years. The policies are antiquated, the direction he is taking the organization no longer fits the market, and at the end of the day, it will end up just like Jackson Hewitt, his former employer. Good Luck……………
Can anyone recommend the name/number of an attorney that has successfully handled a lawsuit against Liberty. I’m recently widowed and Liberty put my husband in a financial situation that only Liberty benefited from (for 6 years) and that my husband would never have been able to climb out of. He was stressed beyond belief! I have 3 small kids to support now and Liberty is trying to muscle me into signing away my rights to ever sue them or deparage the Liberty name. They indicated that it is a generous offer that I should accept, to which I replied, “if it’s soooo generous, why is there the need to force me to sign away my legal rights?”. They had no answer to that….
Any help is appreciated….
Talk to your family attorney. Liberty is set up so that any actions take place in Virginia, which, if you have read any other commentaries, has a very favorable court system for Liberty. Never sign away any of your legal rights just because they say so. It only works to their advantage and they will take advantage. Please remember that they are nothing but a litigation machine designed to bilk people of their money. I also belive, but I am not a lawyer, that a contract cannot take away your federally guaranteed right to freedom of speech vis a vie the disparagement clause. Seems somebody doesn’t want someone to talk. Hmmmmm………
Regrettably, you are unlikely to succeed in any lawsuit against John Hewitt et al.
In the EOT John proudly proclaimed how Liberty Tax cannot be sued due to the content of their Franchise Agreement preventing such.
I heard of a class action which never got off the ground some years ago.
Virtually any legal action will be deemed by them required to be held in a courtroom in Virginia which Liberty has several judges who favor Liberty.
The costs would be prohibitive and consequently the idea of challenging them would be financially not viable.
I wish I had better news but the reality is Liberty can and probably will only fall on their own sword. Enough lawsuits against them for misleading ads etc… keep them in the news anyway but then again they have such a big legal department for these and other such purposes.
JTH are more than happy to sue everyone and sundry including siblings, children and relatives who may go out on their own in another tax biz.
Good luck… and if you decide to proceed regardless, begin with a heap of prayer!
Welcome to Liberty Tax. I would suggest you look for a good franchise attorney who can hopefully negotiate a better settlement for you and your family. There are some great ones out there. Remember, JTH got fired from Jackson Hewitt, and has decided to use his Liberty franchisees to make him bigger than H&R Block. Liberty loves to get people in over their heads and then threaten them that they need to “fulfill their contractual obligations”. I suggest from experience that many things they force you do are not in the contract., especially when it comes to locations. When you talk to the attorney, as part of his due diligence he/she should be able to get the names of people who have been forced into similar situtations. There are a lot of them out there. If not, there are plenty here. JTH is a corrupt and ruthless individual. Good Luck with your situation.
What Liberty did to my husband was morally unconscionable. And, it frustrates me to no end that they pretend to be a morally upstanding entity. My husband was an extremely hard worker, no one would dispute that, including Liberty corporate. He followed the Liberty directive for operating procedures, staffing, guerilla marketing, business to business marketing, etc.. He listened in on weekly conference calls and implemented suggestions. We saw very little of him during tax season and no ROI to make it worth our while.
I have no doubt that Liberty is “buttoned up” legally. I’m sure they have more attorneys than Harvard Law School. Clearly, I don’t stand a chance in trying to “lawyer up” against them, however I feel a moral responsibility to at least shed light on my huband’s experience.
Thanks for your feedback…..
Widowed,
I am sure I speak for many here when I say I’m very sorry for your and your childrens’ loss. I admire you staying strong for them thru the holidays, which must be rough. You have our condolences and prayers.
Excuse me for being indelicate here, but I’m not sure what you’re saying is the basis of your lawsuit. Are you saying that Liberty Tax or the stress from it played a role in your husband’s death? Is there evidence that it was a factor or is your suit more general?
I think it’s important to know the basis of the suit before commenting on whether it’s viable. There also may be precedents.
Guest:
I doubt Widowed wants to lay out her issue on this forum. I am pretty sure I understand what she is dealing with. If you read your promissory notes and contract, JTH collects your Liberty debts from your heirs and from your estate if you pass. Her husband borrowed money from Liberty to build his business. He passed away, and left a business which Liberty is taking back. She is still left with the indebtedness of the business even though his business no longer exists. JTH would sell his mother into prostitution if he could make a buck doing it.
That is the problem with this business. There is no residual value. He passes, the value of the business is low and the debts are enormous. She will end up paying Liberty for the debt, and was given nothing for the business.
She is in my thoughts and prayers. And for those of you reading this who are considering buying a franchise and financing it through this corrupt organization, think once, twice and three times before you sign anything.
All,
For those of you disguntled with Liberty Tax, please go to http://www.wltx.com and read teh article about the class action lawsuit. Sounds like Liberty Tax is in for a ride they’ll never forget.
Widowed
I am not an attorney but if you did not: “sign the franchise agreement”, the debt is unsecured, and you don’t live in a community property state, you are not obligated to pay your husband’s debt. As a matter of fact, you could open up your own tax practice in the same place that your husband had his, solicit his client base and as long as you don’t call it Liberty Tax Service there is nothing that JTH can do to you. Not that they won’t try!!! As I stated earlier I’m not an attorney so seeking legal advice before you proceed is prudent. If However you did sign the agreement, I would contact a bankruptcy lawyer before Liberty can say your in violation of the agreement. Once your in bankruptcy the franchise is an asset that would become part of the bankruptcy proceedings and JTH would be a creditor. Prior to actually filling the bankruptcy this could give you some leverage
Keep your head up!
Chuck
I read the article about the suit being filed in South Carolina. The suit alleges that JTH encouraged it’s franchisees to build up fees by filing unnecessary forms and schedules for their clients. I was involved with a franchise for 5 years and never heard the company encourage this behavior. However, They did encourge some questionable marketing ideas like “Cash in a Flash” This is where you give the client $50.00 in cash or gift card as an inducement to have their taxes prepared at your office and then just add the $50.00 to the tax preparation fees. I also listened to many a conference call where Anne Fuller was considered a marketing guru by the company and JTH even encouraged other franchisee’s to have her visit their locations to improve their store results. The conference calls where always interesting, with Anne going out and trying to round up customers. They talked about how she would literally go out to lower income areas and try to locate people who had not done their taxes and then take them back to her Liberty office. There was one recorded audio of her going to a Stop and Shop one morning, finding a guy buying beer, asked him if he had done his taxes yet, the guy said no, she paid for his beer and took him back to her office to prepare his tax return.
I don’t think JTH every verbally encouraged this type of behavior, but John Hewitt as the self-appointed King of the tax industry certainly turned a blind eye to it.
TAX FRANCHISES: Biggest Winners & Losers of 2010 Learn which tax prep franchise chains have grown – and which have declined - in the past three years.
Comments, insights invited
I went to Liberty the lady talked about how she was sleeping with a guy she bowls with. She kept getting up to anser the phone and her kids were running threw the store While she was suppost to be doing my taxes. Then come to find out after she told me to send in amendments she called me 4 hours later to tell me that I need to sign a paper that they are not responsable for my amendments. I told them I wanted my fee back I paid and she said after I sign the paper stating that they are not responsable. I will nnnnever go there again! Too many night talking to IRS and worrying about how they messed up my taxes! And 100% guarentee or money back is NOT TRUE!
They also stated they had a Masters in Accounting and my CPA that fixed my taxes didn’t. DONT GO TO THEM!
Has anyone noticed the latest scam that JTH has imposed on his franchisees. For every ERC and RAL, JTH collects $20. So now when your customer sees your fees, he also sees a cost of $49.95 just to take your fees out of the refund. I can suggest that has made several customers consider walking out until I lower the fee. Again, just another way to make happy customers.
Just curious if John Barilla is still out there?
This is about the point in the tax season where you begin to realize you just aren’t going to make it and that you have made a huge mistake, despite ‘following the system’. Good luck to you all, I’m afraid you’re going to need it.
Man the doom and gloom here is out of this world!!! This is part of the season I get exited. The early season is over and now clients that my preparers have spent much time building solid relationships start coming in. These clients pay by check cash or credit card, set appts, and truely appreciate the service we provide.
Last year we did well over 30 percent of our business in March!!! Thats paid business. And this year that will be even more and thats on top of having a great early season.
This business is not all doom and gloom. I know many do not beleive that but the opportunity to be succesfull is tremendous in this industry!!! No its not a walk in the park and yes it takes total commitment but there is not another industry or business I would want to be involved with at present.
I know the attacks will come but thats normal here. Everything nots doom and gloom. Late season clients who frequent paid preparers do so because of the value they place on the relationships with they have with the preparer. Build relationships with these clients and charge a fair price and late season will work.
Bob and Frustrated,
First of all I am sure you guys are the person. I just think it looks pathetic that you guys keep posting on here over and over. If you spent more of your time trying to run your business the right way you would be way more successful. Not preaching, just a thought
by the way sorry i didn’t mean Bob and Frustrated are the same person. Don’t Be Fooled and Frustrated are definitely the same person or life partners.
RUN FAR FROM THIS MONEY-PITT.I LOST HALF OF MY LIFE SAVINGS,AND
THSES PEOPLE LIED AND DID NOT DO AS THEY SAID THEY WOULD.
THIS PIECE OF TRASH IN VA MAKES HIS MONEY BY SELLING THESE MONEY
PITTS,THEN LEAVING YOU HIGH AND DRY.
Another testimonial of how inept this organization is to run anything larger than a small tax preparation office in Virginia Beach. Again let me repeat RUN FROM THIS ORGANIZATION LIKE YOUR LIFE DEPENDED ON IT, BECAUSE IT DOES.
Frustrated,
How many times are you going to post with different alias? You have lost all credibility that you might have had. Face it, at some point look at yourself in the mirror and blame yourself, not the rest of the world!!!
John:
I have one alias, Frustrated and Disgusted. I have never posted under any other name. Like your B2B person, my point is to hit the same point over and over. I again spent some time in a major city in the southeast over the weekend. Had a chance to stop in and talk to several franchisees. Same story over and over. If your store is in a low income area with a high visibility storefront, you are coming out OK. Higher income areas, the store turns into a money pit with no way out but bankruptcy. My point is that Liberty is out selling territories in areas that they either know and don’t care, or are so inept they don’t know will fail. I suspect it is a combination of the two. I see people investing hard earned money, follow the system, and are in debt up to their behinds with nothing to show for it. Liberty has an obligation to understand what markets and territories are viable and which ones aren’t. And don’t tell me they are all viable just because the territory exists. Unfortunately people are not aware of the pitfalls of this business, and the ineptness of this organization. JTH will sell any territory regardless of it’s viability. When it fails, he blames you for not following the system and resells it to someone else who again loses their money. Sorry, but this is a dishonest way to do business.
John
Most franchisees are not successful. If they where they wouldn’t need operating loans from JTH. According to the 2010 financials JTH Tax had to loan $32,488,000 in operating loans to its franchisees. Based on the 3,280 stores listed on this web site that breaks down to $9,904.88 per store. This shows the stores don’t generate enough cash flow to stay open. With the exception of certain stores the only winner in this is JTH Tax
Just curious, we all know that JTH is an SOB. How can we stop them from destroying more lives? Someone posted a thread to a lawsuit link above but it is not there anymore. We need a Class Action lawsuit against them ASAP, any suggestions?
While I think there are grounds for a lawsuit, getting to JTH is going to be tough. You have to show that he knowingly set out to mis-represent the opportunity which in a business environment is tough. There are some specific areas that should be explored which I will state to a lawyer, not on this forum. My suggestion is to find a good law firm that is well versed in franchise laws, and willing to create a link so that people can get in touch and supply supporting evidence. I know there are plenty who can supply the necessary documentation to get this started.
Mike and Frustrated:
I certainly would support a class action suit I just don’t know where to begin?
AM HERE CAUSE I DONT KNOW WHERE ELSE TO GO AM A WAVER WITH LIBERTY TAX AND I LOVED MY JOB AM IN TEXAS UNTILL WE FOUND OUT WHO THE OFFICE MANGER WAS HE DID WHAT HE COULD TO MAKE MY LIFE HELL LIKE I HAD TO BRING MY OWN DRINKS AND COULD ONLY GO IN TO USE THE BATHROOM NOT TO WARM UP OR ANYTHING HE TOOK MONEY FROM ME OUT OF MY JACKET WHEN I WAS OUT DOING MY JOB HE GRAB ME AND THOW ME ON A WALL AND TOLD ME I WAS GONNA DO IT HIS WAY OR LOSE MY JOB AND THEN WHEN WE WERE ALONE AGAIN HE TOLD ME IF I WOULD GO IN THE BATHROOM WITH HIM MY TROUBLES WOULD GO AWAY THEN I HAD TO TAKE OFF WORK FOR MY DAD WENT TO TRY YO WORK AND WAS SENT HOME THE NEXT DAY MY DAY DIED AND NOW I DONT KNOW IF THE GUY WHO HAIRED ME WELL BELEAVE ME OR NOT I NEVER SAID ANYTHING CAUSE I NEEDED MY JOB A WAVER IN NEED CAN YOU HELP
Mike:
I will get you started. Ask around and find out who is a good lawyer, is familiar with business and franchise laws who would be willing to at least spend the time and find out whether there is provable grounds for a lawsuit. When you talk to him, the basis of your discussion needs to be that JTH is knowingly selling a system that only works in select areas, and is committing fraud in telling people that they will make executive income if they purchase the franchise. In a ton of cases, not only have you not made executive income, people have lost thousands of $$ trying. His real system is to have you and tons of other people lose money to build his empire. At some point he will have critical mass, but done with yours, mine and many others hard work and lost money.
I just bought an existing LTS franchise last year. This is my first tax season. I did not quit my real job. Today is March 7, 2011 and I completely paid off my investment of the business today. I owe nothing. Basically the money I took out of my bank to buy the business, down payments for this, toner cartridges for that, every penny is back in my bank as of today. I still need $25K to pay the rent for the year and I haven’t t paid myself but I have to admit, I’m very happy with this years numbers. Next year if everything stays the same I will be at $25K profit and I did not quit my “real” job.
I looked over this site before buying. Wife even said after she read the above she wanted to do a “post nuptial” if I buy this business LOL Thankfully she didn’t go through with it. I had a very long conversation with a few successful owners. I did a lot of homework and I took the plunge. Knock on wood. Everything is going as planed. I feel sorry for the above posts. I’m by no means consider my self “profitable” at the moment but my path is very clear and I’m confident the franchise I bought will be profitable in a year.
How?
Luck lol. # 1 I got the business cheap. The last owner had a crap location and did not use wavers????? I moved the location, turns out, a very good location. I got 4 months free rent + $6K in improvements. I put three wavers on the corner. Cash in a flash works! Use it for early season, period. Now I’m stuck with what the hell to do in March???? I did two returns today, crap. I just bought three 50% off signs and I’m going to couple that with March Madness or something??? I gota get March rolling. April will take care of itself.
Anyway I just wanted to give some feed back. Lots of good information here, but continue your research after reading here. Also I’m no expert, I have only 3 months experience LOL. I will occasionally post updates and I would be happy to post some numbers as long as there’s no legal issues with posting here. My wife is a lawyer so I’m sure I can get the skinny on P&L’s and so on. Cheers all
I’m glad your doing good. Would you mind telling us what state your store is located in the demographics of your area? Most of the ones that I know who have had some success, which isn’t many in South Jersey are in lower income urban areas with a large population.
Thanks
My store is in Phoenix AZ area ,high populated low income. The location is ideal, of course. Why buy in a crap location???? Not all of this is luck. You have to do your research. It’s important to find out what works as well as what doesn’t work.
The reason I was on this site was to research the franchise over all (LTS). I was curious about the support they provided, tech support, marketing and so on. IMO: Over all the franchise works and I get what I pay for 19%. Would I be happier if they cost less? Yes, of course. However, that’s the price they charge and I agreed to pay for it, done.
My personal experience: The longest I waited for tech support on my computer issues was 2 hours. I had a computer fail and had a new one the next day. Of course I paid for the expedite fee but time is money also. Info I got from other franchisees was the same. Over all happy with the support provided but wish it was less than 19% LOL, go figure right.
Disclaimer: I’ve been doing this for 3 months, LOL, maybe my opinion will change, but doubtful. LTS makes money when I make money. LTS makes more money when I make more money. If they (LTS) was doing something illegal the courts would stop it, doesn’t matter how many lawyers they have or how much they spend on their lawyer fees. My wife is a lawyer and specializes in contract law, if there was something shifty going on with this franchise or any other franchise she would jump all over it free of charge. Of course she would collect a percentage of the punitive damages that could be in the millions
Basically as a franchisee I’m risking my time and money to make a profit. If that risk is acceptable I will do it. If not, I will keep my money in the bank at 2.5% LOL Nowhere in the contract did they promise me a profit. No one held a gun to my head to sign papers. If this fails it’s primarily on me. The economy is crap, I’m getting older, rent is going up, fuel cost are high, but I knew this going in. Good luck to everyone on here but don’t stop here and jump in a franchise with both feet, do your homework.
The basics are the same in every business. Where does the money come from? (the customer) and how much does it cost to get that money? (rent, franchise fees, labor and so on).
Someone tell me what to do about March???? LOL you can see I have a lot of time on my hands…….
John:
If you are happy, good for you. You need to remember two things. It sounds like you purchased the franchise for substantially less than the current $40K investment, and you probably got not only equipment, but a customer list etc. That goes a long way toward the success you are enjoying, not having to pay those up front costs. Someone obviously lost a bunch of money to allow your success to happen. Many franchisees you see on this forum did not have that advantage. In the next couple of years you are going to wonder why you are giving LT and JTH that 19%. They supply software which can be purchased on the open market for less than $1500 per year. You will realize that the customers are coming in doing so because of your efforts, not due to anything LT does. I can attribute less than 1% of my customers come in due to ever being on the website, and since H&R and Hewitt have better known brands, you are actually fighting an uphill battle to find customers. The 4% you are paying for Danny (the clown) Hewitt and his Marketing would just as well be flushed down the toilet. You are also paying for that A/D who has no clue about your area or customers, and does no more than collect some of your very hard earned money.
Certainly hope you have a good experience. We will be watching as your attitude changes.
LIBERTY TAX Scam Exposed by Franchise Owner
http://www.unhappyfranchisee.com/liberty-tax-scam-franchise-owner/
Yes, I bought the franchise at a substantially lower cost than the $40K going rate and it came with everything. Basically a turn key operation. Yes, the guy I bought it from most likely lost a bunch of money and was disgruntled. I believe he was making an emotional decision and I jumped all over it. He actually told me he would of gave me everything for free if I was whishy washy and delayed until December, just so he wouldn’t go through another tax season! Yes, I believe this added greatly to the success so far and I strongly recommend keeping the initial investment as low as possible!
I agree! After the second month of paying my fees I realized I want that job! I’m irritated with myself it took me two months to see the light! I WANT that job 
I will spend this off season researching…….
You make a very good point about the A/D
John:
I don’t doubt your wife is probably a good lawyer, and in reading the contract, she looked at it from a lawyer’s point of view. I want her to go back and reread it from a business owner perspective. According to your contract, if you owe money to LT, you are charged 1.5% per month compounded which equates to a little less than 30% annually. If you owe money to LT, your fees are confiscated from your RAL and RT’s leaving you no cash flow. If you die and your wife cannot sell your franchises, LT takes them due to non-performance, your wife will still have to pay any owed monies even though she doesn’t have the franchises. Your contract states that you have signed a personal guarantee for the money even if your corporation fails. If you purchase a franchise through LT, you pay 12% interest, again, your payments are confiscated from day 1 of your season until the debt is paid off, leaving you no cash flow. There is no requirement that they offer any assistance in site selection at all, but you are required to only move into an approved location. There is no requirement on LT’s part that they supply anything but software for you to do taxes with. All that assistance you heard about at the initial meet and greet are just that, great ideas with nothing behind it. Just some thoughts for you to ponder.
F&D:
Every thing you said sounds correct, I haven’t double checked but it sounds right and I agree with the above for this conversation. In-fact my wife said she was going to print out a “post nup” LOL if I went a head with it! So anyway I signed the above paperwork. She was joking….. I think? Personally, with an attorney wife, I have absolute no excuse to complain. I signed it, my attorney looked it over, done! A deal is a deal, that’s the way I was raised. As an American my signature is law.
12% interest is a little excessive but personally I would not ask for that kind of loan. Same thing happens to me when I go to buy a used car, we start talking about financing and I ask about the cash price, big big difference. I mean that’s why I’m buying used right? I can finance something new but that is possibly the dumbest investment possible, except maybe lottery tickets LOL. By the way, I will never win the lottery. I also don’t do title loans and/or pay-day loans LOL. Just making a point.
Crossing fingers I don’t die. Hopefully, when I sell, the business will be worth more than I paid…… at least that’s the plan.
I will keep everyone updated with my stores progress, I have nothing to hide. I might not be so mouthy if I start losing money? Update: Today zero returns but I worked on 5 rejects and was able to get $1000 out of that.
It was money I should of made but the staff sort of messed up. Good day over all. I have 377 returns done so far. Last years total was 302, so I’m way up from last year and haven’t got to April yet. I ordered “50% off” signs, I will cut prices to get the customers in for the last two weeks of March. Staff is there anyway, might as well keep them busy and warmed up for the last quarter (April).
Based on your numbers you should pass 400 returns. 400 paid returns at 180 net fee is about the break-even point for most Liberty offices.
400 x 180 = 72,000, royalties of $13,680 and rent of $25,000 leaves you $33,320 to cover wages, utilities, supplies, merchantile license, donuts etc.
With rent of $25,000 I can see why the guy wanted out hopefully you didn’t sign a long term lease.
Bill:
Based on 400 returns, John should be able to feed his family on his “Executive” income quite well. Like most Liberty promises (what most other’s except for the kool-aid crowd would consider lies), he will find out why the former owner was willing to give his franchise away.
John, we love you like a brother, but we have all been down your road before. First year, great, we have customers coming in, wavers in front, B2B out giving away donuts, life is good. At the end of the season when we start calculating our winnings and losings, we realize it was not a very good year, but hey, it was the first. The next year we spend more on wavers, B2B, etc. thinking we are going to set the world on fire. End of the second year, oh crap, didn’t do well, but sowed a lot of seeds for a better third year. Third year, this time we are going to set the world on fire, end of the third year you come to realize that this is just a mediocre business (if you haven’t already filed for bankruptcy). The problem as you will find with Liberty is that your ratios are out of skew. You can’t give a franchisor 19% of your gross and get little or nothing in return. How much better would you feel putting that 19% in your pocket at the end of the year, or spending it on marketing to really boost your revenue, opening new stores, etc. Quite simply, this is not a good business model and it doesn’t work.
Frustrated and Disgusted,
Why are there 3800 stores if this model does not work? What about Jackson Hewitt’s model, which is exactly the same. It worked really well until the last 3 years when corporates management ran the company to the ground buying back its stock at $30. Just because you are a failure don’t make everyone think they will fail. You need to look at yourself in the mirror
Liberty Tax sells fracnhises extremely well.
2nd year offices report. Office number 75 is at 400 returns from 450+ new offices. So 375+ are on average 250 or under to date.
3rd year offices report. office number 75 is at 471 from 500+ new offices.
So 425+ are on average 300 or less to date.
Do the math.
You’re a cretin if you buy into all the crap.
Franchisees can’t leave when they’ve invested $50,000+ when there’s the hope that year 2, 3, 4 or 5 will be the salvation year.
And ask your AD how many territories were handed back to Liberty before you start trying to sound intelligent.
John Barilla
I posted this back in feb and you didn’t respond
Most franchisees are not successful. If they where they wouldn’t need operating loans from JTH. According to the 2010 financials JTH Tax had to loan $32,488,000 in operating loans to its franchisees. Based on the 3,280 stores listed on this web site that breaks down to $9,904.88 per store. This shows the stores don’t generate enough cash flow to stay open. With the exception of certain stores the only winner in this is JTH Tax
and you won’t now
Bill that is the stupidest question and that is why i didn’t respond. You think a $9k for a new business is a lot? If so, let me stop wasting my time responding.
After reading this board for the longest period of time and never commenting, I think the issue so complex is very few realy understands this business. Here are some facts. Most Franchisees fail or do not reach profitability because of debt. Some of this is because they may of came into this well enough capitalized but after messing things up they end up having to borrow money from JTH just to pay for the mistakes and it will not take very long before short term debt financing kills any profit especialy if you have not mastered properly running the business from a profitable standpoint.
The money paid in royalties and Advertising Fee does not make this an impossible model to succeed in. But you do have to factor that into the way you operate and you must make sure you understand your financials. If you have no clue on your Profit and Loss and your are just hoping to come out ahead you will probably never be able to reach it.
There are good points here on both sides but the answer is somewhere in the middle and the cause of some of these issues have not ever been addressed here on this board. Good Luck to everyone current and past.
John Barilla:
If I were the only franchise failing, I would look in the mirror. When I see 7 out of 10 failing in the area where I have my stores, I tend to look elsewhere. I also know that the Jackson Hewitt model is not doing well either. Maybe they both need to stop screwing their franchisees out of 19% of their revenue for software you can purchase for $1500 per year.
John:
Just because you don’t have a good answer doesn’t make the question stupid.
I have heard this argument that the 19 percent is what is making so many fail or have financial issues and that is just not the true reason at all. If doing away with the 19 percent would make the tax business all of a sudden profitable you would see tons of independents making huge margins and thats not the case. In fact most independents have a hard time even hitting 15 percent and struggle as much if not more than there franchise competittors. The main reason for that is even though they do not have the extra expense of the royalites they do not have any solid business models to run off of and underprice themselves and barely squeak out an existance and fail as quick as they start.
The reason franchisees fail is they do not excercise and usualy do not understand basic business priniciples either. They rely on this to be a business in a box which it is not and fall into a trap of thinking that if they do these certain marketing steps and follow some hype they will find huge success which is a pipe dream at best.
Now the blame does not all go back to the franchisees because Liberty has to take responsibility this also. Franchising is by nature a combat zone and anyone considering entering franchising needs to realize that it is not fuzzy bears and flowers. Its landmines and high explosives and the key is to figuring this out and understanding how to get through it and obtain success despite the combat zone.
Truthful and Honest:
I would like to understand your premise for suggesting that franchisees do not understand the basic business principles. I agree with you that a franchise is not a business in a box, but when your franschisor knowingly gives you erroneous information to make the potential opportunity look better and profitability look higher, you tend to think they know what they are talking about. I would suggest if you go talk to many struggling franchisees, you will find that they probably know their business pretty well. At least that has been my experience. The issue I find most often is that Liberty does not know their business very well, and cannot or will not help when a franchise is in trouble. They take the attitude you do which is that they didn’t follow the system. I suggest in my case that I was given horrible advice on everything from site selection, potential first year returns, and how to best market to my potential audience. I found that my AD had absolutely no knowledge of the area, (and still doesn’t), nor how to run a profitable tax business. Had it not been for my business background, I would have been bankrupt by now using Liberty’s system.
The question I think we all need to answer is what does Liberty owe their franchsisees for the $40K and 19% they are collecting. I would suggest it is a lot more than an operations manual and software.
I am a sole operator using a similar model to Liberty.
I am a third year office having prepared more than 300 returns less than a nearby Liberty office (who is also my friend).
He has $50,000 more net income than me, is a Top Gun, spends less than 25% of his net on payroll and he is a 5th yr + office.
I have more than $30,000 in the bank and he has a couple thousand more.
His average net fee is $15 more.
Our rents are comparable.
The simple difference is that where my friend has two wavers 12 hours a day, I have one 5 hours a day.
My payroll is 16% of my net fees.
He has RAL’s. We don’t.
His marketing is amazing. I only advertise in the local paper and Valpak.
He has given away $25,000 in royalties for the cost of software.
My software cost me $1100
Liberty model works… but you have to trim the costs to the bone.
Beg to Differ,
I congratulate you on understanding your business and executing! You are correct in you analysis on the business model. With that being said many do not understand the business side and they follow blindly for the longest period of time and then when they realize that they are broke they lash out at Liberty Corp for not promoting the business side of things and feel that they have been led down the wrong path and not be told the truth.
Congratulation on your success and your knowledge of the business!!
Beg to Differ:
I think you have again made the point that spending $40K and 19% only makes you poorer. What software are you using? Are there any additional fees for filing? How do you hire and train people ? How many preparers do you typically have in a season and are you actively also doing returns ?
Using Drake Software and a bank provider for RAC’s.
$10 fee for filing (paid to software company – only for bank products).
I use the IRS website for training and I have drafted a simple tax class.
We have 8 preparers. I work 70 hours per week. Open 9-7.
Payroll YTD is only $13,000.
Beg to Differ:
Congrats on your ingenuity. Time to jettison this over priced franchise.
Frustrated and disgusted:
final peak of the tax season but soon Liberty will be selling franchises and hopefully we can give them some insight on why they shouldn’t invest in this company.
To anyone looking at purchasing a Liberty Tax franchise, please keep this in mind. Liberty Tax, has no incentive whatsoever to help you as a franchisee, nor does your A/D. They will collect 19% plus of your hard earned dollars, and at the end of the day, you will have nothing to show for it. Not one person will come in to your store because you have a Liberty Tax sign vs Joe’s Tax Service, not one person will come in because you use LT software, not one person will come in because JTH thinks he is gods gift to the tax industry, all of which you are paying for with your 19%. They will come in because they saw your advertising, have gotten to know you and your preparers, and feel comfortable that you are interested in their business. There is nothing that Liberty Tax will do that will help you be successful vs. your own hard work and effort. I have done a lot of research since I purchased my territory and found that except for one or two die hards who are getting kickbacks by LT, the rest realize they were taken big time by an organization that offers nothing more than a lot of hype and empty promises. I have heard them all, and now laugh when someone calls me to find out how I like LT. They get the same response at each store they call, don’t do it.
Buyer beware!!!! Now that tax season is over JTH can go back to selling franchisees. That’s of course unless he’s too busy helping the people of Japan & Haiti, Feeding the Needy, Cell phones for Solders.
Don’t buy it!! Most stores 90% do less than 1000 returns regardless of age, if after your 4th season you are not doing 1000 returns you are in violation of your UFOC and Liberty has every legal right to your store even if you are at 999 returns!! Liberty wants you to work hard, invest your life savings then in a few years the store is theirs!! Check your contract, and ask how many stores do more than 1000 returns! They are selling a nearly impossible task! If you follow their model be in a low income high RAL area, one small problem, RAL’s are almost over with and probably will be next year unless JH finds some way to fund them I think he is doing a test with JTH Financial in Detroit area, keep your eyes open for this new venture because without RALs and with the dramatic increase in “free” return sites, most Liberty offices will be toast next year, unfortunately most zees don’t see what is on the horizon!! and John certainly at the Greet and Meets won’t be told how the industry is changing!
“Liberty Tax kicked sand in the faces of tax franchise competitors Jackson Hewitt and H&R Block by boasting strong systemwide sales growth for the just-completed tax season.”
LIBERTY TAX Boasts Growth in Tax Returns & Revenue
Comments invited.
Not sure how anyone looks at 11% growth a win when you added 10% more offices. Still doesn’t make it a good investment.
Frustrated,
Nobody expected you to say anything good anyways…. If growth had been 70% what would you have said then?
Frustrated,
Weren’t you the one saying that there is no way they added 10% more stores since they have been closing a bunch…. Seems like you want to have it both ways….
John Barilla
I actually had a decent year, but it does not hide the fact that anyone who buys a franchise will get nothing for their $40K plus 19% royalty. I never even heard from my A/D during the season, the advertising that was supposed to happen never did, and the few times I tried to contact Tech Support, they gave me answers that were clearly wrong. That tells me the growth that happened was because the franchises themselves were more effective, not Liberty.
Rather than criticizing me, how about telling us what you get for your 19% and how it is worth that much.
Isn’t it clear that LT wants us to do free returns only because it gets the number of returns up for the purpose of saying Liberty did more returns than H&R or JH. It is clear though that the 50% return rate that they said we would get is non existant. As for the advertising fees they charge where is the money being used? I see no advertising to promote the preperation side of the business. If you ask me the fees are being used to promote Franchise sales only. What they refuse to believe is that their way to attract business on the local levels do not work in all territories. Yes the Liberty wavers might work in small towns and the B to B also but I have franchises in the New Orleans area and people wear costumes everyday, nobody even takes notice of them. All I’m trying to say is if you buy in be prepared to be on your own as far as advertising goes. I’ve been with Liberty for two years and this may be my last tax season. I wish I would have read this blog before going to Virginia and hearing all the BS that was feed to me.
Free returns produce repeat customers primarily wanting free returns.
My second year office produced 700 returns. No RALS. Just ERC’s and cash loans up to $100.
We prepared more than the nearby Liberty office opened at least seven years.
Yes we had a waver.
For all intents and purposes, any “Busy Bee Tax Service” would have been as successful as ANY new Liberty office.
RALS are going as we all know. Look at HRB’s share price. Started the season at $12.49. Today it’s $17.51. And HRB did not offer RALS.
What does that say about Liberty as the only RAL provider. Not much really.
Commercial software costs $1200.
ERC’s are available from any of the major companies.
Leave Liberty… wait a couple of years and start your own brand.
BTW. My old Liberty friends (with the exception of ONE) all made less money than last year.
Hello… Perhaps one of you could help me, I have been trying to contact the main office in Kearny Mesa,CA for my last pay check ( 2 weeks pay for sign holding and waving as a Liberty Tax Statue of Liberty ) I cannot get ahold of anyone by phone and our offices are closed. Did they flee the country with the pervert from Tempe Arizona or what? Please send your comments to 5663 Balboa av ,San Diego,CA 92111
I just finished my second year with LTS with no profit made. When I purchased my 2 franchises I paid for one and financed the 2nd prosponing the opening of the 2nd store until the following year which was approved by LTS at the time of purchase. They did not tell me that they would be collecting all the fees though during my first year therefore the money I was generating for operating cost of my first franchise was being eaten up by these fees for the 2nd and I made no money and actually had to invest more money to keep operating and to keep my business during the off season. My second franchise has very limited commercial rental space available in it. I spent all off season looking for an office to get approved. I located one finally in October and notified my AD to approve the site. After 2 weeks of no response from him I finally got an e-mail stating he was no longer my AD and someone new was. I was never contacted by anyone from LTS to notify me of this change and was upset as when I went back to the office I was trying to get approved the owner had rented it out from under me. There was no other office available to lease in this territory so I could not open up. Liberty did not even care and charged me $3500.00 dollars for not opening and charged me all the fees and interest due which again made my cash flow non existant and I made no money the second tax year. If anyone thinks LTS cares about their Franchisee’s being sucessful you better think again. All I hear from them is that I musn’t be using their marketing strategy correctly. The new AD spent less than 1 hour the whole season with me and this was his comment about why I’m not making it. Just to let you ya’ll know the original AD opened 10 stores in my area the same year that I started and he has informed me that Lts now owns them all after his 2nd year. WOW. Now this year I’ll have 10 corporate stores in my area if I decide to continue with this , Three corporate stores have already closed previously in our area, I guess they weren’t using the correct Marketing strategy, who knows.
Until JTH starts to feel the pain that the rest of us are feeling, it will be business as usual. His ego is way too big for him to admit the system doesn’t work, and most people are fed up with LTS. I am currently in contact with a lawyer who is looking into potential litigation. I should have more info in the near future.
Those of you that are currently in the system and it looks like there are a few of you, what ever you do, don’t sign the Mutual Termination Agreement, if you do than you have NO further recourse! Also, make sure to post these “comments” on H&R Blocks yahoo board. It seems like a lot of zees and Hewitt, post there as well. Good luck and please post any lawsuit advancements, I am sure there are many who want to see that go through.
I have heard that the reason he intercepts for the prom note first is that he would have a hard time collecting those fees in court. He is forcing you to have an A/R balance that he could easily collect in court. If I were you I would term the 2nd one now..and not open the first store again if they don’t relent on the remaining prom note. If you do they will do the same thing until they get their full payment for the 2nd store that you will never open. I wish to God I would have seen this site before I went to Virgnia Beach. Then I would have known why lying bastards these guys are.
Let’s again for Bill’s sake, look at the facts. LTS has a horrible franchise business model. It can be seen season after season. LTS takes 19% of your gross and supplies you with mediocre software. LTS does no advertising whatsoever, leaving you with creating your own customer base with what’s left after your 19%. The vast majority of stores are either just breaking even or losing money. EIC is going to be reduced, and the IRS is paying refunds in most cases within a 8-10 days so there is little need for RAL’s if they even exist anymore. . LTS could care less if you succeed or fail. Need I go on.
These are great posts, these should be posted on their fa ce book as well to let possible new zees have the opportunity to see what lts is all about.
I just attended the Liberty Tax Service seminar this past weekend. After leaving the presentation I had a feeling of “is this too good to be true” It sounded way to easy. These posts have been great. I had a feeling that the franchisees that they brought in were hired guns. Not one negative thing to say about the franchise. I was told the average margins are about 20-25% and the way they made it sound you could easily make 100k in your 1st year. The seminar almost seemed like a cult. They were hanging on every word of JH. Thanks for the info. If anyone else would like to share their views
I copied and pasted an entry of mine from a while ago because I see it is still relevant based on the seminar lies. Sure, make 100k your first year. What about expenses? If you go to these seminars and ask questions about expenses, you get blown off. Its nice to have a 25% margin, so your gross profit is now $25,000 without royalties, rent, wages, etc. Here is the repeat of a prior post, all still valid.
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.
Hondo-great post! Call current and former zees in your neighborhood, especially find out if there are any corporate offices and see if they follow the “system.” Is it do as I say not as I do?
Hondo:
Please give us your insight as to specifically what you said and heard. Any specifics would be appreciated. It is time these liars were brought to justice.
I’m not a franchisee, I’m an unhappy customer! I am an unemployed single mother, I have always done my own taxes before but since I had a 1099 for a paper route I did for 3 1/2 months and I had never done that before I decided to have them done this year, and being new to town and not familiar with businesses in the area I chose Liberty because I knew where they were from their statue of liberty guy who stands on the sidewalk, and I had heard of LTS back at home in another state… HUGE HUGE HUGE mistake!!! They wouldn’t tell me how much it cost til they finished preparing it & had all my paperwork in their possession, & they charged me $544, that is literally 1/4 of my entire fedral return!! Then on top of that I went to fill out some paperwork & grabbed the folder with my tax stuff, and all I have from them is a reciept & a bunch of disclosure papers, but NOTHING with any of my tax return info or any of my original documents…
So YEAH, I’m sure owners like that are REALLLLLLY happy with LTS, but if you are a nice and decent person and have a hard time being an evil thief then you are probably gonna go bankrupt..
Ashley, no matter what you paid $5 or $500 they have a “satisfaction guarantee” see thier website, demand all your money back. Obviously you are not “satisfied.” You can call 800-790-3863 and ask for John Hewitt he is the CEO I am sure he would refund your fees. If he doesn’t, post it on their Liberty facebook until you get some resolution.
Ashley,
One, you should never feel pressured to pay for something that someone will not price up front. I am a Liberty Z and do not price up front but make it is very clear to clients that if the value does not match the price they are welcome to go find someone that will do it for the price they want and at least they will be educated and know what they need to look for.
Consumers are confused on shopping for tax professionals and I understand why. Price has zero to do with what type of preperation you are going to recieve. If you shop based on price you can pay $50 and get crappy Preperation or you can pay $500 and get just as crappy Preperation. On the other hand you can get great preperation at either price. The key and the difficulty is finding the professional you can trust. This takes alot of time and a little luck. Referals can be a big help but you can get referred to a place that gets you a huge refund and the reason is the place is committing fraud.
So I do feel bad for the way you feel. Liberty is primarily a franchisee ran operation and each individual franchisee can set there own prices. Each franchisee hires there own preparers and the quality of preparers differ widely just as they do with other places.
My suggestion is to educate yourself and go out and speak to as many tax people as you can doing your homework and ensuring the person you are speaking with is giving you honest answers and someone that you will be able to trust. As far as what you should pay that is up to you. I expect many of the $50 tax return places will soon be gone with regulations coming soon. No matter what find someone you trust and someone who will be around and whos value and price matches up.
If you doubt the accuracy or if you think things may of been missed on your current return, many places will take a second look but there again you have to ensure the proffesionalism of who you are going to. Liberty Franchisees are not thieves but there is a wide range of talent and performance between stores and it does not take being a thief to make it. Sure theres a ton that goes into succeeding and there are issues franchisees are experiencing. But alot of these same issues are going on in many other companies.
Good Luck and I hope you are able to find the professional you need.
Ashley:
Please call the office where you had your return done and talk to the owner. I hope you get satisfaction.
Unfortunately this points to another weakness with purchasing a LT franchise. While the franchisor typically does not dictate pricing, creating a realistic pricing schedule would be of value. After the first couple of returns in 2011, I quit using the LT pricing schedule. It was unrealistic to the point of ridiculous. Simple one W-2 returns pricing out in the $200′s. C’mon, no one should pay that, and no franchisee should charge that. I reviewed three Block returns this year, in each case, the LT pricing schedule was in excess of twice what Block charged. Now you can say that with 50% of coupons running around, you may need to do that, but again, why would a franchisee be distributing 50% off coupons. I say this again, stay away from these clowns. They do not know their business, they rip everyone off including their customers and franchisees, and will stop at nothing to make sure they take whatever they can get. Ugly, ugly, ugly.
To Honestly on May 5th, “I expect many of the $50 tax return places will soon be gone with regulations” is that what John told you? Is he single handedly putting all the CPA’s out of businesses? Why don’t you ask him this June at your convention about what will happen to all of the 70% of Liberty offices that are in RAL markets what they will do for revenue when they can’t offer RAL’S?
Frustrated,
Maybe you should be charging the recommended price and do the 50% coupons and then you would be successful and not have cry on here everyday about how you lose money even though you follow the system. Basically you just admitted you do not follow the system….
John Barilla,
How old do your comments really get. Remember, not just disgruntled franchisees read this page… potential franchisees do too so an argument which holds water is better than snide or demeaning remarks. You sound like a Yankees fan.
If you have access to zeenet, checkout the top 100 offices report. It’s under reports> performance reports> if you’ve never checked.
The 25th office prepared 1774 returns
The 50th office prepared 1414 returns
The 100th office prepared 1230 returns.
It doesn’t take a genius to figure that of the ~4000 offices that at least 3700 offices must have prepared less than 1000 returns. And let’s not even consider the volume of free returns which bloats those figures. (and we know you are required to file at least 100 free a season).
At this rate of descent, compared to the DMA report of offices with growth of 40% or more across at least 10 major markets, it’s clear that 2000 offices or more prepared 400 or less tax returns this year.
What does that say about the 600 you were expected to do in your first year when the majority of offices had completed at least their 3rd year tax season?
If you were honest, you’d see the pattern. If you did well… great, but if the whole network is suffering then longer term it will affect your business.
I have read most of your comments and clearly you were accepted as a franchisee because of your gullibility, and not your clarity of mind.
Walk a mile in another franchisees shoes before you think LTS is the pot of gold at the end of the rainbow. Because it’s not.. it’s an option but the lack of honest disclosure is where they fail you.
First of all, it is obvious Frustrated and Antonio are the same person……
When did I ever say LTS is a pot of gold?
All i ever said is Frustrated comments make are inconsistent and its hard to respect him with his comments…. First he says he follows the system then he says he didn’t because the system is stupid…. Which one is it??? The Yankee comment shows how ignorant you are, stereotyping all Italian Americans as being from NY….
I’m Italian! So what are you talking about and why mention Italians!.Again your assumptions are false and misleading. Your comments suggest those who don’t succeed didn’t folow the system. Hence, all who did must succeed. Tell that to the 3000+ who aren’t breaking even. Clearly you are one of the 3000 or from corporate.
Once again, where did I say that all that follow the system succeed? All i said is if Disgusted is going to say that he follows the system in one post and then on another argue that $200 is too much to charge for a tax return and it is ripping off customers and does not feel that he should distribute 50% off coupons, then obviously he does not follow the system and I felt like I should point out that he is not credible because he is all over the place….
I really think he should not have invested in a franchise, like that he could have done his own marketing, charged $50 per tax return instead of $200, not have to paid the 14% in royalties and then he would filed bankruptcy and blame someone else for his bad decisions….
Why are there more complaints about Liberty than JH? Why are there so many complaints on Liberty’s f ace book? Can’t wait to see the number of zees filing bk next season, maybe they all will file a complaint with the FCC and put the rats back in the sewer.
Mike on May 7th, 2011 9:15 pm
Why are there more complaints about Liberty than JH? Why are there so many complaints on Liberty’s f ace book? Can’t wait to see the number of zees filing bk next season, maybe they all will file a complaint with the FCC and put the rats back in the sewer.
Probably because Frustrated/Mike/Antonio are the same person….. Probably because JH franchisees are beyond unhappy that they have given up…. They are filing bankrupcy and won’t exist anymore!!! What can they going to do? File a lawsuit against a company that does not exist?
Listen, I have never understood why so many of the same people come on here trying to damage Liberty while they are still operating stores. I guess there goal is to hit it rich by lawsuit which if you look at how many times that is done in franchising I suggest going the lottery route, it provides much better odds.
I do not like franchising as a whole and think it is about to go through a huge transition. Franchisees and Franchisors will always have a combative relationship just because the goals and priorities will never be the same and in many situations they will be polar oppisite causing mistrust and conflict. Because of the very nature of Franchising only a few will ever, at least where we stand now, find that sweet spot where they can operate and not allow the conflict to get in there way and navigate the choppy waters to make very good money. Most will allow all the conflict and issues to sidetrack them and they will at best attain average numbers.
Now the question is can a person make money with Liberty? The answer is yes!! Liberty has a good base system and only gets messed up when people start talking about it and complicating it. The tax business will provide huge opportunities in next couple of years and I do not know another industry right now that has this much opportunity. I guess you can hope to jump on the lawsuit wagon or you can start figuring out how to take what you have and succeed even with the challenges and there are many inside of the Liberty System. You can make great money and attain flat out amazing profit margins owning Liberty Stores. I am not saying to start listening and following everything you hear on calls or communications from Liberty. I am saying as a business owner seek out the answers and figure out what you need to change to achieve huge results depsite of some of the challenges.
I could sit here and complain pointing out all thats not fair but do not see the point and dont believe the ship will ever come in on the lawsuit issue. I do believe that a Z can take advantage of the current opportunities and make some great money even if it does take adding some possibly many sound business strategies to Libertys system.
Mr. Barilla:
First of all, I have never posted under any other alias, and doubt anyone else has either. I will set the record straight for you. The first year I purchased my franchise, I followed the system to the letter. Lost 10′s of thousands of dollars. Should have walked away, but I have too many assets and do not believe in not paying my debts. Year two, I opened with a limited system because I had no money. Lost money, but not what I did the first year. This year I opened again because I had to. Yes, I have tried to sell, but no buyers. There are areas where the system does not, and will not work. When I purchased my territories, I was under the mistaken impression that Liberty Tax was a well managed, would help me understand the tax business, and be there when there were hurdles. Nothing could be farther from the truth. Everyone I have met in the system, and there are many, are disgruntled with Liberty Tax. Why ? Because they are not making the monetary returns that LT talks about. Most are either breaking even, or losing money. They see LT taking 19%, and doing well, while they are working their butts off, and making little to no return. Many have their stores for sale, but cannot sell them, are working full time jobs, and still dealing with a business that is doing nothing for them. Are there areas that you can make money in income tax, yes, but as more and more competitors move into areas, LT does not offer anything that Joe’s Income Tax cannot. Hence they have paid $40K and paying 19% for nothing.
You will put your heart and soul into this money pit. In my area another Liberty just closed recently. I knew this zee for many years and they just wanted to stop working for free. All you are doing is buying yourself a job, most of the zees that grow are because of the cannibalism of clients from those that go under.
Does anybody out there have an AD called steve D. He was nowhere to be found this season. heard from him after season, and all the blah blah blah. so much for the 19% in royalties for assistance. We should all group to gether and sue lts for at least our franchisee fees and screw the rest they can keep the customer list
Sounds like my last two A/D’s, but they went by different names. Maybe all three are the same person, what do you think J. Barilla ?
You had an AD? What’s that??? Actually they turn over pretty quickly I am on the 7th one that I very rarely saw. It just shows what a POS, LTS IS.
Honestly, you write:
Franchisees and Franchisors will always have a combative relationship just because the goals and priorities will never be the same and in many situations they will be polar oppisite causing mistrust and conflict
Let me suggest as I have said over and over, JTH is using your money to build his empire. It is that simple. By having someone purchase a franchise, sucking them dry by opening and promoting their business, then selling it to a new franchisee who does the same is not franchising, it’s about as dishonest as it gets. If that is what you subscribe to, you are as crooked as JTH is. Having different priorities is one thing, telling people they will make money when they clearly will not is lying, cheating and stealing. That is what the LT franchise is all about.
Totaly agreed-Frustrated. Just last season the AD said “it’s about bringing people in and then consolidate” which means get a bunch of new people in the system, use and abuse and then take over. This area developer is Gene H. and it he aint no comet! He said that is Liberty’s goal.
Hello… I’m the Liberty Tax sign holder from Kearny Mesa,CA. I just wanted the forum to know I finally received my last paycheck I was waiting a month for. My company owner here didn’t flee the country like I originally suspected. Ha !! Ha !! On a serious note may all of your luck change for the better with control over your franchises. As we begin to do more for each other some day money will be a thing of the past, but as long as it’s here for now we might as well band together and support each store and increase efficiency not only for payroll matters but for ease of business—lets get $50 coupon books in the offices,start to process returns in high volume, offering a nominal fee just above what someone would pay online for e-file, in office food, soda and treats, maybe an American flag or two and we will be well on our way to controlling our finances on the way to not needing tax services or money in the future. May God bless all good people , Thank You.
I was also bamboozled I followed the system johns top 10 gave free pizzas out the ass and doughnuts within a 2 mile radius of the store. Maybe got 5 returns out of that and spent thousands on free food.
Needless to say I had to full time wavers and a marketing person. I had coupon holders in all the gas stations and taliban stores. Did radio ads and also did a block part as they recommended for visibility. I also participated in the christmas parade and gave away bam bams candy ballons and coupons. I started my marketing in december I figured the early bird gets worm. Well I got no worm. I ended up with 62 returns and 13 were free after sinking an additional 37000 in operating expenses for the 4 months.
I kept calling my ad for assistance and he would suggest different ideas which I did but only put me further into debt. At the end all I did was SPEND MY MONEY TO FURTHER LTS AND PROMOTE THEE NAME. If I would have known this I would have just had 1 preparer in the office and that would have been it. Would have lost a hell of a lot less money.
All I can remember from EOT was that they made everyone believe they could do as many returns as they wanted. Well that was a lie. The only way to recoup ur money is to sell out to block by showing them the LTS system. You know the free doughnuts and costumes. I did have a noncustomer make a comment once and it did make sence ” why would you have someone that uses costumes prepare your taxes”. Looking back kinda makes sense
In the meet and greet with John and the request for consideration which occurs prior to that a question is asked on the paperwork similar to this:
“Do you a job?” This question is posed so that LTS may consider your ability to survive the off season.
It is already understood that Liberty agrees that your first year projections should be 600 returns.
Well if that were correct and assuming 100 free then 500 net returns multiplied by at least $150 per return would realize $75000. Less $15,000 for franchisee fees, $25,000 for rent/utilities and $25,000 for payroll and $5000 for marketing.
This would leave a first year profit of approx. $10,000. That wouldn’t bee too bad for a first year office. I was a top twenty 1st yr office and I had a net loss of over $40,000!
Of the 300 or so new offices, the
20th office prepared 501.
50th office – 391
75th office – 336
Take off the freebies and you see a whole different story!
What does that say about the other 225 new offices?
How can anyone hope to make money… any before Barilla rears his ugly head… look at the 2nd year offices:
20th – 700
50th – 576
75th – 515
Wow…. So the 75th second year office of 400+ new offices according to entrepreneur.com – less 100 free prepared only 415 paid returns.
And the third year office in 75th place prepared only 580 returns!
Good times….
I am one that believes that there is great opportunity in the tax preperation business but will warn anyone that believes that you can build a tax practice on buying and delivering food products and with costume wavers outside alone without any business savy not to buy or go into any business. This business is tough and takes understanding what makes your potential clients respond and more importantly have the ability to execute a plan to make it happen. Yes you can use Johns Top 10 to be very succesfull but if you cannot do the many other things it takes to build a business and have a natural understanding of business and being able to judge when things you are doing is working or when you or wasting your time to stay away!
Liberty has allowed so many to open offices when they had no business in being a business owner let alone a Liberty Franchisee. In business it takes skill, some luck, and the ability to not quit despite the doom and gloom that will more than likely hit you the first couple of years. Its hard work and takes a ton of humility and the ability to not only blame someone like Liberty but to take responsiblity for your own mistakes and mis steps and the ability to look at all of these and formulate a plan to learn from these mistakes and to move on to success.
Good luck to everyone.
We need to start a revolt, i bought a new territory and this was my first year. they lead me to beleive that i could do as many returns as i wanted. that was a lie. I did between 200-250 returns and many of those free. i have lost so much money and the wife is threatening to leave me. I dont know what to do. i followed the system but the system sucks. the guy down the street an independent did close to 1000 returns and had to pay no franchisee fee or royalties. He had wavers dresssed as uncle sam and did b to b and coupons but under his own name. LTS Sucks
Antonio
Liberty Tax Service uses the same business model as Jackson Hewitt.
If we look at JH financials they provide an average number of tax returns per office by number of years in the network.
fiscal 2009 fiscal 2010
1st 205 166
2nd 235 234
3rd 274 253
4th 305 277
5th 348 297
6th 405 334
7+ 558 482
Yet Liberty starts a first year store off with a bogus 600 return which they use for every store regardless of location, demographics or franchisee ability. Then using this number they give you a projected staffing chart which if you follow just cost you money. John Hewitt just willfullly present misleading facts to sell their franchises. Unfortunately franchise law is written to protect the franchisor and not provide any real protection for the franchisee.
The 4/30/10 financial stmts for Liberty Tax Service shows they issued $32,488,000 in operating loans to it’s franchisees so the franchisee can stay in business. This averages out to $10,000 a store. Which supports your position that there is not enough cash generated during the tax season to make these stores profitable.
I think the post from first year Z in NC proves my point. Liberty has its issues yes, but because a guy or female believes that they can just do any amount of returns they want by following any system and then becoming irate just flat out amuses me.
I am not sure what you were told NC but I am guessing you have limited business experience if any at all and would of struggled with any type of business. As far as the guy down the road that is fine but there are just as many independents out there not paying royalties that are going broke.
I think whats the most important thing is for everyone to realize what the truth is and what is personal opinion.
NC Z I want to appoligize for the “amuse me” comment. I do understand where you are coming from and would like to offer some advice.
1. You must limit your expenses to only the items necessary.
2. Find a Z who understands how to operate a Liberty Office, they are out there and they can be found. They can help you seperate fact from myth.
3. I think you may be better off than you think. As far as your spouse well thats one of those things that needs to be addressed going into any business. It is very hard to succeed when your spouse gives you no room to make mistakes and expects only success from the very beginning.
I am not going to defend Liberty in what you were told because I have no clue. I can tell you that you can quit now and accept the losses, or you can do some real investigating and find out if you can pull it out next year at least to the point where you can sell the office or recoup some of your losses.
I hate to interrupt the pity party, but does it occur to any of you that you bought a franchise OPPORTUNITY? Note the word is “opportunity” as opposed to “guarantee.” You decided to launch a business VENTURE. If you want a promised ROI put your money in an FDIC insured account and reap the big reward. Don’t start a seasonal small business in a highly competitive market.
You all signed a big fat franchise agreement that said you didn’t rely on any sales numbers or projections that weren’t in that agreement when you purchased your LTS franchise. Now you all claim you were “bamboozled.” Take some responsibility for once.
The comment by “new francise zeew” on May 13th, 2011 1:40 am is classic.
“I was also bamboozled I followed the system johns top 10 gave free pizzas out the ass and doughnuts… I had to full time wavers and a marketing person. I had coupon holders in all the gas stations and taliban stores… I ended up with 62 returns and 13 were free after sinking an additional 37000 in operating expenses for the 4 months.”
“I kept calling my ad for assistance and he would suggest different ideas which I did but only put me further into debt. … All I can remember from EOT was that they made everyone believe they could do as many returns as they wanted. Well that was a lie.”
Guess what? All the adults in a 2 mile radius of his shop had someone do their returns – just not the crude bigot who gives pizza “out the ass” and refers to his prospective customers as terrorists.
Anyone who claims he believed “they could do as many returns as they wanted” would have lost his money to the next magic bean seller anyway. Many of you should admit that you want the return of owning a business without the risk or the responsibility.
Look on the bright side… at least you’ve got someone else to blame for your decisions. That’s something.
For those of you who haven’ t yet figured it out………..People like Honestly and Guest have received some type of favor or kickback from LT, hence they are defending a bad investment from a company that has no business being in business or selling franchises. This organization does not understand the tax business which is why they are getting the comments above. To all thinking of buying at Liberty Tax franchise. STAY AWAY. THESE PEOPLE ARE A DISASTER AND YOU WILL END UP LIKE THE PEOPLE WHO HAVE LOST THOUSANDS. I GUARANTEE IT.
Frustrated and Disgusted you are comical. I am not defending anything and your message looses its validity when you claim that any Z that does not blame Liberty for everything is a company plant or is being paid. Liberty has done many things I dont like and I do not defend them but I also do not blame them for everything.
As far as them doing favors that just shows how much you know about how Liberty operates. Trust me they would not do anyone a favor or pay them for posting, they do not want any posts on here at all!
If you want your message to be heard you need to stop being so radical and realize that Liberty is not at fault for everything including the assassination of JFK or the disappearance of Hoffa. Would I suggest someone with no experience and that has no business knowledge to run out and buy a Liberty, No!, but I wouldnt suggest they buy any franchise. I believe that this entire and very lengthy thread needs to be a word of caution and tell people that they need to do tons of soul searching and investigating before buying any franchise.
If you do buy and fail then I also suggest you be prepared to take the blame not blame Liberty. The information is out there and anyone that still thinks opening a tax office is 100 percent guaranteed to show profit first year is just foolish. If you do your homework and believe you can make it then go for it and it is possible to make a profit but it will take work and more than delivering food products but you should know that if you did do your homework.
I do not disagree with many of the items you say Frustrated but I grow tired of you claiming that people are plants or being paid. I think if you would put some of your natural talent toward obtaining a profit instead of trying to damage Corp you would be happier. I do not say that to defend corp either. I state that because the way your going about trying to damage them is not going to work. Yes some of there practices will be called into question and may result in fines or people leaving but if I was you I would spend more time on your own financial future. It is not impossible to get a store to respectable profit levels. It is not easy but not impossible.
Just this last season, on one of the “New” Zee conference calls. Cory H_G__S said that “you (meaning all new zees) should have 3 budgets, one for 600 returns, one for 800 returns and one for 700 returns.” this way you will be prepared for one of the likely scenarios– he is a propogandist! It should have been 200,300,400 which would be a lot more realistic. (DONT FORGET NEW ZEES are required to get 200 FREE RETURNS NOT 100!) When I heard this conference call, I said to myself ‘wow a lot of new zees are going to be very disappointed at the end of the season!!
Re: Honestly – It is clear you have bought the JTH line of rhetoric hook, line and sinker. Unfortunately I have heard it all before. Blame it on the franchisee who didn’t follow the system, or has poor business skills or etc. , etc. etc. However you want to justify it in your mind, you will live in fantasy land forever. I know different because I have met and talked to many, many franchisees. These are smart intelligent people with good business skills who wanted to own their business, either for personal or professional reasons. They were lied to at the Meet and Greet, they were given theoretical BS when they went through EOT, and when they went through their first year, they realized that this was a scam. A big one. Unfortunately the franchise laws make it difficult to individually fight back. I am going to make every effort to shut this scam down, so other people don’t get financially hurt. I would like you to do something, go look at yourself in the mirror and ask whether you have sold your soul to the LT devil.
Frustrated and disgusted writes “People like Honestly and Guest have received some type of favor or kickback from LT, hence they are defending a bad investment…”
F&D makes 2 assertions here, both of them wrong. Sorry, but
1) Not everyone with a different point of view is being paid to disrupt Whinefest 2011
2) I’m neither defending nor promoting the Liberty Tax franchise or any other franchise. In fact, I agree that those who are complaining shouldn’t have bought this franchise and probably shouldn’t have gone into business at all.
Speaking of looking yourself in the mirror, perhaps Frustrated & Disgusted, Mike, Bill, Antonio & First year zee in NC can share what mistakes THEY made that led them to signing and agreeing to adhere to Liberty Tax franchise agreement?
How many Liberty Tax franchisees did you speak to? Should you have spoken to more?
Should you have worked for a season at for a Liberty Tax franchise location before sinking your money and time into a franchise?
If you were given bogus projections by LT and its minions, should you have independently verified their accuracy? Or do you still believe anyone who tells you you can “do as many returns as you want” like new zee?
I’m sure LT salespeople easily dismiss even your valid points by branding you as whiners who don’t take responsibility for their own actions. Your points might be a little more credible if you acknowledge that you should have done things differently rather than simply claim to be an innocent victims of the “LT devil”
GUESS & HONESTLY,
You could not have responded any better to Frustrated blaming his problems to “LT Devil” and the bigot ” New Fanchise zeew” ………. They both must be Sarah Palin supporters and part of the Tea Party too….. Blame everything on illegal immigrants or anyone is is a shade darker than them…..
Re: guest
Your comment: If you were given bogus projections by LT and its minions, should you have independently verified their accuracy? Or do you still believe anyone who tells you you can “do as many returns as you want” like new zee?
You prove my point better than I ever could. In other words, go out and give a franchise organization $40K and 19% of your gross, but don’t trust anything they say. I’ll bet there are a lot of people who would love to sign up for that opportunity.
Frustrated, your last post was finaly dead on!!! Do not trust anything and verify everything. You are putting down and making accusations at people who do agree with many of the points you make?
I have no illusions about what Liberty is and what Liberty isn’t. But in the end being a small buisness owner for many years I cannot put all the blame on them without taking at least an equal amount of responsiblity myself. It has been a very expensive lesson but one that will keep me from ever making the mistake again. Now if not blaming Liberty for all of my woes is something that makes you think I am a company plant or that I was in the grassy knoll at the Kennedys assasination I am not sure what to tell you.
Honestly:
If I understand your post right you wouldn’t invest in Liberty if you had the oppurtunity to do it over again but since you did, your willing to share the blame?
My goal on here is to discourage people from buying a Liberty Tax Franchise. The reasons are clearly stated in many of the above post.
From my personal experience I don’t believe Liberty is a well run company.
Why have someone budget and staff for 600 returns if you know the average 1st year store does around 200 to 250 returns?
E-smart software purchased it for over 2,000,000 and then had to write-it off as a bad investment!
Unwillingness to have a national ad campaign. Ask AFLAC if advertising works?
John Hewitt, while he did start Jackson Hewitt he was eventually given the gate. I believe he’s narcistic personality has a negative affect on the organization.
There is very little effective training of franchisees and Area developers. The tax code is complex and without proper training you have inconsistent and inaccurate tax preparation.
The landscape for the tax industry is changing. RALs are all but over. New regulations on paid preparers. The business model that Liberty currently uses is based on the early filer and the use of the bank products. It will be interesting to see what changes Liberty makes.
The company is financially strong but a majority of their receivables are based on the underlying performance of their franchisees. While they do have allowance for doubtful accounts. I personally have not know of any franchisee who has been able to resell their franchisee for what they paid for it. So I guestion the valuation Liberty uses for it’s territories.
Did everyone read the disclosure document that Liberty provides to you prior to signing on as a franchise. The numbers are all right there for averages 1st year, 2nd year, 3rd year, and 4th year offices……
ALL i can say is disappointment and frustration for my first year. While i did verify everything, and know ultimate success depends on me, LT is very misleading. Their AD and chosen Zees, are there to brainwash you and suck you in deeper. I take full responsibility, but I can also honestly say LT suckers everyone out of there money, only empty promises and unrealistic goals are given to zees. All i kept hearing is follow the system and you will succedd, or everyone that fails did not follow the system..
Looks like Liberty Tax franchise owners Tonia and Derek Barefield may have figured out a surefire way to turn a profit: Just keep your customers’ tax refunds.
“GRAND JUNCTION, Colo. — A month after they were supposed to receive their tax refunds, one Grand Junction couple says their money has disappeared. They filed with Liberty Tax Services – a temporary business that’s storefront is now gone along with this couple’s money….
“The company’s signs are still up, but nobody’s home. And now thousands of dollars worth of tax refunds seem to have gone missing. “We need our money,” Schultz said. “It’s irritating.”
She and Stout went with Liberty Tax for the first time this year. They were promised their money back in April. But, it has been a month and a half and they still haven’t seen a penny.
“They said 8-15 days and we got a prepaid debit card that they were supposed to put the money on,” Stout explained. “I haven’t seen any of it.”
It seems that they’re not alone. Business owners in the four area shopping malls that Liberty Tax calls home tell us they have seen crowds of people banging on the tax service’s doors with the same questions about their money. “It’s terrible because there’s nothing, really, that we can do,” Schultz said.
Over the past week, she and Stout started looking for answers. Quickly, they ran into dead ends. The doors are locked and the phones are disconnected at every location but one on North Avenue. “We’ve called [that store],” Stout said. “They’ve told us they were supposed to be open Thursday and Friday from 10:00 am to 2:00 pm.”
But, during our 12:30 pm interview on Friday, the lights were on, but the business was closed. The next place to turn was the Liberty Tax corporate office. “It seems like every time we call, they blow us off,” Schultz said.
“We called and they keep transferring us to some lady’s voice-mail and she never calls us back,” Stout added.
That is when it was time to contact the IRS. “We called the IRS and they said on April 15th the money was transferred to Liberty Tax and I haven’t seen a single dime of it,” Stout said.
One more company is involved in this transaction. The debit card company, NetSpend. So, we called them, but they haven’t seen the money either. “Sir, we haven’t received any yet,” the company’s agent told Stout.
So, the question is, what happened with the money? Since they can’t get a hold of anyone at Liberty Tax and because their calls haven’t been returned, Stout and Schultz fear the company is behind it. “They just cashed and ran,” Schultz believes. “What else could it have been?”
That scenario, though, is far from the company’s symbol or it’s guarantee.
Apparently, the refunds aren’t the only money that’s missing. A notice on the North Avenue location shows that they owe rent, as well. Our calls to the listed owner of that Liberty Tax location went straight to voice-mail.
As for Stout and Schultz, they are holding out hope that will eventually see their money. But, they say this headache is enough to make them never want to file with Liberty Tax again.
We are also trying to get answers from the corporate office, but have not heard back. We’ll continue to follow this developing story as more details emerge
http://www.kjct8.com/news/27891256/detail.html
This one speaks volumes………………….
The poor zees in CO were probably trying to “follow the system” went in over thier heads by passing out too many pizza’s. Liberty would probably say, you need to do xyz more Business to Business marketing, maybe have five wavers not just one or two, etc. etc. and what happened next? Their fees were “FEE INTERCEPTED” and Liberty took all fees collected from bank products, such as those from NETSPEND! I hope this gets resolved for the clients that may have lost thier money. I also hope the zees from CO will post on this and many other boards the truth what happened and share their stories to keep others from getting into this POS!
The poor zees in CO? You mean the alleged thieves? The suspected con artists? The people who betrayed the trust of their customers and whose national press will now speed the demise of many other lts zees?
Is there any scenario you won’t twist to make the franchisee the victim?
Hilarious, really.
Improve wrote: “Did everyone read the disclosure document that Liberty provides to you prior to signing on as a franchise. The numbers are all right there for averages 1st year, 2nd year, 3rd year, and 4th year offices……”
Why has no one answered this? Aren’t these numbers more important than the post-sale projections everyone is whining about?
I think we have already determined that you cannot believe a thing LT tells you, shows you, or prints.
Dear Guest,
Then why doesn’t Corp respond?
Please speak on their behalf.
Frustrated and Disgusted:
Please dig out the Liberty Tax UFOC that you thoroughly reviewed with your attorney, scrutinized, and signed and turn to Item 19 Earnings Claim.
What are the averages 1st year, 2nd year, 3rd year, and 4th year offices disclosed in that legally binding document? I’m sure they’re all “lies” that Liberty submitted to the FTC and state franchise regulators, but humor us.
So the number is 500 or 1000, that is really not the point. The fact remains this is a lousy investment with a company that doesn’t understand their business well enough to help the people they rob for $40K and 19%. You and the rest keep blaming it on the people who purchase the business. I can show you store after store that is losing money, following the system. You might be one of the lucky ones who does well, but you may be one of the many who does not. You can say that about any business, but if you pay someone that amount of money, and they cannot help you, or won’t, you made a lousy investment. That is the point with Liberty. After giving them a franchise fee you are put in the hands of a A/D who could care less what happens. For several months after giving Liberty my franchise fee, I left message after message for mine, and got no return. After opening , when my return count was lower than expected, I asked for help, and was told to read the EOT manual. I asked what others were doing to increase their customer base, and he couldn’t tell me. There are others in the area with the same experience. Only those in really low income areas are breaking even, the rest are failing, and Liberty does nothing. Ask for tax help, or software support, and good luck getting an answer. Have a problem with an invoice, good luck getting someone to respond with something that works. This is what you paid good money for.
Frustrated and Disgusted:
It’s interesting that you claim Liberty Tax robs people by giving them deceptive numbers, yet you refuse to post the numbers that you relied on. Weren’t you given actual averages for 1st year, 2nd year, 3rd year, and 4th year offices? How is that not the point?
Aren’t you being a bit deceptive by posting internal, hypothetical numbers being used for goal-setting as if they were used to sell franchises, but refuse to post the real numbers you relied on?
I’m not saying this is a great franchise or great franchisor, but your credibility seems a bit questionable when you dismiss anything that doesn’t support your role as poor innocent victim as irrelevant.
guest:
Item 19 is not required to be filled out. Have you ever seen a UFOC for Liberty and if so what where their earning claims?
Guest:
I am going to come at you from a different point, going back to something many have said on this forum. That Liberty will sell a franchise to anyone, regardless of business acumen. As mentioned in many of my previous posts, I have visited several franchises, to date well over 30. I have seen those who are successful, and those who are not. I will give you an insight into my visits. Those who are succeeding have made this into a business, very little of it resembles what you learn in EOT. They have found their niche, found good customers who return, and built a business that succeeds on hard work and effort. What is unfortunate is that these people would succeed with or without Liberty. It should not take this level of talent to be successful in a franchise business. Franchises have been built on taking a system that should work with some local tweaks, and be successful 70%+ of the time. With Liberty, the system fails way too often, and most cannot recover, or find their niche quick enough to right the sinking ship without losing it. This is due to the high cost of marketing, especially the first year. Many have spent so much on a losing year, that they cannot make it to the 3-5 when they actually can see their tweaks work. Liberty is at fault for their unrealistic forecasts and expectations. Your thoughts ?
Frustrated & Disgusted:
- I’ll ask for the 3rd time: What does it say under Item 19 of the Liberty Tax UFOC that you signed? If you duck the question again, for the 3rd time, we must conclude that you do so either because 1) the contents disprove your claim that LT provides deceptive numbers to sell franchises, or 2) that you do not have a UFOC because you are not really an LT franchisee.
Anyone can come on here and say they’ve talked to 30 franchisees, even a competitor. It’s curious that you keep ducking the question about the agreement you signed. Could it be that you won’t reference it because you’re not a franchisee?
I agree with guest the franchise is overpriced and so are the royalties. the only ones making money is corporate. i invested almost 100k this year and stlll only did 220 returns at average fee of 200.00. A mcdonalds make money even on their first year (operating expenses) What they sell you is a viable franchisee, but it is not worth 40k it is worth 10k at the most and the royalties at 15%. Maybe we should all group together and ask for part of our franchisee fees back.
By the way, when i went to EOT last year, a funny comment at the time, was made by one of the EOT Trainers. They were amused there was a mexican lady at EOT that had bought a territory but spoke no english only mexican. so she sat at EOT all week long looking confused. once in a while someone from the hispanic marketing dept would come in and ask her if she had any questions, she would just smile and say yes or no. Last i heard since we all exchanged information, she did 84 returns and went broke. NoW you tell me liberty wont sell a franchissee to anyone aslong as they can fog a mirror.
guest
I don’t believe Liberty does publish those numbers of 1st, 2nd and 3rd stores in their UFOC and if your not a franchisee or a plant how would you know?
As “Frustrated & Disqusted” and many other people on this site have stated the value of being a Liberty franchisee does not justify the cost. If you are already knowledgable about the tax industry and can meet the IRS licensing reguirements you would be better served investing the money in yourself vs. Liberty.
The brand while growing is not a “name brand” with most individuals and won’t be because there is no national/regional advertising campaign.
guest:
What is your purpose for being on here? Why don’t you tell us what Liberty’s UFOC says under item 19?
I don’t believe they included in their UFOC that I reviewed in 2005.
New Zee: Thanks for the story about the woman who only spoke “mexican.” You proved Liberty Tax will sell to anyone even better than you know.
bill: Don’t you think it’s curious that Frustrated & Disgusted has been posting on here for a year but cannot say what’s in the Item 19 of the agreement that he signed? His whole argument is that Liberty Tax is deceptive. Now all of a sudden he’s silent. Remember all the flack the ADs got for not being forthright? If he’s not really a franchisee, he should just say so.
Many here are criticizing Liberty Tax for giving unrealistic projections, as if these projections are being used to deceptively sell franchises. Is that the case? The Item 19 either gives actual sales numbers, as “Improve” contends, or it gives a disclaimer saying that LTI does not disclose sales numbers and you agree that no representations have been made or relied on.
The only contentions I see here that LT is dishonest in the sales process is running franchise ads disguised as employment ads. Was lied to BEFORE they signed on?
Liberty Tax DOES NOT, and certainly did not when I purchased my territories, show the average returns prepared by year.
This is an absolute lie….
As an accountant, it would have been my first question as to why I would be asked and inclined to reduce my expected 800 first year return count to 600 because that’s more likely when in fact it nowhere resembles what the disclosure states.
Clearly, there’s a few a little more about guest we don’t really know.
Did you read the FDD????
Does anyone have a recent Liberty Tax FDD? If so, please email it in confidence to unhappyfranchisee[at]gmail.com. If you’ve got a hard copy and would rather fax the item 19 pages, email me for the Fax #. Thanks.
Odd that some claim there’s a financial performance representation while others say there isn’t. Fewer than 1/3 of franchisors provide a FPR. Did Liberty Tax add it at some point? Improve… do you have one?
There was no FDD. It was an UFOC.
Get your facts straight.
UFOC FDD didn’t change until less than three years ago.
Our territories were purchased more than six years ago.
And according to the Federal Trade Commission, there are only 15 states that require franchisors to give a FDD to franchisees before any franchise agreement is signed and before any money changes hands.
From the Federal Trade Commission:
19. Financial Performance Representations.
Earnings information can be misleading.
Franchisors are not required to disclose information about potential income or sales, but if they do, the law requires that they have a reasonable basis for their claims and that they make the substantiation for their claims.
Franchisors practicing Franchise fraud may have a high number of former franchisees under a Gag order, preventing a potential new franchisee from obtaining a clear picture of financial performance.
Sample Size
The disclosure document should tell the sample size and the number and percentage of franchisees who reported earnings at the level clai