LIBERTY TAX SERVICE Franchise Complaints
UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
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.
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?
.
Bottom line is Liberty tax service is a bad investment. I know of no franchisee in SJ that is happy with this organization. The ones that have grown with Liberty do so by foolishly taken over failed territories. Buyer Beware
I would like to talk to some of the franchise owners in SJ and get their perspective. Burlington, Ocean, Cape May county. Do you know of them?
Also, I was at Liberty’s main website and they say they have certified preparers. Sorry, but they are not certified until they pass the IRS exam and get their EPIN. That will be a headache for Liberty since they now have to get more competent people in their stores which will cost more to study for the exam, pass, and pay for their EPIN renewal every year.
John Barilla:
What part of this do you not get. I could have easily started my own tax business and been farther ahead than buying this POS and still owing thousands of $$ to an organization that does nothing more than send me royalty bills on a monthly basis, and supplies software. The contract says you will receive help with budgets, locations and running the business. I begged for help and my A/D wouldn’t even return my phone calls the first year. He has no idea what marketing works in the area, when I submit a budget that shows I will lose money again this year, he has no suggestions on how to get enough returns to make a profit, and is insolent and denegrating. I have had my territories up for sale and they will not sell. What about an opportunity like this would you purchase.
John:
You should have been a MR REFUND using
1-800-Mr-Refund.com
Wow, just got of f the phone with a franchisee, he/she is requesting from Liberty a new Area Developer!!! Says the current one is “useless!!!!” I say maybe a CONVICTED FELON?????
F&D, what general part of the country are you?
I’m truly amazed that this website allows the useless drivel to drown out legitimate discussion. Liberty did make a mistake allowing a few adolescent people to buy a franchise. The behavior on this board MUST have shown itself among these people in the sales process. Truly amazing.
Amazed;
Please show me the intelligent discussion that is being drowned out by drivel.
Mike:
I am hoping one of our fine Liberty franchisees will get on this forum and tell us they actually have a good A/D. I have yet to meet one that wasn’t arrogant, dishonest, self-absorbed, and actually understands business 101.
Amazed:
If you read most of the post on here you will see that people on here are willing to provide relevant information based on there own experiences with Liberty. I agree that there is a percentage of drivel on here but most of that is instigated by people who are pro liberty. Their whole reason for being on here is to deflect from the real issue isIs Liberty Tax a good franchise to buy? From my experience it isn’t. The number one reason is there is “NO REAL BRAND RECOGNITION”. Number two which is part of number one is that the Franchisor “HAS NO NATIONAL ADVERTISING CAMPAIGN”. There are other reasons, such as a system in it’s present format which works well only in highly populated, low income areas where they can benefit by collecting high fees through bank products. Software that isn’t much better then a box product you can buy yourself. etc
To any potential franchisee:
Most individuals that post on this board have their own reasons for posting. I post here so that you potential franchisees reading this board thinking about buying a Liberty Tax office will be dissuaded and invest in something else. As you see from reading the posts, this DRIVES the Liberty supporters CRAZY!!! I LOVE IT, LOVE IT LOVE IT!!!!!, Like Chris Mathews’ legg.!!
Remember, John I Screwitt and Danny Sure Blewitt want to have everyone “like” Liberty on fb, well I say thank God for the developers of this site, let’s get the word out as well about this sight and take Liberty Tax to the most comments on UNHAPPYFRANCHISEE.COM!!! WOOT, WOOT!!
Liberty never had a business model, and if they did, it’s broken. RAL’s are history. Tax preparation of the future will have professional, trained, licensed tax preparers required by the IRS. Not $8.00 per hour part-time employees with a week of tax school training that LT attracts preparing tax returns.
Liberty is not
1-800-Mr-Refund.com
MR REFUND will blow em away.
Bill:
Here is what needs to be said. Liberty has no connectio to the customer.
The tax customer owes IRS and does not pay. The refund customer is looking to claim a fraudulent refund.
With online refund fraud w-2 holders do not need a Hewitt or the new Hewitt; Liberty
My bet MR REFUND. Tells the customer what they will get using a teledotcom
1-800-Mr-Refund.com.
Liberty is about minimum fees to Liberty which is a lose win for the zees. If you did 1000 returns ok. 300 is break even.
Just got a email from Liberty Tax stating that they are waiving the $40k Franchise Fee. Now I realize there is possibly a catch to this. Things must be going poorly for this company to make a offer like this. I personally have no interest in this company for many reasons, but I would love to hear what you guys think of this.
Tim-they seem to be getting very desperate. it seems (though I could be wrong) that some franchisees they have been “suggested” to up the numbers on their budgets to look good for the IPO, cant’ verify just a solid rumor.
IPO:
Yesterday there was a good article in Morningstar about HR Block and the tax industry in general and the direction it is headed. Then today HR Block announced it would discontinue it’s ExpressTax Brand, which “focused on early season filers who tended to opt for financial products like tax refunds”. The industry is evolving, the move from brick & mortar to the internet, the IRS rules regarding tax preparers, the move by the IRS to speed up refunds and in some political circles the desire to decrease preparer fees all puts downward pressure on the share values of an HR Block. How will this effect JTH IPO?
I wish I could talk about all of the issues a franchisee faces trying to deal with this organization, but for obvious reasons, best not. Needless to say, you will deal with an organization that doesn’t understand business 101, you will deal with people who are clearly ill-equipped, A/D’s who in any other organization would have been fired, and a President who is pissed due to his being fired by Jackson Hewitt, and is using his franchisee’s money to finance his grudge match. Like Mike says, stay away, stay away, stay away. Last year 50% of the 1st year franchisees went out of business. If that doesn’t make you question investing in this organization, I am not sure what will.
There will always be a market for tax preparers. The early season market will shrink because the IRS has to get a handle on the fraudulent returns; and the best way to do that is to ‘slow down’ the refunds on suspect returns. The next batch of changes to the tax credits will reduce the refunds. That will also shrink the early season market.
The Express brand was never successful. I would think because they could’nt use the H&R Block logos. I talked to them about a franchise and it was’nt very attractive.
There was another article about HR Block expanding by buying up other tax practices.
If the IPO stock price is right, people will buy the stock. After all buying and selling stock is a gamble like everything else.
I would bet on tax preparers being able to stay in business if skills are improved and cost are kept down.
Block sees the writing on the wall with EIC clients, unfortunately for many Liberty franchisees that have leases in high RAL areas will be in big trouble. Liberty as a whole will fail as long as the current management is in place. Stay away from this POS it will bankrupt you!!!
So who has a better way to do 100 million REFUND$?
Mike,
Are you drunk?
Hey TESTAICLEPIRATE, you are back! I missed you, Remember anyone that wants to buy a franchise from Liberty will have a stalker like this Liberty Area Developer who is probably a convicted felon like some others that Liberty has had. Don’t buy into this organization, you will lose your money!! Love this site, pass it on to as many Liberty franchisees as possible.
Hey Mike,
Unfortunately, i had to get away from reading the whining from you/Frustrated (same person). Just wondering, other than you AD possibly having a DWI or something what was wrong with him and how did he “cause” you to lose all your money and hopefully filing bankruptcy soon so you can get out of our lives?
“other than you AD” Do you run your office better than you write? A DWI, is that what you have?
testaipira:
According to my simple mind for math, John has only added 371 new territories. Of course both Mike and I know that at least half of them will be on this site next year. Let me see, John can’t even give them away. Let me suggest why. Because this is a REALLY BAD INVESTMENT. I have had my territories for sale for three years. No buyers. I have lost money three years in a row. AGAIN, REALLY BAD INVESTMENT. Liberty refuses to help. AGAIN, REALLY BAD INVESTMENT. According to the contract, Liberty is supposed to give me help with locations and budgets. Good luck trying to get it. AGAIN, REALLY BAD INVESTMENT. Liberty takes 5% of my revenues for Marketing, but over 50% of it goes for internal costs, never touching a customer. AGAIN, REALLY BAD INVESTMENT. Liberty takes 14% of my revenue of which 7% goes to my worthless A/D, so what I am paying is 14% for $1200 software and a really bad A/D. AGAIN, REALLY BAD INVESTMENT. Maybe you can shed some light on why someone would purchase this REALLY BAD INVESTMENT.
F&D, you crack me up!! You are so right, this moron (who probably owes John a boatload, but says to himself this is the year) doesn’t really have a clue. When Liberty goes public I will be all over that board on YAHOO. Have the Liberty morons said anything in their conference calls of significance?
Most importantly, to individuals that are thinking about buying a Liberty franchise, this board should scare your money all they way back to the bank!
MR REFUND will run the table on John Hewitt.
Refunds run the show.
Nobody pays tax.
If you are a new or potentially new Liberty Tax Franchisee, please call and visit any Liberty Tax franchise in your area. Talk to the franchisee and ask them if it was a great decision. Also, look at the office and ask yourself if you would have someone at that Liberty Tax office prepare your return, the answer will most likely be NO, therefore, stay away from this investment!! You will likely regret it!
For my DD I would like to hear from the franchise owners who lease stores in southern and central NJ to see how they are doing and what their past results have been.
Sean,
Go to Liberty’s website, store locator and put in the desired zipcode. All the offices will come up with their phone numbers. Call them all, so you get an accurate depiction.
Sean:
There are no current franchises in Cape May County. In Atlantic County one person
owns the Egg Harbor Twp and Mays Landing Locations and there is another in Williamstown. e-mail me at [redacted] and I can give you names of current and past franchisees
Sean & bill: We don’t allow posting of personal contact info on the site, including email addresses.
If you would like to exchange information, you both need to email your request to unhappyfranchisee[at]gmail.com. Thanks, Admin
We are considering offering an inexpensive ad service for franchisees interested in selling their locations. The ads would appear on this site and also several other sites.
While it may seem odd to advertise on a site with so many negative comments, there is a market for franchise resales perceived as priced to sell, and we generate a lot of traffic from those interested in tax franchises. We are interested in helping those who want out to move on.
If you are interested in advertising or willing to provide feedback on the idea, please email unhappyfranchisee[at]gmail.com.
Thanks.
Send the email to Frustrated and MIke-tarded….
John,
Pull your panties out, I guess you are not capable of having mature dialogue about Liberty Tax.
All potential franchisees, if you are considering buying a Liberty franchise consider what type of colleagues you will be working with before you invest your money into this failed organization. As a very SUCCESSFUL (giggle, giggle) franchisee John Barilla said invest your hard earned money keep your day job and in 5 years you MAY make a profit. Good luck John, we’ll see you on the other side next year!
Mike-tard,
If you were promised a get-rich quick scam and actually believed it and are angry now, whose fault is that? Why don’t you grow up and take responsibility for your actions! I told you you should make a profit in year 3. If you expected to make a profit in year one, I really think you were just naive.
To all potential franchisees:
“Since John I Screwitt, (and his number one fan/lover John Barilla) has obviously been brainwashed, I will repeat again for your (my) enjoyment. From above:
“All potential franchisees, if you are considering buying a Liberty franchise consider what type of colleagues you will be working with before you invest your money into this failed organization. As a very SUCCESSFUL (giggle, giggle) franchisee John Barilla said invest your hard earned money keep your day job and in 5 years you MAY make a profit. Good luck John, we’ll see you on the other side next year!”
Don’t buy into their sales/screw tactics! If this franchisee claims to be one of the better ones following the Screwitt system, you maybe just as lucky to have made such a huge profit as this dreamer in your 4th season (giggle, giggle)!! John-don’t quit your day job (giggle, giggle)!!
For anyone considering buying a Libert Tax Service franchise you need to understand that the company does not believe in paid advertising. This means they don’t believe in paying for it so they provide no television, radio or print advertising. They do charge a 5% advertising fee which is split between your area developer and the corporation. You will receive some of this money back in the form of print media i.e. coupons etc.
Their argument is guerilla marketing is the best type fo marketing but the reality is the company doesn’t want to spend the money on marketing it’s tax business. However, one year I did see a commercial on cspan from Liberty marketing its franchises.
If you have the tax knowledge you don’t need to spend $40,000 investing with Liberty. Invest in yourself. You are your businesses best asset. Why take all the risk and bare all the cost and pay out 19% for a name with little brand recognition. You couldn’t find 3 out of 10 people who would say “Liberty Tax service” if asked to name a tax preparation service.
Please read all the information on this site. Don’t get distracted by John Barilla and his negative comments about the other posters. His whole purpose on this board is to discredit others but he offers no facts.
Bill,
Very well put, Barilla offers zero facts. Those that are interested on opening a new Liberty Tax office should read all of the postings and make their own decision. The Liberty supporters NEVER give any substantative reason for buying a Liberty office, buyer BEWARE!
Let me add to Bill’s comments. Liberty does well in low income, poor areas where people walk into a tax preparation company and when they are told their refund will be $5,000 plus, they really don’t care what they pay to get their taxes done. So the preparer socks them $300+ for a return that is takes less than 1/2 hour to do. In years past, the tax preparer could also advance them most or all of the refund within 24 hours. That made these places gold mines. That has changed. The Refund Anticipation loans are no longer available to but a few who have good credit. That is the exception. So take away that business and you are forced to make money the old fashion way, earn it. The problem is, no one but the low income know who you are, so you will spend mucho $$$$ to find customers. Add to that the cost of retail property for 12 months which averages $1800+ per month, and you will be lucky to net $5,000 per year from this franchise. Anyone is a fool to invest $40K plus 19% of their revenue when they can purchase software for $1200, and spend $12,000 per year for advertising and probably net $20-30K on their own and have no debt. Unless you are so intent on worshiping John Hewitt once a year at his annual ego bash, I would stay away from this joke of a franchise.
Update. I sent a letter to corporate stating that i would not open a store this upcoming year, season two, due to extensive losses my first year and dont see the future any brighter. I ended up with 127 returns and 64 were free. I followed the top ten, and spent money out my ass, but this is a losing model. well yesterday i received a response and they are suing me, go figure. what should i do know. I dont have any money to continue. I paid cash for everything, so i dont owe corporate anything but, i just dont see the point of sinking $25K more into the business to lose more money. Any guidance.
JP, sorry to hear about your situation. Have you talked to any surrounding franchisees? Maybe you could pay the $5000 transfer fee and dump your territory. Outside of that your options are pretty limited, Liberty will probably still want the minimum royalty. DOCUMENT everything don’t sign the MUTUAL TERMINATION AGREEMENT. It is not mutual. Keep us posted, tell as many franchisees as possible about your situation.
Let this be an example of the “support” Liberty provides. To any potential franchisee, don’t buy a Liberty franchise even if they wave the $40,000 franchise fee!!
Why are you being sued?
JP,
could you be Mike-tard logged in as a different name???
As a former franchisee, I can say that just about everything about this company is something to stay away from. They view the franchisees as victims to be milked. In my experience they were unethical, dishonest, greedy, abusive, and just plain scumbags.
New name, same person again…..
Jonny,
I feel sorry for you. You are so desperate to promote John Hewitt that you probably spend more time here than you are on your tax school and your FOURTH year NEGATIVE profit office. Guaranteed you are not on ANY of the top 100 anything lists, you promote Liberty here because you only hope we are wrong! Sorry, see you on the other side, chuckle, chuckle!
This website was created by a guy who allows us to contribute to the individuals who are considering purchasing a franchise of any description. Business people like myself who have had success with liberty appearing in most top 100 and top new offices am still extremely disappointed with the promise versus the real life. This is why I post. I now am involved in a new tax venture which is making more money than I ever earned with liberty where my best year achieved little more than $85000 from two offices. I worked 80 hours a week and now work 50 hour tax season weeks earning more and no franchise fee. I would not have been able to do what I do now without liberty’s assistance no matter how pathetically minor it was. many here have prior business experience and the liberty model looks good on paper but incidentals and required additional marketing costs etc. Make the profit outlook bleak. No matter the name of the poster here if the information is useful then the potential franchisee can make a better informed decision. Comments from barilla for Ll we know is testapuira and stugotz etc. Appear to be written by an uneducated man. The grammar is similar and use of vocabulary is llimited so ignore him. His comments only add to the argument that there are many liberty zees who had there money taken, barely survive and must back their own decisions even while staring bankruptcy in the face. May God have mercy on John Hewitt soul and the poor people who spent their life savings in the hope of building a better retirement and are now left with the prospect of working for minimum wage at the Home Depot in their twilight years!
Moneypit,
Just curious what your new venture is? Are you doing another tax franchise or just have your own office? Also being that you have experience with Liberty do you know what is going on with Pittsburgh? The AD seems to own all of the Franchises here and it seems like he has to buy the ones that fail and then just sells them to new franchisees. Just seems a little off here.
To prospective franchisees: If you have been sent an email or if Liberty is telling you that they will wave the franchise fee don’t buy a Liberty tax office for it is still a bad investment!!! Do your own research and call every office in a hundred mile radius of your prospect. you will most likely conclude that most Liberty offices are hanging by a financial thread!
Mike,
Why do you keep saying they are waving the franchise fee. You have to option to pay 25% royalties instead of 14% for five years instead of paying $40k. That means you will pay way more unless you are a loser like you whose office does $50k in year 5.