LIBERTY TAX SERVICE Franchise Complaints

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

• Testicle pirate,

  So you agree that they use deceptive advertising? Glad you prove the point that this company is a BAD INVESTMENT!!

• I agree that trading the $40k upfront for 25% royalties is a bad decision. HR block charges 30% royalties. Try buying a new HR block territory? Go ahead.

• Now is the time to buy a Liberty Franchise if you want to be honest about it. I know there is a ton of bitter people on here that will never say Liberty is a good investment but the tax industry is one of the most exciting industries out there and Liberty is in a perfect posisiton to either take over the number one or at least become a household name.

• I am a current franchisee who was in the top 20% in the country my first year. As a result I was encouraged by my useless A/D to expand and buy a second territory. My second territory underperformed and I am broke so Liberty has told me I must put both offices up for sale or they won’t help financially. They play into your idea of the American dream and put the handful of successful franchisees in their Thursday night socials to perspective buyers. They are in the business of selling franchises. They don’t have a vested interest in the franchisees success because they get paid no matter success or failure. The bottom line is do your research. If you need to borrow A PENNY from corporate than you no longer own the business, they do. You need a helluva lot more cash in the bank to get through the off season and their Cash in a Flash promotions, that come out of your pocket not theirs. You get very little, if any support from corporate. I have had legitimate concerns about how I can save my business and hopefully not have to file for bankruptcy but none of my questions have been answered or my calls returned. That’s what kind of support you get from this organization. Period.

• It is actually a good deal if you can figure out how to bring in customers. HR Block has local marketing teams and national advertising. But you can’t buy a Block franchise now. Have to buy an existing store. Not many for sell.

  Not paying the $40k upfront should give you more money to run store.

  Question for admin:

  Do you think you will be running a list of stores for sell? Maybe providing access to that list with a link to a separate site.

  Biggest problem with selling stores is the inflated prices. Multipliers on sales don’t make sense for the buyer.

• i think a 1.2 multiple of sales should only apply if the revenues are above $250k or so. A store with $100k or less that is been open for over 5 years is not worth much. A mature store with $150-200k in sales, i would say a multiple of .9 or so would be ok. I personally wont not pay much more.

• Guest,

  Not paying the $40k upront might give someone more money upfront to run an office. I would generally agree, however when it is promoted like a coupon, to entice a sale at a lower price essentially to capture a larger market share in this case the less affluent. It probably means that this new purchaser doesn’t have the $40k and thus will not have additional capital for investment. Thus they will fail– because the price is reduced doesn’t make it a better investment only a larger gamble.

• Mike,

  I think you discovered America while in a bucket of water.

• With the change in IRS requirements the ability to enter the tax preparation business has gotten little harder. If your a potential franchisee you need to know that in order to file electronically you will be required to obtain an EFIN number from the IRS. If your not an enrolled agent, attorney or CPA you will need to submit your fingerprints and go through a background check. According to the IRS website this can take up to 45 days. All tax preparers in your office are required to have a PTIN # issued by the IRS and pass a competency test. They also may need to be fingerprinted and pass a background check. The projected cost for each tax preparer is estimated by the IRS to be between $250 to $275.

  If your a potential Liberty Franchisee and are not an EA or CPA this is important information and I hope the Liberty Sales person explained all this to you. Corp. will leave it up to you and your AD to get everything in place.

  The reason I bring this up is Liberty use to have classes for new franchises right up to the week before Thanksgiving. Then the poor franchises struggle to get everything in place to open. I never understood why Liberty would do this or why they wouldn’t have a better vetting process for new franchisees but once I closed I realized it has to do with selling franchises not with the success of the franchisees.

• Bill,

  You are right on the money. Liberty will boast how well someone can/will do even if they don’t get open until mid January! Also, Liberty will once again have the franchisee incurr all the costs of the new IRS procedures. In addition, if there are franchisees that are nearly out of the system, start sending all of your deadbeat non-paying clients to collections. Liberty (of course would rather you prepare these returns for free) start getting your money now. Offer a significant reduction in fees to be paid in cash! Don’t follow Liberty’s procedures when it comes to these matters! Go for the money just like Liberty does to you!

• Mike,

  Great suggestions! Whatever, you always prove what a moron you are.

• Guys: Please stop the name-calling, insult slinging and ad hominem attacks.

  Attack the argument, not the arguer. People are here to learn from you about these serious issues. Please share your opinions and insights, and don’t undermine your credibility with petty sniping (as fun as it may be). Thanks.

  FYI this thread is heading for 1000 comments. Only the thread on Curves reached 1000 comments so far. Thanks to all contributors and participants for some really good content on both sides of the issue. Please keep the posting substantive comments, information, ideas and opinions.

  Things are ever-changing in the tax prep industry, and you are helping people make important, life-changing decisions.

  Thanks again.

• Admin: Agreed,

  I believe that we should only post serious comentary about why Liberty Franchisees are Unhappy and why people considering investing in this organization should reconsider.

• If you are planning on taking Liberty”s tax class and have been enticed by thier ads on craigslist saying you can make up to $30-$40 dollars per hour preparing returns, don’t be mislead. You probably won’t make 1/3 of that !! Stay away from this organization!! AND DON’T BUY A FRANCHISE EVEN IF THEY OFFER YOU NO MONEY DOWN!! *read the fine print of 30% royalties!

• Liberty Tax may go public and if they do and you own one share you get to go to the annual shareholders meeting!! I can’t wait, packin’ my bags!

• The U.S. Small Business Administration has seen lots of small businesses come and, unfortunately, go. According to the SBA, over 50% of small businesses fail in the first five years. Why? What goes wrong?
  In his book Small Business Management, Michael Ames gives the following reasons for small business failure:

  1. Lack of experience

  2. Insufficient capital (money)

• So many of the comments by the people that feel cheated on here are incongruous. I really don’t understand how you think liberty is making money on about $56,000,000 loaned out to their z’s if you think most of them will have to file bankruptcy. This money is effectively a loss if this is a fact. If the heads of this company are so terribly greedy then they are not terribly bright

  Oh yeah, the third reason that 50% of small businesses fail in their first year is location. A lot of this stuff is not rocket science. You obviously have internet, try using google the next time you have a business idea.

• John Hatfield,

  Excellant analysis. One thing that Liberty sells is that one should open an office as close to Block or JH as possible. John Hewitt likens this to BK and McD’s. If one has kids it is obvious that this business model is a failure, filing taxes is only completed once a year and is not the same as a fast food franchise. DON’T BUY THIS Propoganda!!!!, call all your Liberty offices within a 25 mile radius of your house and see what you get.

• I have owned 1 Liberty Tax for 6 tax seasons. I am still surviving and these are some of the reasons why…

  1) I have 21 years tax experience. I am not a CPA but this is my chosen profession. If you buy a Liberty Tax or any other tax office, be prepared to learn the tax law and how to do taxes. You will not survive if you are counting on someone else to run your office. Because the tax business is seasonal, if you do find good people and train them….they are likely to move on to a full time job within a year or two or three. The ideal employee is someone who wants to work some….but does not NEED to work. …..Even those kind of people will eventually move on.

  2) Reasonable Rent and Control Employee Costs. Do as much work as you can yourself. I wasted so much money in the beginning training people who did not stay with me. I would have been a lot better off financially to do the work myself. Also, do stay within the pay schedule that Liberty suggests. I had the big idea if I paid my employees more…they would stay year to year… Not so!

  3) Do use their Marketing Plans…Guerilla Marketing does work ….especially the wavers…but again…watch employee costs.

  4) This business is how I provide for my family…so there are some things that they require…that I just cannot do and still make money. So, some of their plans work and some do not. You have to do what’s right for you and your area.

  5) Do something else on the off season. I offer Payroll and Bookkeeping to my business clients. Liberty does not get a cut of this. This is my bread and butter….helps to pay the off season expenses. It is essential that you prepay your off season expenses or put back money for the off season. This will kill your business if you don’t.

  My total net fees collected have gone down every year since 2008…I think mostly due to the economy and I don’t give tax returns away anymore…in other words…I charge for the work I do. However, my net income has gone up every year since…except this year it is a little down because I had a baby during tax season and was not able to work at the office as much.

  There are good things about the Liberty Plan….but some of it you have to take with a grain on salt. I feel really sad for all the people who have lost all they had buying a Liberty. Everything I have is wrapped up in my business too. But really for only working 3 and 1/2 months out of the year and part time on the off season….The income is really not too bad. And even though you do have to answer to Corporate….It’s nice being your own boss!! Also their software has really improved…it was really rough in the beginning. But, it is alot better now! Also, take advantage of their tech support and tax support! That’s why they make the big bucks!!

• Mardawn,

  Would totally agree with you, what you posted is reality. I would bet that to your clients you ARE Liberty, take you away and your office will fold. Unfortunately, most people that buy into Liberty are thinking it is going to be like buying a McDonalds. Open the office get a waver, have a tax class, etc. and the money will come rolling in. The tax industry is very complex, if you do not know taxes or are lucky to hire a tax professional chances are your office will fail. Unfortunately and obviously, Liberty doesn’t disclose this information because they wouldn’t be able to sell any offices. Sounds like you would have made it just as well if it was “Mardawn’s Tax and Bookkeeping Co.” Thanks for the honest posting.

• Wow, Mike actually had a posting where he is not blaming someone else or attacking someone that has not failed….

• Testaipira,

  You can’t post anything positive about Liberty Tax nor the tax industry in general? It seems you are more worried about my postings rather than give valid legitimate reasons why someone would purchase a Liberty office. Obviously this proves there aren’t ANY!!

• Mike:

  There are a lot of advantages to owning a Liberty Tax franchise. You will lose your savings, your home, your retirement, and probably your family. Just think how much easier your life will be.

• F&D,

  What was I thinking, who needs money, a home, retirement, a family (those dang kids never pick up after themselves anyway)? Wow, I wonder how awesome life will be for all those new franchisees that are considering buy a Liberty!!

  IF YOU ARE CONSIDERING : DON’T DO IT, LIBERTY IS A BAD INVESTMENT!!!

• Mike and F&D agree…I would hope so since you guys are one person….

  Positives? Many positives for both Liberty Tax and tax industry. Liberty Tax is up and coming, has name recognition, continues to grow and is going public and is a low cost high rewards investment. You can work 3 months out of the year and make enough money for the rest of the year. Tax industry has been there and will continue to be there forever. 61% of return are prepared by paid tax preparers. That number has not changed in the last 10 years with Turbo tax and other software being out there. 40% were always doing their own returns. Instead of using pen and paper they are using computers.

• The tax service industry will be shaken to the core if Cain or Perry’s flat tax plan take root.

  A 9-9-9 or a 20% flat tax will annihilate the tax prep business.
  They will not care if 300,000+ seasonal preparers lose their jobs.

  Perry was holding a postcard at his last speech:

  http://blog.chron.com/rickperry/2011/10/rick-perry-wants-you-to-pay-your-taxes-on-a-postcard-if-you-want-to/

  The claim that 61% of all returns are done with a paid preparer was what John Hewitt stated 5 years ago.

  In fact, back in 2009 (tax year 2008) by mid March, the IRS numbers indicated self prepared returns rose from 15 million to over 18 million. This explained a drop in our numbers as with virtually all of the other Liberty offices in my region.
  Approximately 20%. Could any business accept a drop of 20% in returns! My break even is 400 returns per office. (400 x $200 less franchisee fee = ~$65,000 less preparer payroll $25,000, wavers $8,000, rent $22,000, marketing personnel/direct mail/coupons/new costumes $5000, utilities $4000, office supplies $1,000). More than half of the Liberty network prepares less than 400 returns! Imagine a 20%+ drop!

  If you knew this you would not be spouting the same old crap.

  IF a new flat tax was introduced, the tax preparation industry as we know it would be all but finished unless we charge double to offset the 50% fall off in clients for half the work.

• Your numbers for paid preparer tax returns for those years do not match the irs data i see on the irs website

• John,

  Those were early season numbers…. Here’s the rest

  And i was wrong.. not 20% (though i said approximately) actually 19.3%

  http://www.irs.gov/newsroom/article/0,,id=207293,00.html

  IR-2009-46, April 30, 2009

  WASHINGTON — The Internal Revenue Service announced today a record 90 million tax returns were filed electronically this year, led by a big increase in people using home computers.

  For the first time, more than 30 million individual income tax returns were filed from home computers. By April 24, the IRS had accepted 31.2 million returns filed from home computers, up 19.3 percent from the same time last year.
  ……

• E-filing Receipts:

  Tax Professionals 59,444,000 59,439,000 -0.01%

  And though you might add that the number of preparer returns only dropped 0.01%..

  Consider this:

  The IRS has issued almost 700,000 PTINs as of March 20, 2011. About 40 percent of these PTIN recipients did not previously have a PTIN (GAO-11-336 (PDF), page 6).
  http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2011/Tax/Continuing_Sequels.jsp

  That’s a lot more preparers/offices… 40%

• that information is from april 30 2009, they would not have a completely accurate count of all returns processed for the tax year 2008. if you look at a current report of the data from tax year 2008 tax year you will see that the number of returns processed by paid preparers was close to the same as the previous year.

• Money Pit,

  Are you forgetting you are not even required to use a PTIN before 2011. A lot of preparers used their social. I didin’t even know what a PTIN was until 2010 and I have been a CPA since 1997…. Stop making stuff up to make yourself feel better….

  They have been talking about flat taxes since 1968. I hope the fear of it happening keeps a lot of people from getting in the business…. It will never ever pass….

• Don’t buy a LIBERTY TAX Franchise!! The paid Tax industry is in serious decline, if you have kids you know how computer savy they are, only the complicated returns will be done by a Tax professional! These complicated returns are usually for higher income sophisticated people that would RARELY if EVER enter a Liberty office!

  Would you enter a Liberty office because some teenager or worse (some degenerate, welfare recipient) wearing a costume standing on a street corner holding a sign? Obviously NOT!! NEITHER WILL YOUR CLIENTS!! This is Liberty’s marketing strategy- DON”T BE FOOLED and DON”T BUY!!

• “Would you enter a Liberty office because some teenager or worse (some degenerate, welfare recipient) wearing a costume standing on a street corner holding a sign? Obviously NOT!! NEITHER WILL YOUR CLIENTS!! This is Liberty’s marketing strategy- DON”T BE FOOLED and DON”T BUY!!”

  I may not but 60% of my customers did…. Your last post proves your ignorance!!!!

• Saying that the Tax Industry is in serious decline just proves that there are certain people just wanting to “even” in there mind and cause as much chaos as they possibly can. Tax Industry is heading into one of its most prosperous times and the outlook has never looked brighter.

• Go to the unhappyfranchisee Jackson Hewitt site.
  http://www.unhappyfranchisee.com/jackson-hewitt-franchise-complaints/

  Control F and type Stugotz, Testaipira and Barilla.

  Amazing when you note how they sound the same and constantly agree with every blurb they post one after another after another….

  And meanwhile promoting the alternative tax company in Liberty…. hmmm read enough posts and it sounds like AD marketing eg.

  John Barilla on January 5th, 2011 11:16 pm

  Herb,

  How many offices has Jackson Hewitt closed this year? Do you think that is a good or bad thing? Do you believe Jackson Hewitt is losing customers to Do It Yourself software and Free Preparation or to Liberty Tax and independents

  John Barilla on March 25th, 2011 2:14 pm

  Liberty Tax passes Jackson Hewitt!!!

  http://www.accountingtoday.com/photo_gallery/2_3/photo/Top-Tax-Firms-57751-1.html?ET=webcpa:e1361:166861a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_032511

  Testaipira on March 25th, 2011 9:41 pm

  Liberty Tax is now #2 and Jackson Hewitt #3? This has to be a bad sign for Jackson Hewitt. How is Liberty doing this?

  stugotz on March 28th, 2011 11:50 am

  Sounds like this is the end of Jackson Hewitt!!! I feel bad for the franchisees that are going to lose everything! Sad, very sad!

  John Barilla on March 29th, 2011 4:06 pm

  I am excited…. All these years JH franchisee have made fun of Liberty Tax and its marketing strategies!!! Who is laughing now? #2 Babyyyyyy…. soon to be #1…..

  John Barilla on April 17th, 2011 7:30 pm

  13 more days until Bankrupcty!!!! Rumor has it a lot of Jackson Hewitt locations will either become Liberty Tax or close down…… Frustrated will then still be whining on how he lost everything and want to blame someone else… You should follow Jackson Hewitt and file bankruptcy yourself….

  John Barilla on April 22nd, 2011 7:58 am

  I think its a no brainer to go LIberty. Yes you pay 14% royalties but you will easily be charging 14% more per return then a Mom & Pop would be able to. Company is growing fast and the name brand recognition will only improve going forward. Just my opinion.

• Sorry the wording should of said “Get Even” I left the “Get” out.

• To anyone looking to get into the tax business via buying a franchise;

  Go into your yellow pages, and count how many competitors you have. The retail tax industry, better known as H&R Block, is the only one with name recognition. Jackson Hewitt is hanging on, but for the most part, without RAL’s, you will be competing with everyone on those anywhere from 5-10 pages. Liberty Tax is unknown to 90+% of the people on the street. You will be competing with the Mom and Pop’s who also service their customers very well, as well as the money stores who have gotten into the business, and a ton of independent preparers who have much lower overhead, and have been in business for many years. John Hewitt is cashing out which should speak volumes. The people on this forum are telling the truth when they say THIS IS A BAD INVESTMENT. Run away as fast as you can.

• DON’T BUY A LIBERTY TAX!! IT IS A BAD INVESTMENT. Just look how ridiculous the coments are from the Liberty supporters. They NEVER give ANY real reason for buying a Liberty they are either too ignorant or so far in debt that they will say anything to prop up this failing organization!!

  Furthermore if you are an investor and looking into purchasing some shares upon their IPO, these comments from their supporters should make you very nervous!

• Potential franchisees – Liberty Tax Services does not provide any television or radio advertising. Has little to no brand recognition in most areas. Provides you with only minimum training that isn’t sufficient enough for non-tax professionals to pass any IRS testing. Does not provide you with assistance in obtaining an EFIN or PTIN. Site selection is basically a local Area Developer trying to place your location next to an HR Block or Jackson Hewitt. Presents you with a budget based on 600 returns (everyone gets the same budget) which will basically have you overstaffed most of the year. An office set-up plan which consist of receptionist area, tax prep area and a processing area. Processing area consist of a printer, processing computer, supplies and 4 boxes: 1 for waiting to be processed, one for waiting to be picked up, one for returns waiting for checks and one for IRS rejected returns. Boxes not included in franchise fee. Provide you with recommendations on books you should read i.e. querilla marketing. You will of course be obligated to spend $1,000 to $1,200 on a marketing kit which will include the Lady Liberty Costume. Site selection will be based on 5 min proximity to Block or Jackson Hewitt. You should be open starting aroung 1/13 and stay open to 4/15. Liberty requires the office to be open from 9am to 9pm M-F and 9-5 Saturday. Franchise fee does provide you with Liberty’s software product which is not developed in-house but by CCH.

  You now have basically “The Liberty Tax System” just add your tax knowledge, your own location and tax software and you can kiss having to pay a $40,000 franchise fee, the 14% royalty fee and the 5% marketing fee goodbye.

  Best of luck!

• Bill,

  You forgot on thing, you get to listen to the daily conference calls from all of the marketing geniuses that have never ran a tax office in their lives. Oh, and their Area Developers, if you get one they are new every year!

  Potential franchisees: DON”T BUY A LIBERTY TAX OFFICE, IT’S A BAD BAD INVESTMENT!! NEARLY 50% OF THE OFFICES CLOSE IN YEAR TWO!!

• DON’T BUY A LIBERTY TAX OFFICE, IT IS A BAD INVESTMENT!! It ‘s such a pathetic organization that the Liberty Tax Area Developers that post on this Liberty site are even now posting on other companies boards about current and former franchisees!!! These continous examples of unprofessionalism should demonstrate to any POTENTIAL and even CURRENT FRANCHISEE that Liberty Tax is a BAD, BAD investment!!

• Let’s keep all the Liberty comments under the Liberty section and get this POS to 1000 comments.!!

• Got another solicitation from Liberty today, they must really be desperate. THEY ARE TRYING TO FOOL YOU INTO THE ZERO FREANCHISE FEE SCAM!! YOUR ROYLTIES WILL BE INSURMOUNTABLE!! DON’T BUY A LIBERTY TAX FRANCHISE IT IS A BAD INVESTMENT READ THE FINE PRINT!! Call all offices around you (that is assuming all the phone numbers haven’t been disconnected), and find out for yourselves!

• Here’s a copy of the Liberty Tax Zero Franchise Fee email solicitation:
  http://www.unhappyfranchisee.com/liberty-tax-services-zero-franchise-fee-offer/

• DON’T BUY A LIBERTY TAX FRANCHISE!! IT IS A BAD INVESTMENT!! Almost half of all new offices close!!

• Anyone receiving this should ask what’s the catch? There is no mention of royalties but in the old agreement there was a minimum royalty fee of $5,000 1st year, $8,000 2nd year and $11,000 the third year. I imagine that under this agreement the royalty percentage is higher and so are the minimum royalty fees. For any one consider a Liberty tax franchise you need to beware most franchisees are struggling and you can see proof of this by looking at their financial statements. On Their cash flow statement you will see they had to issue $56,400,000 in operating loans to franchisees. If you divide that by 3500 stores that comes out to $16,114.29 each. Please remember that Liberty Tax Services does not do any national television advertising and outside of the tax preparation community it has very little brand recognition. Just ask 10 of your friends to name a tax prep. business and you will be luck to here Liberty mentioned.

• Bill,

  Here is the catch and it is quite the catch for Liberty!!:

  25% ROYALTY , PLUS 5% Additional Royalties for the exclusive marketing promotions (free costumes and a strobe light).

  FOR a Grand TAKING of 30% of every dollar that comes through the door or atleast the minimum that you must pay Liberty is:

  1st year $6000
  2nd 9000
  3rd 12000

  Anyone that is considering buying a new office under these termsTHINK TWICE and realize that you will have to have a profit margin of atleast 30% to break even. If you buy a Liberty you only buy a job that doesn’t PAY YOU ANYTHING, YOU GET TO WORK FOR FREE!!

• I was considering on becoming a franchisee but after reading your comments, i am somewhat turn-off on this one. I thought this is something that will change our lives for the better. But it could turn to the other way. I have to say something tho. Someone is offering me to be a franchisee but without paying the franchise fees. But the set up cost which includes their software, computers, training and support would cost about $10,000. But you pay 25% royalty for 5 years, then after that 14%. No mention of marketing fees, etc. What say you?
  Thanks.

• IF YOU ARE CONSIDERING BUYING A LIBERTY TAX FRAINCHISE, DON’T DO IT! More than likely you will lose money. they will wine you and dine you until they —-you!!

• 1-800-Mr-Refund.com has it right.
  No fees, free online software and a phone number that rings in your home.

  Nothing better than MR REFUND.