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LIBERTY TAX Franchise Warning Part 3

LIBERTY TAX Franchise Warning Part 2 is a continuation the guest post by a Liberty Tax franchisee, who posts on UnhappyFranchisee.Com as NCHillBilly.

NCHillBilly warns prospective about the downsides of the Liberty Tax franchise opportunity.

In LIBERTY TAX Franchise Warning Part 1, the franchisee warned of a

  • High royalty fee,
  • One-sided franchise agreement,
  • Lack of AD accountability,
  • Unfair dispute resolution,
  • Inadequate tech support
  • Ineffective marketing,
  • Mandatory free returns,
  • Lack of systemwide teamwork,
  • Non-standardized pricing,
  • Lease liability,
  • Higher expenses than expected.
  • Lower income than expected.

In LIBERTY TAX Franchise Warning Part 2, NCHillBilly’s allegations include:

  • With Liberty Tax, you don’t own a business
  • Liberty Tax uses gag orders & noncompete agreements
  • Liberty Tax gets paid before franchisees
  • Liberty’s financing is too good to be true.
  • Liberty Tax gives misleading sales numbers
  • Liberty Tax has a poor customer retention rate
  • The Liberty Tax system is constantly changing and ineffective.

What follows are more opinions of commenter NCHillBilly.  We have added the bolded subheads for readability.

Are you familiar with the Liberty Tax franchise?  Please leave a comment – positive or negative – below.

Part 3: A Warning from a Liberty Tax Franchise Owner

NCHillBilly writes:

Part III: Why I would not recommend Liberty Tax Service

Liberty Tax awards are bogus  When you first meet John Hewitt, you will be highly impressed with his implied knowledge, name recognition and so called celebrity status.

You will be impressed with all of the awards that he has won.

Accounting Today magazine has named Hewitt one of the accounting profession’s top 100 most influential people eleven times.

The International Franchise Association honored Hewitt as its Entrepreneur of the Year in February 2006.

When you investigate how these awards are won, you will discover it is through a voting processing, which John’s employees are instructed to vote for John until he wins the award.

John has no experience in accounting, nor does he hold a college degree.

John Hewitt uses franchisees, then discards them  Until you become a franchisee, John Hewitt appears to be your new best friend making you feel like you are a member of his family.

Once becoming a franchisee you will discover that you do not have direct access to John.

He sells you on idea of becoming a CEO, but there is no direct communication between CEO and CEO.

John Hewitt is a master in deception at every stage from being introduced to Liberty Franchise until becoming a Liberty Franchisee.

John takes full advantage of franchisees for his own personal gain, and once he is done with you he tosses you aside like a piece of garbage.

Tossing individuals aside why not ask about his son, Danny Hewitt that was tossed aside in 2012.

Danny was one of his hard chargers, promoting and marketing Liberty Tax 24 x 7.

Danny was once an area developer and individual store owner and all of this was taken away from Danny.

Liberty Tax sent out a mass email stating that Danny was leaving Liberty Tax to start his own advertising and marketing business.

If Liberty Tax was so great and offered monetary opportunities, what happened here?

Liberty Tax churns franchise territories  Reselling of territories, John Hewitt’s business plan is not about long term franchisee ownership, but a constant reselling of the same territory every three years, and each time the cost of territory continues to go up.

If it is an established territory, the likely prospect will be convinced to even pay more.

This not only applies to territories, but also to area developers.

He is not truly interest in your long term success at all.

This is Liberty’s major income source selling and reselling territories, not just royalties or marketing fees that are taken from franchisees.

Franchisees are responsible for Liberty Tax’s mistakes  Liberty’s 100% SATISFACTION GUARANTTEE, beware Liberty Tax as whole does not honor this guarantee; it is the franchisee responsibility.

It does not matter if it is a preparer error or even Liberty Tax software, the franchisee becomes totally responsible.

This guarantee not only includes the interest and penalties being imposed by the IRS or State, but it also means refunding the cost of the return and if it was a bank product that includes all of the bank related fees involved.

Once the franchisee honors Liberty’s 100% SATTISFACTION GUARANTEE, the franchisee will not receive any royalty or marketing credits for honoring Liberty’s guarantee.

Liberty’s in house tax preparation software, Liberty Tax does not accept any responsibility for software errors in determining incorrect refunds or balances owed.

The franchisee accepts all of the responsibility.

Often the franchisee is not aware of this mistake within the software, until 2 – 3 years later when the IRS or State does a computer audit of the return and catches the mistake.

Also read: LIBERTY TAX SERVICE Franchise Complaints (2600+ comments)

LIBERTY TAX Franchise Warning Part 1

LIBERTY TAX Franchise Warning Part 2

LIBERTY TAX JTH Holding, Inc. Receives NASDAQ Notice of Non-Compliance

LIBERTY TAX Leaked Email Exposes Sleazy Sales Tactics

LIBERTY TAX: Are Liberty Tax Franchise Owners Living Their Dreams?

Are LIBERTY TAX SERVICE Franchise Owners Happy?



Tags: Franchise churning, John Hewitt, JTH Holding Inc., Liberty Tax, liberty tax complaints, Liberty Tax Franchise, Liberty Tax franchise complaints, Liberty Tax franchise costs, Liberty Tax franchise warning, Liberty Tax sucks, Nasdaq: TAX

12 thoughts on “LIBERTY TAX Franchise Warning Part 3

  • In order:
    * High royalty fee

    This is nonsense. H&R Block franchisees pay 30%. Jackson Hewitt franchisees pay 21%. Liberty franchisees pay 19%. Those are the only three national brands.

    * One-sided franchise agreement,

    Request franchise information from UPS Store, Curves, Subway, and a few others. ALL franchise agreements are one-sided.

    * Lack of AD accountability

    Don’t know what that even means. Some are better than others, true. Otherwise, this is meaningless.

    * Unfair dispute resolution

    What dispute? If you don’t pay your royalties you get sued. If you misuse the company’s name and marks in unauthorized advertising, you also might get sued. Unfair?

    * Inadequate tech support

    14 years as a franchisee and tech support saved my ass so many times.

    * Ineffective marketing

    Some franchisees are ineffective at implementing the company’s marketing strategies. They tell you up front that they don’t do national TV buys like Jackson Hewitt and Block. They explain their marketing strategy at your first visit. If you don’t like the strategy, don’t buy a franchise.

    * Mandatory free returns

    Not true, they are recommended, but they are an outstanding strategy. They explain the rationale up front. Again, if you don’t like their program don’t buy their franchise.

    * Lack of systemwide teamwork

    You are a business owner. Nobody but you can make you successful.

    * Non-standardized pricing

    Standard pricing across the system would violate the law. Each franchisee sets his/her own prices. A franchisor can only recommend. That is a good thing.

    * Lease liability

    Yes, if you sign a lease (in any business) you are liable for living up to your bargain. Duh…

    * Higher expenses than expected.

    You have to estimate all expenses – rent, utilities, insurance, payroll, supplies… it is not hard, but if you underestimate then they will be higher than you expect, sure.

    * Lower income than expected.

    I (and many other) made a good living for many years. Talk to folks who did and talk to folks who didn’t. Decide which one you are more like. If you are like the people who fail, then DON’T BUY A FRANCHISE! But you know yourself better than anyone else.

    In LIBERTY TAX Franchise Warning Part 2, NCHillBilly’s allegations include:

    *With Liberty Tax, you don’t own a business
    *Liberty Tax uses gag orders & noncompete agreements
    *Liberty Tax gets paid before franchisees
    *Liberty’s financing is too good to be true.
    *Liberty Tax gives misleading sales numbers
    *Liberty Tax has a poor customer retention rate
    *The Liberty Tax system is constantly changing and ineffective.

    With Liberty you own a franchise. If you don’t understand this, you have not done enough homework. All franchise systems have noncompete agreements. I have no idea what gag order this person is talking about. Financing? If your finances are such that you need to borrow money at 12% interest in these times in order to be in business, you should not be in business. I never borrowed a dime from Liberty and wouldn’t borrow at 12% from anyone. If you have to do that, you’re probably not suited to own your own business. If you find anything in the FDD that is false or misleading report it to the FTC and your state atty general. Your customer retention rate is up to you. Mine was well over 60%. Block’s is 70% but they’ve been around 60 years. The system changes because the industry changes. Ineffective? That is something said by someone who failed as a Liberty franchisee. I’m sorry that happens sometimes, but not everybody is suited to be a franchise owner, or any kind of business owner.

  • Franchizee

    This was good Jim, however, you came into the system very early. If you had my territory where a top zee took over and is miserably failing right now because the market is over done, and it was YOUR ONLY territory, then NCHillBilly information would be so correct.

    The problem with John Hewitt and is goons, is he sells “one size fits all.” He tells everyone the same story and it is on you tube, it is your business, you are the CEO, we are there to help you when in realty they are under staffed to help most people and when you have a processor crash three times in one month, tell me how much stress does that entail?

    When selling a territory, there is NO mention of the failure rate, but maybe when you came into the system, they had a different story. Not when I purchased two territories.

    The above is correct and it cannot be disputed. You are correct on your version, but you haven’t been burned yet, 1,000’s of others have and LTS offered the moon and gave many of us debt!

  • ZeeOut

    “H&R Block franchisees pay 30%. Jackson Hewitt franchisees pay 21%. Liberty franchisees pay 19%. Those are the only three national brands”

    – H&R and JH actually get something for thier $$. Its called marketing. Lib Tax Franchisees pay a fee to be told to spend more money – on wavers, door hangers, stickies, marketers, donuts….. get it?

    “Lack of AD accountability
    Don’t know what that even means. Some are better than others, true. Otherwise, this is meaningless.”

    – Meaningless? It means you do not become an AD by merit or knowlege – you only need to cough up the money. The AD spews the same Lib Tax kool aid.

    What Franchizee states is correct. The good territories are long gone. As far as being a “good” CEO to make a successful business – if that were true then Top Gun Zees wouldn’t have failing business along with thier successful ones. And they certainly do.

    Truly, I’m glad you and others are successful. But there are far too many unsuccessful franchisees for this to be considered a good franchise. It simply doesn’t work for all territories and the good ones are gone.

  • Zeeout, you know very well that John Hewitt explains in the very first “dog-and-pony” show in VA Beach that Liberty doesn’t pursue TV advertising the way Block and JH do. If you were looking for a franchise that promoted itself through TV advertising, that should have been a red flag for you. Hewitt explains his marketing strategy and it either makes sense to you or it doesn’t. If you would like to pay a bigger % to your franchisor to run TV ads for a seasonal business you should not have chosen Liberty.

    I found B2B marketing and the constumed LL characters to be far more effective for my business, but I know some franchisees don’t believe in this kind of marketing. I’m always baffled why they buy. The reality, I think, is that this is one of the straws they grasp at when they don’t succeed. You never hear anyone reflecting on what THEY might have done better, or how they might have mis-evaluated what they were told. That NEVER happens, and that alone is very telling.

    Yes, you are right, there are large Zees who have a dozen or more territories, and a couple of them are not successful. With due diligence and good site selection, that can be very different though. There are bound to be some territories that are not as good as others. Block has stores that do 3000 returns and others that do 400.

    Yes, if a person does not do property evaluation (i.e. due diligence) when opening their first office then they might fail. Not everyone is suited to own their own business, though Liberty will indeed accept their check. That’s a weakness the company has, but most of the stuff that is thrown around is nonsense.

  • Franchizee

    Back when we were looking at purchasing territories, there was nothing online to dispute what John Hewitt was spewing about LTS. We were unable to make an informative decision. Hewitt was able to keep everything off line until he got too big.

    People have this site to make an informed decision and it’s not to be found in Hewitt information that is provided. His information is tainted and the full truth cannot be found.

    As ex franchisee, we can give another prospective of what can happen and people need to know that this could be a disaster for their families. We have an obligation to let people know and beware of the dog and pony show! At least they can take a deep breath and reflect. Instead of the rush, rush,rush as Hewitt always wants people in a fury running around until it is too late to back out.

  • ZeeOut

    I really don’t have the time or motivation to waste my time responding to Jim, but will do so one last time just to try to set the record straight.

    Again, he is basically stating that anyone who failed did so because we *didn’t follow the system* and we are loosers. BUNK.
    Followed the system . Even did the B2B and put a LL costume (think about this – a costume!) and went out there myself, and yes, we got responses – but not enough. And the cost of hiring wavers, marketers and all the other nonsense is well over a few %. Also used the LT training to train marketers, wavers, and preparers.

    Also, I am not referring to Zees who have “HUGE” amounts of territories.. referring to Zees who have a one or 2, or a few, and bought some loosers with the intent of turning them around and – surprise! they are still loosers. So if the system always worked…….

    Absolutley there are some winners – especially the older Zees who were able to get good territories. But this is NOT a one size fits all business model yet is being sold as such. Period. Can’t disbute it.

    I’ll say this again – we are not loosers – most of us have or had have other successful businesses. We all also have the motivation, resources and backbone to run our own businesses. So stop stating it is always the Franchisees fault, because it is NOT.

    I personally reached out to many, many succesful Zees trying to make it work, trying to figure out what I was doing wrong. I am tenacious if nothing else. But at the end of the day, not only my territory, but all the surrounding territories have been turned over at least once. At some point you have to have the brains to recognize a looser and move on. Made a mistake and moved on. That doesn’t make me, or any of us, loosers. Makes us sensible business people.
    I also came to realize that there are a lot of so called “successful” Zees barely making a living. That is not my definition of successful.

    Gotta go, took a break and now have to get back to running a real business.

  • You can try to put words in my mouth if you think that helps your case, but I never said any such thing.

    For those who are doing REAL due diligence, you should call and talk to REAL franchisees, both current and former. Talk to ones who consider themselves successful and those who did not succeed. Explore the attributes you can identify within each group, and then evaluate yourself against what you learn. Liberty will give you an FDD that has all the phone numbers. I’m brutally honest, and so were the not-so-successful franchisees I consulted before I bought. Yes, even in 2000 there were people who did not succeed when all those “good” territories were being sold.

    Also, evaluate the territory you are entering. If the Block office in your territory does 2000 returns and you can only do 150 your first season, then YOU ARE the problem. There is no reason a brand new Liberty office shouldn’t do at least 400+ returns the first season in a territory like that, and then grow strongly. I did over 700 my first season. BUT, if you go into a territory where Block can only do less than 1000 then you are going into the wrong territory. Call me, call others, anybody will tell you these things. Get your information from many sources, not just a message board where 2 or 3 failed franchisees create ten or more fake anonymous IDs and talk about how nothing was ever their own fault.

    And THAT is good advice, for which you’ve paid nothing…

  • SanFranDan

    Jim (also known as Barf villa):

    You both have the same exact writing style and LOVE to use the word “fail”. Well guess what Mr. Jim? I WAS a successful franchisee with multiple offices and I still left after the 5 year contract was over. I certainly was not a “failure”, whatever that means in your book. I was successful and making money as a franchisee. I HATED my time with LTS. If you have a couple of hours, I could write a book about my experience. I was also a very early franchisee and had prime real estate in my area. This company SUCKS. There is nothing redeeming about the way this company operates and treats franchisees. At least not when I was there for the 5 longest & most stressful years of my life.

    So you continue to call us all “failed” franchisees. We all know the truth. Just because we are on this board posting on “UNHAPPY FRANCHISEE” does not make us failures. Get it Barf villa?

  • The whole reason Jim post here is to take attention from the other site. this site has 8 post vs. 4193 on the other site. Don’t even acknowledge his post here. If you want to counter his points do it on the other site. If a potential franchisee browses this site and sees 8 or 9 post it doesn’t have the impact of a site with 4193 post.

    Jim your comments are welcomed on the other site.

  • Hey, I would not call anyone who hated being a Liberty franchisee and therefore left a “failed” franchisee. If you hated it, though you were profitable, then you did the right thing. What do your “feelings” have to do with anything, though? I mean, other than your personal choices.

    Bill, what “other site” are you talking about? I stumbled across and saw a lot of comments that struck me as unfair and biased in a way that is different than my own experience. That’s why I posted. I’m not on any campaign. I know it is possible to be financially successful with Liberty, and I personally found it personally rewarding. And now I’ve moved on. I’m not looking for anything, and I don’t have a dog in the fight any more. Anyone who has been current in Liberty recently probably knows who I am – no need to compare my “writing style” with anyone, because until I sold my business I had no time for such nonsense as cruising sites like this. Yeah, my name reall is “Jim”.

  • WOW–Did anyone see the new Block commercial? Great for Block–sucks to be Liberty….GET 50% OFF where you filed last year ($75 dollar minimum). I know Liberty promotes get 25% off what you paid last year with someone else etc. BUT BLOCK IS ADVERTISING THIS ON TV!!! What do you think Screwitt will do? Probably he will say….if you went to Block last year, we (the franchisee!) will do your return for FREE!! Just a guess any other thoughts how Liberty or others will combat this marketing campaign? PRICE wars are great for the consumer, not so for franchisees.

  • Block announced that its in-office returns were down 9% through February 28. So their promotion is hardly blowing away the competition. IRS was also down 4% through Feb. 28 while Liberty was down less than 1%. But clearly it will increase through April 15… later filing this season, but Block is in the worst shape.

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