LIBERTY TAX SERVICE Franchise Complaints

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

• Bill,

  Your problem is you think negative cash flow from paying down loans means you business was not profitable. While this is a cash business, paying down principal of the loan does not affect whether you are profitable or not. If you are still confused i really think it is you.

• Richard, I am sorry to hear that after 2 years you have to shut down. If you haven’t already don’t sign your Mutual Termination Agreement (for surely it is not mutual) . Do you owe Liberty any money? That is the key question about whether you may or may not have to file bk. As for who you have to talk to the fact is the ONLY one that makes any decisions in Liberty is John Screwitt. So your only contact should be him, there are many levels of 20 somethings that will contact you but they can’t make a decision in regards to any business decisions out side of what to wear at the beach party. Sorry about your loss and I hope to see you on this board. If you owe any money to Liberty DON”T do a bank product this next season if the fees are going to be intercepted, $50 bucks cash for a tax return is better than a $250 return that is going to be Intercepted. I hope you have a great CASH season, keep us posted.

• Mike,

  Great advice. Charge $50. That is the solution. I wonder why you are going out of business.

• Richard,

  Testaiclepirate, misses the point charge $50 or $550, if a client can’t afford to pay upfront charge whatever that client can afford to pay without having to utilize a bank product to avoid giving John Screwitt a DIME more than they have recieved from your hard work!

• Everyone needs to go back and read how one of our military men was treated. Please go back and read bankrupt July 2011 on August 13th, 2011 1:15 am. That means you barilla, testaipira and all you other kool-aid kids. This franchise and it’s owner are corrupt – period. John Hewitt was canned from Jackson Hewitt, and he is going to use you, me, and anyone he can find to rob every dime and grow his empire. He doesn’t care about his franchisees, he wants your money to grow his empire. Every part of this organization is focused on growing his empire. If you grow, you give him money, if you fail you give him money. He doesn’t spend a dime to advertise or make his business visible to anyone but himself. Collect, collect, collect and screw anyone he can to get there. None of you can justify how he treats people who have invested in this organization.

• Liberty will be out of business in 5-10 years if John Blewitt is still in charge.

• John

  I understand cash flow and I understant profit. Now if you understand a cashflow statement you will know that the first line of this statement reflects the profit or loss from your income statement (Profit or Loss statement). In most cases Liberty store owners don’t have enought revenue to show a “profit” let alone enough profit to pay down loan balances.

  Last year Liberty had to provide $56,400,000 in operating loans to their franchisees. By definition an operating loan is a short term loan to cover operating expenses. The reason Liberty franchisees need an operating loan to cover expenses is their franchises are operating at a loss.

• the reason the need a loan is that it is a seasonal business. Therefore, even if you break even as of April 30 (the end of the fiscal year) the new fiscal your begins on May 1 and until January you will not see any revenue but will incur expenses such as rent, utilties and marketing. You will then ear all your revenues in two months and that will be your profit. Why do you not understand that?

• For everyone that is potentially a new Frannchisee that is looking into buying or opening a Liberty Tax Service, call all current and former Franchisees before you buy into this POS organization!! Read all of these posts before you buy. Anyone on this board will tell you the truth about how poorly this company is managed. The very very very few (maybe 2) that support Liberty do not give out any supporting reasons why Liberty is worth purchasing they will only promote Liberty by saying if you fail you didn’t follow the “system.” Therefore don’t buy into this POS organization, if you really want to franchise or buy into the tax industry look into a Block office first DO NOT buy a Liberty office!!! Block has a brand and a Marketing Department! Liberty’s marketing strategy — buy donuts for the businesses around you so they pass out your coupons and put someone in a costume and put them on the corner to wave to cars! Think about it- Did you ever see or hear a Liberty Tax commercial?

• you are so right Mike…. Buy Hr Block and pay 30% royalties instead of 14% at Liberty….

• Buy an H&R Block franchise, have name recognition, REAL marketing and make money. If you are considering buying into the tax industry don’t buy into Liberty Tax, you will lose your investment. Look how many postings are on this website from Liberty current and former franchisees. How many postings are on this website from current and former H&R Block franchisees? Pay 30% at Block which includes marketing support or pay 14% + 5% a total of 19% to pay John Screwitt for the ability to buy costumes from Liberty’s vendors. Liberty is a POS do your own research and get the FACTS you will than make the right decision. Good luck on your franchise search.

• Pay 11% more royalty and get 100% more customers. Sounds like a no brainer to me. Most H&R’s are doing double plus what the closest Liberty is in the same area. That also means you get better preparers, spend less time managing $8-10 marketing people, most of which are pretty useless, and have a store that looks like a business, not a brothel.

  I agree with Mike, Liberty is the worst organization you could ever associate yourself with. I continue to experience that every day I have to deal with these clowns.

• Testaipira:

  I would be shocked if you are not spending at least 30% of your revenues on royalties and marketing. I will bet it is even more than that. Put those $$ you are currently spending on marketing into the hands of a professional marketing organization and tell me you won’t do a lot better than you are doing now. Currently you are spending 5% on corporate marketing and more than 50% of that is going to pay for internal marketing costs, and a website so you can purchase waver costumes. None of it ever touches a customer. You might as well smoke in your cigar. The rest is spent on Yellow Pages ads (who uses the yellow pages anymore), Career Builder,( talk about another joke), hispanic marketing, (which I doubt you or anyone else has every seen), and you get a percent to buy coupons. Even you have to admit that Liberty Tax corporate marketing is worthless. Let’s compare that to H&R or JH who use radio ads, mailers with local addresses, not corporate addresses, a ton of google ads to get people to their website, and even you have to admit the “free return” program that H&R ran runs rings around CIF. Liberty is out marketed in every way you look.

• It should not come as a shock to anyone that if you fail to pay your royalties your franchisor will be upset with you. Also, if you want to advertise in a way that the company doesn’t believe (and advises you that it won’t) will be successful, of course you have to pay for it. But Liberty does pay for your yellow pages ad from the 5%, and they also send direct mail. They give about half of that 5% back to you in a budget you can use to buy marketing materials. So, BostonTax, you’ve utterly misrepresented the truth, which is just a nicer way to say you’ve lied. You claim not to know what advertising was approved, but you were provide with an operations manual and with a marketing plan/manual. Yes, when you agree not to compete for 2 years in the contract YOU signed, Liberty will enforce that.

  You were clearly not somebody suited to owning a franchise business. You were doomed to fail from the start, and Liberty utterly failed to identify that fact. That is where they fail. They sell franchises to people who obviously don’t understand being self-employed in their own business while operating as part of a franchise system. I would have spotted you and predicted your failure when you attended your first operations training.

  By the way, compare your 14% royalty with any other tax service franchisor. And compare it to any other service-only franchised business. Then you will have a clue as to how your criticisms sound to others.

• Frustrated and Disgusted, of course it is the Franchisee’s responsibility to make money. On 843 returns, it is unthinkable that a franchisee would not be making A LOT OF MONEY. That’s $200,000 in annual revenue. I could make a minimum of $80k a year on that kind of revenue easily. It amazes me how many people Liberty sells franchises to who have no concept of how money is made, how a business is managed, and what their own responsibility in the whole equation is. I hate to see anyone lose their money. Surely Liberty could be a teeney bit more selective and not have so many failures by people who are obviously ill suited for self-employment.

• Cz.. You don’t get to number 1 in 2020 by being selective. Liberty Tax takes anyone who has a spare $40,000. Want to guess how many JTH has rejected? Maybe one disabled vet here, a downs syndrome woman there…. I bet your left nut they never say no to money.

  And you calling boston tax a liar? I paid $17,000+ in ad royalties my second last year with liberty. Got $2300 in funds to spend through liberty approved vendors. Lts stopped yellow pages advertising that year. Only had valpak. Not great direct mail when sent with 100 other coupons! Oh. Forgot to mention I got 24 cookie tins. No cookies and two $100 liberty costumes. It’s great. And you are seriously very insulting towards people you’ve never met hiding behind aak anonymous “cz” name

• CR, you obviously don’t owe JT any money. The 18%number compounded interest is what the bible calls usery. It should be against the law. This is besides the point that JTH is only for his own interest. He did not want to support me in all problems that they had not disclosed to me before buying this territory. It is not about people having an understanding of being self employed. There should be more people going to the media and expose their gimmick to the rest of the nation and the US government.

• Earthquake in VA, I hope nobody was hurt, but I do hope the Liberty corp office crumbled!

• Tony:

  Nice point. Last year franchise sales counted for 14% of their revenues at 13,148,000. Roughly 329 territories. What a sweet deal for the company. The franchisee pays an intial fee of $40,000 and then is on the hook for a minimum royalty fee of $5000 the 1st year, 8000 the second year and $11,000 the 3rd and subsequent years. The contract prohibits the franchisee from talking bad about the company and essentially limits their right to sue.

  Your paying all this to a company with no national brand and no national advertising campaign. Buyer beware!!!

• Bill,

  You are right Buyer Beware!! I am not too worried about talking bad about the company, No one here is not telling the truth about how horrible they were treated by John I Screwitt!

• If you are considering buying a Liberty Tax franchise, don’t do it! This is a POS organization that only wants to sell franchises. Consider all of these posts as a word of caution.

• I agree with the advice to talk to current and former franchisees. Talk to successful franchisees and failed franchisees. Do a personal self-inventory, and honestly determine if you are more like the failed franchisee or the successful one. Not everyone can succeed in their own business. No fracnhise is a guarantee of success, it is only an opportunity. I would not tell a person to buy a Liberty franchise. I also would not be so presumptuous as to tell them not to. Only someone with a real grudge says that sort of thing, and that’s not a good basis for making a decision.

  People can and do fail as Liberty franchisees. People can and do succeed as well. If you are not savy enough to see that you can’t just work 3 1/2 months out of the year in ANY business, you should not be self-employeed. I do take it very easy from April 16 to mid-August every year. The 8 hours a week sitting in an office is not hard work, and when I go on vacation I pay an employee to do that. Tax school is a fun time, not hard work, but you do need to be involved in that even if you pay someone to teach for you. The holiday season is hectic because you’re getting ready for the next tax season. Those are the facts, and if someone at the company has told you (i’ve never personally heard them say it) that you only have to work 3 1/2 months, well, use your brain and know otherwise. Ask a dozen franchisees if it is true. You can check out everything you’re told.

  Just don’t think your first tax season will be profitable. That shouldn’t come as a shock, as no business is profitable in its first year, but it’s shocking how many people are devastated becasue they didn’t make a profit that first year. Again, if you do your homework you can know the facts. If you don’t, you might end up as a pathetic digruntled franchisee griping on a message board.

• CZ, i agree with you 100%….

• CV:

  Since your one of the successful ones, why not tell us where your store is located? Are you an area developer?

  Do your homework is good advice. Understand that Liberty used the same business model as Jackson Hewitt but without the advertising or name brand recognition. The model is to have a store front location close to one of the two biggest tax prep. services H&R Block or Jackson Hewitt. In a densily populated urban setting with demographics of income earners below $30,000. This population receives the earned income credit and additional tax credit. This demographic is underbanked and right for selling bank products too and charging high tax prep fees. Since the models are similar; Liberties results are similar to Jackson Hewitts results. Please see my July 28, 2011 post.

  Liberty’s business model does not work well in middle or upscale areas. The CPA/Accouting firms are strongly entranched with their clients. So are the Mom & Pop tax practices who can provide just as good of service as Liberty, they can provide coffee and donuts and they can beat Liberty on price. It is very difficult to take market share. That’s why all three major tax prep. services are willing to buy out those types of practices.

  Liberty’s website says you can be an owner in 45 days but how well will they prepare you? When you go to Virginia Beach ask if the franchise fee includes covering the cost of you obtaining a PTIN or if they provide you with an efin number. Both required before the IRS lets you process tax returns. For those with no tax knowledge ask how much time they provide in their one week training that is devoted to tax preparation.

  For those potenital franchisees who have the tax knowledge and experience. The only reason your looking at a franchise is to give you a leg up or advantage over those who start out on their own. However, franchisees don’t have any higher success of succeeding then non-franchisees.

• Bill,

  I also agree with your most of your post. Do you have any facts to back up your last statement that franchisees don’t have any higher success than non-franchisees? Is this your opinion or fact? I don’t know either but would think it it slightly better as a franchisee.

• The one biggestproblem with JTH John Hewett is this. If you are requesting financial assistance with them at 18% compounded interest, you will be in a spiral down hill and by the third year you will receive a notice to cure demanding that ALL monies are due now or you are in violation of your franchise agreement. The reason that they do this is so that they can kick you out and get another sucker to get financing from them so they can do it all over again. It is better for them to turn over a territory every 3 years instead of five (when your contract runs out). They have you sign an agreement that you will not enter into a class action law suite. There are so many people who get ripped off and the helpless franchisees are stuck forclosing on houses, destroying them financially with backruptcy, cleaning out retirement accounts all because John promises them if they just do what they say you WILL be successful. My store was doing a little over 400 for 3 years Net fees a little over 70,000 each year. Liberty placed me on their intercept fee program to pay back some of what I owed. in three years they had intercepted over 110,000. At the end do you want to guess how much they said I still owed them, pretty close to 135,000. If you do not come up with most of the money to pay them off the third year you WILL NOT BE IN BUSINESS. I had many problems with the location of my store and received little or no assistance from corporate. They had violated their own agreement. I was the one who was left holding the bag. They are going to find someone else who will lease the territory and be in the same boat as I was in that is full of holes and soon too will sink. I do know in business you are not guarrenteed anything. But when a system like LTS is supposed to be proven and that is the way they sell it, you do expect for the price you pay for it to at least half work. They are supposed to help Vets with the VETFRAN program. Look up vetfran programs and see what they say they will do. They left me desolate and bankrupt. Thanks for supporting our troops.

• Bankrupt-thanks for your service. Soooo sorry that Liberty would stoop so low as to abandon our VETS! Let’s keep up the good fight on bringing Liberty the publicity they deserve!!

• CZ:

  You get a gold star. I am sure your boss John Hewitt is happy with you. I am guessing, and would be willing to bet a lot of money the only experience you have is working in a company store. Anyone who comes on this site and expresses the types of views you do has no experience as a franchisee.

  As for Bankrupt, I am guessing people like Testaipira are extremely happy you got what you got. After all, you are not in the same league as he is, and clearly were not up to the task. JH only wants stars who can make gold out of straw. The rest of us should realize our inadequacies, and accept them.

  Let me suggest that you are not alone. This franchise is a ripoff, and everyone should know how bad it is. Keep posting so that others will stay far away from this POS.

• Wow Frustrated, you are attacking CZ. He is the only person to make sense on this board. Everyone else just seems to whine about their failures an not take any responsibility. Go Liberty Tax, #1 in 2020!!!!

• Testaipira:

  My comments about a franchise success rate vs. independent is based on a study done by Dr. Timoty Bates a professor at Wayne State University.

  Stugotz:

  Could you show me where the “whine” is in my post dated August 27th 2011.

  I am no longer involved with Liberty. So I have nothing to gain or lose by posting here. My only goal is to provide potential franchisees with information that is factual and can aid them in making a knowledgeable decision.

• Great site, and very helpful in understanding the issues and pitfalls. To me the failure rate of stores says everything. Even using a best case number. No one should buy into a Z that, for whatever reasons, has the failure rate that appears to be the case from the postings. There’s clearly something rotten. I don’t even need to know what it is, rather with a failure rate so high, who would sell to such incompetents, or, who would sell such a crap Z.

• Just got done listening to John Screwitt’s “Interactive Conference Call” all I can say is if you are truly interested in opening a Liberty office call all current and former franchisees before you invest your savings, you will be glad you did!!

• Mike:

  You are right on, John and Danny need to get out and let someone with knowledge of how to run a franchise business take over. I hear a toilet flushing.

• Mike and Frustrated agree!!!! What a surprise…

• If you are considering buying a Liberty Tax Service, don’t be fooled at the “Meet and Greet” they will wine you and dine you and definately BS you. Save your hard earned money if nothing else look into H&R Block they are a better run organization and have better brand recognition. Open a new H&R Block and you will write 500 paid returns for sure, open a Liberty and you will be lucky to write 150 paid returns in your second or even third year!!

• if you do 150 returns your third year, you should jump off a bridget and do everyone a favor….

• Potential Franchisees:

  Liberty charges a 14% royalty fee & a 5% advertising fee which comes to a total of 19%. There is a minimum royalty fee of $5,000 the 1st year, $ 8,000 the 2nd year and $11,000 the third year. Advertising is only charged on your actual net fees.

  If you look at JTH Holding, Inc. consolidated statements of income for 2011 you will see they had royalty and advertising fees of $46,879,000. Using this information and the 19% fee we can calculate what the total amount of tax fees that where earned by all the franchisees.

  JTH Holdings Statement of Income

  $46,879,000.00 Royalties and advertising fee
  divide by 19.00% % of royalties and advertising fee charged
  equal $246,731,578.95 total amount of net tax prep fees in 2011
  divide by $211.00 Estimated average net fee
  equal 1,169,343.98 Total number of returns prepared
  divide by 3,000 Total number of US. Stores listed
  equal 390 Averge number of Returns prepared per store
  multiply by 211.00 Multiple by Avergage net fee
  equal 82,243.86 Average income per store

  total liberty stores listed on their site was 3294 last tax season. I used 3000 to eliminate corp. stores from my calculation. While this is not an absolute it is viable given the information that we know about Liberty. It also shows that on average a mature store > 3yrs can expect to do 390-400 returns and generate $82,243.86 to 85,000.00 a year. Maybe its just a coincidence but if you divide the ear mimimum franchise fee by the 14% royalty you come up with net fees of $35,714.29 the 1st year, $57,142.86 the 2nd year and $78,571.43 the third year. If you take those net fees and divided them by an average fee of 211.00 you come up with 169 returns in the 1st year, 271 returns the 2nd year and 372 returns the 3rd year. If you look at my July 28th post you will see that the 1st and 2nd years are almost identical to what a 1st and 2nd year Jackson Hewitt store would do.

  My point here is people want to believe and Liberty is in the business of selling franchises and will promise you pie in the sky resultes. Unlike the stock market franchisers do not have to give you a prospectus. If they do choose to give you historical performance it can be based on any group of stores that they choose.

  “Buyer Beware”

• John Barilla on August 31st, 2011 5:41 pm

  if you do 150 returns your third year, you should jump off a bridge and do everyone a favor….

  Maybe Mike and Frustrated should both jump!!!!

• Attention potential Liberty Tax Franchisees: Do not buy a Liberty Tax Service, they promise you help and support but many franchisees have said that they hire Area Developers (your corporate support) that are convicted criminals! Don’t waste your money, buy into another industry or H&R Block.

• Maybe the Liberty location scout and area developers should throw themselves off a cliff too. They approve the site. They are the local support. The franchisor has to take some blame here. If these franchisees fail then the argument that Liberty will take any idiots money must have some basis. Some of u haters only seem to see just one side of the coin. Open your minds. And say something intelligent. Some of these negative comments are schoolyard childishness. Especially when you guys can’t be identified and hide behind your fake names. John barilla, stugotz etc. you guys are really very immature.

• John Barilla:

  First of all, I don’t plan on jumping off a bridge. Second, it is unfortunate that you just can’t get it through your head that there are many who have lost substantial sums of money with this organization, and are fed up. I have lost money since day 1, have attempted to sell my franchises for a substantial loss and to no avail, I continue to open stores year after year so I don’t lose more money hoping that at some point I can get rid of them. I am in a no win situation, and Liberty gives me no help whatsoever other than a termination agreement that makes me pay tens of thousands more. I have paid for consultants to come in and give me suggestions on how to make money, and none can come up with a plan. John, I realize you think you know it all, but you don’t. Yes, there are areas that work and make money, and there are areas that because of the way they are situated, fail. I did not create the territories, nor did John Hewitt. Many were created long before the population centers were established, and due to the demographics, make them non-workable territories. I own two territories, with (1) H&R block between them. No other competitors except a ton of Liberty stores, none of which are making money. I think it’s time you make an effort to understand the tax market and quit criticizing those of us who are in a no win situation.

• I had to pay liberty $15000 when I sold my territories as a transfer fee. What’s this for ? To print a new franchise agreement and change the name of a territory and create new Zeenet passwords? Downright theft! The system is designed in favor of the franchisor. $5000 per territory is daylight robbery. Explain the sense in that!??

• Frustrated and Money Pit,

  Why did you pick those territories. Do you take the any blame for selecting the bad territories? MoneyPit, did you not read the franchise agreement stating that the $5000 transfer fee? The sense is that the Franchisor is in the business of making money not just serving you. If you thought it was too much you could have not bought this franchise…. Antonio, what is your real name since you are so much more brave than me?

• Hey people just wait till folks start using iW-2.com technology and e-file with their cell phones.

  iW-2 if for real for the 100 million who live refund to refund and want to turn their iW-2 into cash automaticly.

  Stay tuned.

• The transfer fee WAS $3000 they upped it to $5000 That WASN’T in the franchise agreement.
  How long you been around. I was in when my state only had 24 office. there are now more than 80. And half of them have left the business.

  The number one new entity sold after the first year. There have been more than 10 which were simply handed back. One of the top three Top Guns filed for bankruptcy. One leading zee had five offices.. he now has two. The top zee does 2000+ office but with a net fee of under $180. One zee was a former employee of the AD offices. She was encouraged to open two offices on the “try before you buy” program. Her offices prepared no more than 250returns. needless to say she has left the company and so have the AD’s.

  But I guess you have an excuse for everything. None of us has fully read the franchise agreement’s negatives and we all expected to make a good living.

  I know of not ONE franchisee who has sold for the recommended selling price. Not even close.

  Email me at [redacted]
  I’ll tell you who I am and where my offices were and what I do now. But I WILL verify who you are. My new office does twice the average Liberty new office. Second year 800+ NO RAL’s Learn more.. email me

• FYI I’m getting some weird emails already and I only set up the email account a short time ago.
  One is so pathetically a current Liberty zee. forget i posted it.

• Moneypit: Excellant posting, it is important that we ALL continue to educate the public about Liberty Tax and to warn anyone, everywhere about how horrible an organization they are! Keep us posted on the weird emails and the content of the cowards!

• re: stugotz

  I learned a lot the first year. And if you were in my situation, your tune would be a lot different than it is. I did not do a good job of due diligence. I listened to someone whom I thought was a straight shooter. I later find out he is a JTH kool-aid drinker. That said, should I lose my house and life savings just to satisfy Liberty Tax ? Should anyone be in that position ? I suggest they have given me more wrong direction that right direction. I understand this business very well now, and realize this is not the place for me. I want out. But at what cost ? I have tried to sell these territories for half of the normal franchise fee, and no buyers. I have attempted to do a work for equity, again no takers. Why don’t you give me a workable solution rather than criticism.

• F&D-I feel your pain. Unfortunately, you will not get anything but criticism from the Liberty supporters on this website and even worse from Liberty corp in the form of Area Developers. The problem with Liberty is it is more like a sorority than I business. You really are only buying a job. You maybe a hero one day and be on the conference calls etc. the next day you mabe down in returns and then the phone calls start coming on what you “aren’t doing enough of.” It is the most “POLITICAL” organization!

  You are amongst an unfortunate list of those that were duped buy the “sales” cons! The only reprieve is to tell everyone to post here and everywhere the truth about Liberty. The fact is the word is getting out. The evidence unfortunately is in the lack of territory sales. Liberty will go out of business, as long as John calls the shots, for NO BUSINESS decisions are made without his approval/recommendations and as much as his worshippers adore him, surely they themselves like all those before them will one day realize the people posting on this board are real people that lost real money, did follow the failing scam of a system!

• Unfortunately your territories are worthless. Nobody will buy them and Liberty corporate won’t help you sell them. You need to walk away, cut your losses and be done with this nightmare organization. Do you owe Liberty any money?

  Without RALS, Liberty offices are really going to struggle. I feel bad for all of you who are dealing with this type of stress.