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LIBERTY TAX SERVICE Franchise Complaints asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiarliberty_logo with the Liberty Tax franchise, please share a comment below.

Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind  McDonald’s & Subway.  However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.

This post was originally published 

BostonTax wrote:

I’m a former Liberty Tax Franchisee

I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.

Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.

Barbara Green wrote:

I too was a Liberty Tax Franchisee and I agree with everything you said.

The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.

Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.

At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2’s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.

It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.


5,730 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • dr zhivago

    And today they bought Sears Hometown for $130M

  • #youhavetoaskwhy

    You have to ask ‘why’? Sears Hometown definately on it’s last leg. Almost impossible to sell a liberty store. You have to ask ‘why’? If you can’t sell it only value is working it at a profit. You have to ask ‘why’?

  • Sarah EA

    Is Liberty Tax still a viable business? I was surprised to see a couple of ads for tax prep and for tax preparers recently. I actually saw one last weekend with a lighted “open” sign. I thought most of the franchisees would have bailed by now. Hopefully some franchisees will post and let us know how it’s going.

  • #stillstanding

    It’s going great and business is good! This would be from franchisees work. Not much to do with corporation.

  • NCHillbilly

    Department of Justice truly missed what truly created the fraudulent tax return within the Liberty the system. The root of this problem goes back to Liberty’s lending program on territories, operating expenses and cash in the flash program. Liberty had a strict 100% fee intercept program where Liberty intercepted the fees on a bank type product from the franchisees to pay towards the loans they had from Liberty. These fee intercepts often left the franchisee with little to no operating cash. Which forced many of the franchisees to do unethical tax returns just to survive.

    Liberty’s new management team is not focused on tax returns, their focus and background is based on predatory lending. Even though there are restrictions on Liberty selling franchises for the next 3 years, it will be very easy for the new leadership to get around this. The Franchise Group will do this by opening Liberty Loan and Tax locations as corporate owned stores. This will allow them to expand, increase the number of offices and make their investors happy.

    These new hybrid offices will focus on lending money to individuals at rates around 155% yes 155%, these are short term loans. These new offices will be branded as Liberty Loan and Tax. Each location will have a cash recycler that will disburse the loans and collect the payments on site. Liberty has already open 40 of these locations, mostly in Tennessee. These offices will be opened 6 days a week, year around.

    Once these offices haves been established and the three-year probation period has elapsed on who they can sell a franchise to, these locations will be put up for sale at a high cost.

    This DOJ settlement is a win for the Franchise Group, John Hewitt as whole, not the Franchisee.

    The franchisees will take the hardest hit. Here are some of the ways that the Franchisee will take the hit.

    1. All of the burden of the compliance requirements will be put on each franchisee at a cost, most Liberty Tax franchise offices are already operating at low to negative income, and this will only increase the cost to support these new compliance requirements (hardware, software, storage, labor etc.). At the end of this upcoming tax season there will be fewer franchised owned offices as more owners will abandon their offices.
    2. What the client does not realize when they are having their tax return done at a Liberty office and their tax return has been selected for an internal compliance review and the franchisee fails to provide the necessary documentation to the compliance review board, the individual’s tax return will not be forwarded to the IRS or State for processing resulting in no tax refund loans or refunds. Once a client discovers that their tax return has not been forwarded to IRS or State for processing, because of an internal compliance review, this news will spread quickly amongst their family, friends and coworkers, today’s social media makes this extremely easy and quick. This news will be like a virus and will spread quickly.
    3. Liberty HQ does not have buyback program of existing franchises. These new restrictions will make selling an existing franchise extremely difficult during the next 3 years, as there fewer buyers that are qualified to purchase a Liberty Franchise. This will result in a declining value of existing franchises.
    4. Decline in new clients, the internet provides a wealth of information, and new clients that are looking for a reliable tax company will steer away from Liberty offices, as they will be seeing numerous articles on this DOJ fraud case against Liberty, this story will be nationwide. Most individuals will not read or understand the various news articles, once they see the words fraudulent tax return’s they will look elsewhere.
    5. Liberty HQ is not removing the original source of the problem and that is the “Cash in the Flash (CIF)” program. This program created an environment that offices had to do larger number of returns that had extreme high risk. These type of tax returns are bank products where Liberty HQ gained money numerous ways (bank fees, royalties, marketing fees, e-file fees, and check printing fees) plus 100% fee intercept from the Franchisee to pay for the various loans from Liberty HQ. The CIF and Liberty’s lending to franchise offices put these franchisees into a position that they had to do fraudulent tax returns just to meet Liberty’s 100% fee intercept policy. These types of loans and CIF program will continue, and franchisees will now have to charge a higher fee or continue to do questionable tax returns.
    6. Franchisees will be losing revenue on returns that fail to be processed by the compliance requirements. Most of the returns that will be selected for compliance reviews will be early filing returns. These are the type of returns where the individual is paid $50.00, CIF, just to have their return done. Along with losing the $50.00 paid to these clients, the franchisee will be paying all the cost to prepare the return (payroll and overhead).
    7. Client retention will continue to fall. The reason most clients have their tax returns done at a professional office is to help avoid audits, once existing clients learn more of this and the compliance reviews that are required, they are going to feel that their tax returns will more than likely be scrutinized by the IRS increasing the risk of an audit. They will be scared away.
    Finally, I suspect that part of the requirement when John Hewitt was required to sell his Liberty Tax ownership was a portion of the sales proceeds were set aside in an escrow account to cover any future fines from the DOJ, as this case on going during his reign. If this was done, then the DOJ fine would be paid from amount that was set aside. The DOJ should have barred John Hewitt from owning any tax business for life not just ownership in Liberty Tax.

  • NCHillbilly

    check out the office below

    Liberty Tax & Loans

    Tax Service
    Address: 3501 Dayton Blvd, Suite B, Red Bank, TN 37415

  • dr zhivago

    Thanks, NCHillbilly! Interesting to see them switch. the 155% APR is depressing.

  • Can you provide a source for the new information about loans I have noticed they don’t have any loans posted to the website?

  • NCHillbilly

    Here is the trademark information for the new name Liberty Tax and Loan which you can Google and you will find locations located in Tennessee and Texas. All forty of these locations are currently company offices.

    Mark Identification:

    Last Applicant/Owner:
    Jth Tax LLC
    1716 Corporate Landing Pkwy
    Virginia Beach, VA 23454

    Serial Number:

    Filing Date:
    October 8, 2019

    New Application – Record Initialized Not Assigned To Examiner

    Status Date:
    October 11, 2019

  • Thanks also saw the liberty tax and credit repair. :(

  • Needtojustbuysomesoftwareandtakesigndown

    The changes put franchisees in position to take the sign down and operate on their own. Some will decide to do just that. There is no value added from the company and the situation seems to clearly break the franchise agreement. Bank products are available to most tax offices. Highest risk is having returns not filed for some unnecessary paperwork. Paying royalty is gifting money. Got better sense than that.

  • Jewel McHardy


    I have a question. You said that there are restrictions on Liberty selling a franchise for the next 3 years.
    Are you referring to the fact that new Franchisees must be either an EA, licensed CPA, licensed Attorney or a tax preparer with 4+ years of experience? Or are there more restrictions that I can’t find? And I agree these requirements will make it difficult for any current franchisee to sell their practice. I don’t seem many of these professionals wanting to pay $40K to join this organization. And I don’t really see too many professionals wanting to sell credit repair and all the other new add ons.

  • NCHillbilly

    Jewel, you have described the legal restrictions.

  • Jesus Cervantes

    Hello , and hope that somebody can help us?
    My wife is a unhappy franchisee with liberty going on 4 or 5 yrs. she want out,period. we think and know for fact that this was a big mistake.
    we would like to get out of this deal completely, but do not know where to start ?
    with a lawyer maybe? or any other suggestions? title in lieu of foreclosure? or just walked out completely? and we do not know ,what is going to be our liabilities?
    any ideas how much we will have to spend? please help us if you can. thank you

  • Taxman

    My experience has many of the elements noted above. I took over a “company store” where they hid the fact that there was no history in the location so the volume of 300 tax returns I built in 2 years should have been considered “successful.” Unfortunately, it was not a financial success as the Company committed to outrageous rent and using the “fee intercept” to take my money right off the top. When I figured out what was going on I begged for change and let the company know that without that cash, I would never be able to pay rent on my own, couldn’t pay staff and certainly could not succeed over the long haul – even gaining agreement that if I’m driven out of business they’d never collect anything.

    Long story short, I walked away and now they are suing me for the franchise fee and unpaid royalties even though the money they took via fee intercept went for rent. (Note – they are not suing me for rent.) The company is not friendly to franchisees and focuses heavily on marketing to drive in poor people on foot to pay inflated preparation fees. Once a store reaches a critical mass of say 800 tax returns, as long as they are skewed to the early season, a franchisee can be very successful as long as the rent is cheap but overall, Liberty Tax Corporate is more focused on squeezing franchisees than building a reputable business.

    (PS – keep your eyes open as they are now “developing” new concepts to make high interest loans) I’m a little sad for my involvement.

    Anyone who is interested in a class action suit should drop me a note at [redacted]

  • Liberty is now partnered with Rocket Mortgage

  • Don't Be Fooled

    Liberty is now partnered with Rocket Mortgage”. In what manner? Have a link? I have to think this prior year was terrible for the Zee’s. I feel bad for anyone trying to make it with Liberty.

  • Nothing in life is perfect and all relationships create natural conflict as no two people were created exactly the same. I have been a franchisee for almost 20 years with Liberty Tax and here is what I can tell you.

    1. The system works if you are creative, flexible and have good business sense. My income is triple any “job” I could have in my area and I love being my own boss.

    2. Is it easy – NO! It’s like raising your kids – if you believe that you can pass them off to a babysitter every day, you’ll likely get poor results. Same with your franchise. I am vested and involved every day and my results prove it works. I can’t hire someone for $12 an hour and believe that they are going to tend, cultivate and grow my business like I would. You reap what you sow.

    3. New management – yes they have a background in lending and have some interesting ideas…however, the results of their efforts are shining through. The technology improvements alone in the past 2 years are amazing. They seek feedback from the field! And they listen! They also admit when ideas don’t work or pan out. I’d much rather be a part of an organization that is constantly evolving than to be stagnant in a world that is constantly changing. If you are evolving, mistakes are going to be made. If you never even try, you’ll become a dinosaur quick and put yourself out of business. (Note: my locations do not do loans and likely never will!)

    Bottom line: Buy a franchise if you are looking for a system and a network. I will gladly pay my royalties every month (interesting that people complain about the fees after they sign a contract) to have the results I have. John Hewitt told me 17 years ago that no one promised it would be easy – and he was right! He also asked me if I was willing to be average – and the answer was “NO”! Stop complaining, take ownership and use the system to create your future – I am proof that it works and can be wildly successful…with a LOT of hardwork!

  • Frustrated and Disgused

    Congratulations on your success. It sounds like you have done well. For the rest of us, until John Hewitt is in jail and forced to repay the many who lost 100’s of thousands of $$, you would be considered one of the few. John Hewitt was a promoter, ( I will leave out scam artist, but that was true also). That was obvious. Unfortunately his supporting cast knew little to nothing about; 1) how to run a business, 2) the retail tax business, 3) the changes in landscape that the retail tax business was going through. I actually did reasonably well my first year as a franchisee. We did over 175 returns, many were business clients, good revenue, unfortunately no profit. Intercepts of my first two months of business made it virtually impossible to do advertising/promotion necessary to attract clients. I was told I had to have a strip mall location which had rent of $2800/month not including massive fees. What a mistake. There was an office building within two blocks that would have had the same visibility which would have cost $1000/mo. all inclusive. It was turned down. I paid over $$1500 the first year for an AT&T business line which turned out to be a total waste. Vonage would have been free. I was told that i would receive advertising that was included in the franchise fee I was paying, that never happened. I called Liberty Tax for help, and they were basically useless. Just a few of the basics.

    Bottom line, I could have purchased a multi -use tax software and come out much better. The Liberty Tax name bought me nothing.

    Maybe things have changed, but as i said at the beginning. This was a scam and John Hewitt should be in jail.

  • Frustrated! Been a long time! I agree, I hated John I Screw’em , seems he is on to other zees with his new company, him and Martha..wonder if things have changed?

  • Liberty mission is to make money for the stockholders and investors. Like all businesses they need human capital to achieve this because they do not want to run the day to day operations of individual stores. If you are looking for buying yourself job security and job stress this is a great place to go! I was with this franchise a long time and see there are a lot of successful zees who work their tails off. But for every successful zee there are at least 10 who either fail/give up or make less than 50k per year net. Average store Grosses less than 100k nets less than 30k per year after all the franchise fees royalties, rent payroll etc. My advice either go into this trying to achieve 10+ stores but be ready to borrow against your 1st born because you will have to. Or be satisfied making retail wages $10-15/hr if you stick to under 5 stores. You’ll make a lot during tax season but have to spend it all in off season paying rents. Remember the business cost of “quasi ownership” you only are really renting a territory and the fees continuously roll in but revenue has to be made 1 tax return at a time. Franchise Royalties are the highest of any franchise system out there. They keep almost 1/5 of the gross which means you will pay them more each year than you actually take home. Of course they love their franchisees they feed all the investors and corporate C-Suites.
    Buyer Beware!

  • Liberty Tax franchisee is the worst. They will giving you financing to help you by into the name but will charge you a arm and a leg in interest about $600 in interest per month. Just for the name and software they charge you the most. They bill you for stuff you have no idea what it’s four and no one has the number to get in contact with accounting. You have to put i a ticket and wait about a week to get an unclear answer so it takes about two weeks just to find out. They hold your money until you pay them in full and even then they come up with new fees to hold your money for so that you don’t start getting your money until almost March then they offer if you financing to assist with bills with more interest. It’s a four year contract. First year I made $119,780.02 total and they got $80k and I got the rest around $37K barely able to survive. It’s more money if you want to add extra services like bookkeeping. It a normal person like me charged someone up like this I would be facing legal action, labeled a loan shark and possibly faced jail time but for “Liberty” it’s ok. You have to split everything with them and I mean EVERYTHING! Don’t do it.

  • Fatiha

    My husband got the liberty franchise but was not able to able to open the location because of the pandemic, we want to come out of it because we paid 10, 000 cash and looking at everyone’s review we want to come out of it . We tried to come out of this they are penalizing so much we don’t know what to do. Please give any suggestions

  • Donald Boswell

    Fatima, 10k is a tough lesson. Just count it a loss and move on. Suggestion is to definitely operate 25 miles away from the territory you agreed to open.

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