LIBERTY TAX SERVICE Franchise Complaints

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• Bill:

  I am not married, but my understanding is that i can not solicit any Liberty clients, but I also can not stop them from seeking me out. I have my pool of grandfathered clients and the referrals they have given me, and none of them go to Liberty because of Liberty, they only go to Liberty because of me. I'm actually 20 miles from my territory, if only I moved 5 more miles away then it would be fair game. haha

  By the way, do you know how they pursue this? I would think that who a taxpayer chooses to prepare their taxes is a privacy issue and none of Liberty's business.

• Another Zee:

  I don't have the terms of the contract in front of me but I do recall that I couldn't open a store with in 25 miles and solicite the clients for a 2 year period. In my case I went to work for a local CPA and anyone that was my client at Liberty I told them why I was closing and where I was going to be working. A decent numer of those individuals called the firm and followed me over.

  Another former franchisee basically told the customers he was leaving Liberty and again the clients contacted him to do their taxes. It was a second business for him so he just did the work out of his house. Again he didn't actively pursue the client. The client made a decision to follow him. His comment to me was I make more money now doing a 100 returns then I did doing 500 returns with Liberty. Liberty did send him a letter and of course they did try to retain as many client's as they could by offering discounts but that was about it.

  Remember the contract is between you and Liberty. It can't prevent someone else from starting their own tax practice and hiring you. The relationship between the preparer and the client is most important factor and if they like you they will find you.

• Thanks bill. That is my understanding of how it works. My store is actually profitable at this point, but its just not worth all the extra work and energy I put in, like you said, I can do 100 returns from home and make more than doing 500 here!

• I would have to disagree on making more money at home with 100 returns vs 500 at a tax office. Let's say there's no difference in ANF in either scenario and you do $200. That would be $20,000 of revenue vs $100,000 revenue. Let's assume you have only $5,000 of expenses at home your profit is $15,000. At a Liberty tax office you can do 500 returns with expenses of about $70,000. I know this for a fact. Your profit would be $30,000. I would agree that it would be less stressful at home. However, working out of your home would probably limit your growth potential. Also the thing to remember is in the tax business most of your expenses are fixed. Every new return should be at a 75% margin. So if you grow your business to 700 returns in a few years your profit would double to $60,000. If you can get to 1000 returns in 10 years your profit would be a little over a $100k. Each person can decide for themselves if that's worth the work involved. Also I think some people are not able to get to that number of returns or have the ability to keep their expenses in line. If you can't grow your return count or control your expenses I'm sure it can get very stressful as your money drains away. I think some very valid observations have been made on this board but personally being a Liberty Zee has been a great experience for me.

• Texas Zee, The NJ area seems to be a more difficult sell, at least from what I hear from others. I also work a full time job and make decent money, this is just a little extra and for all the time, effort and energy I have to put into it, I can do without the couple extra bucks.

• I don't have to work because my husband makes decent money. He actually encouraged me to start the business so he could retire early and come work for me. I started the business without borrowing a cent and my financial goal was to get to a $100k profit within 10-15 years. I've been at it for four years and should get there in 8-10 years so I'm pleased. I certainly have no interest in multiple locations. I just want to build a loyal customer following and have really focused on professionalism and great customer service. I opened in a higher income area because I was concerned about the long term viability of the bank product business. This franchise will allow us to have a very enjoyable life style when we get older. I know most people are not in my situation and are counting on the business to be their primary source of income too soon. I think that's a big mistake and will lead to tragedy. Your time horizon should be at least 5-8 years to make decent money when opening a location. My two cents for what's it worth.

• Texas Zee:

  What did Liberty provide you that you couldn't have done on your own especially in the higher income neighborhood? It's been my experience in the NJ area that there is no real brand recognition and I didn't/or was hoping that it would change with time. But the only people aware of Liberty are the people who use their services or the retail franchises and ones like HR Block don't view them as a threat. Most tax professionals don't even recognise the Liberty name until you mention something about wavers and then you get a response like "that's what that is".

  How do you compete with the major players in the tax industry when you don't have some sort of national advertising. As I pointed out in my earlier post, John was focused on selling franchises and advertising was just to expensive for his plan. His goal now is to cash out but I just don't see the IPO being a success.

  Buyer Beware!!!

• Texas Zee;

  You are right, most people are not in your situation. Waiting 5-8 years to make decent money is not an option, nor does it make good business sense. Had you invested $40k and had to borrow, you would be waiting a lot longer. I would be willing to bet that you could have easily done what you are doing without Liberty. Had you done it on your own, the time horizon would have been a lot shorter, and you would not be a puppet to a scam artist.

• Frustrated and Disgusted:

  I have a feeling it's going to start getting ugly in here so I will sign off with this. I invested $81,418.13 to start this business and a lot of sweat equity. In return I will get a revenue stream over the next 25 years that is over $2M and afford me a comfortable retirement. I will be able to travel and share time with family during the 8 month off season every year. It was worth it to me to invest the up front lean years to get there. It may not be for everyone. As far as doing it without Liberty I don't think I would be as successful. I ignore some of what they preach because I'm a thinking person that knows my unique situation. I truly believe that they do provide a level of support that I couldn't do without. I do realize that I've never been in a debtor situation with them which would probably negatively impact my relationship with them. I'm sorry it did not work out for you and it has obviously left you very bitter. I wish you nothing but success in your future endeavours.

• Texas Zee;

  I am not going to get ugly about you or your business. As a matter of fact, if you providing good service at a fair price, and are conscientious about doing a good job, I commend you. That is what American capitalism is all about. What I don't like is seeing people get ripped off. Look through my posts and what I have tried to do is present facts about this business. Most people who start and get into business are doing it to earn an income, and it needs to happen within a couple of years. If a business is not earning a decent profit by year 2 or 3, it should be. That is just basic business 101. Your situation is very different, and while it works for you, it won't for most unless it is a sideline business. Again, if you had to finance and you were not active in the business, it would be a loser for sure. When I went to Virginia Beach, I was told about how many people were able to quit their day jobs after a couple of years to concentrate on running Liberty. That's a bunch of crap, you know it and I know it. You bring up some good points, so stay active on this site to keep the other posters honest.