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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i bought in 2009. This board was here with the same lame guys complaining. I know have 3 stores and no regrets. Any smart person that reads your crying and actually does not buy is a good thing, because they probably as smart as you guys writing on here are….
F&D, Right on!!
This site is an excellant site for a potential buyer, ANYONE considering buying a Liberty Tax MUST read all the comments and then they will come to the right conclusion. Go to yahoo, finance put in Liberty tax symbol LTAXA and see how people really view Liberty as an investment PATHETIC, and I LOVE IT!!!! The stock started out at $15 per share and only a few days is now down to 10, Hmmm, do you think Hewitt, Knewitt—don’t think he made any money this time around, no zees involved, hahahahahhahahahahahahahah!!!!!!!
Haha the stock only lost 16% today.
johnbarilla writes:
“I know have 3 stores…”
“…they probably as smart as you guys writing on here are….”
john, “know” that you have 3 stores and you probably smarter as us guys, it might be a good time to hire youself a tutor and git some o that booklernin you obvously never had time for.
haha, i typed so fast i didn’t read what i wrote… did not want to spend more than 8 seconds on this site with you guys… by the way, nobody mentioned the stock was up 40% today… you guys are sad
“haha, i typed so fast i didn’t read what i wrote… did not want to spend more than 8 seconds on this site with you guys…”
Yeah, we never read what you write either. Feel free to pare it down to 4 seconds next time.
“nobody mentioned the stock was up 40% today”
Yes, 4 more shares sold today. Congrats, John!
Re; johnbarilla;
What is sad are the 100’s of people who have lost 100’s of thousands of $$ on this horrible investment. The city where my stores were, 60% have closed shop, and no new ones have opened. The ones that are still there have seen significant drops in overall revenue and returns.
Some day you will come to the same conclusion all of us have and wish you had taken the advice we were all trying to convey.
I’ve been getting spam mail from LibertyTaxFranchise.net for a couple of days each time that I have clicked on the links in the spam from there I get a blank page. So I Googled the web address in the spam mail from LibertyTaxFranchise.net and read what they were all about. Looked at the cost for a Franchise then checked out this site here. I can say that it’s three things that prevents me from even getting into this LibertyTaxFranchise racket. 1. There is already a Liberty Tax office in the city/area I live in, 2. The Franchise cost, and 3. The reported trouble that former Liberty Tax Franchise owners have had when dealing with the corporate office.
I bet one could start their own Tax Service up by just using Turbo Tax rather than pay the high cost in a Franchise fee, charge even a lower price than what Liberty Tax does and make a better profit for themselves.
That is a great idea.
What would you call this service?
1-800-MR-REFUND.com?
Online, and via iPhone
Mike,
You can call it anything you like. For you I can definitely why you’d call your tax service Mr Refund. Heck Name it after Obama if you want.
What I always found interesting was when results were announced in our local DMA the numbers would look good compared to the previous year and then I asked the AD to breakout the numbers for the same store sales and return count. Funny thing was they never wanted to provide that information because it didn’t paint nearly as rosy of a picture as they wanted. The 3 areas I was familiar with last year all went down in return count and our top gun franchisee lost a couple hundred returns from last year.
@Mike aka Mr Refund
Sent you a request to connect on LinkedIn.
IF YOU ARE CONSIDERING BUYING A LIBERTY TAX OFFICE, This website should be of great interest to you. If you are going to one of the “Meet and Greets” be prepared and ask real questions! Call all offices in your area, ask them about TENURE!! Good luck.
If you look at the 2012 financials you will see that Liberty’s stores are down over 1% in return volumne and 2.7% in fees. The average store in 2012 (2011 tax returns) did 457 returns compared to 462 in 2011 (2010 tax returns) and average fees was 188 in 2012 compared to 191 in 2011. With the loss of RALs the net fees will certainly continue to drop along with return volumne. These numbers are a far cry from the 600 returns Liberty requires franchises to budget for in their first year.
Buyer beware!!!!!
I have driven past several locations in town since the season was over and many are saying on the door, OPEN BY APPOINTMENT ONLY. I guess JTH has decided that he is not going to force his already money losing franchisees to stay open 1 day a week during the summer. Probably a good move. Most are out looking for money making opportunities.
Check the hrblock’s. All in my area open by appointment only.
I really don’t know why this so called “Liberty franchise” thing is flooding my inbox. Once thing I could see from those positive comments given above, they are more likely paid by reputation booster crapatoids.
Businesses don’t worry much about their reputation being tarnished online anymore, because they can pay someone to bury all these bad reviews, complaints, and comments by sending an offshore trolls to post positive rebuttal for every negative comments. If they can get 30K from a new prospect, and then spend a penny for every rebuttal posted for a site this, they still made a profit of about 29,999.99 dollars.
My only advice to people who were truly victimized by this type of bad business practices is to post a negative feedback to every blogs, business forums they found, and they must do it as many as they can do it. You post 50,000 negatives, it would cost them about $5,000 to rebuttal if they use people living in the shack overseas, but for more concise and much organized rebuttal postings, it would cost them about $10,000 or approx.. 0.20 to 0.50 cents per post. I used to make a living this way. In fact, I wrote a program to remotely post a positive comments over negative comments for businesses who are willing to pay.
However, my conscience got me pretty good. Most importantly, if the complaints are real. Take those money making scams ads on TV for example. How many people were actually posting complaints on ripoff dot com website? Well, to be honest there were too many of them. What happened to all these complaints? Well, they are still there, but if someone is constantly posting a new positive comments, then all the negative comments were eventually buried underneath.. or the site owners don’t have enough space in their database, so older comments will just get deleted.
That’s my take on this. Please be careful when investing you hard earned money. It don’t matter if it is brand name or not. If it is too good to be true, many troubles may follow.
DO NOT, DO NOT, DO NOT, DO NOT EVER SINK ONE PENNY INTO THIS WORTHLESS PIECE OF GARBAGE FRANCHISE!
I HOPE HE GETS WHAT HE DESERVES. DO NOT BUY THE STOCK. LET THIS BUSINESS SINK INTO A HELLHOLE.
THIS IS THE WORST FRANCHISE EVER. EVER. EVER.
THERE ARE MANY, MANY PEOPLE THAT ARE TELLING YOU ALL TO STAY AWAY! TRUST ME, JUST STAY AWAY AND FIND ANOTHER FRANCHISE TO BECOME INVOLVED WITH….NOT THIS ONE.
HE IS A LUNATIC AND I CAN’T WAIT TILL HE COMES TUMBLING DOWN AND LANDS IN JAIL. I’LL BE DOING THE HAPPY DANCE.
SAVE YOUR MONEY AND DO NOT INVEST WITH THIS COMPANY. EVER.
Those of you wishing to speak to an attorney, at no upfront cost. Please contact me via facebook or email by asking the ADMIN of this site for my information ASAP. We have a strong and long list of people telling their stories collected. Far more people that post here but are readers. Now is the PERFECT time to speak with me. Take action now.
Those of you who have called already, THANK you all. Most of you know why I have not recently posted. I have been busy working with many people. Every single one of your stories are so very important. Please do not short yourself and call in.
And by the way, No…Corp does not want any extra traffic on this site and I was told that Hewitt posts on this occasionally under whatever name and orders everyone else to stop.That is why the positive comments have slowed!! There is NO denying the history and recent spike of activity in this forum, ALL without positive rebuttals. There is NO denying that changes have come. Do you see any positive comments of anyone who has lasted more than 5 years?? I did not think so.
-Trisha
Hi, I see very poor service and bad response from one franchisee of Liberty Tax in Jacksonville, FL. I took their assistance to file my IT returns and I heard till now they havent even filed them with IRS. When called after 3 months of filing, they mentioned they still need my signature on one of the papers. They had only a sorry when I asked why they did try reaching me these 3 months. Even now, after calling they are not providing me timely updates.
What can I do, whom can I complain to about this irresponsible behavior.
Any help is much appreciated.
– Srikanth
trisha,
you are nieve if you think J Hewitt wastes a second of his time to read let alone post anything on websites like this.
These comments are really quite comical.
Looks like ed is another Liberty plant! Keep up the good work, Trish!
What’s comical is that this website has GROWN exponentially since its conception but I bet you can’t read about it in the F.D.D.’s which is why attorneys push mediation instead of a filing a case in your state. The IFA has insured that its members can’t hurt franchising by having its franchisee sign over their constitutional rights to have the privilege to be a franchisee owner.
If every attorney filed a case in the state of the victim of fraud and the case listed what the fraud was then people would read about it in the F.D.D. and NOT INVEST!
But just like me , others read the F.D.D. and see maybe one of two lawsuits and miss the 40 others that were settled out of court due to mediation or BINDING ARBITRATION!
Just got back from 3 month vacation in the Caribbeans after working so hard during those few weeks in January and Feb and last week in April. God, i love this business. I am glad the happy franchisees are keeping this secret to themselves. I am planning to keep expanding this season, maybe next year i can take a 5 month vacation. Mike, Frustrated, Bill, Trisha, taxnerd on yahoo, how many aliases is none loser going to post under? Get a life, file bankruptcy and move on already….
Testiclepirate,
Glad you are back, just remember John Hewitt can’t afford braces, so your vacation is likely to your backyard, or you must be making more money then john or maybe you are John? What is your multiple alias?
We too are owners and I have been struggling with support. I get none with our AD or with Corporate.
This is our second season and I wish I would of left after one.
They pump you up about making all this money and all the support you will get I have never seen a corporation be so unprofessional in my entire life. They never give you a straight answer about anything and they always push it to someone else which never contacts you. They are all BIG FAT LIARS!!!!
Admin how can I get Trisha Grabert’s email address?
bill:
Email me your request at UnhappyFranchisee[at]gmail.com
Thanks,
ADMIN
Bill,
If you need Trisha’s email why dont you email Mike, F&D and the other losers. It’s the same person.
Testaipira,
I personally am not rooting against the individual franchisees. My dislike of Liberty has to do with the corporation and John Hewitt. I think a Liberty franchise like many of the ones on this site are companies that found they could make more money franchising then they could actually running their so called business. As a current franchise you must be some what discouraged that last year JH and company were given franchises away. Dosen’t that hurt the value of your franchise? Selling franchises to people who don’t have the knowledge to properly run the franchise, dosen’t that hurt the value of your franchise? If you really thought about it the best thing for current franchisees would to some how find away out of your Liberty contract, keep your client base and operate as an independent.
As I stated previously on this site, if Liberty couldn’t get an IPO they would need to take on long term debt. Now that this has happended Liberty won’t be offering anymore try and buy locations or giving away franchises. JH’s over expansion is a mistake just like e-smart was a mistake. In the past he was able to provide operating loans for a lot of his struggling new franchises but I think you will see a more selective process before a franchise is offered this financing and that will accelerate the number of stores that close.
If you don’t believe that Liberty as a corp. has limited value take a look at it’s stock trading on Nasdaq, the volume is at 4000 shares a day and closed today at 13.75.
Most of those trades are insider trading to keep the volume up. JH was going to raise $90,000,000 with his IPO. Based on this numbers he would have to sell 6,545,456 shares and it woudl take him 4 and half years to sell them. It’s easier to sell franchisees…
In Atlantic County, NJ the best store that they have is now up for sale again. The first owner turned it over to Liberty, they ran it for a year, sold it to some poor sole who tried for two years and now it’s back on the market. Just sent me a postcard to see if I was interested.
Buyer beware!!!!
Bill, i have never cared that they are offering territories for $0 because you would then have to pay 30% in royalties if you went that route and no onewould do that, so it is a non-issue. The more offices that Liberty opens and expands, the better it is for its brand, the better for my business.
The fact that they were able to get a term loan that is due in 2017 instead of having a LOC that they had to repay every year would give them more flexibility in financing their zees, not less.
Why would banks give them an extra $25mill if they were concerned with Liberty Tax’s future. Are you saying, you are smarter than these banks at analyzing their balance sheet?
I could keep going but your arguments are weak and not worth responding too…
IS LIBERTY TAX A GOOD INVESTMENT? IF YOU ARE GOING TO INVEST IN THIS COMPANY CALL EVERY LIBERTY IN YOUR AREA, ASK WHAT THEIR TENURE WITH LIBERTY IS, YOU WILL BE AMAZED AT THEIR RESPONSES!! OH AND MORE IMPORTANTLY ASK THEM IF THEY HAVE MADE ANY PROFIT!!
Testaipira:
The reason they went long-term is that they don’t have the cash flow to meet the LOC it’s the same reason that they will need to cut back on operating loans to their franchisees.
In my analysis of the balance sheet I’m considering the fact that many of their receivables are to their franchises and I’m questioning the underlying ability of their franchises to pay these receivables off. Read the notes to the financials.
You will respond to my statements because that’s what your job is at Liberty.
Random thought of the day: In your Liberty Tax franchisee contract there is a illusion that Liberty Tax will not encroach on your territories, however you can never sue them if they place a Corporate Store or any other store on or in your territory boundaries. You cannot complain if they place another store inside or on your territory boundaries; after all branding saturation is good for the franchisor at the franchisee’s expense. So those who believe this saturation is good for your business, have you lost all sense of your personal gain? Expect displeasure at the expense of the franchisee as the client’s migrate. And there is NOTHING you can do about encroachment in those meaningless pages of the contract as it is only a selling point to the prospective franchisee.
@Testaipira, sorry that you suddenly are back with speculating interests and entertainment of other people’s complaints. Don’t presume anything about me and ask the former Mrs. Hewitt if she knows if John Hewitt gets on this board. Bet that catches your attention. Now that is real talk!
See if this puts anyone in a reality check. Remember, a good manager does not want those who hate him already, talking to ones that are not sure if they hate him.
June 13
Linda Hewitt
“Sorry, I did not acknowledge your friend request before because I did not know who you were. Many Liberty Franchisees ask to be my friend and I would prefer not to be a part of them unless I know who they are. I have just been reading some of your comments on “unhappy franchisee” I am not sure exactly what has happened to you but this crap is not new to Liberty. It was the same with JH. John has done not just my oldest daughter dirty but also my youngest daugther. None of them were done as dirty as Danny was. I see that John is monitoring that website and making comments. Very interesting. I would like to keep up with what is going on with you and Liberty. Hopefully you can be instrumental in taking him down. He needs it.
I do not want to post to you because he has many spys out there.”
Linda
Bitter middle age ex-wife…..ha ha… that is funny, i’m sure she is credible…. by the way I am a franchisee not an employee and while i don’t think Liberty is the best thing since sliced bread, i don’t think it as bad as the obsessive compulsive people that keep posting on here every day all day under different names….
Anyone interested in buying a franchise should contact a current franchisees.
Potential franchisee: Could you tell me about your experience with Liberty Tax?
Testaipira: While I can tell you it’s not the best thing since sliced bread but I don’t think its as bad as the obsessive compulsive people on unhappy franchisees say it is.
Potential franchisee: Thanks for the advise, I think!
With comments like yours you won’t be an employee for long at Liberty.
Keep up the good work
What did John do that was ‘dirty’ to his daughters and Danny? Seems like Linda might have an ax to grind with her ex. Why did Danny leave the company, I thought he was an integral part of LTS?
If these franchise businesses were really profitable, why would the franchisors sell them in the first place? The franchisors would operate them themselves.
Typically the only ones who benefit from franchises are the franchisors.
Save your money, my friends. Unless you got money to waste….
I am a Liberty Franchisee, I think that you get out of Liberty what you put into Liberty. This has been a very rewarding experience for me and my family. I was a preparer for years before we bought and we have been franchisees for 7 years. If you go into any business you have to work at it. Liberty provides a proven successful business model, most who follow it are amazing and love it. From the culture to Mr. Hewitt I love this company. My AD is amazing always there when something is needed. There is a support system in place you just have to use it. John certainly cannot bring every customer into your door. That is your job and if you didnt excell with all of the tools available then you must not be very bright. In every franchisee there are ups and downs. If you cant handle the heat get out of the kitchen. I am sure a Liberty Franchisee isnt for everyone however that doesnt mean that the CEO is horrible or a crook!
HI Mattie:
Would you mind telling us where are you located?
Considering current IRS requirements what would you say to someone considering this franchise who has no tax experience?
@Mattie,
Speaking of not very bright, how are you have you excelled in your 7 years? Are you in the top 1 or even 30 percent of the company? If you followed John’s successful business model, you should be on that tiny or non-exist list of profitable entities. “Nobody has EVER followed my Top 10 tips for success.” –John Hewitt. Please share your numbers, debts and expenses year over year and don’t forget your debt ratio. After 5 years, your tax return is suppose to be 1000 plus per store, so please do share how much support you need from an AD after now being an expert. Fact is Liberty does not give equal support to all franchisees or people would not complain of it. Keep believing your Corporate team is amazing as they take everything you thought you had. Good Luck to you in your next season. Don’t forget this website when you see your last.
-Trisha
Thank you @TexasTee and @ Charlotte, Please contact me through admin.
-Trisha
Bill,
I’m not sure if you are a regular poster on this board or not, but I would suggest nobody buy a business that they have no experience in, period. Despite what John Hewitt will tell you, you won’t be successful, especially with no experience. Think about it. (if you are a duped franchisee, Bill, you already know this and hopefully it will reach a potential new franchisee.)
Many people go into the tax business with no tax experience. Right now marketing is more important. So far the IRS requirements are just making money for companies selling classes and seminars. My email is full of offers to pay for training. If you are not already in the tax business, only get in if you buy from someone else.
Since I was ripped off by Liberty and Hewitt, I would advise for anybody to keep away from this franchise. Trish is correct.These people are crooks! Can’t say that enough.
I AM SOOOO EXCITED KNOWING THAT HIS DAYS ARE NUMBERED!! I HOPE HE ROTS IN JAIL FOR A LONG, LONG TIME.
LINDA: IF YOU ARE REALLY HIS EX-WIFE, MY SYMPATHIES TO YOU. HE HAS MADE THIS COMPANY INTO SHAMS….SELLING, RESELLING TERRITORIES….RIPPING THEM OUT UNDER PEOPLE’S FEET TO MAKE MORE $. THA’S ALL HE CARES ABOUT IS $. NOT AT ALL HOW HE TREATS PEOPLE. THIS FRANCHISE COULD HAVE BEEN A SUCCESS, BUT HE DOES NOT KNOW HOW TO TREAT PEOPLE,
HE ALREADY BOUGHT HIS MAGAZINE ENTREPRENEURIAL OF THE YEAR AWARD. HE BOUGHT IT!!! NO ONE IN THEIR RIGHT MIND WOULD AWARD THAT TO HIM.
HE HAS TURNED THIS COMPANY INTO A HELLHOLE.
AGAIN PEOPLE, LISTEN VERY CAREFULLY: TAKE YOUR $ AND RUN. DO NOT INVEST ONE PENNEY INTO THIS COMPANY. YOU WILL BE FOREVER SORRY.
I was a franchisee for 5 yrs with Liberty Tax. I was able to get by with a modest profit as long as I kept expanding. When I got into Liberty John said it was easy to sell the franchise just pay the 5000.00 transfer fee. After 2 years of the local topgun franchisee and I came to an agreement to buy my 4 offices. Liberty required him to pay the down payment to Liberty then after taking out the transfer fees they sent me the remainder 3 weeks later. Now the “top gun” is refusing to make his annual payment and threatens to bury me with legal expenses. The local AD said its between me and the Top Gun. To make matters worse all stores went up in revenue and my 3rd yr store was up 40%.
I am currently broke and in need of an operation. Does anyone know of a solution to this problem?
@Ace – what does your P&S say about defaulting on payments?
It accelerated repayment to full amount of loan. The buyer personally guaranteed the note but an attorney wants 25% of all monies collected.
@ Ace 1947 and all Zees,
I am the one you need to speak to. You need a lawyer with experience that knows EVERYTHING going on. It is a lot to digest and you are one of hundreds with a claim and testimony who needs protection and action. Please email admin for my information.
I just returned from a deposition on the South Carolina RICO case against Liberty Tax, John Hewitt and Danny Hewitt. Plenty of information was revealed and much more to come. This is the beginning of the end of despair for people like you.
-Trisha