UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
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?
.
Recent developments have left franchisees worried and uncertain about their futures. To advocate for greater…
The Building Kidz Worldwide franchise is an opportunity to own a preschool & childcare center…
PAINT NAIL BAR has undergone some significant changes since franchisees contacted us with their complaints,…
U.S. Veterans magazine has removed JDog Brands as its #1 "Best Franchises for Veterans" list.…
More than 400 Veterans & military families who invested in JDog Brands franchises have failed,…
Genevieve McDaniel is a former franchisee turned franchise researcher, franchisee advocate, advisor and fiercely honest…
View Comments
Dolestsky ran Fanatical U and trained Liberty Zees on Fraud with John's approval and financial support! I skipped all those B.S. Trainings. He thinks he is the Tony Robbins of tax Prep but he's only good at Fraud. Check out his insurance business I'm sure thats clean too. These guys are only interested in a quick buck to Payoff Liberty Debt. John brags about making over 700 people Millionaires which was proven bogus he has Definitely Bankrupted 700 Franchisees. John's legacy will be that he was the only CEO of two Bankrupted Publicly Traded Companies. Great accomplishments SteveD and John! What's next I'd check out Hartford CT and Cincinnati OH and Los Angeles if I was the DOJ. Actually any Liberty office that has Agi less than 40k in the area that does over 1200 returns would be a good place to look. That will narrow it down because less that 5% of Liberty offices do that many returns
Don’t forget Chicago where offices do 200-300 returns by January 15th.
The DOJ and IRS are already checking out Los Angeles. There's a Grand Jury already in place looking to indict John Hewitt. The IRS CI are already roaming the streets of LA and Orange County gathering information and evidence.
First the irs and doj investigating closing the sale will use that information to go after as many franchisees as they possibly can. When it comes to them trying to go after Liberty i don't see it ever happening.
The reason is most Americans do not know the difference between Liberty Corp and Liberty Tax Franchisee. Also Liberty has committed so many more crimes than closing the sale which I think would be near the bottom. Liberty using there well written franchise and Area Developer Contracts to steal people blind knowing that they will never be held to there obligations of the contract because very few can fight them in court. And Liberty has been very careful and made sure that they sold to people who could not afford to fight them in court for their rights per the contracts.
WOW, it's about time! Doletsky was one of the biggest scumbags around. Can't believe that he lasted as long as he did. Hope that he enjoyed his first stint in jail, cause it sounds like he will be heading back. This is one of the original guys that was promoting fraud......and if you didn't follow his lead he would try and work you out of the system. EVERYONE at Liberty knew what he was about, and not only turned a blind eye but encouraged him to teach others what he was doing.
It's kind of a shame, some of these guys were talented and could have built sustainable businesses. Instead, they committed fraud to grow faster and make millions.
IRS and DOJ need to start cutting deals with the small fish.
Steve is the type of person that John loves. Because in the end Liberty is able to financially gain and in the end Liberty will turn on him as they have already done and place all the blame on someone like Steve while claiming that they do not support or encourage anything except by the book tax preperation.
The problem is that franchisees and Area Developers both quickly come to a realization that to not go bankrupt owning a part of Liberty that something drastic will Need to take place. Otherwise they will be facing complete failure. This is not a good excuse to turn down a road of breaking the law but it is the reason that it does happen more often than you would think. Most never come anywhere close to what is being described in Steve's situation. Most struggle daily with how far they should push the limits. But the pressure on franchisees that are made to feel like they are idiots and worthless by Corp is intense at times.
Now if Liberty Tax Franchise system was not a franchise that's business plan focuses almost entirely on the poorest and least educated tax customers things would be easier I think but the fact is the poor and uneducated are the main focus of there marketing with little effort placed on anything else. If your not doing a large number of eic returns and doing them for 200 to 300 a shot your just not going to get much from Liberty Tax Franchise system.
Doletsky was one of the people that ushered me into their "Special School" for franchisee's that they claimed would maximize my fees. They did this by 'suggesting' that if a low wage earner had a little more income from and outside business such as construction, beauty parlor or child care, they would receive more government tax refund. He instructed several of us on how to manipulate these small time businesses to optimize the EIC by lowering or raising net income through these fake businesses. His rationale was that the IRS lacks enforcement so the likelihood of getting caught was slim. He also argued, along with Stacey Barnes and Corey Hughes, that this would increase our fees and have the client refer other friends and family in a similar situation. These people would provide examples of how this tactic worked and garnered them a high return count and exorbitant fees. Meanwhile, Liberty was getting 19% of the high fees for all these questionable returns.
Now I see the the illustrious Corey Hughes is now in charge of franchising. It seems to me that the same bunch of crooks are still running the company with John as the emperor. Make no mistake, John will be throwing these people under the bus soon enough. They deserve it.
Sounds like Steve was (and also having his cohorts and preparers) engaging in the same pattern of fraud and deceit that franchisees such as Nazim Chandrani, Stacey Sanchez, Sam Desai, and others have engaged in out west, with the marketing and assistance training of none other than Danny Hewitt. Also forgot to mention that Doletzy was the one who inspired the top LA Zee, John Balkhi to get into the Household Income game-only his preparers were well versed in the law to do it legitimately.
SteveyD always ended his training sessions saying Fake it til ya make it! Well it tax prep that just doesn't work.