LIBERTY TAX SERVICE Franchise Complaints

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• Another Zee,
  Didn't have to pay what I owed them. Walked away without any debt and yes I did tell them I would have to claim bankruptcy.

• I had to claim bankruptcy as well. They still continue to harass my former employess and customers by telling the employees that they were part of MY franchise agreement (That takes a lot of nerve!) and my customers that I have left the country ( I'm still here by the way). This is not at all an ethical company. I still get bills from them for franchise fees even though I left some time ago.

• Forgotten Man;

  Think about this for a minute. You are JTH and you want to make your company look like it is worth more than it is. Acc'ts and Notes Receivable are assets. Of course, what it would take to collect those assets are never figured into the equation. Most of us who still owe Liberty cannot pay or we would, many have declared bankruptcy. They probably still show as receivables. Remember, this is a scam artist at work.

  Again, this franchise is a bad investment. Period

• F&D:

  Yes, I'm keenly aware how the balance sheet structure works. And I did think that very thing when I noticed the receivable balances (though they didn't really go up that much from 2010 to 2011 (real curious to see what the FYE 4/30/12 statement will look like).

  "Again, this franchise is a bad investment. Period" Again, horse still dead and severely beaten...not getting up any time soon.

• F&D,

  Their financials are audited. If there was any doubts of collections their auditors would have made them write off the debt and the bank would not be lending them even more money than they have. Common sense is what you are lacking.

• The allowance for doubtfull accounts is a number that is determined by management.

  See page 10 of this years financials which explains that it includes the company's best estimate of probable credit losses. Further along in the note it explains that the amount is dependent on the performance of the underlying franchisee, management estimates the amount of the allowance for doubtful accounts based on a comparison of amounts due to the estimated fair value of the underlying franchise.

  The auditor as it states in the report it plans and performs the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

  What I am questioning is the reliance on the underlying franchisee, how does an audit test for reasonableness and who is determing the estimated fair value of the underlying franchise. On the financial statements you will see that the allowance is about 6.6% of the receivables. My questions is this figure adequate. Are only 6.6% of franchises going to fail and not be able to pay. consider that about 35% of all franchisees fail I don't know if that is adequate. And how does selling franchises for $2,500 + higher royalties change the estimated fair value of a franchise?

• so you want people to trust your opinion more than the auditors that are putting their name on the line or the bank that is lending them $120mill? Obviously, they have looked into your question and determined that the allowance was reasonable and that the chances of LIberty not being able to pay back the $120mill was very small.

• While it's true that audited statements should present the most accurate depiction of a company's financial status, I have to agree with Bill on this one. I highly doubt the auditors at KPMG fully understand the inner workings of Liberty and their franchise model. There's no arguing the historical failure rate, and the corporate henchmen at Liberty are smart enough to be able to mask anything that's going to look egregiously negative in the general public's eye.

• 1 IPO And 2 Companies To Watch Out For During Tax Season

  As the saying goes: "The only two certainties in life are death and taxes." Yet for investors looking to count on the stability of companies that prosper during tax season, such certainty of late has been far from stable. The advent of the digital era, along with a growing do-it-yourself mentality, has changed the playing field of the tax industry. All the while, the need for external tax assistance is only going to grow as the shifting political landscape is likely to introduce additional complexities in the tax code.

  One such winner to gain from this changing landscape is Intuit Inc. (INTU). The financial management solution provider responsible for the popular software brand of "TurboTax" has consistently proven itself to be a leader in tax-related software. Yet part of the company's success has been its ability to also diversify into other areas geared towards small and medium-sized businesses. Intuit's "GoPayment" mobile payment system has begun to gain momentum, competing well in a market that is beginning to be crowded out by such players as "Square", Ebay's (EBAY) "Paypal", and Google's (GOOG) "Google Wallet."

  Intuit recently reported its second quarter results, with profit soaring 62% on strong revenue of $1.02 Billion. Intuit's TurboTax brand experienced a 10% increase season-to-date through February 2012, allowing for the company to confidently reiterate its full-year guidance that consumer tax revenue will grow about 10-13% for the year.

  We are off to a great start in tax. Early indications are positive and we are pleased with how the business is performing so far. Third-party data and our unit sales through Feb. 18 give us confidence that the software category is growing and that we are executing well. - Brad Smith, CEO of Intuit.

  While such positive news for Intuit may be sounding optimism for the industry, those looking at the brick-and-mortar tax store operator of H&R Block (HRB) still have much to worry about. Since 2005, the company's share price has steadily declined almost 40%. In its last quarterly report, the company saw a wider net loss, as it was wounded by higher expenses, including the discontinuation of its Express Tax business. Even with an 8% rise in revenues, the last quarter demonstrated the rough patch H&R is going through as its fights to keep up with the changing times.

  Yet even as the share price falls, the company continues to show confidence in itself. Apart from a stable dividend that has grown to a 4.9% yield, the company also retains an ongoing share buyback program. Additionally, the company recently announced its interim tax results which allude to a stronger year than that of the prior.

  It is still early, but we believe that we are clearly on pace to gain share in both our retail and digital channels this tax season... - Bill Cobb, CEO of H&R Block.

  In light of the changing tax assistance field, one additional play investors may choose to be on the lookout for comes from the likely IPO of JTH Holding Inc. JTH Holding serves as the parent company of Liberty Tax Service. From 2001 to 2011, Liberty Tax's number of locations jumped from 508 to almost 3900 stores. It now stands as the No. 3 retail provider of tax returns in the United States and the No. 2 provider in all of Canada.

  In its S-1 filing, the company has shown its business model is succeeding, as its net income grew 43% to $15.8 million in 2011, up from $11.0 million in 2010. Working under a franchise system, JTH Holding believes this is the key to their success, as it allows for the parent company to focus on the marketing, support and development aspects of the company's initiatives.

  Taken as a whole, JTH Holding looks as if its entrance in the public market could provide an opportunity for investors looking to further diversify into the industry of tax assistance. Found again in its S-1 filing, the company asserts that the number of tax returns filed with the IRS looks to increase at a rate of 5% for the years of 2011 to 2015. With such consistent growth to a potential market of 131 million current tax return filers, there remains a sizable opportunity for business expansion for all those involved.

• Forbes has just published a very suspect ranking of the 20 Best Franchises for the Buck. It ranks McDonald's #6 and Liberty Tax #7.

  http://www.forbes.com/sites/jjcolao/2012/02/08/top-20-franchises-for-the-buck/
  _____________________________________________
  7. Liberty Tax Service

  Virginia Beach, Va.

  The tax-prep chain takes to the streets with employees who dress up like the Statue of Liberty and wave logoed signs. Each year, for a week in January, Liberty offers free nationwide classes on tax preparation.

  Average initial investment: $63,350
  U.S. locations as of 4/30/11: 3,592
  Closures (last three fiscal years): 337
  Hours of Training Offered: 31
  _____________________________________________

  We are protesting their pick of Snap-on Tools as the #1 pick, as they are understating the investment, claiming Snap-on had zero failures when they've had 1000 fanchises "reaquired" by the franchisor in 3 years, plus lost a major franchisee class action suit.

  Check out: Forbes’ Praise of the Snap-On Franchise Draws Fire, Disbelief
  https://unhappyfranchisee.mystagingwebsite.com/forbes-snap-on-franchise/

  They also list Edible Arrangements, even though 170 franchisees are suing the franchisor. They obviously don't care what the franchisee's have to say.

  Should we also question their endorsement of Liberty Tax? Is the info/criteria they're using valid?