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?
.
Nice job, Trish!!!!!!!
Sad to say
Franchise Family/Half of all franchisees only perform at 50% level means NO PROFIT!
Management Family/Danny has lived his whole life being rowdy because he cant’ live up to his fathers expectations. Although a gay acting son is nothing to be proud of.
Danny’s son autistic, Danny autistic, see a pattern here? On the male chromosome typically speaking.
ANYONE CONSIDERING BUYING A LIBERTY FRANCHISE? BE VERY VERY SKEPTICAL WHEN YOU GO TO THE MEAT AND GREETS!!! DON’T GET EATIN!!
I have much information to tell. If was a Franchise owner for three years. There is way to much to tell in one post so stay tuned for an education of how they do business.
Today’s Topic is Liberty Tax Financing:
First thing you need to know is I will only present facts and you can figure the rest out.
In the fall before the season starts they will gladly loan you as much money as you need to get started.
This loan is at 12%. They receive their money through bank products done during the season through what they call “Intercept fees.”
They may begin collecting on the first day of tax season. If you need money you must fill out an excel spreadsheet for all your employee hours+returns done for the day+fees collected for those to give you a “ANF” (Average net fee).
The first thing they collect is the intgerest. IF you do not do enough business through bank products to collect the iterest the rest of the money goes on an AR. accounts receivable that is now at 18% compounded interest. When your loan is paid along with the interest then they begin collecting the Royalties and Advertising fees. If you are not able to pay those during the season the go to the AR at 18% compounded interest. Remember you are already paying 19%. Oh remember also you have a minimum royalty payment due so no matter how littel returns you do. They will charge your AR the minimum, I think it was 8,000.
Ok enough for tonight. Stay tuned for more………………………….
We should rent a bill board and post this website on it. Anyone interested?
Forced to bankrupt,
Right on, HAMMER liberty with the TRUTH! Glad to have you on board, Make sure you tell EVERY franchisee that you know about this website. Post here, post everywhere!
Maddie:
Your post of July 26 is very naive. You cannot possibly make a post like that unless you know people’s individual situations. Yes, real people who have higher education and real business and tax experience. MANY many franchisees have had little to no support from AD’s or Corporate. Liberty has made millions and given almost nothing in return. I cannot tell you how explicitly disgusted I am with this company and their owner. They are CROOKS! Bigtime. Just trust me on this one. You will see. I don’t wish any harm to you, but unfortunately it will happen.
Your statement that “you have to work at it” is laughable, sorry to say. I cannot tell you how many years we worked at it and were quite successful ON OUR OWN…..it had NOTHING to do with ANYONE at Liberty.
Maddie: Be aware. Don’t be foolish. This is a real grown up situation, not a school kid problem. This man must be and will be stopped. He is evil. If you have a responsive AD, you are one of the few.
Whoever is reading this post and is deciding to buy a Liberty Tax franschise or not, PLEASE< PLEASE save your money and RUN in the other direction!!!!!!!!!!
@Ace – probably time to get an attorney. Are you out of the system altogether now? If not, you should be able to take back those offices in question. Get the attorney to do something about before tax season because if you shut him down you will now have a lot a liberty customers coming in to your office and you won’t have to pay royalties to anyone but yourself.
@Trisha – don’t pat yourself on the back too hard here. You’re not the only person who has been screwed by these guys. Plenty of people on this board have extremely valuable information to share with others so we ought to all be sharing with each other.
@Forced to Bankrupt – you are exactly right on the financing. I got into letting them finance a little and it was the worst decision I ever made in regards to my operating 2 locations for 3 years (besides getting a franchise in the first place).
Well it’s almost September and time for John Hewitt to make his annual annoucnement. In the past he was going to buy Jackson Hewitt, last year he offered to take over as CEO for HR Block. What will he come up with this year?
@bill,
Excellant point, wonder what he will try to sell this Fall? Keep up the great posts!
I hear Republic Bank is a bargain…….
Trisha I called you at your office and left a message on facebook but have been unable to reach you. Not sure how to get your info from admin?
Send an email to UnhappyFranchisee[at]gmail.com – ADMIN
Anyone considering buying into this DO YOUR HOMEWORK before you spend a dime!
What is the rumor I keep hearing about Liberty trying to entrap current and former Zees with legal advertisements saying that the firm can help them? I saw one on this website and was wondering if they were legit? Any body know whats up with this?
Congrats to this board on letting people know what scum JTH really is!
If anyone has information about this allegation or suspicion, please email UnhappyFranchisee[at]gmail.com at once.
We take the confidentiality of our commenters’ identities VERY VERY seriously.
PS the only ads we run are the Google pay-per-click ads and they are not specific to our website.
Thanks – ADMIN
Anyone of you Zees notice that Liberty Tax Service was ranked Vetfran Top 10 Military-Friendly Franchise on June 13, 2012 by Forbes?
Do any of you know who created Vetfran?
You should. It kind of put things into perspective when you ask yourself how can someone fly under the radar who is this fraudulent?
Why not just tell us who created Vetfran?
Polar bear, how dare you. Danny is not gay and autistic children do not cause bad franchisees to fail. I’ve seen liberty change the lives of thousands of people. I’m sorry you failed but if attacking a child is your mode of operation I can show you WHY you failed. Danny has followed his father s footsteps and is starting his own company. To bash family members is a classless blow.
Vetfran was created by the IFA International Franchise Association through the eyes of Don Dwyer Sr. in 1991. He created this organization because he owned several franchises and wanted to offer them directly to Desert Storm troops coming back from Iraq in 1991.
I think he wanted to give the troops a GOOD opportunity to succeed as a business owner and I believe he was doing it with good intentions but knew he could PROFIT from dependable and disciplined troops who had the qualities he was looking for to invest in his franchises.
Below are some links which tell who Don Dwyer Sr. was.
http://www.leadingtheserviceindustry.com/CompanyHistory.asp
http://www.dwyergroup.com/vetfran/
http://www.vetjobs.com/vet-ta22.php
http://www.franchise.org/franchise-news-detail.aspx?id=32912
But at the end of the day I have contacted committee members of the IFA and Vetfran and both parties refused to look at my situation and referred me to litigation which they know I will not win through an Arbitration Clause. This is why they do nothing.
An organization which may or may not have been created to help Veterans is DESTROYING the lives of Veterans and they tell me to sue when they already know what the F.D.D. says.
It must be nice to include an Arbitration clause in the F.D.D. and then point the finger for failure at the franchisee knowing that nothing will change and the deception will go on. OR WILL IT!
Thanks to all of you for the valuable insight on LTS Franchise system. After reading EVERY comment, I’ve decided to go against the franchise route and venture out on my own. Thanks again and well wishes to each of you!!!
Researcher:
Great Decision!!! I’m glad that you learned from my mistakes. Good luck.
Very Very wise decision! I wish someone would have had a site like this when I was looking for a franchise.
I know that this is not the Matco posting site but I think some of the research I have in this article applies to ALL franchises. For better or worst I share.
http://freedomoutpost.com/2012/08/veterans-be-warned/
Researcher,
How far along were you in the process of buying a Liberty? Did you go to any of the meetings? So glad you made the right decision, you would likely have regretted it FOREVER.
Todd Peterson,
If reading this website is what caused you to not take advantage of a great opportunity then you probably were not going to make it anyways at this or anything else for that matter.
Mike, Ftard & Disturbed, Bill, Trisha, please answer a question I have. Have you ever been successful at anything in your life?
johnbarilla,
Evidently you have not read my article in Freedom Outpost. I don’t really know if Liberty is a good franchise or a bad franchise. What I do know is that if Liberty sells franchises under the IFA “International Franchise Association” they are part of a group of franchisors who produce F.D.D.’s which in no way protect entrepreneurs but make it easy for entrepreneurs to become victims of SCAMS and NON-VIABLE business opportunities.
Call me a failure if you like but being #41 out of 1500 franchisees, my first full year in business, leads me to believe that I put my military work and discipline to good use because my route was built to fail. I am the one that made it successful and Matco was the one who threatened me with the loss of my franchise if I didn’t surrender customers I established through my District Manager (Matco’s Employee).
IF YOU ARE CONSIDERING BUYING OR INVESTING IN LIBERTY TAX SERVICE, DON’T GOOGLE “LIBERTY TAX SCAMS” DO YOUR HOMEWORK FIRST. If you go to visit Liberty and they make you wear a costume ask them “when has John worn the costume?” Don’t make a fool out of yourself.
By the way, if good franchisors don’t like the way I talk about the IFA and the way that bad franchisors USE the franchising system to promote fraud and non-viable opportunities I think it is about time to start PROTECTING your franchise brand and name and make the IFA responsible for fraud imposed on franchisees.
The Franchisors, who are members of the IFA, are well trained on how to protect their name brand from being sued in a court of law through the Binding Arbitration agreements created by the attorneys paid to look after the interest of franchising.
I don’t blame franchisor from wanting to protect their business from frivolous lawsuits but surely you good franchisors saw this coming that VICTIMS would eventually catch on to the fraud and start speaking out.
You want to offer GOOD opportunities to entrepreneurs and profit off of them? Start cleaning up the CESSPOOL of NON-viable opportunities that are out there that are CHURNING and BURNING investors instead of creating more business.
Back when America had jobs there were GOOD companies to work for and there were ones that took advantage of the American’s need to provide for there family with terrible working conditions, low pay and no benefits.
Unions were created to control big corporations and the profit they could make from employing American citizens. (I don’t like unions) Unions helped destroy our economy as well as American products became too expensive to produce because prices had to meet the demands of workers.
Foreign trade laws and import taxes were loosened to let American companies move over seas and hire cheap labor to create the products we use and ship them to the U.S. for use and financial gain.
With all the jobs and products moving overseas how can those who have no moral compass in a quest for power and control get to the American investor and the money they use to support their family and make an honest living.
Create FALSE franchise opportunities which are protected by corrupt organizations (International Franchise Association) who are governed by a government organization (Federal Trade Commission) which looks the other way.
GOOD FRANCHISORS! Clean this crap up! Make franchising a reputable organization which promotes HEALTHY opportunities for individuals instead of non-viable opportunities which is going to bring about the destruction of your organization and opportunity.
Of course John has never worn the costume….do as he says, not as he does(or doesn’t).
Todd, I feel for you but I also feel ffor the Liberty peopled who were scammed. 41 out of 1500 would be a losing money situation for a Liberty franchisee. In fact, the top 10 stores could very easily be losing money…lots of Top Guns (ha ha) are gone, broke and out of business.
Listen to Mike and know that john barilla is a schill, or just obsessed with this site. Maybe he should hang out on the Happy Liberty Franchisee Site….wait, there isn’t a site like that and because their aren’t and happy Liberty operators.
Don’t be fooled says:
do as he says, not as he does: Looking over the 10K and you see that Liberty tax lent John 750,000 at 4.5% meanwhile they sock it to the franchisees at 12%.
If your looking to purchase a Libety tax Franchise it would be worth looking at the 10K report. In 2012 the company had to offer franchisees operating loans totaling 67,969,000. If you divide that by the number of stores it comes out to $16,248.86 per store. The 10K will also show you the 341 stores closed in 2011 a failure rate of 8.8% based on number of stores open in 2011. 2012 results show the average store did 523 returns. The net average fee was $173.00. The average store revenue was $85,847. These figures are an average. A new store is more likely to have a return count of around 150 to 200 and grow around 15% per year over the next couple of years. For people that already have the tax knowledge the purchase of any franchise dosen’t make sense if that is the kind of return volumne you are going to do.
Buyer Beware!!!
If anyone has any questions regarding owning a franchise just do some serious research and talk to an experienced (minimum 20 yrs) Franchise attorney that DOES NOT represent Franchisors.
Unfortunately “cesspool” is the perfect description for Franchise in this day and age
@Todd, I have not read your material yet, I confess. However, Ok, so blame the IFA just as the DOJ has been pushed by Hewitt in every company he has been involved in for the entire industry to blame and accuse “rogue” franchisees or Corporate Employees. Blame anyone but the promotion specialist and advanced or invitation only training specialists, right? I think we are off topic here of what is presently happening with the lawsuits and defense cases for JTH they are keeping HIDDEN. Does anyone know what fraud was trained to the franchisees from Liberty or more directly John Hewitt? Does anyone know what inside information is not shared and why the family has told me they are shorting the stock? Does anyone know why his wife which he still is so very very close to would send me that facebook message that he needs to be stopped?
If Hewitt has 44yrs experience in his industry. Using a probability factor of 4, this would mean he is in his last let’s just say 20percent of expected lifespan for his operation.
Hewitt in a hurry praises let’s be #1 by 2020…..No, No, No, how about this interpretation? = 2020 is a kill-date if not sooner. It is over for him by 2020 so everyone still in as a franchisee will be encouraged and has been encouraged/persuaded and ordered to hurry and inflate your return counts (manual invoices, duh) and revenues (check your reports closer) as well as your budgets you turned in compared to your budgets your Area Developer tweaked and turned in among other tactics. WHO WANTS TO INVEST now and expect a ROI after all this legal activity he fails to mention in his PR announcements? And just why exactly does the IRS have a non-stop investigation always against him and Danny? Are they randomly selected. no, we know better. Especially those already interviewed
To answer JohnBarbarian, which is the most disrespectful and angry person I have ever encountered on a blog….Ftard? Real mature John. I can’t believe I am answering you, however, I must say of all my success, I want to point out FAME.
My name comes from your posts a lot and I think I can chalk that one up as a prized accomplishment. Don’t you? Yes I know you will respond, just remember….the more time you spend on here focusing on a diversion or distraction, the less time you are using to focus on YOUR operations. You got it? If you are so successful, you should be using your time better than to be on a board you have nothing to contribute to and John Hewitt would not approve if you were a franchisee, so that means you are encouraged to post here and keep some confusion and trashtalk going to disinterest people from reading the truths others want to speak about. You don’t belong here as someone mentioned. You are so great, you do not qualify to be teaching us anything…have you taught us anything since you believe we are so stupid? Well go ahead and do so and while you are at it, show us how you wear the Liberty costume. I am positive Admin would not mind posting it, John. Come to think…NO. Keep your intellegence to yourself like a hidden treasure, we would all appreciate it not knowing the meanness inside of you. We know enough of you.
We all know that John Hewitt has a strategy and he posts here. Let’s talk about risk aversion. Let’s talk about his dominant strategies. How many of you have seen the renewal clause or for some, a separate paper saying I forgive Liberty of all the wrongs in the past, but it does not even tell you what they did wrong to you? Were you forced to sign it? Does everyone have a copy, yet? Let’s get to class and get some class Mr. John.
Ace, I am available today, give me a call or email so I know which member you are that I have missed.
Hey Mr. Barbilla, why don’t you give me a call too or would that be considered intimidating a federal witness in the RICO case as done from others in Liberty earlier this month? Fine line, don’t cross it.
Rock, paper, scissors….YOU go first.
-Trisha
“@Todd, I have not read your material yet, I confess. However, Ok, so blame the IFA just as the DOJ has been pushed by Hewitt in every company he has been involved in for the entire industry to blame and accuse “rogue” franchisees or Corporate Employees.”
Trisha: I don’t think Todd is blaming the IFA INSTEAD of Liberty Tax or John Hewitt. The IFA is the old boy’s network of fatcat franchisors who pool their money to protect their fellow fatcat franchisors and make sure nothing changes for franchisees and victims. The IFA promotes bad franchises to returning veterans by pretending that offering a discount equals “veteran friendly franchises.”
The IFA runs FranPac, the political action committee I’m sure Hewitt contributes to which takes action to kill pro-franchisee, fair franchising legislation as it did in CA not long ago.
Remember, in 2006 the IFA named John Hewitt its “Entrepreneur of the Year” (or was that Entre-manure of the year?). That gave JH more manufactured credibility with which to sell franchises and, now, stocks.
I don’t think its an either-or situation to blame IFA OR fatcat franchisors and their expensive lawyers OR the media which heaps undeserving awards and rankings on bad franchise concepts. It’s all part of the same shell game, and Liberty Tax is certainly a willing participant.
Absolutely Guest,
Mr. Hewitt is as guilty as sin itself but he is nothing compared what lies ahead for you Trish. Start trying to get answers from your politicians. How can they do this to me? Why doesn’t the IFA or FTC do something about the fraud? Why won’t the media tell my story?
When real victims look for answers the truth can be found. Franchising is a scam. Matco Tools was allowed to commit criminal acts against my franchise because franchising is UNTOUCHABLE! OR HAS THE RIGHT AMERICAN NOT FOUGHT YET???
We all need to come together and make stand! All franchisees. This is the only way!
New post on Liberty Tax. Press release from JTH in 1Q performance. Franchisees mentioned prominently:
LIBERTY TAX Service Fiscal 2013 First Quarter Results
They are drinking their own Kool-Aide with those 1 Qtr results.
Agreed TexasTee, Their first quarter results are lies and sloppy. 12percent, no…double that until your accounts recievable notes are transferred to a new loan if you play nice. And we can pick at those numbers all day, it is just flat out sloppy and deceptive.
Thanks guest and Mr. Peterson for your response. There are many places where the problems lie in general, complaints for Liberty Tax and JTH are heard here and it is nice to see people looking at multiple ways to solve them as well.
Actually, the media will be putting a surprising story out and that’s a good start.
-Trisha
To all;
Just to give anyone thinking of getting into this franchise the flavor of how well it works in real life, I will give you the example of one close by. There was an office nearby where a franchise competitor had been. I looked at it, and so apparently a potential Liberty franchisee. Landlord picked him over me because he wanted a long term lease. I would not commit to more than a year. Well, 8 months later, the office is bare. Signs gone, furniture gone. He had wavers every day, large hispanic population nearby, good street traffic, visibility and a store that had been another franchise. Only made it 8 months. Kind of tells you how you will do if you purchase one.
Frustrated and Disgusted:
We must keep reminding potetinal franchisees of the pitfalls of purchasing a Liberty Tax Franchise. This website is full of good information taking about the business model Liberty uses and what areas it works best in, the quality of the tax software, the fact they never advertise dispite charging a 5% advertising fee, The lack of branding associated with the name. Poor support, Area developers who don’t provide any real assistance.
Buyer beware!
In my earlier post dated 08/28/12 I talked about the information that a potential franchisee could get right from the company’s 10K. The individual stores for the fiscal year ending 4/30/12 prepared 523 returns with an average net fee of $173.00. A couple of things I want to point out is in that the 523 returns figure includes free returns. As a Liberty franchisee you are requred to give away 100 free returns during the tax season. The reason I point this out is the breakeven point for most franchisees is 400 paid returns.
Also, beaware that Liberty charges a minimum royalty fee. When I was a franchisee the minimum was $5,000.00 the first year, $8,000.00 the second year and $11,000.00 the third year.
If it was so easy to make money with their system why do they need you?
Buyer Beware
Has anyone ever walked away from a store before your 5 year agreement was over and still had debt to Liberty? I have to make a decision in the next few weeks and I am considering just walking away, selling everything in the office and giving them back the territory. Any thoughts?
Another Zee:
Is there another zee in your area? If so, sell the store to them for the transfer fee. You could try talking to your AD but likely you will not get much resolution. How many returns did you do, and when is your contract up?
You are correct about that, my AD stopped responding to my emails once I put my territory on a Commission Agreement. I have a few years left, I do a decent amount of returns, over 300.
If you don’t owe any money couldn’t you just give it back and walk away-assuming you can’t see
sorry meant to say can’t sell
Bill the 400 returns for break even is that calculating expenses (rent etc) for the May-Dec period when there is little business
@another zee
A couple of years ago, I obtained a territory because the zee walked away and I simply signed the transfer agreement and agreed to pay the $5k transfer fee and assume his debt. When I decided to get out after last tax season, I found a local zee who assumed my debt, paid the transfer fee and also paid me cash. I think I was fortunate to get the deal I got. Also, whenever I had to get a loan I would strike the personal guarantee and waiving of homestead rights from the P-Note and they were always returned to me signed by JTH. If you don’t owe them any money, walk away from their system and sell your clientele to someone else. Maybe operate as an independent so you don’t have to pay 19% in royalties.
JOSEPH: My breakeven calculation was including the expenses of operation through out the year. This breakeven point can go up or down depending on the area that you rent in, the amount of your average net fee, advertising etc. While on average 400 is the breakeven point most 1st year stores will average between 200 to 235 returns which includes free returns. The average net fee will be between $150.00 to $170.00.
When I was involved with Liberty Tax they would get you (1st year store) to commit to spending $6000.00 an up on an advertising budget. They would also tell you how much staff you need. This includes prepares, wavers etc. When you sign the franchise agreement you also commit to paying 14% royalty and 5% advertising fees. Regarding the royalty fees there is minimum of $5000.00 the 1st year, $8000.00 the second and $11,000.00.
If you have tax knowledge and are considering going with a franchise because you think it will generate returns for you, please think again. In the 4 years I was at my location I only had a handful of people step into my office because they had heard of Liberty Tax. Everyone else who used my servcies came in through my own effort. Liberty Tax my be expanding but it has no national brand and this is a company that now has over 3000 stores in the US. Go ask 10 people you know to name a tax preparation business and most will say HR Block or Jackson Hewitt.