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?
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Heres my question, Does anyone know what they will do if I don’t want to pay the 19%. Why can’t I close the Liberty Tax and have my wife open a tax place of her own in the same place? This will be the last year of my contract (no minimum royalty nonsense), but these guys are making more then I am for nothing as far as I can tell.
Just more JTH bull crap. This franchisor has sold over 4800 territories, but only 4200 offices were open, and considering several territories have more than one office, you can do the math. They added 5% more offices, but only increased revenues by 4.7%. Anyone who thinks this is a good investment should have their head examined or go to business school to learn what real business is.
To Franchise owner; JTH can and will come after you. Having your wife own the business would be considered an arms length transaction by the court. Instead open up an accounting office not a storefront, keep your phone number, and answer the phone under a new name, the chances are no one will touch you.
Another Great Year,
You and I know that John has got to be very upset with those numbers, If I am correct, this is the first season with less then double digit increases that means John is pissed and all of the zees and especially the corporate store managers are going to be expected to really work hard next year..because they are going to need 500 new offices to get a 5 percent increase next year… Good Luck see you at the convention!
What do you think happened during march and april? Seems like they were up 11% as of February 29. No growth at all for late season crowd. Turbo tax had similar numbers so it can’t be that everyone was moving to do it yourself software. Could less people have filed this year? More extensions?
Guest5:
I work in a CPA firm and it was a very hectic tax year. It seemed like every return had some sort of issue, forclosure, forgiveness of debt, recapture of first time home buyer credit, brokerage account statements not being received or no basis available etc. These type of returns are complicated and I would imagine that they would present problems to most online filers. As for Liberty their business model is based on the early filier and that accounts for a bulk of their business. If your situated in a lower income area your not going to draw in the higher income tax filers. Unlike HR Block which has a corporate based training program, staffed with experienced prepares and monitored by their regional office, Liberty has no such program. Each office is really a reflection of the owner and his or her abilities.
Now that the IRS is requiring testing and licensing shouldn’t this effect how Liberty markets its franchises. It was bad enough when people were sold a franchise and then they had to go throught the steps, on their own i might add, to obtain an efin number. Now with the new requirements how could any inexperienced franchisee effectively open, train and run a tax preparation service.
Bill
Are you getting higher fees for all the extra work?
HR block just announced they are closing 200 more stores…. Liberty will add 400 more stores, seems like #1 by 2020 may actually happen sooner.
John B. – How many Zees are going to close there stores to offset the increase of 400 that you speak of?
Cut back on the kool-aid.
Liberty would be DOWN in returns if it weren’t for the 400 unfortunate souls that bought into the system this last year. This POS company is doomed for failure, they can’t even pull off an IPO. Don’t become one of the fools, see you in Vegas!!
Back to my original question on April 20th. I wanted to stop using liberty and do this myself. These seem to be the options:
1) take the liberty stuff down and come up with a new name by next tax season. That sounds very risky.
2) wait until may the contract expires next year and and hope they do not come after me over the non compete agreement. Does anyone know how well the noncompete can be enforced?
I want keep my current location but ditch the liberty nonsense. Is this possible?
I have made a small profit in my store however in my area I think I could be the only one. I was hoping that a franchise cannot protect the noncompete unless the business is profitable.
Thank you everyone for your advice.
Option 1 is not good at all, I’m sure they will come after you legally on that one.
Option 2 is more realistic, but legally, you are still in violation of your non-compete and they probably will come after you. It probably all depends on your AD, if they feel business is being taken away from their Liberty office, I’m sure they will pursue it. Best bet would be to wait out the 2 years and then open your office right across the street from your former Liberty location.
Keeping the store but ditching the Liberty stuff wont work either, that is almost the same as #1.
Could Liberty not renew a franchisee after 5th year for some lame reason? What would the franchisee recourse be? Could they then open as independent?
I know for employment purposes at least in my state you cannot hold someone to a non compete unless you were making well over the average salary. I was thinking you add to that I have all the franchise of the year awards and still am scrapping to make a profit what is a guy to do? I was told a third of us would be very successful don’t I have a case that business model is a dud? Therefore legally can they keep me in a dead end business?
To guest27 you could only be so lucky. You recourse would be not paying 19 percent royalties. If you can stay in business for 5 years they are not letting you go.
Franchise owner,
You probably have a case, as we probably all do, unfortunately we are all to scared to “talk” to each other and Hewitt knows it, so nothing is done legally. Furthermore, after we all go broke who has the money to sue him? He knows that as well. The only thing that is certain, is Liberty is a BAD investment. What we all need to do is continue to keep warning potential franchisees about the company.
It sounds like they got you beat.
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
http://www.irsmedic.com/wp-content/uploads/2011/01/liberty_tax_complaint-filed.pdf
How is the case going? I remember reading about it last year, I hope it goes well for the victims!
Trisha, didn’t Liberty settle with Annie for about 300k?
First time I ever read that case. I was a franchisee when Anne would be on the daily phone calls and some of the things she said made me question her ethecs. The best one I remember is she was at a gas station one morning and I guy was buying beer she bought his beer for him and had him go with her to do his taxes. There is no way that John Hewitt, self-proclaimed master of the tax prep. industry, shouldn’t have know that what she was doing was fraudulant.
Todd A. Peterson:
You are right on target all of these franchises are targeted at the small investor and there is no protection for us.
Is some one actively suing Jth in a big way or are we all just helpless victims ,I too have a ton of dirt on LTS. Anyone going to convention ?
When and where is the convention, we should all meet at a bar near it!! Let’s have an anti-Liberty BS convention!
Does anyone realize why it is hard to fight these franchisors?
It is because everyone is bought off. From franchisors to attorneys to politicians to the media franchising is protected. The IFA was, originally, an organization to protect franchising which included FRANCHISEES. But it is now an organization which has BANDED together all the people who are PROFITING off of franchising into a force that can not be reckoned with.
The ONLY way we as SCREWED franchisees can get change to happen in franchising is to BAND together!
A good start at change would be the IFA Legal Symposium May 20-22 in Washington D,C.
If all of us unhappy franchisees were to show up and voice our opinion at this convention people would take notice. But the facts are we are doing what our government trained us to do. Be a WORKING America. It is hard for any of us to represent ourselves at ANY of these meetings where people are grouping together to decide how to screw the next round of franchisees USING our legal system to do it. That, my friends, is exactly what will be taking place on May 20-22 in Washington D.C.
Want to educate yourself further go to this 16 page brochure that is found on the IFA’s web site.
http://www.franchise.org/uploadedFiles/LegalSymposium2012_web%204-16-12.pdf
Learn that on May 21, 2012 these attendees of the Legal Symposium will be learning all about how to deal with us pesky franchisees.
It says franchisees are even invited. All you have to do is come up with $1475 to cover your non-membership of the IFA. A room rate of $306 a night (Standard) and a $50.00 registration fee. I see a lot of franchisees going to this convention DON’T YOU?
Another way to fight the IFA and make them hold franchisors responsible is support of my petition. Please read the petition and if you support my cause for holding the IFA responsible for its franchisor members actions please sign and share. The link is here:
http://www.change.org/petitions/veterans-deserve-success-not-matco-tools-franchise-failure
@Mike, the case with Annie is still going on, several cases still going on. Another zee just filed a case on April 26th. The 3 attorneys in the case link above are still taking depositions in South Carolina, but that is small compared to what else is pending. Call them, they would love to hear from you all about how we were trained to uphold our guarantees like getting the highest possible refund, etc. They will fly out to you. You still need to get with other franchisees to get the lawyer for your breach of contract matters, etc and I am willing to share info. So who needs a lawyer?? Who are contributors and who is just whining or trolling?
@mike They did not settle for 300k with Annie as in it is over with, they settled a portion of that case to shut her up from helping customers come forward and add more franchisees to the suit to collect the money set aside to claim for damages.This was all before there was a special rule in the renewal contracts that say we are not to join any class actions and forgive any wrongs Liberty has done to us in the past and never sue anyone ever. Read your renewal contracts for those still in!!!! They push you to sign it fast for a reason, they don’t want you to notice the changes they threw in there. She still has OTHER cases going for contract law matters, etc…and she is very happy and in good hands. Annie did what she was told and paid to do. Her ethics told her to come forward and that is when it got ugly and she got gagged along with others.
There are huge cases pending right now. Many Many Many of them. You just have to know who to talk to and NOT to talk to.
@jon I am easy to find on fb for anyone interested in speaking to me about that is not with Liberty Tax Service or JTH inc. I will give you the info and a checklist. There is a reason Liberty is #2 in the Top 25 Unhappy franchisees. And to corporate, Trisha has no idea I am posting this for her, so don’t send her letters about this forum in the future, her children check her mail and she may not get it for a long time. She is busy with other business so I am helping her out of my own free will and right of speech while she is away from the harrassment. She won’t be taking any mail for a long time and her attorney can let her know if you need anything. Ask John Hewitt or Robyn Hurych for her lawyer’s number.
NOBODY here is helpless unless they are just lazy and distracted. You have rights.
@Mr. Peterson, what makes IFA any different than the BBB subscription services, it is not really out there for protecting customers either. And how can they be made to do anything, they are just a business too? I do not know how this type of petition campaign can help any of the victims or should I say people who need to take action. I would assume focus should be kept on litigations direct to the responsible party. Maybe I am missing something??
anyone with who was a zee last year of Liberty is welcome to go to their Liberty Tax convention, Annie did. :-)
@Trisha Grabert
Have you looked at what the IFA does?
Have you read any of my posts?
Do you know what the IFA was created for?
The IFA IS the problem with franchising! It educates the franchisor on the latest trends of how screw its franchisees!
The IFA has lobbyist which strategically promotes its interest to congress getting franchisors TAX BREAKS, more SBA loans and more protection from being sued by franchisees.
Have you read your franchise agreement?
Doesn’t it say like mine that you can become a franchisee but you have to give up your right to a FAIR TRIAL?
Doesn’t it say that litigation will be in the state of your franchisors choosing?
Doesn’t it say that you must mediate first or go through binding arbitration?
Where do you think companies have learned or been educated how to screw their franchisees?
Do you think that each franchisor just thought up on his own how to make a DISHONEST contract, which keeps him out of court, and robs the franchisee of due diligence in a trial court?
What do you think a Legal Symposium offered by the IFA is going to do for 45 years consecutively?
Do you think they discuss the same thing year after year? Or do you think that they stay up with the CURRENT legal trends of franchisee attorneys and come up with ways to make sure their protected RING stays PROTECTED?
Trisha,
Did you recieve the Mutual Termination letter yet? Don’t sign it. Do they claim you owe them any money? Start calling all your clients and let them know what is going on. Liberty will send them all sorts of coupons etc. Do you still have a lease?
@ Todd, I am getting a better understanding now of what you are saying. Yes it says that we would have to go to their State for Venue and we are not protected under their states Fair Franshisor Act so basically that means we can say they are meanies and it gets thrown out because my territory is outside of Virginia.
But as I have read so many of their cases, they almost pray we take them to court in our state and use the fair franchising rules of our own State which only allows less damages depending on the date of term. For example: If your state says you had to get a 60 day notice of term, they are held liable of 60 days of projected income. If you don’t have business in off season when they termed you, then damages are so small if they did not give you proper notice. Then there is question of who is considered an expert witness, if you have been in business, you are an expert of your business but your numbers better make sense.
@Mike, I have not been offered a mututal term. The AD first said I had like an hour to decide if I am interested and if so they would send me paperwork but first before any of the things I wanted to discuss, she wanted me to sign amendment to the lease of my store so they can have access (which they already broke into and changed locks on). I refused so she said, then this will be unilateral and we have nothing further to discuss. I would not sign a thing without a lawyer anyhow. I still have 2 leases of 4. The two in Louisville were up for renewal and they tricked the landlord into signing as if they work for me. They have not been open for business ever since. Just some number of a ladies cell phone. Nice customer service.
Has everyone read every case published? Do you all know how to get them? I have read 18 cases so far, interesting stuff.
Todd, I have to start from beginning of thread to get to your posts. Were you a Matco zee?
Trisha,
If the lease is in your name, call the landlord and then the police. They are tresspassing. Then (if you haven’t done so yet) take all the furniture and the exterior signs down. Keep the phone lines in your name and continue to make the payment. Take all the physical files and keep them as long as you can, and for fun SHUFFLE THEM, between offices and years!
mike you crack me up, why are you not a fb friend of mine yet, eh hem?
The police were called. The charge is actually called forcible entry under Kentucky Revised Statutes and any who abetted is under a Class A Misd. 323.200 I believe is the statute. They have to answer in Ky for those charges alone. They had no right to be here and not follow laws here.
They changed the locks to get access, I don’t have access to the buildings they got into while they thought I was minutes away from there and I told them I could not meet them to get them in the building that day as they claimed I HAD to. However, 4 people watched everything and my landlords are shocked they were tricked thinking they are with me. They would have never signed a May1 lease with them had they knew the truth.The ones I do have access to, I have a longer lease and landlords are aware and in contact with my attorneys if anyhting happens.
They actually stated they had no intentions to keep the Salem and Scottsburg Indiana stores open for customers. They only interested in the ones they broke in to and said the other stores are my problem. (robyn Hurych) stated that. So they don’t care about servicing clients, they just want to takeover and resell stores so that I can’t profit off them myself in selling to my buyer.
*instead
of letting me sell to my buyer
They just contacted my friend in another state (my homestate) by email offering her a great franchise opportunity. How interesting. How they got her email in the state I asked about buying a dma from?….faceboooook trolling likely (of course I am speculating until I get proof-not to be mistook for slander). Do they not realize my fb friends are friends and people I have know for years state to state? Dirty little deeds. Of course they will ask my opinion.
Trisha – Why did you lose your stores? What happened?
@guest 5- breach of contract of course, reasons given are disputed and not good enough in the eyes of a non-invested observer.
@Trisha,
Yes, I am a Matco zee. But what I am trying to do is educate other franchisees that we all have one thing in common. We are all victims of a system which allows franchise members of the IFA to treat their franchisees “Fraudulently”! It is the IFA profiting off of franchisors who sign up to become members, they profit from people who want to be CFE’s, they profit to train their members and they profit from their conventions and legal symposiums. These franchisors who are members of the IFA are mostly owned by large corporations who have huge deep pockets and can keep the IFA with a big smile on their face as they get congress to give them more tax breaks and SBA loans. The IFA holds NO franchisor accountable for their conduct as members of their organization and that is what NEEDS to start happening! That is what my petition is all about. Getting the IFA to cut some of these franchisors who are not successful opportunities and committed immoral and unethical business acts.
Were those stores profitable? Or several years of losses?
Mine was very profitable being ranked 41 out of 1500+ franchisees my first year. My problems started when they fired the employee of their company who hired me a District Manager and then proceeded to tell me that if I didn’t surrender shops that they claimed were unapproved by their company I would be terminated as a franchisee. When I did what they requested, because I felt I had no other choice, they just let an ailing economy and shop closures destroy the half a business I was left with after the TAKEOVER.