The referral fee is $3000 for referring someone who becomes a franchisee. Where do you get your facts from?

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.

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.

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.

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.

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.

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.