LIBERTY TAX SERVICE Franchise Complaints
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.
This post was originally published
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 not a first year zee and i owe nothing in the way of royalities or interest. The question would be would they fight me over anticipated royalities for 2012- The annual minimum in the agreement thanks
Steve,
I believe you will owe them the minimum roaylties $8000 (or so) per year until your contract expires. If you get out now you should be able to save some money. Do you have a lease?
so your view is if i don’t open ( which allows them to terminate agreement) i would still owe the remaing years of royality in the agreement
Why are you trying so hard to get out ?
Not so much trying hard just looking at options- when I took the franchaise i was between jobs- i now have a reasonably demanding one- which severely limits my time for the store-tried to sell without success
Steve,
I would have to look at your franchise agreement. I would think you would only owe up until they terminated you. If you can’t sell it, give it to someone and get out if you feel need to, you maybe digging a shallowerr hole. You should contact a lawyer before the season starts, and you have to start spending more and more money buying cookies and candy for every business around your office assuming you are following the system.
John Barilla got quiet lately…..I wonder if he happened to watch the Chick-Fil-A Bowl the other night….which was sponsored by H & R Block. Lots of advertising dollars spent on the game by Block, but then again, millions watched the game. Block seems to have it figured out, Liberty, not.
Steve:
This is a question for your lawyer. My situation was significantly different, although had I given up at the same point you are at, I would have been much better off. The problem is in your situation, you are screwed no matter what you do. If this is going to cost you a substantial amount of money by opening, get out now. The amount you owe will only go up exponentially.
Don’t Be Fooled,
You are hilarious, Barilla probably choked his Chick-Fil-A! When he saw that your comment!
Sorry guys, actually doing work opening up another couple of offices this year and already getting a bunch of clients in. Busy busy….
I think the siutuation Steve brings up is a good example of what not to do when buying a business. If you are looking to buy yourself a job DONT!! Buying a franchise just to buy yourself a job is not a wise thing to do and a big reason many fail. Buying a Franchise is a tough thing to succeed at even if your a commited business person but someone thinking that they can buy themselves a job usualy always fail and cannot understand it why it happens, and as most employees do, they blame everybody but themselves because it is not their fault.
Steve I am not sure the financials behind what you have done so far but I will agree with others and state that you need to cut your losses and not open if at all possible. If you plan on opening and giving it 20 to 30 percent you will do nothing but bury yourself. Hopefully your not commited to a long term lease which can make this even more difficult. Seek legal help and good luck with your job!
Laughable;
Geegoshwilligers, why didn’t I think ot that. I guess they forgot to teach that in EOT. I agree with you 100%. It is much easier to absorb the losses you are going to incur if you have an income against which to take those losses. And at the end, you have more money to give John Screwitt for his overpriced royalty fees.
Laughable:
“Buying a Franchise is a tough thing to succeed at even if your a commited business person.” Especially a “Liberty Tax Franchise”
“Someone thinking that they can buy themselves a job usualy always fail and cannot understand it why it happens, and as most employees do, they blame everybody but themselves because it is not their fault.” Where did you get your psychology degree?
I was on HRB website and they talked about stores lossing prepares has this been happening at Liberty? Are franchees helping pay the staff registration fee?
I got an e-mail from Liberty wanting to know if I wanted to be come a tax animal. I tried calling the 800 number but no answer, tried the website and it just shows you how to locate an office. How much was Liberty billing the franchisees for this service?
Again, this is a loser franchise. Please read all of the posts. You will get the real picture of an organization that is nothing but a screwed up mess hoping to find their next victim. I hope it is not you.
Having just gone thru a tax course in Phoenix area, I agree with much of the above. I am an early retiree, have a degree in Bus Mgmt, and have had my own business in the past. I thought ‘doing taxes’ would be a great part-year job. After seeing the extremely poor quality of staff (no one with ANY tax knowledge other than the 4-day course!) being hired by this new franchisee, finding out the low wages, the emphasis on tricking low-income EIC clients to file and sign over their $249 tax fee – well, let’s just say I go back to my previous initial impression of Liberty when I saw the costumed wavers leaping around on the streets – it’s a joke, and I’m not working anywhere that I couldn’t recommend to my friends and family.
Shari;
I think you nailed it pretty well. There are some decent people out there doing taxes legitimately and doing well with it. Unfortunately the retail tax business is nothing but a bunch of scam artists posing as legitimate business people, Liberty Tax probably the biggest offender. No doubt there will be some Liberty naysayers out there who will disagree, but just look at all of the complaints both on this board, and every other complaint board on the internet and you will soon realize the purpose of this franchise is to rob everybody and anybody, the more, the better.
F&D, look at Liberty’s facbook, the complaints are starting already and it is not really even tax season!! One can only wonder when this POS will file bk? LOVE IT!
Hi to all,
I am a second year zee and am frustrated. have had two people walk in the door and then left. they felt the price was to high at $250.00. The invoice was for 200 but i had to add 50 to cover CIF. it has been dead since saturday. we actually opened on last friday, my AD said we have to go above and beyond so we opened earlier. it doesnt look very promising. i have 4 wavers outside and 3 people tagging coupons alover town on houses and parking lot. have radio ads blaring and a 18 foot blow up doll on roof. andy more suggestions on how to throw more money out the door. I just feel i am trying to row upstream with my hands. Block and jackson have really good tv ads every couple of minutes and if i was a potential customer i would go with the more professional looking company ( BLOCK) not the clowns in costumes.
2nd year zee,
Sorry you have to go through what so many have before you. Stop wasting your money, control your expenses and give great service and tax advice not cookies to everyone. Maybe you will make it. I hope you do .
2nd year zee,
Mike has good advice. I would cut your expenses immediately. You have 7 people working right now?! That’s a lot of money everyday that you are spending and w-2’s aren’t even out. I’ll bet you have a few preparers sitting on their hands as well?
Liberty’s marketing is a joke. They need to make some serious changes at this point. The old give coupons to everyone and free donuts to 50 places a day is tired and clearly ineffective. Too bad you can’t pull the donut fund from all your local z’s and get some high quality tv or radio ads. Same actions equal same results, year after year.
I’m curious how many returns did you do last year? Do you owe money to Liberty? Your AD’s plan is text-book Liberty. Throw good money after bad and hope for the best.
Good luck, I hope you can figure out a way to keep your head above water.
I think the 2nd year Z brings up some interesting items. 2nd year Z my suggestion to you is easy “STOP”. If you cannot run a professional office and both Block and Jackson Hewitt are clearly more professional than you, you need to stop and do some soul searching. This is a Tax Service not a Circus or ‘Freak Show”. Some of those items you are doing will bring some clients in and it will increase your visability. The trick is to be able to do some of those items but more important than any of them is to “Run a Professional Tax Service”. So many get caught up in this hype but they forget about running a professional tax office. If your preparers all take the bus to work daily, and all cant wait to file there taxes so they can get there EIC checks, and none of them can build relationships with clients your sunk!! Or you better be great at bringing new clients in and then ready to replace 70 percent that dont come back next year!!!
Liberty is to blame for a ton of this over hype and not enough focus on hiring the right preparers and on top of that keeping the right preparers. Your clients do not come to your Liberty for the Circus. They come, if they do come, usualy to see a specific preparer they have trust in or they are looking for one they can trust. TV and Radio does not make you professional. I have not seen a professional JH in my city in years!!! But even with Liberty to blame on this over hype, Zs falling for it and doing it knowing its not correct is even crazier.
If you plan on making it you need to forget the hype and stop the circus. Become a student of why clients go to tax offices. My net fee is much higher than yours and I gurantee my retention rate is higher than the vast majority! Wavers are fine, B2B is fine but remember were not in the Donut business or the Costume Charachter Business. Its your money start acting like it and start figuring this stuff out. Otherwise your going to be another broke ex Z spending there days on here crying that someone did them wrong vs building a profitable business!!
Truthful and Honest,
You have a second year zee reaching out, this is how you Liberty morons treat those, you know what never mind… 2nd year zee you are doomed!
Mike,
We are know it is you logging on with a different name and then responding to your own posting….. You are not fooling anyone….
John,
Sorry, you wish!
Yes, very mature that you entertain yourself….. Did you find that bankruptcy attorney yet?
Ha, ha, ha, there are plenty in Columbus check your phone book!!
I’m curious, what type of return gets quoted at $250? Is it a basic 1040 EZ or 1040 (with no schedules)? Maybe EIC.
John:
Are you an area developer? Where is your office located?
I use to be associated with Liberty and everything that 2nd year post rings true. Liberty requires that you budge for 600 returns and staff accordingly. They pumb up the marketing and waivers and the benefit received does not justify the cost.
Most of the Liberty Tax offices in South Jersey are failing.. In the 4yrs I was involved I watched at least 8 franchisees go belly up. There is really only 2 offices I know of that have made it in this area and both have other sources of income to get them through after tax season.
I am so glad I can think on my own and pick out hype from reality. I guess most people can’t and they just blindly do what they are told or what they think they are told even if it is wrong thing. In reality most people can realize the wrong thing they just do the wrong thing anyway and when it fails they blame Liberty. I learned my first year you could not make money in this business by running a circus unless you had a kick but team doing taxes proffesionaly. You need quality preparers to be able to back up any marketing efforts circus or non circus like.
The fact is most of you on here complaining could not and did not make it with Liberty. But I don’t think that you have any better chance of going out on your own either. Get a job, complain about your boss, move to another job, and move on!!!! Then we can make a website “My Boss Sucks” and you guys can entertain yourselves all day long!
Truthfull and Honest- Over 50% of new Liberty offices never open in their second season, this is not a winning formula. When you have such a high percentage, it’s a formula for disaster, and even the AD’s admit that Liberty ‘s goal is to “consolidate’ offices, Code for using other peoples money bankrupt them and grow , but it is not working the word is getting out obviously!. If Liberty was such a great company, you would NOT need to be here trying to defend them! Be Truthfull and Be Honest! Liberty Sucks!
Re; Truthful and Honest
You have a right to your opinion, as do the others who post on this site. I always find it interesting that the Liberty Tax promoters can seldom state facts to back up their opinion. Fact is, 2nd year Zee paid good money to buy a franchise, took the EOT, and probably some advanced Liberty training. He is trying to run his business the way he was taught during his training. Fact is, he is not getting the customers he was told to expect when doing the steps he was taught to take. And when he fails, fact is, he will come on this website and bash Liberty Tax and you will respond on here and try to tell us he didn’t follow the system. Fact is, in many cases, the system does not work. It would be great if we could all have started our business, had plenty of cash and taken a few years before we needed to get any profit from it. That is not the system Liberty promotes. Instead they promote it as a get rich quick scheme, make money the first year, and more and more each year. I know now that what I expected was impossible. I did what 2nd year Zee did and spend thousands on promoting my business. When it didn’t happen, I went broke with nowhere to turn. I had locations and territories I couldn’t afford, a debt that was building and no way to turn off the faucet. Liberty just sat there and collected their fat fees ahead of everyone else. I got no help from my A/D, I tried to sell but there were no buyers. I suggest you take your blinders off and see the reality of the situation. When as Mike suggests Liberty has a huge number of failures year in and year out, maybe the reality is there is a problem that needs to be addressed. You may be one of the lucky ones who figured out how to make it work. If you are so blessed with all of this knowledge, maybe you need to be teaching the EOT classes, not the clowns who have only worked at corporate stores with endless money to make them profitable. If you want to face reality, quit blaming the franchisees, as they are only doing what they were taught. Not sure why you can’t figure that out if you are so smart.
I posted just two times in December, but I just read over some more of everyone’s comments since then. It seems as if “Frustrated and Disgusted” and “Mike” and many others had the same experiences as we had.
We were extremely knowledgeable of the tax business before buying into Liberty. Not only did they Not have a business formula….but we had No support from the home office, No AD’s that knew anything at all……once Corporate got our money, we never saw or heard from them. We spent OUR money on ridiculous door hangers, costumes, advertising, road side Bar-b-ques (what a joke) and Liberty Tax “Clowns” waving outside.
John Hewitt and his bunch of Clowns in the headquarters that consist of Lawyers, Lawyers and more Lawyers are dispicable. I have never hated anyone as much as I hate him. He has bankrupted us and thousands of others. That is no way how to run a decent franchise business.
I cannot wait for the day for it to come crashing down around him. He is a dispicable man, running a scam business and stealing thousands of people’s dollars, dreams and futures.
Anyone on this website that is in favor of this particular franchise is probably working for him or with him.
Those years with Liberty were the most intense, most stressful, most agitating, most disappointing way above any other time in our lives. Unfortunately we’re still not completely out of the water……..they’ve wrangled the life out of us and we’re still paying, several years later. I’m not sure when we’ll ever be free from their strangle.
My hope and dream would be to see him locked up in jail forever. My hope and dream would be to see him pay thousands of people back for their stolen years and monies. My hope and dream would be to see him suffer greatly.
Whoever on this website has anything positive to say about Liberty Tax really must have their head examined. It is the worst schlock operation and rip-off and they’re getting away with it!!!!!
LIBERTY TAX IS A SCAM…..DO NOT BUY INTO IT………..PLEASE!!!!!!!!
Re; Free at Last
My heart and prayers go out to you and your family. I hope that your impassioned pleas do not fall on deaf ears. Those of us who have had to deal with Liberty Tax know that they have no interest in helping a franchisee succeed once they have your signature on the dotted line. To those attending or planning on attending one of their get rich quick seminars, please think twice about it. We are speaking the truth.
FREE AT LAST,
I agree with everything you said, we all need to continue to spread the word about this company, Keep up the postings, God Bless you and yours.
We will continue to post from time to time. Once things are settled down for good. Wish we could talk about it openly! :) You would all literally be amazed at what we have endured.:(:(
Make no mistake, HE set this company up in Virginia delibertly because of the favorable tax laws for the franchisor.He’s probably paying off all the judges there too. Of all the litagation going on, has anyone won anything against Liberty? NO! And it won’t happen either.
Thank you to “Mike” and “Frustrated and Disgusted” for your support. Man, I wish we could tell you what has happened…….I KNOW you can relate to it.
Every time I see a Liberty Tax store now, I really begin to shudder. It is the most unprofessional group of people out to rip you off as quickly as possible. Do they still make everyone do free returns? STUPID.
THE MOST UNPROFESSIONAL GROUP OF IDIOTS EVER!!!!!!!!!
I WILL SAY IT AGAIN, THANK GOD ALMIGHTY WE ARE FREE AT LAST!!!!!
Free at last , I will send an email to you via ADMIN,
People effected by a bully franchisor shoul call mark & Klein llp in red bank nj.
I went in for a basic return. They told me it would cost me half my returns, So I told them I would just go to the IRS and have it done. They tried taking off 50.00 here and 100.00 there but I still didn’t agree so they told me they could do it for free.As long as I promised to get some of my friends to do there taxes there. WHAT UP !!!!
Don’t fall for it. Another Liberty Tax scam. Bring in other people that they can rip off, and you will get yours free. Best way to lose friends there is. They are in the business of over charging everyone who walks in the door. Get on the IRS website, or get it for free at any of a number of free sites that there are out there. Otherwise find a good independent accountant tax preparer. It should never cost you more than $100 to do any individual tax return unless you have a separate business which then should be around $200. Good luck.
At the tender age of 33, John Hewitt made an important decision that changed his and thousands of other lives forever. He took the leap and left his position as a Regional Director at H&R Block to explore the world of entrepreneurism. And now, Danny Hewitt at the age of 33, is doing the same thing. Based upon the last fifteen years of rallying the troops at Liberty, Danny is starting his own business to focus full time on what he does best, marketing, creating excitement and motivating people to win! As we say goodbye to Danny as a Liberty employee we wish him the best of luck in his new venture in othe words THE RATS ARE JUMPING SHIP
At the tender age of 33, John Hewitt made an important decision that changed his and thousands of other lives forever. He took the leap and left his position as a Regional Director at H&R Block to explore the world of entrepreneurism. And now, Danny Hewitt at the age of 33, is doing the same thing. Based upon the last fifteen years of rallying the troops at Liberty, Danny is starting his own business to focus full time on what he does best, marketing, creating excitement and motivating people to win! As we say goodbye to Danny as a Liberty employee we wish him the best of luck in his new venture in othe words THE RATS ARE JUMPING SHIP
At the tender age of 33, John Hewitt made an important decision that changed his and thousands of other lives forever. He took the leap and left his position as a Regional Director at H&R Block to explore the world of entrepreneurism. And now, Danny Hewitt at the age of 33, is doing the same thing. Based upon the last fifteen years of rallying the troops at Liberty, Danny is starting his own business to focus full time on what he does best, marketing, creating excitement and motivating people to win! As we say goodbye to Danny as a Liberty employee we wish him the best of luck in his new venture
At the tender age of 33, John Hewitt made an important decision that changed his and thousands of other lives forever. He took the leap and left his position as a Regional Director at H&R Block to explore the world of entrepreneurism. And now, Danny Hewitt at the age of 33, is doing the same thing. Based upon the last fifteen years of rallying the troops at Liberty, Danny is starting his own business to focus full time on what he does best, marketing, creating excitement and motivating people to win! As we say goodbye to Danny as a Liberty employee we wish him the best of luck in his new venture in other words the rats are abandoning ship
2nd year Zee
I too was once in your position. I’ll tell you what I should’ve done my second year. Lower all your costs, change how you market – have one waver (if you have a store with poor visibility in a hard to find you way otherwise you don’t need one). Get yourself one tax preparer maybe two if you personally don’t prepare them.
Don’t do the BBQ’s, don’t do the bounce houses, don’t do all the other stuff they tell you all of it is a waste of money.
Go to events in your area such as running events, art shows, etc. and pass out coupons but don’t waste your time or money on going B2B and giving away donuts or cookies or candies or whatever they have you doing now. You aren’t selling telephone service or widgets your are offering tax preparation; I wouldn’t go to a tax preparer cuz you gave me donuts and a coupon. Would you?
Once tax season is over, RUN and don’t look back! Get as far away from these people as you can. Liberty is good at telling what to do and how to do it and when you follow their stupid plan as they tell you then they will tell you and everyone how you didn’t follow the system.
It took me 4 years to come to my senses and to the decision to shut down my stores (I had 3). The day I shut down my stores was the happiest day of my life. I liberated myself of Liberty :D and I am now enjoying my life again.
I am guessing that JTH is getting ready to bail and leave a bunch of shareholders with a worthless piece of crap, just like he is doing with his franchisees. It was a few years ago that JTH was touting Danny as the second coming, and that he would be there to take over when JTH moved on. Well, as an earlier poster stated, he wouldn’t hire Danny to clean his dog cage. I wouldn’t either, nor would I hire him to promote my company. People want to see a professional image when they are dealing with an organization. You are not selling used cars, you are selling professional services. It’s interesting now as I drive up and down the street and see the wavers, I know that they have so little effect anymore as there are so many people out on the streets with signs, that people just ignore them.
Go out, create a professional image, do good work, treat customers fairly, and they will return. Screw them with over inflated prices, look like a chinese nail salon and hire incompetent people, you are guaranteed to fail.
BANKRUPTED BY LIBERTY:
WELL SAID. THE BUSINESS IS BUILT ON YOUR CUSTOMER SERVICE AND YOUR KNOWLEDGE. IF YOU HAVE THOSE TWO ABILITIES YOU CAN BUILD A TAX PRACTICE BUT IT WON’T BE EASY. ADD IN A LIBERTY FRANCHISE AND IT JUST ERODES YOUR CASH FLOW.
FRUSTRATED AND DISGUSTED:
WE CAN ONLY HOPE THE IPO IS A FLOP. BASED ON THEIR FINANCIALS I JUST DON’T SEE IT BEING SUCCESSFUL. MOST OF THE ASSETS ARE RECEIVABLES AND THERE ONLY AS AS GOOD AS THE UNDERLYING FRANCHISEES ABILITY TO PAY. THEN LOOK AT THE FACT THAT LAST YEAR THE COMPANY HAD TO EXTEND $56 M IN OPERATING LOANS TELLS YOU THESE FRANCHISEES ARE FAILING.
Call marks & Klein llp in red bank nj if you feel you were effected by franchise fraud. You may be entitled to receive money back.
Bill;
I agree with you 100%.
Have you also noticed that Liberty’s office numbers never drop? I know of (7) offices that have closed just in my area, and know for a fact that they are not being reopened by the A/D or anyone else. I am sure this must be happening in other areas too. You can’t tell me that the number just increases every year taking into account those offices that have closed.
Hi Mike:
Not sure how to contact you. Don’t have an email set up yet. This one is already “taken”. We’ll figure it out.
Franchisee: Why would we contact some Law Firm in NJ? We’ve already lost thousands of $$ and will not pay another thing.
Bankrupt and Bill: Sounds like we have similar despise for this same man. Didn’t know his son was jumping ship, but not surprised. Worst experience EVER.
What is Danny Hewitt doing now these days, not cheer-eading the masses?
I really feel bad for all of the zee’s who are about to lose a lot….and not just money. Getting out of Liberty was the best thing that I ever did business wise….of course getting mixed up with theses salesmen was the worst.
I agree, get out now or after the season, cut all costs, limit your hours and staff to bare minimums and forget what Liberty tells you. You will never sell your office or territory, they are worthless. Liberty will not help you, you are on your own.