LIBERTY TAX SERVICE Franchise Complaints

5,730 thoughts on “LIBERTY TAX SERVICE Franchise Complaints”

• I suggest an Unhappy Franchisee convention at the same time JTH is having his kool-aid party this year. Bet we would get a pretty good size crowd to show up.

• I would love to be at the UNHAPPY FRANCHISEE CONVENTION!!

• Count me in.

• Despite my somewhat contrarian points, I do hand it to you guys who are speaking out and schooling would-be franchisees. My point is just that there are lots of crap franchises and the only way they continue to thrive is that franchisees go into it too trusting. Just like Madoff’s victims, there was an illusion of trust so they didn’t scrutinize. I’d just suggest that you make the point that it’s not just evil Liberty Tax that’s the culprit. Some are much worse.

  As to your convention, Is there an organized Liberty Tax franchisee association? If so, is it effective? Are any of you involved? Wouldn’t that be the best way to make the franchisor respond to franchisee concerns and complaints… and the logical host of an unhappy franchisee convention?

• I am have considered investing in a tax franchise for several years. Your opinions of Liberty are pretty clear, but what do you think of the others?

  What do you think of H & R Block? Or Roni Deutch? They certainly advertise. Jackson Hewitt Tax Service? Instant Tax Service? Express Tax? Colbert/Ball Tax Service?

  Are there any good tax franchises or are they all bad?

  Do you think it’s better to be an independent, or is the Tax Prep industry to be avoided altogether?

• I spoke with someone that worked at JH corporate after my first year.. I was very dissapointed as I only did less than 300 paid returns. I expected to do about 750 based on what I had been told. (slap me).. and spent enough money in labor and marketing to match my expectations. His response? Who in the hell gave you the idea that you would do more than 300 returns your first year? He said the avg JH averaged around 250 and that’s what I should have budgeted for. Point is.. I would not have hired 23 tax preparers (ie..nearly every student in my class) and I would not have spent thousands in donuts and pizza trying to give away free tax returns if they had just been honest about what to expect. I probably would have saved $40K that first year.

• Wondering:

  Several years ago, the retail tax business got off to a booming start, offering to do taxes at reasonable prices, give refund anticipation loans to most anyone, and do the work most people didn’t want to, or felt uncomfortable doing. A lot has changed; PC compatible tax software, the loss of the refund anticipation loan, the IRS returning refunds in a matter of days, lower incomes, the loss of many deductions, increased competition from both the retail, and CPS’s, and the freebie preparation for low incomes has made the industry a lot different. While there will always be a need for tax preparation services, it is not the instant reward it used to be. And it will continue to change in the next few years as deductions will become fewer, tax preparers needing to be certified by the IRS, and the large EIC refunds currently enjoyed by the lower incomes. My suggestion is try it on your own first. Doing the basics like coupons, someone waving in an Uncle Sam costume, visible location and good signage is currently what brings people in. You can do that yourself without a franchise. You can purchase as good or better software than the franchises give you, and use Peachtree or any other accounting software to do your billing. Take cash, checks and credit cards, and you can also sign up for refund transfers for those who want to take their fees out of their refunds. None of the franchises are going to bring customers in to your store, and if any of them tell you they will, run like hell. It’s not a difficult business to run and money can be made if you keep your expenses manageable.
  Why Liberty is a bad investment is due to the extra costs incurred that do nothing to further your business. You can find good visible office space for a lot less than a storefront, hire qualified people on Craiglist, and run your business like a good business person does, and do quite well without all of the overhead. Once I am able to jettison this money pit franchise, I will be doing exactly what I am suggesting you do.

• guest;

  If I for one minute thought that John Hewitt would listen to intelligent conversation on how to help his franchises, I would be more than willing to have that discussion.

• If you sign Libertys’ MUTUAL TERMINATION AGREEMENT you are basically saying that Liberty is great. That’s why very few zees post on this or other boards. That’s ok, I am an ex-Liberty employee!

• DONT FORGET THE MANADATORY $5000 ROYALTY FIRST YEAR AND THEN THE MANDATORY $10000 YEARLY ROYALTY THEN AFTER

• Jackson Hewitt filed for bankruptcy. Is that good news for Liberty Tax? It’s a major competitor after all.

  http://www.bloomberg.com/news/2011-05-24/jackson-hewitt-tax-service-files-for-bankruptcy-after-loan-curb-push.html?cmpid=yhoo

• The article talks about a pre-packaged bankruptcy that will reduce debt pretty significantly . I would guess they will come out of it as a much stronger competitor without the debt and debt-service they were carrying. Should help their brand next year, as I am sure some were hesitant to go there under the cloud that they may fold. It should also give their franchisees the solid footing that has been missing the last few years. I predict that Liberty will lose market share to both H&R and JH due to the fact that both have stronger management teams. In 2-3 years Liberty will be forced to realize they need to replace the current inept management team.

• Exactly ‘who’ is their management team?

  I would stay away from Liberty Tax. Too many people have lost too much money and very few are making any proifit. Look at the numbers above and you will see there is no way to make much profit, and a whole lot of risk.

• Just remember, Jackson Hewitt and Liberty (outside of wavers -the costumed characters) have exactly the same business model–so what does that say about LIBERTY’S FUTURE?

• Oh as well, Jackson Hewitt filing bk, is not unlike the many many zees that were with Liberty! Buyer Beware you will probably be next.

• It will be interesting to see the financials for JTH this year. While the current financials appear strong a large part of their balance sheet, 70%, is receivables from their franchisees. The financials also show a large amount of operating loans, $32,488,000, that they extend to many of their franchisees so those franchisees can keep their stores open. Revenue for the sale of franchises has dropped from $21,393,000 in 2008 to $9,632,000 in 2010. At the same time Liberty’s financing of these sales has risen from $5,691,000 in 2009 to $10,600.000 in 2010. A review of the cash flow statement shows that if you back out the proceeds from exercising stock options, cash flows has been negative for the past 3 years.

  There was a rumor on the JTX message board on Yahoo that Liberty was going to go public. It would make sense since they can’t rely on franchise sales to carry them.

• I want my money back!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

• MR REFUND is the real solution to both Liberty and JTX.

  100 million get REFUNDS. 1-800-Mr-Refund.com is just too easy to market.

  Mike Kolar CPA

• New Zee from Texas:

  You will get yours back just like the rest of us are, via business loses on your federal and state income tax.

• I am also a former Liberty Franchise owner. I would agree with everything in the other two messages and add, they missrepresented not only the number of tax returns I would do but vastly understated the cost involved in getting into one of their franchise’s. I tried to stick it out for four years but by then they had wiped out my life savings and there was no way I could continue. Rest assured they encouraged me to continue to throw my good money after bad right up untill the end. If any one gets a class action Law suit going against them please post it here, I personally know two other former owners that Liberty helped drive into bankruptcy in less then two years of doing business with them. The problem is none of us have the finacial resources to get one started.

• Liberty tax and Hewirr are predators in the first degree. Hewitt is the best used car salesman I ever saw. You can’t believe a thing he says and is clearly out to rip you off.

  I was in his franchise for a couple of years and received no return on my investment nor any help from the corporation ar the area developer. I even had a successful operation in the sense that I was able to generate 630 returns by my third year. After Hewitt and his cronies got a hold of my franchise royaties, I had very little left to pay for such things as rent, electric, A/C and payroll.

  My only comment here is to warn anyone that is even considering joining this group of clods, not to do it. Consult a lawyer, consult other franchise owners, especially those that are out of the franchise. Keep away from these clowns!

• Great to see more warnings from other zees, just sad that it ends in bankruptcy for most.

• Also, keep posting on their face book.

• I’ve spent the entire day reading this blog. What an eye opener. Liberty and HRB try to get me to franchise with them every year and I never could figure out how I could benefit. Now I know my gut was right.

  Another point everyone has missed. RAL are definitely dead as congress hates them and they forced the IRS to shut them down. But additionally, the IRS is supposed to be doing 4 day refunds on 100% of all tax returns by the year 2013.

  If you don’t know basic accounting and tax theory don’t get in the tax business. From now on you will need to know how to do real tax returns in order to command decent rates. You cannot expect $200 average tax return if all you can do are EIC’s and EZ’s. A lot of people with a day of training and software can do that. You need to know what you are doing.

  I wouldn’t try to build a house just because I could by a House Building Franchise. And you cannot expect to be a viable tax prep business if you and your preparers are basically following a question cue.

  I’ve had a tax prep business in AR for 9 years and my retention rate is in excess of 85%. You cannot get much higher than that because of normal flow of people in and out of the area and some people just come in when a particular years taxes are different than normal.

  Don’t build your business on gimmicks. Provide a service so that people will appreciate your help. You can definitely do this without a franchise and you can make good money doing 500 returns. Now you have to do those returns yourself but a good preparer can do 500 returns in a tax season and still not work more than 60 hours during the rush periods.

  Learn your business both the technical and the management side. But if you don’t know the technical then you are starting in a hole that is hard to dig out of. People know when you don’t know what you are doing. You cannot hide it. And they won’t come back.

• Independent:

  Wow, your insights are great. Only wish I would have talked to you before I invested in this money pit. Unfortunately people like JTH would like you to believe that their system will somehow increase your business, when in fact it does nothing other than cost a lot of money. Please, anyone reading this who thinks this may be a good idea, do not invest. It is a horrible opportunity.

• Dont forget Liberty’s Convention starts next week June 2-4 at the Virginia Beach Convention Center. The agenda besides some of the usual technology stuff and vendors, looks mostly like how they are trying to talk current zees into becoming Area Developers and sell current franchisees on opening more offices. SHAME, SHAME SHAME!! Most are not making any money and they want these poor folks to take on MORE DEBT!!! I hope there will be many of you UNHAPPY FRANCHISEES at the convention “spreading the word around.” Oh by the way they should change the name of the convention from 3DR to W_SCRUW_U!!

• To prove a point that Liberty is bringing nothing to the table, franchisees need to look at the TaxAct software site and realize how they can spend less than $1K per office and get just as good or better prep software than they are getting with LT. Feature for feature, this is as good or better than what JTH and his cronies dream up. So that leaves marketing, which we all know is a farce (LT spends most of your money on internal administration and a website that allows their over priced vendors to sell to you), and your A/D who in most cases you will never see or hear from. Again, you are paying 19% royalties for JTH to market his franchise business. What a deal !!

• Frustrated,

  I feel sorry for your wife…. Do you whine all the time?

• John Barilla:

  Aren’t you at the kool-aid convention this week ?

  To answer your question, my wife and I get along well until I bring up Liberty Tax. She also contributed money to this POS, and knows full well that they are ripping people off left and right. Can’t say as I blame her.

• We’re ready to celebrate 14 years of success with super events at this year’s convention. In fact, our theme Three Dimension Retention is a call to action for all of us to create ways to retain customers, retain staff and ultimately retain success. Because we haven’t lost sight of our goal to be the #1 tax service in the universe by 2020. And retention of our customers and employees are the keys to realizing that goal. We’re already in the #2 position and I thank all of you for the hard work it took to get us here! But we can’t rest on our laurels, there is still a great deal of work to be done. The cards are in our favor. I invite you to share the Liberty 20/20 Vision and attend our upcoming 2011 annual convention June 2-4 at the Virginia Beach Convention Center.
  Our keynote speaker Scott Deming is going to energize our retention efforts by using his marketing experience to show us how creating relationships is the key to bringing customers back every year. Our great customer service has always been a fundamental part of the Liberty way of doing business. Scott will show us how to build on that and give us new ideas to get even better at it.

  Since you and your family are also ready to HAVE SOME FUN, our convention planning committee has added more quality time with a Family Fun Day at Ocean Breeze Park. There’s also a Spirit of Norfolk mini-cruise adventure as an option for the Thursday leisure activities. Or you can participate in the popular annual golf tournament, deep sea fishing trip or poker run. We’ll also have a Casino and Variety Show Friday night. Share your feedback during our breakout sessions, and get to know other franchisees and the Liberty Tax home office team during our events and cocktail party. Getting here on Wednesday? Join us for our Dine-Around Wednesday night at local restaurants.

  I look forward to personally welcoming you to our 2011 convention, June 2-4 as we prepare to forge ahead toward 2020!

• I’ll bet there will even be an opportunity for many franchisees to actually learn the name and meet their A/D !!!

• Why not call your convention what it is……….A John T. Hewitt self-aggrandizement convention.

  Well folks, this is what your 19% is going toward. They will not spend a dime on advertising to get customers in your door, but have plenty to spend on a convention to enlarge John’s ego as if it needs any enlarging anyway.

• All they do is pump people up with food and booze, so they have a good time, nothing wrong with that because they were fun. However, if you watch John he always looks sooo nervous and out of place as he walks the room saying hello. He looks as if he is having the worse time and is there out of necessity. He looks to be hoping and praying that no one will confront him on his scheme. Just curious, how many of you ever called and got him on the phone when you were going down?

• Looking at the website, Scott Deming speaking fees are between $5001 and $7500 per stint plus travel expenses. Wow, that could buy alot of really good advertising. If you are in business, and cannot figure out how to bring your customers back in the next year, Scott Deming is not going to help you one bit. Try lowering your fees so they don’t think they are getting ripped off every time they walk in your door.

• 1800MrRefund.com can kill any tax firm with his REFUND$.

• JTH has announced that he is going to add 1000 more unhappy Liberty Tax franchisees this year. If you thought your 2-3 day wait for answers this year was bad, wait until next. If you thought your competition was H&R and JH, just wait, you have just added Liberty Tax to that list.

• Frustrated complains that there should be national advertising to increase brand recognition. He criticizes Lt for spending $7500 for a speaker on retention and says that should have been spent on increasing brand recognition. Adding 1000 new locations will increase brand recognition more than any as campaign but he doesn’t have the guts – or honesty – to praise that.

  Face it frustrated nothing LT could do will meet with your approval. I’m sure you could run the convention better. No expensive speakers no growth goals just one big whinefest no one would ever return to.

  You are one of those complainers that never offer a solution. What would you do if you were in charge?

• Anon,

  Love your response!!!

  Frustrated would fail and will continue to fail at everything he does because he does not look at himself in the mirror and admit that he made mistakes too. Frustrated, since you have owned your franchise was there anything you think you should have done differently that would have helped you be more successful? Let me guess your answer is i should not have joined Liberty and paid 19% royalties… Enough of your whining that just makes you look silly!!!

• Anon and Barilla:

  Rather than resorting to personal attacks, why not tell us why buying a Liberty Tax franchise for $40K and paying 19% royalty is a much better option than starting your own tax business with commercially available software and doing your own advertising.

  Just to give you a quick background, my personal net worth is over $3M in real estate and investments. Liberty was something I decided to do as a semi-retirement activity. I worked for Fortune 100 companies most of my adult career. Would I have liked Liberty to be the investment I was told it would be, of course. Do I think Liberty is a poorly managed organization, quite definitely. Once you get down to the numbers and get rid of the hype, it is a very poor investment.

• Frustrated & Others think LT is a poor investment.
  It’s not worth $40K + 19% royalty.
  We get it. Point made. Ad Nauseum.

  Question remains: If you were in JTH’s position, what would you do to fix it?
  What changes should current franchisees be demanding?
  Is there any way to improve the system, or are you advising all Liberty Tax franchisees just to throw up their hands in despair and give up?

  There are nearly 500 comments on this thread, many of them complaints with no constructive ideas for improvement.
  I’m sure Liberty Tax corporate and maybe even JTH is reading this thread.
  By not offering any positive ideas, demands or changes, you just reinforce that franchisees are simply whiners who will complain no matter what LT does.

  Is that true, or are there improvements that you want? Anyone?

• For starters, they could apologize to everyone that has filed bk since purchasing a Liberty franchise. Second, they could tell the truth and give real expectations. Third, they should have AD’ s that have owned and run offices for more than 3 years and have been truly successful, not one hit wonders.

• Anon,

  Good question….

  1. Stop forcing franchisees to pay additional royalties on 2nd and 3rd year territories they cannot afford to open because of less than stellar results from their first season… forcing them… to file for bankruptcy after the second year does not succeed.

  3. Allow franchisees to sell their territories for whatever they want without the limitation based on “reducing the value of a Liberty franchise” by selling at least for a price the zee can walk away on. Eg. Fellow zee wanted to sell his business (net revenue of $160,000 – net profit of $45,000) for $60,000 to a buyer. Liberty says business is worth $160,000 (based on standard Liberty calculations) and he cannot sell it for less than $100,000. Zee cannot find a buyer for that amount and zee is forced to walk away or continue in a business her cannot afford to run. Why? Because his costs are $60,000 to support his family he cannot keep trying to find another seasonal job/or his employer won’t keep letting him have four months off a year to work his tax business.

  3. Reduce the franchise territory value to $30,000 by removing the AD’s (re-aquiring the 7% fees that go to them), have regional area directors like they had 7 years ago. All the fees will go to the franchisor. And stop selling AD cities/states for $200-1 million.

  4. Use an inhouse marketing team with marketing experience. These pathetic flyers can be produced by my 12 year old. Why use IIP etc.. when all they do is find similar products online and mark up. Card board cut outs, decals etc… Can be mass purchased by the franchisor and resold for less than an individual franchisee can find himself online for less.

  5. Have a national campaign where each state gives away a new house to one lucky tax client. Who does that?!! $250,000 house will produce more than 5% growth and cost less than $5 per return per office. Simple sales campaign and in this economy…. better odds of 50,000 – 1 than buying a lottery ticket at 4million to 1.

  6. Ensure ALL offices are visited one a tax season. Apart from DMA meetings…I say my AD/Regional director once in 5 years! Actually saw my RD three times in one yearand my AD once in 5 years.

  7. Instead of returning a portion of the 5% ad money, use it on national advertising! Majority of people who apss our stores are drivers who listen to the radio. Spen franchisor money not zees spending their life savings.

  8. Montior zees spending – payroll marketing etc… This will at least help to project end of season success. Zees spend when business is slow. Money needed for off season rents etc.. LTS should see the writing on the wall for a zee as early as mid February. Throwing money that late will not change anything unless its a late season territory which is not a territory LTS should approve anyway.

  9. Offer other progams apart from tax.. teach a bookkeeping course, notary training etc.. To encourage off season income.

  10. Have office stay open 6 days until end May. I have done dozens of taxes since April 18th worth ~$4000. Rent for three months.

  8.

  7.

• Antonio:

  You are right on target. I have a couple comments.
  1) Both the franchisee and LT need to be realistic about the first year of business. It has been really easy to blame the franchisee for not following the system and having a bad year. I suggest that the reason many have a bad year is because they did follow the system. Throwing money in every direction with the hope of having a good year is the quickest way to bankruptcy there is. My first year, the site selection person recommended I get an A location for $2500 per month and sign a 5 year lease. I was smart enough not to do that. I took one in the strip mall right next to it as they were willing to give me a 5 month rental. Thank god I did as the area turned out to be a bust. Again, the A/D was unable to give me any direction on how to market, what would work best and what didn’t work as they were new and had never even set foot anywhere close.
  2) Liberty needs much better site selection system. Not everyone has a store front that is 30′ from the road on a highway that sees 50,000 cars. Many urban centers these days are hidden from the street, with little to no visibility from the street. You would need at least 3-4 wavers just to cover the entrances which is cost prohibitive. That is why there needs to be at least some regional or national advertising.
  3) Liberty needs to get rid of their A/D’s and go direct with Regional Directors who are directly responsible for the health of the franchisees. The A/D’s are a cancer on this organization, as way too many are coupon clippers. I have seen mine once in three years at a 1 hour DMA meeting. If JTH keeps the A/D system, he needs to make them accountable for the health of the franchisees. If a franchisee goes out or declares bankruptcy, the A/D loses that territory, and any royalties they may have earned from it.
  4) The franchisee, A/D and corporate must agree on a yearly plan for each territory. If the plan shows a loss, corporate needs to examine what can be done to fix the problem, and come up with a solution. Two years of unexpected losses in a territory, and the A/D loses the territory and royalties from it.

• 1-800-Mr-Refund.com is a much better option.

  You can do REFUND$ online and in person.

  It is a REFUND business.

  Liberty does not speak the end result of REFUND$ for 90% of e-filers.

  MR REFUND is the best brand name ever for those that are getting REFUND$ as in 107 million for $317 Billion.

  That is simple inovation, online with a teledotcom.

• Look people, it is too easy to go online and get a $5000 bogus filled refund in a week without providing a social security card of the kids on the 1040.

  You need millions of 1040s to win this game.

• quote:

  Author: Mike Kolar CPAComment:Look people, it is too easy to go online and get a $5000 bogus filled refund in a week without providing a social security card of the kids on the 1040. You need millions of 1040s to win this game.

  And you can file your bogus 1040 at MrRefund.com

  Come on folks.. just get a few bogus SSN’s and Mr.Refund’s your uncle!

• The point is Tony tax does not sell like 1-800-Mr-Refund.com does Tony.

  You know it too.

• Mike Kolar CPA: If mrrefund sells so well why do you have to spam a franchise discussion with irrelevant self promotion? Are you a franchise? If not please stop interrupting. You.re like that guy on the commercials with the question marks all over his suit. Try it with dollar signs and late night commercials. At least then we can change channels.

  All: There were some really good demands flowing before mr refund. What other things should Lt change?

• Still waiting on Mike or Frustrated (same person) to say something intelligent. At least Antonio had some suggestions worth discussing.

• Lt should have a better name.

  25 million owe TAXES of $300 billion now to IRS.

  So much for the TAX part.

  A statue is irrelevant since so many here are illegal.

  MR REFUND will kick any tax guys A$$.

  Simple for non BK zees?