UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
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.
WHAT DO YOU THINK? DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE? ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY? WHY OR WHY NOT?
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View Comments
Franchise owner'
Not me personally, I had a great tax season. I am looking to open my second office this fall. You are right though, a lot of good people got "beat."
I am going to win for us all.
Don't be scared of them, they are going to surprise you and boot you out anyday now. See, if they wanted a company buyback they would have to pay you at this time of year, 200percent your gross. They are executing a new strategy and getting rid of all the old zees, yes ones that survived past 5 years too. I just got my term paper April 22, how convienent right? It is not legal, none of their threats and contracts are legal but they need you bankrupt first to abuse you so they will hit you at the perfect time. I have several lawyers and need all of you to contact me. Liberty is up to some evil dirty deeds now more than ever. They are busted now. My email is [redacted] and warning to Liberty Tax kites- Corp has already been served a no contact with me so don't try it. The case is that strong that we just need everyone's testimony. You do NOT have to go to Virginia for Venue and then not be protected from the state fair franchisor acts. How can you use a case against them there when everything you say will be thrown out because your territory is out of the state. Read the NEW contracts and you will see they punched that in there. If they come into your state and change locks or take anything from you, I want to know about it. You do have right to class action suit- join the party zee or ex zee, it is time to move it and occupy your turf.
Hey, my name is Trisha Grabert and I will not be intimidated by Liberty Tax contract threats.
Upon termination out of nowhere, did you know they want you to say you have NEVER been affiliated with Liberty Tax? That is first on the list. So...a customer calls, and employee calls and you say you never existed? Nice. I will follow the BIBLE and not someone elses commandments. This girl shall not lie. And I am ready to share with you all. Those scared to speak up, stop...time to tell it all. These new zees are future victims and it is social responsibility to protect them. I and Annie Fuller were hired and fully financed together and pushed us to get more get more opened and they knew we had NO assets if they wanted to sue us for whatever they make up when they toss us at the right time and resell. They used us all. It is free speech time. I am not slandering when I tell truths. I am not causing damages, they caused their own damage and they are exiting. Surprise surprise. Why are all the top zees gone, one by one, and two by two months apart as though it was not planned? Just a question?
You sue on contingency basis. If a lawyer makes you pay, it gets dragged and dragged on as they are making something. If they are working hard to get your their money, they work faster and smarter. Don't let lawyers play you too.
Ms. Grabert,
Are you being terminated? Are you a top franchisee? thanks.
Trisha,
It is very sad what they do to good people. That is why it is so important that we tell everyone, here, there and everywhere and OFTEN, what type of company this is, so future "investors" don't get into the same situation. Sorry for your loss of time and money! Keep us posted.
Yes and yes for the answer to guest2. @ Mike, I agree 100 percent!! Hewitt was given notice of no contact direct and very specific and his Area Developer called me at 836am yesterday, I did not answer. So besides forcible entry without a proper lease takeover at the time, that's another mistake made and they left no message. More franchisees are calling me and finding me on facebook, so let the scared be at peace. It will all work out. I would never tell a candidate to ever think of dealing with Liberty Tax Service. -Trisha Grabert
Trisha,
Sounds like you are gonna take it too them!! Good for you. How did you find this website and what was the given reason for termination? Anything we can do to help?
What is so sad is your franchise experience is shared with other companies who are doing similar things to their franchisees as well. The main problem here is the IFA who is nothing more the a PROTECTION AGENCY for franchising. If the members of the IFA were held responsible for their actions and cut loose by the IFA for improper and unethical business practices honest people who bought into these franchise opportunities might have a chance to succeed. But as long as the IFA continues to profit from supporting the franchisor and the more franchisors that sign up with the IFA the more money the IFA makes, the less likely anything will ever get fixed in franchising.
@ Mike, I have been following this website since the Annie Fuller case. I have listened and listened and since day one took advice and made sure I printed every email, issue phone calls recorded or text messages in any communication coming from Corporate in case you all were correct. This is something many Liberty franchisees failed to do. However, you can get those records, but that puts you on the target list for termination. I suggest you make all copies of commications as you will see many from prior seasons won't be available to you suddenly. Maybe that is because under the renewal contracts, it actually states unquoted that you promise not to take litigation for anything in the past. So make no mistake, they will not make anything easy for you to obtain if you request prior year information through support central or as we all know as "non-support waiting portal". -Trisha