LIBERTY TAX SERVICE: Unhappy Franchisees Need a Reality Check
Franchisee “Joey Black” claims that the unhappy franchisees (and ex-franchisees) of Liberty Tax who vent here are “over the top” and in need of a reality check. What do you think? Excerpts highlighting his main points follow the full text of his comment, below.
Here is Joey Black’s comment, posted on LIBERTY TAX SERVICE Franchise Complaints:
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.”
Joey Black’s Reality Check: Main Points
Startup costs: “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.”
Royalties & Fees: “Jackson Hewitt charges more, and H&R Block charges its frachisees a whole lot more. Same for the ad fees.”
Advertising: “…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. “
Due diligence: “…none of this was hidden when I signed the contract. It was all right there.”
Franchisee failure: “…most people who fail as franchisees are people who are not suited to own their own business.
Sales hype: “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.”
Franchise support: “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.”
Litigation: “…they [the franchisor] are very willing and eager to litigate [franchisees]. You need to know that going in.
Profitability: “I make good money as a Liberty franchisee, but I have had to learn what is real and what is BS.” “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.”
Financing: “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.”
Area Developers: “…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.”
Blaming others: “…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.”
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Joey seems to be a little taken in by the corporate stand. The facts are that Liberty clearly mis-represented the profits and costs of each territory when I was involved with them. I was shown initial costs that included royalties, territory acquisition and office start up expenses to be in the $53K range. Taking an innaccuracy factor of 50%, I originally figured costs to be in the 75K range. These costs were exceeded due to the high costs associated with the marketing royalty that was not presented as a cost in my initial projections.
As for the royalties for H&R Block, at least they do some (extensive) advertising on a national basis. Liberty does not. At least you know that your money is going to some good use other than to line the pockets of the corporate officers.
The AD’s only qualification is that they are able to cough up $100K to buy a region and try to market it to unsuspecting people.
The reality check here is that this group is a bunch of scam artists intent on bilking you of your savings and retirement. You are then rewarded by strenuous lawsuits that are very costly to defend in the VA Federal court that is by far friendly to Liberty. I hope Joey realizes that if he ever wants to leave the franchise, he has no choice but to be sued by his wonderful franchisor!
As I said before, I had my own practice before I met these thieves, and they sold me on the fact that they could ‘grow’ my client base under their system. I was sadly mistaken!
This is not a profitable model, no matter how many corporate dweebs write in to this blog. The best advice is to learn from the mistakes of the others that have experienced the litigation of Liberty There has to be something to the concerns and warnings expressed here just by the sheer numbers of contributors. Be warned from an ex-franchisee that this is a franchise to stay away from!
Learning the hard way! Yes! the deck is stacked in the courts and in arbitration against franchisees because it is the franchise systems who are protected by federal regulatory policy and the “invincible contracts” in which the the franchisor promises very little to the franchisee in writing —because he doesn’t have to under the terms of the FDD and the contract.
Attorneys like Richard Solomon of Franchise Remedies have written that the franchise contract is a license to lie, cheat, and steal and guess who licensed the franchisor —the FTC!
All of the franchisor’s promises outside of the written disclosure document and the actual contract are moot once a prospect signs the “invincible” franchise agreement packaged with the disclosure document.
http://thegreatfranchisingrobbery.blogspot.com/
Carol you are mistaken.
The FTC does not “license” franchisors.
FTC Rule and FDD’s DO act as LICENSE to sell the intangible, the franchise, to the public and the contract of sale is packaged with the license, and the “package” legitimizes the franchisor in the eyes of the prospective buyers of franchises.
The legal definition of a license is “The permission granted by competent authority to exercise a certain privilege that without such suthorizxation would constitute an illegal act,”
Obviously the Rule and the FDD;s do act as the license to sell the franchise because it is illegal to sell a franchise without complying with the FTC Rule/state Franchise Disclosure Documents and providing a copy of the FDD and Sales Contract to the prospective buyers of the franchise ten days before finalizing the sale. Franchisors buy the license and “fraud insurance” as well when they comply with the federal rule and state FDD’s governing the sale of franchises to the public.
http://thegreatfranchisingrobbery.blogspot.com/
1) My daughter signed a franchise agreement with Liberty and I co-signed as guarantor.2) Liberty has cancelled her franchise on frivilous grounds and we are currently in litigation. 3) Fortunately we had the money and the lawyers, both in MS and VA, who were able to move the case to Mississippi, so we are litigating here instead of Virginia.4) LIberty works on the assumption that their franchisees will have no money to litigate in VA, and they will win default judgments. This is their biggest swagger stick with which they intimidate franchisees.5) There was fraudulent inducement to contract 6) No post contract promises were kept. The AD’s lived in VA and rarely stepped foot in Memphis TN and North MS 7) We protested on the discussion boards, and were banned from posting.8) LIberty knows the truth but will not tell it to the franchisees. The franchise regulations allow the franchisor to reveal the true figures, but also gives them the option not to do so. They choose not to reveal , as the true story is that 10% of the franchisees make money and the rest dont. 9) Liberty knows that the future of the tax preparation industry is in online tax preparation. That is why they are so focussed on their on line service Esmart.com. A brick and mortar store has no hope of making money unless its a full service financial center like us where overheads can be spread over many revenue streams. 10) The contract clause that disallows disparaging comment is unconstitutional11) The non-compete is also unconstitutional and has been struck down by the Supreme Court on many occassions.
How come Liberty’s website implies that John Hewitt left Jackson-Hewitt as a result of him selling the firm? The press also spreads this myth which is being spun by Liberty Tax.
The truth is: that Jhn Hewitt resigned from Jackson Hewitt shortly after he was replaced as CEO. Effectively he was fired from the CEO job in June 96. He resigned complety from the compant in September 96. Most likely he was forced out completely. Jackson Hewitt was sold in December 97 well after John Hewitt was gone.( a simple search on the history of Jackson Hewitt will reveal these facts) It looks like some magazines just took Liberty Tax’s spin on the facts and did not conduct an independent review for themselves.
These people play loose and fast with the truth.
Joe Black can you ask John Hewitt about this the next time you see him. Ask him if he did resign or was he fired from Jackson Hewitt for bad management.
New post on the Liberty Tax franchise. LIBERTY TAX FRANCHISE: Praise from 1st Year Owner.
Your comments invited.
Both Mario and Viera Kay have good arguments. Mario is right that one needs to know franchisors will litigate before you go in. But remember 99% of litgation is on the 2 yr 25 mile non-compete. This can be defeated if argued properly. The burden of proof is always on the person asking for the non-compete (Liberty) as to why they need it. If they located a competing store within 25 miles of your location, and they didnt think that was unfair competition for you, then they have a hard time in court proving why you are an unfair competition for their existing locations. Who told me? Carl Khalil currently Librty’s top legal honcho. Before joining Liberty he had a website http://www.breakyournoncompete.com (TM). Also Viera Kay is right. Liberty is a John Hewitt cult. There is no succession plan. If tomorrow John Hewitt drops dead or goes senile, Liberty will come tumbling down like a house of cards. We visited Virginia Beach to see their set up but didnt go ahead as they had no plans beyond John Hewitt and he is pushing 65.
Hewitt’s “story” is the company’s best marketing hype for growth. They play it over the top. Yes, John’s not going to be doing this for ever. Yes, he was forced out of Jackson Hewitt. He did not want to sell the company, and the majority of shareholders did. All those things are true.
Folks who believe in national television advertising should go with Block’s system and pay the much higher advertising and royalty fees. My comments on Liberty’s 5% were to address the criticism in another thread that the company doesn’t spend that money in the local Liberty territory. That’s not true. They give 1/2 of it back to the franchisee to buy marketing materials, albeit at inflated prices through Liberty’s pet vendors (and there’s a financial connection there as well). And they buy the local Yellow Pages ads. And in some markets they pay for radio ads. They also do direct mail in the territories with some of that money. And yes, some of it covers the corporate overhead. I suspect some goes for their marketing of new territories as well.
Look, I’ve seen enough people fail as Liberty franchisees. I’m not trying to paint a rosey picture for anyone. I’m just trying to sort out the facts from the inflated complaints, like people who sign a promisory note for 12% and then complain about the exhorbitant interest rate.
Hello There!
I am pretty shocked by the comments I have just read on this site. I worked in a Liberty Office in North Carolina for a season, then bought the franchisee out. I have found every single minute dealing with every department of Liberty Tax Corporate to be a pleasure. All their staff are highly trained. Any tax questions I have are answered incredibly fast, all technical support is superb! MY Area Developer is fantastic and has provided me fantastic guidance through out my first two years as a franchisee. The funding they provide to me off season has had reasonable interest to help me though the off season. They even finance my opening a 3rd office. I have not had a problem paying the money back in the beginning of the tax season at all.
I appreciate every single person at Liberty Tax Corporate Offices in Virginia Beach for being there for me and the incredible response I have gotten from every phone call or e-mail. The royalties are very reasonable considering all the incredible support that is available. Having been an IT instructor and the owner of a Computer Business in NYC before launching this venture as my semi-retirement in a small town, I can only say that being a Liberty Tax Franchisee is a shear joy! Do I like doing taxes, paperwork and reports. . .NO!
But I find the manner and method of getting support of any kind, including financial, has given me a stress free opportunity to run my own business, provide training and employment for local residents, help people who are being stomped on by the boot heel of Uncle Sam and earn some money.
Liberty Tax Corporate has supported me in my long range and short range plans and provide any guidance I need! Just the other day, I told somebody that with the excellent support and the respect and care that they display to their franchisee is worth DOUBLE the royalties they charge!
Why is my experience with Liberty Tax Corporate so much better than the complainers on this site? I think it is because my main goal is to do all I can for my clients and perform due diligence in all matters and always have my employees trained in the rules of compliance with all government, banking and tax regulations.
I certainly don’t do everything perfectly, I am human, but I am thrilled to own 2 Liberty Tax Franchises. This season will be the beginning of my 3rd tax season as an owner and I expect to make a profit. Anybody starting a business and expecting to make money before the third year is living in a dream world.
I am one very, extremely happy franchisee and adore my Area Developer because of all the wonderful advice he provides to me.
Sincerely,
Connie Crawford
[redacted]
Connie:
Would you mind telling us where your stores are located? Did you finance all three stores through Liberty or just the 3rd store. What is the interest rate their
charging? What was your background before going into the tax business?
Connie:
Read through the comments on this site. Do the people posting sound like they are not passionate about how they were ripped off by JTH ? Then you run across comments like yours only to find out somewhere they are AD’s or connected to Liberty in some other way than just another franchisee. I am not going to suggest that you are not real, I just question your motives, and so should the people who are reading your post.
Hello There!
I bought my First Two Territories outright with cash. One of the offices is in a Mall that is dying. Still that office, having a 5-6 year history is our strongest performer. The Mall is dying and I was trying to re-negotiate the rent as I was taking over. For over 2 years, the Mall would NOT budge on the Rent. I saw a location that is beyond fantastic and available about 200 yards down the road. I called my AD and he came down. He got approval for the Funding for me to get this new location. All was paid back the next tax season.
I am not an AD. So I have two territories and three offices until the lease runs out at the Mall location which will be April 30th. I got the new location a bit early, so I had 3 overheads which Liberty has helped me out with additional financing for this year.
Please realize that I paid CASH for my two territories and that I am not a stupid person. Even in this horrible recession, giving incredible discounts and doing 5 less returns than the previous year at the Mall location my NET was UP!
The territories are in North Carolina in a very depressed area where almost every family qualifies for the Earned Income Credit. I discount very heavily, and ask for referrals so that the client can pick up some money too!
I really try to follow the PLAN, but of course, I will need a few more years to really know all the things that I am supposed to do, but I try very hard to provide year round, wonderful service to my clients. I have a very loyal and dedicated staff because I treat them with respect! Myself and my top staff do seminars, take part in community events, do free returns for the Teachers, City Workers, Health care workers, etc. We have gained very loyal clients doing this and they have sent us referrals too!
The second territory has only one office, and it’s performance was not so great this year because the new office cut into their client base. Clients wanted to follow their preparers to the new location.
We do the ITINs for free and over 40% of our clients are Spanish Speaking, so that part of the program does work!
Liberty requires that the offices be open for 8 hours a week. . .no big deal! We are open 3 days a week, but most of the time believe it or not, somebody is in the office either for an appointment or to follow up for clients who have gotten letters from the IRS. We are picking up many, many new clients because nobody else is open the number of days we are! And we will gladly have an appointment for a client who has gotten a letter from the IRS whether they did their taxes with us or not!
This is a pretty small town, so we get involved! I am blessed with wonderful preparers who were originally my co-workers and appreciate the part time work in an environment where they are TRUSTED and who are not afraid to ask questions and discuss problem returns with the other experienced preparers.
And if we don’t know exactly 100% how to do the best for the client, we simply present the situation to Liberty Tax Support who are wonderful!
As the years go on, my core staff are given more and more responsibility and they grow in their knowledge. I love them to pieces!
As far as the interest rate, I think it is reasonable and that is all I will say about the interest rate. Has anybody tried getting a loan from a bank lately? Since the Liberty Financing is so smooth, and gets paid back fairly quickly, I don’t worry about it.
We do the Cash In A Flash Program, hold 10, 6 and 4 week Tax Courses and then a Rapid Class.
There is so much to learn, and so many people with so much experience to support you in every area of running these businesses that I am one very happy franchisee. I couldn’t say enough wonderful things about Liberty Tax Corporate and the wonderful support I receive.
I was originally an Internet Engineering Instructor, and was in IT for almost 30 years and I have NEVER EVER RECEIVED SUCH WONDERFUL SUPPORT FROM ANY CORPORATION!
My opinion is this: The people who work at Liberty Tax Corporate are some of the most intelligent, hard working, dedicated people I have ever had to deal with and that includes John Hewitt too!
Sure in this economy money just doesn’t go as far as it used to and sure many people are trying to do their own taxes on line. . . . . but so many of the people who try to do their own taxes on line end up with letter audits that more and more of them are learning that you have to have that personal back up! And Liberty’s policy is that we back up every return, will help every client who has any problems with the IRS and we don’t charge an additional $99 for a Peace of Mind Policy. We just do it as part of the Customer Satisfaction Guaranty.
As I am getting ready to gear up for another tax season, I am so very grateful that I have Liberty Tax Corporate behind me!
I am a very happy Liberty Tax Franchisee. And I care for my clients the very best that I can.
Sincerely,
Connie Headrick Crawford
Connie,
Your enthusiasm for Liberty is very nice but your not specific. You have three offices in a depressed area in North Carolina but you don’t say where. Your store in the mall has a 5-6 year history. Does this mean 5 years or 6 years? Your not a stupid person and paid cash for your first two locations but you don’t have enough equity in the business or personally to secure financing for the third territory, instead you prefer to tab Liberty at 12% interest. I googled “internet engineer instructer” and couldn’t find any such title. You where in IT for almost 30 years so you Al Gore can both claim that you started the internet.
Connie I don’t know if your really this niave but I will tell you, when I went for my first introduction to Liberty they took us to this beautiful office in Hampton Roads, meet the owner she had nothing but praise about the business. Two years later she was working for them as an instructer (trying to make ends meet), the next thing I heard herstore closed and she had went under.
The ball is all in Liberty’s or any franchisor’s court. Understand this and make sure the franchisor is bringing value to the table…
Dear Bill,
If you can’t google and find out what an Internet Engineer is, try looking under Cisco Systems.
I don’t know if the Mall Office was open with a previous owner for a year before the owner I purchased from, so that is why I don’t know if there is a 5 or 6 year history. I do know the previous owner owned this Territory for 4 years.
Yes, you clearly read that I paid cash for the 2 territories that I purchased at one time, with an existing office in each territory. Where you seem to be confused is the third office. The 3rd Office, if you read thoroughly, is a few hundred yards down the road from the Mall Office. The Mall is dying. The rent is high. I didn’t buy a 3rd Territory, all I needed was an advance to get equipment and furniture for a 3rd Office. Why would I waste my time going to a bank for that, when I fill out a two page request to Liberty and had the money.
Al Gore did not develop or design nor invent the Internet. It really was around many years before either he or I were involved in it. Al Gore was one of the first politicians to seek government funding for the future development and expansion of the Internet. I was not a designer, developer or inventor of the Internet, but I was a beta tester. Yeah, with an acoustical coupler, way back when. When you had to use cryptic command language to get on line at all, and to navigate around. Long before Windows and LONG BEFORE MS-DOS!
I suggest you learn how to spell instructor before you do another Google search. An Internetwork Engineering Instructor is an instructor who trains the Network and Internetwork Engineers. This includes installation of Routers & Switches, security and trouble shooting and lots more!
Quite frankly, it is much easier to have financing from Liberty. Why would I utilize other funds when I could finance the furnishing and equipment by filling out a form and having it paid back in a few months? The 3rd Office was secured to be ready with a client base before closing the Mall Office. 2 territories and 3 offices until the end of April 2011. Then there will be 2 territories and 2 offices that are already known locations.
You didn’t purchase a Liberty Tax Franchise and so you went a different way. Can I ask you what your problem is with your decision? Do you need others to trash Liberty to justify your decision? What have you accomplished since you decided not to purchase a Liberty Franchise? What have you done to invest the funds you were going to use to purchase a Liberty Franchise? I think you are just unhappy with your decision not to purchase the franchise. And if the owner didn’t make it, maybe they just weren’t cut out to do it and that was why they were selling. Yet, you state that they are now working for Liberty Corporate, so they must have a good relationship with Liberty Corporate, right?
Your anger really shows through in your posts. Since you didn’t purchase, why are you so angry? You took no risk, you lost nothing. I purchased and I am happy. And I haven’t lost anything either. I have gained. Different strokes for different folks. But since you didn’t purchase a franchise with Liberty, I really think your posts have absolutely no validity what so ever. I have answered all your questions and feel that you find some kind of glee in calling me naive. Yet, I am speaking from a point of experience and knowledge and you are speaking from a point of not deciding to purchase and 3rd hand information. Why are you so angry that you didn’t purchase? If you didn’t buy a Toyota, why would you care about them being recalled? Would you go on the web and say how happy you are that you didn’t buy a Toyota?
Connie, none of the complaining on this board is going to harm you or Liberty in any way. Those who are franchisees know what their experience is. And Liberty has been extremely successful in attracting and retaining franchisees to spur its growth. I think it is best to simply share your thoughts and experiences, and ignore those who seek to engage you in their bloodsport of nasty implications of dishonesty, and so forth. Everyone is aware that there are folks who get some sort of pathelogical thrill from such behavior. Best to let others have their say, positive or negative, and let it be.
I’ve shared my thoughts on Liberty in as fair and balance a way as I can, and folks can take that or leave it. In the FDD real prospective franchisees can find the number of all current and former franchisees, and they can call as many of them as they like. Everyone should do due diligence. After that, the decisions we make are on us but some like to look around for others to blame for their failures. It’s human nature.
I agree Joey Black,.
First of all 60-70% of people are morons anyways (see Tea Party supporters, George Bush & Sarah Palin Supporters, Fox News Viewers or the whole state of West Virginia)…
Therefore, you would expect about 30-50% of people to fail at anything they do in life, including owning a tax franchise…
as long as some (about 20%) are doing well owning this franchise, i personally feel, i can be as good as them.
All the other dummies on here, just go buy a Jackson Hewitt franchise.. and vote Republican on Tuesday because you think your country is being taken away from you….LOSERSSSSSSSSSSSS!!!
Dear Joey,
When I first went for the Potential Franchisee Meeting, I was given a list from MY AD for me to call people, who were located all over the United States and get their experiences. Some were very positive, like me, others were not. So I got the whole truth going in the door. Nothing was hidden from me.
Also the owner I bought from didn’t follow most of the suggestions that are part of the Liberty Program. Like NOT paying the $20 Send A Friends! Yeah, myself and another employee were paying it out of our own pockets! The previous owner even wanted us to charge a nominal fee for Free Returns! Her marketing efforts consisted of only focusing on one area of marketing, leaving door hangers on doors in the ghettos. The previous owner also only had 1 waver at any given time.
Having worked at H&R Block in NY and knowing nothing about Liberty until I moved to NC, I didn’t know just how messed up these offices were being run, but I knew for certain that I could do better. All the good preparers who were not going to return the next season, came back when I took over. The previous owner wanted out, and I gave her the price she wanted. The First Year was spent cleaning up a huge mess, that has even taken into the second year to right the ship! Our Clients love us now, the Send A Friend has taken off. We have Hispanic Certification and the magic phone call came for me at toward the middle of the last season, when I cleaned up the previous owners mess and have a Great Rating with the BBB. I was thrilled!
You are right, everybody is different and everybody has a different experience. Mine has been GREAT! I only live 4 miles from any of my offices and have a wonderful core staff that is trustworthy. I have the backing of Liberty Corporate for anything . .. . . seriously, what more could I ask?
You are right to just let these people vent, but I do feel it is important for everybody who reads these boards to know there are two sides to every story. . at a minimum!
Sincerely,
Connie
PS. I forgot to mention that the deal to purchase was finalized on December 30th, without MY AD I would have gone nuts!
To potenial franchisee’s please read all the post on this site before you make your decision. You are about to invest $40,000 or more on a franchise that doesn’t have a national advertising campaign and has marginal name recognition. It’s a seasonal business with a lot of competition. When you open your doors you hope the name “Liberty Tax Service” will add value and bring customers in the door but this is much harder then Liberty leads people to believe. Most people tend to stay with their previous tax preparer unless pricing or preparer error makes them change.
P.S. taxes are much more complicated then Liberty would lead you to believe.
Last count the tax code had over 7000 pages.
Bill:
Obviously you did not read Connie’s posts. Life at Liberty is beautiful all of the time.
As I am attempting to figure out whether I should continue with Liberty, I had a discussion with a good friend of mine who recently got into the Franchise sales business. He made an interesting comment. At his recent training, they discussed Liberty Tax. Apparently there are not only many offices struggling, there are entire areas that are in trouble. Of course Liberty’s answer is always that they didn’t follow the system. Well JTH, the word is out and it is not good.
It’s time Liberty figured out that their system fails in not just specific offices, it is failing in many areas. How do you blame that on not following the system.
“You are about to invest $40,000 or more on a franchise that doesn’t have a national advertising campaign and has marginal name recognition. ”
Bill, your comments are baffling to me. If you are truly investigating Liberty as an opportunity then you’ve attended a presentation by John Hewitt where he explains exactly what you’ve said. He tells you exactly why there is no national media advertising campaign. Now, if what he says doesn’t make sense to you then that’s fine. But it is not as if it is a secret. Mr. Hewitt shares his marketing views precisely with prospective franchisees and then it is up to each to decide if they believe he is right or he is wrong. If you think he’s wrong, of course you shouldn’t invest any amount of money. If he’s right, well, that certainly has value.
Your comment about marginal name recognition is ridiculous, by the way. There is no town of any size in America today where folks haven’t come to recognize the Liberty wavers at tax time. Everyone knows what they are, and what business they represent.
And how would your “friend” have confidential insider information about Liberty if he’s not an insider at Liberty? Your comments sound contrived by a disgruntled person to try to sound like an objective opinion, but they’re too transparent. Talk about legitimate things, and I’m happy to have a conversaion. Yes, I think $40,000 is too steep. I think somewhere around $32,000 is the right price, but hey, they’re not my territories. And yes, some franchisees fail. No doubt about that, and too many for my taste. But many of us have very profitable businesses with quite a lot of equity.
Joey:
I see these comments like “you should have realized that before you purchased”. Let me suggest that Liberty would be much better off at their meet and greets to be honest and straght forward about what someone is purchasing. There are many, many facts that I found out the hard way, that were never talked about at the meet and greets, nor the training. I also asked many questions, and rather than getting straight answers, I received what I now realize were answers based on what JTH wanted you to think, not reality. To me the worst was when I asked how many returns I should expect to do the first year. I was referred to Mr. Top Gun who said he did over 900 the first year. Reality is, the average is less than 300 for each store. Also, I was led to believe Liberty had a much greater appeal in middle income neighborhoods. I was told that I should expect more late season business. That is all BS. Liberty’s appeal is EIC and low income. Without a fair amount of those returns you might as well close your doors. The chances of living on middle income business is slim and none. How should I have known those factsbefore I purchased ? I guess by osmosis because you will not get straight answers at Liberty.
Joe Black:
My whole purpose on here is to make potential franchisee’s aware of the possible pitfalls of purchasing a Liberty Tax Franchise. Without even talking about the bad experiences that many franchisee’s have, The fact that the JTH does not have or believe in a national advertising campaign should make people think twice before investing with this company.
Over the years JTH has made a small fortune selling franchises. However in the last couple of years there appears to be a slowdown in the number of franchises it has sold. This may be due to a slow down in the economy or just a normal stage in a franchisor’s life. When I check the franchises available I do see that the company has adopted John’s philosphy of now developing certain areas of a State where Liberty has a presence vs selling franchises to anyone and everyone.
(wonder how the area developers feel about this).
Overall the company is financial very strong but not strong enough to over take H&R Block despite Blocks own mistakes and Jackson Hewitt’s problems. If there as many failing or struggling franchisees as this site suggest and franchises sales are slowing cash flow may start to become an issue. On top of that the company still needs to develope an online tax presents.
By the way Joe, where are your stores located?
I agree with Bill:
Not only are Liberty’s franchisees struggling because there is no national advertising campaign, they are struggling because they pay 4% and getting nothing from Liberty, and on top of it, having to spend massive $$ to get people in the door. I wouldn’t put Danny Hewitt in charge of cleaning my dog cage. He knows absolutely nothing about advertising or marketing except what he read in his guerilla marketing book. He is clueless. If Liberty wants to grow, they need to get rid of their current Marketing department, and hire someone who has done extensive successful Marketing for a major retailer who understands how to connect with customers. The current marketing plan is so out of touch with the real world it is scary.
I have been researching this franchise for months. I’ve talked to the company and read the negative stuff on the net. I’ve also dug and contacted franchisees to talk to them about real world experiences. All of them gave good reviews and said they learned what worked and what didn’t in their particular area. Most had also purchased additional stores. My situation is I’m combining a relocation to another state with the potential purchase of a franchise. I’m an accountant by trade and really like the LTS methodology. The main (and probably most important) question I need to find answers to is, what is the profitability (averages) of a first year store. I’m willing to do whatever it takes re: “the system” (which if i’m honest, sounds like the movie “The Firm”..lol). I’ve also talked to a marketing company who works with some Liberty Tax stores, not part of Liberty, just a company that works with some local offices. She indicated, if she was living in a different area, she would absolutely buy a store. She sees the actual numbers of the stores she works with. She did say a person won’t become rich with one store, but she said the clients she has who run the stores properly and professionally are doing incredible. I’m not convinced one way or the other, but I am simply trying to find out as much as I can before making the decision…..any constructive opinions or real world experience one way or the other would be greatly appreciated….
Mike
Mike:
I will give you my stores. All you need to do is take over the liabilities. They are nothing but a money pit. And by the way, I am serious.
Why would anyone take advice from someone called Frustrated and Disgusted.
Its like you meet this girl and you want ask advice from her former boyfriend who is a loser and is still stalking her..hahahahahahaa…. Change your name to “Loser and Disgusted”
TestaipiraL
if you spend any time looking at my posts, I have presented facts and stayed away from personal attacks. I suggest you do the same. It’s always interesting to me that people who have no real facts to back them up use personal attacks instead. Like anyone would even spend the time to read them is beyond me.
Mike;
Liberty Tax knows the average profitability of each store, so when you ask them what do they say? Per the 2010 Jackson Hewitt Financials their 1st year store averaged 166 returns which is down from the 205 returns they averaged in 2009. Liberty Tax Services is modeled after Jackson Hewitt so I believe this average would be comparable to what a 1st year store with Liberty could average. I say could be cause Liberty does not have the brand name recognition or a national television advertising campaign. If we use the 205 return figure and an average net fee of $180.00, your first year gross income would be $36,900.
Are you a tax accountant? If you are I would strongly suggest going out on your own and not enlisting a franchise. There are several good books out there one being “How to build an accounting practice”.
Thanks Bill….Yeah, those numbers are anemic. I am a tax accountant (an Enrolled Agent) but there was something compelling about being part of the “group” that seemed to take the risk out of it or @ least decrease it. When analyzing the numbers, it appears they make the risk even worse. I do have a niche I’m going to pursue and I’m not the traditional accountant, and it’s this “look” that I’ll promote. I’ve been in touch with some marketing extraordinaires who think my idea is something that could really make me stand out and draw clientele. I’ve really been wondering why I’d sink $40k plus marketing dollars into someone else’s mousetrap when I could spend a fraction of it and blast my area with a systematic promotion of “me”…..I appreciate everyone’s input, good and bad….Oh, and with respect to what Liberty says when I asked about numbers, profit potential, etc, they indicated it would be “illegal” for them to provide it….thankfully, in the last week or so, I’ve interviewed another 12 or so franchisees and they’ve given similarly paltry numbers for their first year….
That disclosing sales and profit numbers is illegal is a common lie told by disreputable Franchisors. It is not illegal it just has to be disclosed in item 19 of the FDD. Just because its common doesnt make the salesman less of a liar.
Bill:
I think you are right on the money. I also think Liberty has adopted the PT Barnum saying; “There’s a sucker born every minute.” I recently ran into a new franchisee. He purchased an existing store that has consistently done fewer returns every year over the last 3 years. Liberty’s explanation to him was that the owner wasn’t “following the plan”. I know the owner well. He spent a huge amount of time and money trying to develop business. The unfortunate fact was that Liberty had added two new stores over those 3 years within a very driveable distance and destroyed the base that he had when he opened. Liberty is developing new business just by adding more stores so their numbers look like they are growing. I would be willing to bet there are a ton of stores that are doing fewer returns. But “the rainbow is always out there”.
I had an area developer try to tell me that my random sampling of franchisees was inaccurate and that instead, I should talk to the hand selected franchisees he’d provide….
This speaks volumes……………………
Buyer beware!!!!!
The 2011 season is my first year, i decided to go with the franchise because i figured it would give me instant recognition and credibility. I taught about hey why dont i just spend 20k on advertising and to my own shop, but then i said national recognitions would be better. I will say i have learned a couple of things from liberty, but i will be leaving liberty after april this year and open my own stores under my own brand. They can keep my A%$U( $40,000 franchise fee and sticking where the sun dont shine. just when you think your head is above water you have to close your grr and send them another check. Dont invest money you cant lose, thats all i have to say. There best line is not to hang out with loser zees, our you will be a loser to only hang out with winners, kinda hard when they are all losers.
1 year 2011
would you mind giving me an idea where your store is located?
Frustrated and disqusted – do you still have stores and if so has the situation for JTX helped your return volumne?
PLEASE DO NOT DO ANY BUSINESS WITH LIBERTY TAXES. I went to the Liberty Taxes on Forest Ave, Staten Island, NY and had the office Manager, Melody do my taxes. She lied on my returns and put the my same sex domestic partners kids were my nephew and niece. I got audited and went back to her office to confront her about her lie on my return and she told me to get my partner to write a letter saying that she is my SISTER!!!! I made many calls to Liberty’s Corporate office in Virginia and no one got back to me except Melody. I am now reported this to the Attorney General AND the IRS. AGAIN, don’t allow anyone from Liberty near your tax papers.
I am petitioning the IFA (International Franchise Association) to hold their franchisor members responsible for acts of fraud, threatening, stealing,lying and creating false documents to terminate their franchisees from their agreements.
Although our franchises may be different most are members of the IFA and the IFA is stealing our rights to due process by helping these franchisors word their contracts in a way that when we sign up to start also forfeits our rights to due process should THEY commit CRIMINAL acts against our franchise.
Please go to the link below and sign my petition. Then download it and post it to your web site so others will know and can sign as well.
http://www.change.org/petitions/veterans-deserve-success-not-matco-tools-franchise-failure?utm_medium=facebook&utm_source=share_petition&utm_term=friends_wall
Thank You!
Todd A. Peterson