LIBERTY TAX SERVICE Franchise Complaints

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• If they (H&R) don't buy up the mom and pop's they will loose more business to them, because they have to control the pricing and market in order to survive the changes in the tax preparation industry.

  If they don't have the upper hand on their market, they won't make it after several years from now.

  In those mailers, is there a non compete clause for not doing taxes for the next two years? With the H & R in my area cannot do taxes for the next 2 years anywhere in the USA, nor even do their own taxes. There is no mileage test anymore.

  With that information, that is why they are trying to buy up as many people as possible to lower the competition with the new regulations.

  LTS is just trying to hang on and make it another season. I don't see the big 3 doing well in the fore seeable future. They are doing bulk returns, where CPA's, EA and small independents are doing more personalize services and consulting services. Not just filling in a box but actually helping people understand the tax code and helping people build their wealth.

• H&R never liked overtime. It was not permitted except once in a while during first or last peak. Franchizee, I think your friends steered you wrong (or the pay system at HRB is so complex even those who work there don't understand it).

  I also think they are wrong about the noncompete for two years. Block used to have that clause and it was declared void by CA courts and then voided throughout the country. The reason is that if someone is prohibited from working in their career, they have to be paid for the lost income. A sole proprietor who sells to Block might have such a noncompete because s/he is being paid for their business. A preparer, on the other hand, would have to get compensated for agreeing not to prepare taxes anymore.

  You have an interesting observation, though, that the company is trying to buy Mom & Pops so they can control market pricing. Competition does lower prices (but why do all the chains charge so dang much for EITC returns?). Our prices were lower for almost all of the HRB clients who came into our office. We don't accept new EITC returns, so I'm talking about folks with Sch A, maybe Sch D, or a rental property--regular middle-class type returns. If Block were to buy our company, which they have tried, I guess most of those people and our long-time clients like them would see price increases. Most of our clientele, though, have businesses, partnerships, complex financial lives. I can't imagine what their costs would be using the HRB per-form pricing, but I will say our work is not cheap. Most of these folks pay close to $1k (some considerably more) for their personal tax returns; the business returns are even more.

  Perhaps Block is pushing to buy local tax prep companies because they finally see the light. They used to be "America's tax preparer" but then got sidelined into pursuing the easy-money EITC clients. Now that those clients have other much cheaper choices, Block is trying to return to its roots but wrecked its reputation so much it can't do so organically so has to buy companies that do business the way Block used to do. Notice they are not offering to buy out Liberty franchisees? Perhaps that is the model they are trying to get away from.

• Well this non compete started last tax season when a franchise was purchased from Corporate. I have heard it more than once from other tax preparer. They are working on trying to get a class action against H&R Block. In my state, the non compete can stand up in court up to 1 year. After one year, then the clause is not enforceable. The people signed the form prior to be able to be interviewed. This particular location was owned as a franchise and they paid overtime, but corporate does not allow anyone to be over 30 hours a week and never any overtime. Plus they have a number of tax returns that must be completed in order to keep their position. This is all in the new contract with corporate H & R Block in my area.

  I believe my client because franchise business and "captive insurance agency's" are all going to non compete clauses. They are putting mileage test and not touching current clients up to 1 year or 2 years.

  Like you stated, your clients are much more complicated than the average independent and H&R Block. Most of your clients I would not touch because they need more accounting work than I would as an independent would want to venture out. I refer people to my CPA monthly for more complicated tax returns.

• Block is on a buying spree they want any independent they can get along with buying back franchise locations hearing this from many parts of the country.

• They won't be able to switch the mom and pop s to blocks pricing right away. The motive has to be growing the return count and client base. Market saturated so it makes sense.

• So I'm still reading through the old posts. What I'm seeing - from both sides of the debate - is that you CAN make a modest profit with Liberty but only if you DON'T follow the Liberty system. (which is somewhat ironic, in my opinion)

  To summarize so that not everyone has to read through 5,000 posts: Most of the legitimate pro-Liberty people said something to the effect of "use common sense, cut expenses to the bone, and don't do the marketing they recommend." This advice would also be the same I would give to any business starting out.

  So, I'm more convinced than ever that Liberty is a very bad deal. Which is funny to me because my first experience with them - unlike most of the people here - was very good. The owners of the store I worked at were very good and, as an employee, I didn't have to feel the pinch of the 19% off the top like they did.

  In fact, if you'd like to hire me for $40,000 up front and 19% of gross sales, I'd be happy to consult on your new tax service. I guarantee you better service than Liberty.

• Looks like LTS got snubbed by the IRS this year with them getting so much enforcement action against them. http://www.accountingtoday.com/news/tax-practice/irs-plans-to-set-security-standards-for-tax-preparers-78535-1.html?zkPrintable=1&nopagination=1

• Liberty is on the road to being non-existent.

  Anybody that partners with them will lose now and in the future. Their reputation is tarnished. They will squeeze what they can out of those too deeply invested in their territories.

• I'm not sure Liberty was snubbed. Perhaps the reporter only had so much space for the report so focused on the big guys. I think Liberty is a member of the alliance, so they were likely in attendance, just not fawned over by the press.

  The discussion about Block trying to buy up independents made me wonder if they are also trying to buy Liberty franchise stores. While that may seem counterproductive because Liberty set up its stores as close as possible to busy HRB locations, Block might want those stores just for the clients--they would surely close the Liberty stores two door away from an existing Block. I have seen a big supermarket chain buy up a little supermarket and move in even though the place was 1/4 the size of their typical locations just so no other other grocer moved in while they built a megastore nearby. I also saw Walmart buy the building of a dept store that went out of business even though it was tiny compared to other Walmarts--they just didn't want a competitor in that space. If Block is trying to buy out the competition, have they approached any Liberty franchisees?

  Next question is whether Liberty corporate would allow the sale. From what I gather from this board, they have to approve all purchasers, and almost none of them pass. Anyone here approached by a straw buyer?

• It's early here, but I wanted to be the 5,000th poster, yay! Yikes, 5,000 unhappy posts. If that doesn't send a message to future franchisees, I don't know what would.

  Out here Block rents in strip malls and then forbids any other tax company to rent in the same mall. Smart. LTS is nearby but on the outskirts.

  Good article T.E.A. linked, thank you. If those summits are including LTS, then they are not going after the grandfather of Tax, himself, the biggest offender of them all.
  It's really about time that the preparers get regulated. That should have happened long ago. There are way too many quacks that go through the "free classes" and all of a sudden are qualified to do returns, I think not. They should have exams like so many other professions.

  What are the predictions for next tax season? What happened to Bill? And NC Hillbilly? And Greg? Great posters. And Mike too!! :)