LIBERTY TAX SERVICE Franchise Complaints

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

• The comment about Stan would of been better off just working at McDonalds shows that this isn’t about the truth or reality and makes me question why some ever attempted running their own business or what their real motives on this board are. It appears that it needs to be called the “Smear” Board” in alot of cases because the objective is not about truth. Most of Stans stores are fairly new and he is in the early stages of growing his business. Stan is doing what every succesful business owner does and that is learning from his challenges and mistakes each year and making adjustments and improving every season.

  It is real easy to make things sound bad if (you) mess things up the first year or two and quit but most do not quit and most learn from their mistakes and improve each year. My numbers today look totaly different than they did year one or year two. But it is that way with any business, it is always tough at the beginning and very seldom are their over night successes. Not sure what some people think when they buy territories. I have seen people cry and moan about not making money yet when you look at their labor, they work in the office 24/7 and take no pay yet still run 40percent to 55percent labor numbers, and you can’t make money doing business that way.

• Another thing for anyone looking for the truth, is Stans profit margin jumped 17 percentage points from year 1 to year 2. Because Stan understands his budget and understands what needs to be controlled and improving every year on where he spends his money he will be able to easily reach 30 percent profit margin as the return count grows.

  Stan was paying $1500 a month in Rent and able to break even with 300 paid returns!!! I am sorry that is talent any way you look at it. I want to thank Stan for standing up and going through the effort to put his numbers out there for all to see. I am not going to do it, at least on a budget form, but if you calculate Stans profit based upon his numbers today and he grows to 800 returns he will show a profit of around 60k plus and could be higher. As the office continues to grow and reaches 1400 returns, Stans profit will well exceed 100k per year.

  Stan had a choice he could of quit the first year and used his numbers as an excuse to smear someone else and financialy damage himself or he could do what so many other succesfull business owners do and work through things and improve. I think all of this is so simple to see.

• That was years ago (2006), I have since found very favorable lease terms for all my offices and run 25-40% profit margin depending on the office (labor can kill you). With that being said I add 1-2 new offices on each year either through acquisition or opening a new territory.

  My goal early on was to minimize damage from opening a new store and it didn’t take long to realize that each year you build on top of last year’s numbers. I always tell people do the best you can in year 1 because year 2 is always soooo much better if you execute.

• Also McDonalds wouldn’t hire me :(

• Okay peoples….. Time for some truths.
  Anyone with access to Zeenet can see for themselves that what you are about to read is correct. I am not saying I downloaded these figures and manipulated them, they may have arrived in my inbox from a friend but you work out the viability of being a franchisee.

  FYI:
  fran·chisee [fran-chahyzee]
  Definition: A franchisee is an individual who purchases the rights to use a company’s trademarked name and business model to do business. The franchisee purchases a franchise from the franchisor. The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an ongoing franchise royalty fee to the franchisor.

  I guess we agree on that. Emphasis on
  “rights to use a company’s trademarked name and business model to do business”

  Clearly the “business model” is what the focus should be on because we’d all agree, without that, we wouldn’t have signed the frikkin’ franchse agreement or thought the tax business was as cool as it could be.

  Report ZPR07 details the top 350 Entities (franchisees with at least one territory.
  Report ZPR03 lists the top 100 office in the country.
  Office 1 = 3,573 returns
  Office 100 = 1,160 returns
  Corss referencing both reports you can notice 41 Entities in the top 350 report prepared less than 1,160 tax returns or less than what the 100th best performing office prepared.
  It’s believable that some or many of those Entities which appear in the top 350 report that prepared less than 1,160 tax returns actually had more than one office. Which suggests that each of their offices prepared on average 580 tax returns.
  To appear on any report is a target for any zee but more importantly it is the $$$ which matters most and the 350 report is very detailed in that area listing also the prior year results.

  Office number 346 had net fees of $218,200 with 1461 tax returns prepared.
  This office location and return count does NOT appear in the top 100 offices.
  So it is obvious this franchisee owns two offices.

  $218,000 – gross income

  $41,0000 – Royalties
  $43,000 – Rents (2 offices) $1800 per month (I know of no zee with 20 miles paying less than $1800 a month in rent. Several pay nearly $3,000)
  $50,000 – Payroll + taxes for preparers (2 preparers for every hour to up to 4 + receptionist during both peaks
  $28,000 – Marketing/wavers (one waver for every hour open x 2 stores + additional during both peaks+everything from IIP etc..)
  $7000 – Utilities = (~$300 per month per store for internet, gas/electric, phone etc..)
  $5000 – Office supplies – stamps/folders/envelopes/business cards/tax school books/Coffee/Cups/Popcorn/toys/coloring books for two stores
  _________
  $174,000 – Expenses
  =========

  $44,000 – Net Income from two stores

  Perhaps this franchisee had cheaper office rent, spent less on his marketing and understaffed. THEN he would NOT be following the Liberty MODEL especially on the marketing.

  Possibly his net income before taxes was $60,000 but the work and stress from two offices for only this much is only benefiting the franchisor.

  You only have to look at the royalties to see that the franchise fees are almost as much as the net fees.

  Sure you can make money.

  Sure. $10 profit is making money.

  The point is.. is the franchise model going to make you $100,000 a year. And dont accept the BS about the PART TIME crap. Not too many of us can get 3 months off work to run a tax season and have our jobs back on April 16th! And if it’s so darn good then why are SO MANY zees responding to the ads in the zeenet marketplace about making money during the off-season. Why stay open for 40 extra hours a week to earn $40,000 in insurance etc.. when it’s just (based on Entity 346 at $200 per return) just another 200 tax returns to stay closed 32 hours a week! Isn’t the whole point to have a different lifestyle? Didn’t we buy a business NOT a job!

  In advance of Mike or Rob’s responses….. This information was not available to me BEFORE I opened the first office. In fact most franchisees are so focused on their own success, extraploating figures from the reports menu and realizing that most Entities work DAMn HARD just to get a reasonable income. Only RICH guys here are in the top 100 Entities.

  Last point. I made money every year from year two. Best year made more than $250,000 from two offices but netted only $60,000. Not what was alluded to.
  Which brings me back to the line from marketing/sales who said IF you don’t reach 1000 returns by the fourth year Liberty may opt to take the territory back which was only stated to imply you must be a moron if you can’t reach 1,000 tax returns!

  My office average was 925 returns (paid and free). After several years.

• I prefer not to provide details of my store but next year (my third year) I will operate at a 30% margin or more and will do 1000+ returns. My rent is $1,000 a month. Therefore I will make a nice profit on my one store. I am also highly considering expansion. If three years from now I duplicate the success of my first store and have two stores each doing over 1,000 returns and operating at a 30% margin, well I assure you that will be well over the $100K that you seem to think is not possible. And then what happens when I have 3 stores, 4 stores, 5 stores, etc. My wife runs the store FT and I work FT elsewhere.

• Mike. Not questioning your personal success. Just consider if 2900 stores AREN’T doing 1000 returns then making 100k isn’t a possibility. Think if you rent was $800 more. Month you would be making $20k less. That is what most of us details with. Try finding an office in LA for under. $2000 a month and wages are more.You are not thinking about other sees. You are trying to use your example as the template. A zee I know in NY pays $5000 a month!
  Apples with apples my boy.

• Again, many Zee’s on this site are not disagreeing that making a profit is not possible. I am in the boat with money pit. I cannot rent a place that Liberty will accept for less than $2500 per month in my territory. My houly wage is $10 per hour, which includes decent marketers. My wavers go for $9. To get my 300 returns this year cost me over $25,000 in marketing costs. You may ask how I know it takes that much, because I tried and failed in years one and two with less. My gross was $69,000. Doesn’ take long to do the math. I recently tried to sell one of my franchises to an individual who has been interested in Liberty for a long time. Knows the score has he has been doing taxes on his own for several years. He made a lot more in his personal shop than I am making at Liberty. He said, why should I buy a store for $40K and do all the work when I can do my own thing and make more money. The point is, Liberty produces part time income but expects a full time commitment. Add to that the lack of local support, poor software and support and you have what you have. A poor investment.

• To potential Liberty franchisees:

  Brand recognition and strength of brand are a big part of what your buying along with that franchisors system they developed. This brand recognition is what is suppose to drive customer to your store vs you opening your own named business. This brand recognition is especially important in the tax preperation industry because your season is so short. However, while the other two major tax preparation services do have a large national advertising program Liberty Tax Service does not. This is a major disadvantage and one of the reasons I believe that so many Liberty Tax franchisees struggle.

  I know current franchisees will talk about how wonderful gorilla marketing works, but what is the point of paying a franchise fee and an advertising fee to Liberty if gorilla marketing works so well. Just open your own tax business and market your own skills.

  It’s funny how John Hewitt doesen’t believe in national advertising. Did anyone see the commercial last fall with him touting the benefits of owning a Liberty Tax Franchise. Talk about a face made for radio.

• The answer to why you may be unhappy, in this or any franchise, lies within what was expected of the franchisee in the first place.
  I expected a brand throughout the life of my offices, a basic idea of how to operate the business, within a correct and legal nature, support until I understand it, as well as some financing, when needed. I got exactly what I expected and more with Liberty. I never changed my expectations of the company as I was learning how I would perform as an individual. I cannot blame Corporate for my performance while my own personal faults were unveiled. They kept their promises and I continue to have an open sign hanging. I have to make it brighter and more noticeable and make the right choices.

  What is great about this particular franchise is that we have 8 months to regroup and work on our issues to get it right! You can’t just close a Subway down until you figure out how to control payroll or market effectively. When kids go back to school from a break, they are fresh, new clothes, new style. Get your style together and quit wearing the same shoes every year…you outgrow them or they go out of style. Just look right now at your shoes, if they are beat down…then work on yourself before getting into any business. A person who won’t go to the shoe store suffers his look to spare a little time…not realizing that it has made 1000 impressions on people just today. If your shoes are worn, you may be unhappy in any business as you would let your image (brand) change before taking the time to make a small change which was long overdue.

• To 5yr.improvingzee:

  First of all I doubt you paid $40K for your franchise, I doubt you have 6 other Liberty Tax locations within a 10 minute radius of your office, and I also doubt the IRS was giving free returns to those whose income was less than $57K. Read the notes above. These are not whackos. These are intelligent business people who poured their hard earned money into a franchise and were promised decent returns. What they got was far from that. The fact is, most franchisees are averaging somewhere in the 300 return range, not the 900 to 1000 they talk about at the Liberty Tax meet and greets. Most are struggling to make ends meet, and most thinking they were sold a bill of goods by John Hewitt who is still thinking/wishing that it was like it was 5 years ago when you bought your businesses. This is a part time business with full time responsibilities. Unless you can combine it with other accounting and tax products, you cannot make a business out of it, pure and simple. Good luck with your stores.

• I have to agree completely with Frustrated and Disgusted.
  I introduced four people to Liberty and all but one has either sold their business or has it listed. All are intelligent business people with other businesses but ran their Liberty offices full time.
  Most exceeded 700 returns after 3 years. And still they needed financing from Liberty or did not have the funds to continue.
  Consequently, I speak to only one of them nowadays. Don’t blame them as I was a second year zee with hopes and dreams and my excitement at my second year growth was a turning point for them.
  Sadly I should have waited two more years before mentioning this “opportunity”.
  If you’re making money then woohoo. But there’s a scam here that only mature zees can understand. Newbies don’t have a clue and are swept up in the buzz.
  God help those in Jackson Hewitt whose dreams were just as real with a share value of $0.85 cents. Down $6.50 from a year ago and from a high of nearly $20.00.

• Well this thread is going nowhere so I will end with this. Yes the Z who posted does have 6 Liberty Locations within 10 minutes which amuses me like Libertys are really competing with each other and that their is a limited number of clients that Zs have to share when 98 percent of returns filed are non Liberty returns. Sure clients move around but I have never felt like I was competing against other Zs for clients. Also the Z you know so much about has a free tax prep office one of the bigger ones 2 doors down from the Liberty Office.

  I think we know both MoneyPit and Frustrated see a conspiracy theory here and I imagine you have black helicopters flying over your house every night….lol

  Is Liberty perfect….Nope…But no franchise is…..Has John Hewitt ever lied to me?….Nope not once….Has John ever not answered one of my questions to my satisfaction?…..Nope, he has answered every one….I feel Liberty is a better opportunity now than it was 5 years ago. Mainly because of lessons learned and now those lessons are being passed along much better just because of the increase in numbers of franchisees. So the opportunity has stayed the same the increase amount of Zs and the increased communication is what has made it better.

  Go talk to some mom and pops and see what kind of profit margin they are running!!!! I know many of the ones people think have to be doing great are not doing anything close to me!!! I know of a large one who has since sold out that everyone would of thought was crushing it because of no royaties or ad fee but in reality they were running around a 11 percent profit margin.

  If your interested in Liberty do your homework and do not be afraid to go to Va Beach and ask John himself your direct questions. The next 5 years are going to one of the most exiting times we have ever seen in the tax business in my opinion. Now I know MoneyPit and Frustrated has a story of doom and gloom on what the future holds, so I will just acknowldge their gloom in advance. Have fun all and it was interesting posting here sometimes but I think all that can be said has been said.

• Just a question…keep in mind I’m researching this as I type…but has anyone considered the revenue an accountant could generate running their own shop and pumping $56k into their own buisiness? This is what I’m deciding between: paying Liberty $56k or taking that money and building my own practice….just wanted to see what y’all thought..

  Mike

• I think we need to put things into perspective here for Rob’s sake.. For someone who has no business accumen, wants to start a business, and wants a better shot at being successful, a franchise is better than the alternative. Where Liberty fails is the attitude of their organization. They are so focused on selling franchises, especially their AD’s, that they forget they need to support them after the sale. John Hewitt wants to be the biggest tax preparation franchise in the country, and he is going to do it with your money, not his. So when you go to Va. Beach to learn about LT, they trot out their Top Guns who tell you that you can do 800-1000 returns a year. Fact is you would be in the top 5% of all franchisees if you can. Most are doing 300 or so a year. In many areas you will be lucky to get that many. Add to that, their marketing system is inefficient, ie; if they took the money all of their franchises in an area spend on marketing, the number would be staggering. So what you end up with is a poor investment because you will spend thousands of $$, lose a good portion of it, sell your territories, the next person will do the same, and the cycle continues. That’s why it is like Vegas. You keep thinking you will win the big prize. My opinion for what it’s worth, if you are looking to build a good tax business, park yourself in a low income, high EIC area, market yourself well, and give good service, you can do as well as LT does in the same area without the hassle of their ridiculous demands.

• Mike,

  I have a background in tax and small business accounting but I didn’t have a client base and I didn’t have any name recognition. For some reason I thought I would have a better chance with a Liberty Tax Franchise. However, I didn’t take into consideration that they had no name brand recognition in my area. The fact that they don’t do any national TV advertising and that their business model was best suited for a low income urban setting. I am no longer involved with Liberty Considering you already have the knowledge and experience of working in a tax office, what would you need a franchise for unless its your concern about developing business and if that is the case, the only tax franchise that has true national recognition and is considered professional is H&R Block.

• I was going to stop posting but this last topic seems to of turned to real conversation and not just a smear campaign. I have no problems with people disagreeing as long as the conversation is about facts and an exchange of ideas but too many times it becomes a smear campaign. While I disagree with some of Frustrated and Disgusted post I commend him for the way he worded it and his attempt to address the issues without smearing.

  The question that was asked is a common one out there and one that does not have an easy answer. If you take out all factors and you do not take other circumstances into consideration the answer is sure doing it on your own would be great. The only issue with that is their is other circumstances and they have to be considered when making the decision. What appears to be an easy answer and easy situation is fairly complicated and will depend allot on the individuals talents and skills.

  I know quite a few accountants and tax professionals that have decided to do it on their own and try to save the money that it would cost to buy a franchise. The majority of them do not end up as huge success stories and struggle financialy as much if not even more than a Franchise Tax Office. The tax business sounds so easy and getting clients appears to be so simple but in reality it is not. I hear allot of talk about national advertising and national presence yet Block has both and last year could not take advantage of any of the turmoil and huge amount of Jackson Hewitt clients left out in the cold on RALS? If national advertising works so well and is the answer to drive people in the offices than Block should of had the biggest year of its entire existance? Yet they did not grow their early season at all and spent millions on national ads? Jackson Hewitt has a fair national advertising program yet they have been going backwards over the past 4 or 5 years? If national advertising is the answer both should have no problems crushing Liberty?

  Liberty is evolving year after year. As the market changes and things happen things are learned and passed on from Liberty Corp and from Z to Z and these lessons learned are whats enabling Liberty to experience growth while others stay stagnent or go backwards. I know my operations is completely different now compared to 3 years ago and the difference is for the better!!! My results if comparing 3 years ago to today are night and day!!! I have been able to learn from my mistakes and by communicating with other top business people I have been able to learn from theirs and implement items that have made me drop every other business venture and focus 100 percent on Liberty. No, I did not have to listen or change and could easily still be struggling but I did what any smart business person would do and that is learn from my mistakes and seek out other top business people who made mistakes and come up with solutions to solve those mistakes. With Liberty the ability to not only learn from a solid system you also if you take the time are able to develop relationships with other talented franchise owners and learn very quickly avoiding costly mistakes.

  Building a solid profitable tax operation is not easy. The industry is now changing quickly so it will require changes to either stay succesfull or become succesfull if you are just opening an office. Buying a Liberty Franchise can be a very good profitable decision if the opportunities are taken advantage of. If a Z only focuses on the negative and lets what is wrong in their opinion stop them from taking advantage of all that is right then they will usualy struggle. Most independents starting out do not see the huge profit numbers one would expect with the absense of royalties and advertising fee plus Franchise Fee to start with. Why? Their business model is usualy flawed and what they think they know usualy blocks them from any future learning. So they save the 40k only to spend it on mistakes. Of course there will be the few that go on their own and do very well. But if you look at the financials of independents they are not running great profit margins as you would expect. Typical margins I have seen is 15 to 20 percent.

  I know looking back if I would of went out on my own and started my own I may have been succesfull but it would of been extremely limited and I would be no where close to where I am today. Liberty has gave me the opportunity to develop and learn and with that I understand this industry as good as anybody I know. The key was they gave me the opportunity, I had a choice to take it or I had to the choice to ignore it. Libertys system (Operations Manual) is one of the best I have ever seen!!! It still takes execution on the part of the franchisee to turn a good system into a succesfull profitable business. I could of easily of been one of the unhappy Zs but I decided to take a different route and learn from my mistakes quickly and focus on the answer not on any problems I felt was out there in the Liberty system.

  As I stated Liberty is not perfect but their is no company out there that is. It is a viable business model that can produce amazing results. Its not guranteed and it takes work and it takes a dedication to learning and exeucuting. Yes you can fail but you can fail going out on your own.

• I was just in Vegas for a convention. Looking to buy multiple locations. Sounds like a bad idea according to both happy and unhappy Zees. I am sure some may even work for Liberty on here but that’s beside the fact for me. For those that are happy what’s the demographics you operate in? Cause the locations i can choose from vary greatly. For those of you that are unhappy, thank you for sharing, but after you sold it or gave it back, did you stay in contact with the buyer or find out from whoever acquired it what happened from a growth perspective? I am interested in knowing all of this cause from what I have gathered it seems easier to purchase existing locations versus a start up. It also seems in order to make any real money you need multiple stores. I have not finished reading the FDD and will later this week, so as far as the 1000 returns by year X or the store goes back to Liberty, does anyone know a Zee that’s happened to?

  Thank you for your time and help,
  Wondering

• Of course no one has ever had a store taken back for not completing 1000 returns, practically every single store would be returned. That 1000 return number is pure sales hype. If you do your projections/budgets, 1000 returns will have you making money on paper, and you will assume (because it is in the FDD) that you will be doing 1000 returns in ‘X’ years. You won’t and you will have lost money at every location, be it one or ten stores.

  Multiple stores just means multiple ways to lose money. Listen to most of the honest advice found on this site and keep looking for an opportunity, Liberty is not a good choice.

• Wondering, no I know of no one that has had a store taken back for being under 1000 returns. As far as the need for multiple locations to make money that is not true. Sure if you have a strong organization and have built it the right way multiple locations are great and can multiply your profits. Where most make their mistakes is expanding before they should. You need to have positive cash flow in your first store before you expand. There are some execeptions to the rule and it is possible to expand and help cash flow. One of those ways is buying existing stores. Key to making the purchase of existing stores is the terms that are agreed upon and the office you are buying itself. Many office can be purchased and with a few changes the profit and cash flow and be dramaticly inreased. I seriously doubt their is one employee of Liberty Corp posting on this board!

• Wondering

  I started writing a long response to your question, and instead decided that it would be better just to say that I would not invest in the tax business right now, particularly Liberty. Read through all of the responses on this site and realize that they were written to help people like yourself understand the pitfalls of this organization. Rob has done well, but he probably would have done well in any franchise. He is a very committed individual. There are successful Liberty territories out there, but I am watching as each one sees fewer and fewer returns every year, their revenues are going down not up, more and more people are getting into the business. You spend more to get new customers and in most cases less than 50% of the poeple you saw last year return. While Liberty would like to think you can out hussle H&R or Jackson Hewitt, you most likely cannot. Also look at H&R and Jackson Hewitt and see that the actual number of returns are going down. People are using Turbo Tax, seniors get help from AARP, you can go online and get it done free if you have less than $57K in income etc. etc. In my personal opinion, there are better places to spend your hard earned $$.

• As far as “Dont be Fooled” comment about making money on paper but not in reality that is not true. Except if he/she is referring to making a profit but having negative cash flow? Sure its possible to be profitable and have negative cash flow depending on your financing and other factors. This is where understanding business and understanding how business works is crucial to anyone going into business. This is also where Zs planning to expand need to understand what expanding will do to their cash flow. Negative Cash Flow is something that many businesses run up against and something the business owner needs to understand and plan accordingly. If memory serves me right and I will check, most small businesses go out of business because of negative cash flow not because of profitablity. I am pretty sure the last study I read was a majority of small businesses shut down or failed were profitable but negative cash flow caused there failure. I will double check that and post the statistics.

  Liberty has given me the opportunity to build a very profitable business. I had to take the opportunity and run with it but I can assure anyone looking at Liberty that it does not take someone special to succeed. It can be done and the model that is offered is solid. It is up to the Z though to execute and ensure profit margins and cash flow. I see so many times Zs who are upset with Liberty and say they cannot make money yet when looking at profit and loss statement they run 50 percent plus labor and have not been able to control costs? With the best model in the world if a business owner cannot execute and control expenses or prices their product too low, failure is a possibility.

• Rob:

  I respect what is clearly a good business intellect. My suggestion is rather than posting on this forum, you have a chat with JTH and discuss with him why he thinks having raving fans is so important, but having disgruntled franchisees isn’t. Seems somewhat counter to his whole philosophy. Let me give you some ammunition. I have yet to have a one on one conversation with my AD. He has not returned my calls since I purchased my franchise. The person who came out to do my site surveys for my locations did a horrible job, gave me no guidance, and hence I lost a ton of money on one location, and the one he thought was a poor location turned out to be better than average. I spent a ton of money on door hangers, no results, B2B was average, never got nofified when they were sending out direct mail pieces in the neighborhoods next to my location which I could have done more marketing for, there is no cohesive marketing campaign for the 12 locations in the city I have my franchises in, and my AD gave me no guidance on my budget. Maybe there is truly a reason some of the above franchisees have a gripe. Did you ever consider that ?

• I have never judged you nor would I question anyones reason for being frustrated. You will also never hear me say that Liberty is perfect or that every Z has gotten the support they should have. But instead of being frustrated and disgusted venting on here and allowing someone else decide the fate of your business have you sought out help from the many Zs who would be happy to help? In every franchise system there are franchisees that do not get the support they should, not on purpose but just because of the circumstances that are present in the area.

  What I am trying to say is anyone can be succesfull with the system. It does not take someone with special talents. It does take someone who refuses to let any frustrations or circumstances stop them from reaching the level of success they should. I would be more than willing to speak with you and help you confidentialy. I just think it is a shame letting your frustrations get you down when the answers you need are out there for the taking and there are plenty of people who you can communicate with who would be willing to share all with you. I have always been willing to put my money where my mouth is and the offer for help stands, and will be confidential.

• To Rob:

  Your recent couple of post makes me wonder why your spending so much time on this site. Are you really a franchisee or are you and area developer or more likely a corporate employee. Could you tell us where your stores are located so we can get a better understanding of the demographics.

• Funny how Rob didn’t respond. Also interesting how there hasn’t been any new post.

• Bill:

  Whether Rob is or isn’t an AD or corporate employee, the unfortunate fact is that Liberty is just a poorly managed organization. What’s worse is that they would rather be deaf, dumb and blind to that fact rather than fixing it. I would be very interested in knowing how many franchises are really for sale, how well they are doing at selling new ones, and what the turnover ratio is. I recently heard that they were trying to sell one new franchise a day. That is clearly down from their projected 400 that they talked about before.

• You guys also need to put things into perspective regarding the economy and Liberty’s competitors. The economy is in tough shape right now, yet Liberty continues to obtain market share from both HRB and JH. Go back and listen to the most recent conference calls for the quarterly reports for both HRB and JH the past two weeks. Certainly the one for JH was pretty bad in my opinion, yet Liberty continues to grow. I am opening up a second office this year (it is an existing office). My goal is to double revenues in that store and I am confident I can do so.

• Anyone ever looked at the number of offices by year at Entrpreneur.com
  Wonder why the number of Liberty Canadian franchises has dropped about 20% the last five years? (about 50 offices)
  In the last year H R Block added new offices in Canada.
  Also, Liberty added about 600 new franchises last year.
  And if office 75 did ONLY 237 returns:
  75. King NC-1 (15945) 75Eric MoserGreensboro-High Point-Winston Salem, NC – 237

  What does that say about the other 525 new offices??!!!

  Explain that one Rob?

• Mike:

  I do put things into perspective. I was sold non-performing asset. I have recently had the opportunity to talk with a couple of poeple who went up to VA Beach to hear the song and dance Liberty puts on. That confirmed that what I came back with from my visit was reality. They trot out the Top Guns who claim they did 700-900 returns the first year. Fact is, almost all offices do less than 300. I was told I would get support. Fact is,there is no local support for any franchisee. H&R and JH advertised all through 1st peak steadily, iincluding radio, TV , direct mail and inserts from financial institutions. Liberty did none. JH may be in financial trouble, but they will probably go into bankruptcy and come out with a lot less debt. They are not going away. Liberty says their system works, yet of the 7 stores that I know of, most use very little of the “Liberty system”. Fact is, it is too combersome to manage. They talk about all the support you get from VA Beach, fact is, it is more trouble than it is worth to contact them and get a straight answer. Unless you know the tax code pretty well, chances are you will make mistakes with the software. And last but not least, it is impossible to make a business case for many areas of the country due to rents and other costs involved. None of this is ever mentioned in VA Beach. I rest my case.

• Frustrated and Disgusted:

  I am based in Massachusetts where rents are pretty high and I agree that this does become difficult to some extent. In my first year we only did 350 returns, but then last year (in our second year) we did 775 returns and increase our revenues by 170%. It is possible to do. Yes – I had to change many of my strategies and learned a great deal from talking to other Zees. Yes, there are plenty of Zees that struggle but there are also plenty of Zees that do well.

  I appreciate your concerns with Liberty and it appears you are a smart, intelligent individual. Do you still own your franchise or did you end up selling out? I’d be happy to talk off-line from this board if you ever wanted to.

• Mike:

  That’s an impressive improvement. Could you tell us about the demograhics of your area, what was the single most important factor in increasing your return volumn i.e. more business to business or ability to provide rals vs JH? What was your retention rate and how many free returns did you give in each year?

  Thanks

• If an unprofitable McDonald’s or Burger King is closed, the franchiser does not reopen the store with a new franchisee in place. The franchiser realizes the area is not a good location, and moves on.

  Why does LTS continue to resell locations that have not worked for past franchisees, if they really care about a franchisee becoming successful? The only reason I can come up with is that another $40,000 plus goes into LTS with no concern for the success of the new franchisee. There is no concern of success, only of profits at the franchiser level.

  Thanks to all who have taken the time to post here. I am proud to say doing my homework helped me make the decision NOT to pursue the opportunity with LTS.

• Sammit:

  Congratulations on your decision. What is telliing from all of the comments above is that no one has denied LTS shows no concern whether their franchises succeed or fail. That to me speaks volumes about this organization. Just sell, sell, sell. and certainly don’t worry about supporting them after the sale. Let me see, make sure your customers are excited about the service you provide as a tax location, but it is of no concern to us at the corporate level, you are just another means for us to build our empire.

• What is more telling is that you are still allowed to own your location or locations with all the whining and crying you do. When you fail and loose all your money make sure you blame someone else, which is almost a gurantee. No wonder your frustrated and disgusted. I wonder if any amount of support would help since you seem determined to fail and determined to do anything you can to bring down anyone you can while you do so! Good luck, signing off for good.

• Rob:

  I have attempted to keep my comments on a professional level, and suggest to anyone who is looking at purchasing a franchsise, that LTS is only interested in their own development, not their franchisees. If you can give some facts that counter that arguement, I would love to hear it. All I have heard is that there are successful locations, most of which can be credited to the hard work of the franchisee, not LTS. Meanwhile JTH continues to promise gold while the franchisees get straw. I would really love to hear from anyone where someone from LTS has actually spent either time, effort or money to help a franchisee be successful.

• Rob:

  And oh by the way, Entrepreneur magazine now rates Liberty at #28 (in 2009 they were #3), below H&R (#6) and right above Instant Tax (#29) on the top 500 list. JTH needs to wake up and realize you can only screw your franchisees so much before it comes back to bite you.

• Entrepreneur magazine means very little too me. Thats fine if you want to spend all your time letting Liberty frustrate you no matter if its true or false. It sounds like you need a “Job” not a business. When buying a Franchise you are not buying a “Parent” or a “Big Brother” who is going to hold your hand and ensure you do everything exact. The largest issue with Franchising is too many prospects do not understand their role as business owners and too many is expecting the Franchisor to hold their hand and give them a succesfull business. Not only have I become sucessful with Liberty I have developed quite a few succesfull Zs. I practice what I preach and I have always been willing to put my money where my mouth is. Liberty has a solid model and will be even more succesfull in the upcoming years. You will never agree and it appears you have decided to dedicate alot time blaming them instead of growing your business. Thats your right and in a free country thats the great thing you have the freedom to do what you want and I can do what I want. If you ever decide to take controll of your business and come up with solutions I am always available and would be happy to speak and do what I could confidentialy with growing your business.

  I think this thread is way past dead and at an impass so I have decided to focus elsewhere. There are a group of people who are so focused on convincing anyone and everyone that Liberty is bad and no amount of evidence or proof would stop that. My goal here is not to do anything except try to be as honest as possible and possibly help several people and show that this is a great opportunity. I fully understand your posistion and the only thing I would suggest quit giving anyone this much power over you when your success and falure is completely up to you? I do wish you the best and everyone else but I see no need to continue a discussion that will never end and that will always be at a stalemate.

  Not only am I convinced Liberty is a good opportunity I think its a tremendous one over the next 5 years and plan on expanding much more!!! I made that decision because I can find no other business that gives me the opportunity and reward as Liberty does. Good luck to all!!

• Rob,

  “It sounds like you need a “Job” not a business.”

  So unfair. My top 100 office prepares 1300+ returns and after discounts nets $180,000. Liberty suggests you net 30% of that. I work about 100 hours in the pre-season and 1000 hours during the season plus DMA meetings etc…
  The average person works 1800 hours a year and get 401k + vacation time and paid public holidays.
  So you think my $60,000 for 60% of a “normal” years work is a better lifestyle. I earned over 100k + perks before I got a “job” with Liberty. After 6 years I also have a huge debt of $100,000+ I’m still paying off and a “job” would have saved me that.
  Don’t kid yourself that owning a Liberty franchise is a lifestyle change for the better..
  In your best year with one office you could net $100,000. Even Corey Hughes who prepared 1600 returns in his first year had more than 500 free returns or so I was told. And he was almost the best first year store EVER.
  Having a job is not so ignoble as you allude to. I could be earning $100,000 and not be carrying a massive debt and worry for nine months of the year.
  And at least wth a job you aren’t concerned if the IRS, banks and the franchisor is going to screw your business so you lose a large chunk of your revenue as was the case with many zees this last tax season.
  Just worth thinking about.

• If you only net 180k on 1300 returns and you are a 6th year store, you have a problem. Sell me your territory and all your debt will go away and you can go land your 100k+ per year job.

• Funny. 340 free returns due to the economy (trying to help out as Steve Tyler would say – usually minimum 120-150 to meet franchise agreement and bank products rebate) and 970 paid. In a state with no state return so my net fee was $185+
  And btw there aren’t any New Jersey zees in the top 100 offices report so who are you to talk? Office 100 prepared 1166. Which means…. that’s right.. you’re not even there! So keep your comments to yourself okay rookie.
  And have you every heard the story on how to start a NJ zee in a small business?
  Give him a big business and wait.

• I must of struck a nerve. Offer still stands to buy your fledgling office. If you hate it so much just sell it and move on?

  Rookie, that’s funny. I suggest you refrain from name calling when you are admitting to the world you left a “high paying” job with benefits to be miserable in your Liberty business. No matter what names you call me, I don’t have 100k+ debt from my Liberty business, actually now that I think of it I have $0 debt with Liberty.

  I won’t play into your disgruntled attitude, my offices fair just fine in terms of returns, profitaility and cash flow.

  With all that being said I commend you on 1300+ returns, with that base I’m sure 1500+ is in your sights.

• My goal with Liberty is to make much more than $100K a year. I currently make well in excess of $100K a year in my day job, but my goals are much loftier than that. And yes it is very possible when you own multiple stores. This upcoming season will be our 3rd year with Liberty and my wife and I are opening up our second store this year (she runs Liberty full time for us). By the way, JH has helped us tremendously and given us a great opportunity to purchase an existing store, so yes Corporate does help Zees. If I didn’t think it was possible, I would just stay with my day job and continue to make more money every year and get paid a good salary. Your opportunity to significantly increase earnings with Liberty with multiple stores is a great opportunity in my opinion. Once you have mastered how to sucesfully operate one store the opportunities are endless.

• To NJ Zee could you please tell me what demograhics your store is in? It must be a major urban area. I was in the same general area as most Philadelphia and NJ Zees, and with the exception of 1 zee in the Philadelphia market, I knew of know one in the SJ area that was pleased with the technical support or the ADs. At the time I was involved (4 years) there where maybe 13 stores in SJ this includes 1 store in Burlington and the rest in Camden, Gloucester & Atlantic County. Of the 13 stores in this area 4 closed completely and 1 became a company store. This total does not include the store owned by a relative of JH who just walked away or the store in the Vineland area that was open for all of about 4 weeks. .

  To Mike, I agree that the way to go would be with multiple territories if you can duplicate the success you are having in your first store and be profitable. Again I would like to ask you what are the demographics for both stores? How many returns did the 2nd store do last year? What was that stores retention rate? How many free returns?

  As for corp. helping you. I would be glad to lend someone money at 12% rate of return knowing that it will be you expending your money to promote the business and based on the terms of the contract if your not successful the store comes back to me. On top of that there is a minimum franchise fee of 5,000.00 1st year 8,000 2nd year and 11,000 3rd year.

  It is my personal opinion John Hewitt’s main goal is not just to sell franchises but to surpass H&R Block as the biggest tax preparation service. However I do think it is interesting when you google the name of any of the three tax services only with Liberty does Liberty Tax franchise appear ahead of the tax preparation service.

• Bill – To answer your question. The demographic for the first store I opened up (just finished its 2nd year) has a household AGI around $50K-$50K which is actually higher than your typical Liberty store I think. Our 2nd year store did 775 returns with 90 of them being free (including those that defaulted on bank products). Our store retention rate was 43-44%.

• I agree some NJ Zees are absolutely brutal running a Liberty Tax. I did find it funny when the Vineland Zee opened for all of 4 weeks and disappeared.

  5 Year Office – AGI $80,000
  5 Year Office (Acquired Jan 2010) – AGI $41,936
  4 Year Office – AGI $73,000
  1 Year Office – AGI $55,394
  1 Year Office – AGI $28,130

  I have a good mix of demographics, I attract lower – middle income taxpayers in the first peak and I then turn my attention to bringing in higher income earners for March and build up for a strong April.

  I will say that because I like full control, I explore towns and evaluate sites based on criteria that I believe is a winner. I read and digest all the information from Liberty Corporate, Zeenet, Discussion Boards and my own business acumen to make decision on expansion, staffing, advertising, etc…

  I never expected nor wanted Corporate or my local AD to hold my hand or get in my way, but I know they are there if I needed tax support, tech support or procedural help.

  As I’ve stated before I take very calculated risks before I open a new office. I budget so my break even is at the lowest possible level without sacraficing the core marketing techniques that bring in business.

  And by being apart of another large franchise system, I think it’s funny how much hating goes on against Liberty for support, royalties, advertising, etc. Liberty Tax is there to provide the framework and system to run a Tax Preparation business, it’s not their job to run it for you or spend their money on advertising. All big franchise systems have franchisees pour advertising dollars into a fund, with no help from the franchisor.

  People need to take some responsibility for picking a terrible location and/or territory, negotiating a bad lease, over spending on payroll, furniture, computers.

  NJ Zee Out.

• MIke

  Congratulations on your success but I’m a professional skeptic. Could you please give us a little more information like the state and maybe the City you where located in? Could you tell me how many returns you did in your first year and what was your net fee in year one and year two. I know that these may be invasive questions but everyone on here who is a former franchisee is willing to be upfront about their experience and is only limited in what they can say based on the stipulations that Liberty imposes on them. Many of the individuals who speak about their success with Liberty do so in general terms. My purpose here is to provide fair and honest insight into owning a Liberty Tax Franchise.

• To NJ Zee

  Thank you for breaking down the number of offices you have and there respective ages. Since you own 8.5% of the NJ stores and I know who the main store owners are in SJ area then you must be located in the North Jersey area. Would you mind telling us the number of returns each store did? Also, how did you arrive at AGI (adjusted gross income)?

• AGI can be found by looking at the IRS efile statistics for a city/town. I have a spreadsheet with all my offices and all the potential towns I might want to expand to.

  I am in the Central – North Jersey area.

  Bill considering you seem to know my area so well can you share your experiences and level of volume you were able to achieve?

  Mike is from Massachusetts and the statistics he states are true and not exaggerated in any way.

  I am going to decline to post my office returns counts and net fees on this message board because frankly it doesn’t benefit me to share my numbers at this time.

• To NJ Zee:

  I think this is where you and I differ. I expected when I purchased my franchise to get a least a little help understanding the business in my area, what locations would work out better, what marketing techniques have worked in the past for the demographics I had in my territory, and for the most part, what numbers to really expect based on others in the area. I ASKED FOR THIS TYPE OF INFORMATION AND NEVER HEARD A WORD. I GOT NO ANSWERS. If you think it was just me, it wasn’t. There was another franchsiee who bought and started at the same time who spent over $30K on marketing the first year and did less than 300 returns. We are both struggling because we now know what we didn’t know then. The season is so short, and the window so narrow, you have to have a good year or you will go broke unlike other year-round business opportunities. Do I expect Liberty to run my business for me or hold my hand like a child. No, I expected to be able to talk to someone who knew the business and understood based on demographics what may work best. Also, if you have new franchisees, what does it hurt to help with doing some local advertising so that they have a better chance of success. This is the kind of help I expected, needless to say I didn’t get it.