LIBERTY TAX Offers Franchise Test-Drive Opportunity
Liberty Tax has unveiled its latest franchisee recruitment promotion, a try-before-you-buy program it calls the hands-on “Franchise Boot Camp.”
According to an October 4, 2010 company press release, “Prospects will be put through Liberty’s franchise operational paces and paid a salary. After operating an office, the candidates can apply this newly gleaned experience to purchase the office, or finish the job with no further obligation.”
The Liberty Tax press release continues:
“In response to the economic climate and financing obstacles of opening a franchise, Liberty Tax Service announces a new ‘Franchise Boot Camp’ program that puts prospective franchisees through the paces of owning a tax franchise while they collect a salary to run the office. Candidates can choose to ‘enlist’ for seven weeks of extensive franchise operational training and real-time management responsibilities of running a retail store front during tax season.
“’The approved candidates will receive in-depth instruction on marketing, management, hiring, budgeting, tax preparation and other aspects of running a Liberty Tax office. After operating an office, the candidates can apply this newly gleaned experience to purchase the office, or finish the job with no further obligation.
“Liberty Tax will accept applications for ‘Franchise Boot Camp’ at recruiter(at)libertytaxemail(dot)com.
“’This is a win-win for both parties: our approved candidates can try us before they buy, and Liberty Tax has a report card on their ability to run a successful tax office before they enter our franchise ranks,’ commented CEO John Hewitt on this inaugural franchise training program.
“Residents of California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin must comply with the specific state applicable presale registration and disclosure requirements.”
What do you think? Is the Liberty Tax “Franchise Boot Camp” an innovative, risk-free way to enable franchise prospects to make more informed decisions regarding the Liberty Tax franchise opportunity?
Or is Liberty Tax “Franchise Boot Camp” simply another slick franchise sales ploy meant to turn employment seekers into Liberty Tax franchisees?
WHAT’S YOUR TAKE? SHARE YOUR OPINION WITH A COMMENT BELOW.
Company rebuttals, clarifications or statements are always welcome. Contact us at UnhappyFranchisee[at]gmail.com.
All sounds “fishy” to me… Just sounds too good to be true. Would love to see the small print on that agreement.
JH thinks he is smarter then everybody else. For any one looking at this oppurtunity please read carefully there has to be a catch. I know someone who managed one of the corp. stores was told he would have a full time job, lot of hours in tax season and then so many hours in the off season. Was told as a corp. employee he was entitled to health benefits. Started in Oct. they keep putting him off regarding the health benefits and after tax season ended was told he wasn’t eligible for healh benefits.
You can guess what this is all about. Here is what I believe to be the basic format of this opportunity.
The first year:
Liberty owns the store and does 300 returns.
Net revenue: 60K
Spends:
Royalties: 12K
Marketing $12K
Store front $18K
Labor: 15K
Net: 3K
Second year store does 450 returns and franchise is purchased for 1.5 times 1st year revenue ($90K + 5K for equipment)
Net revenue: 90K
Spends:
Debt service: 30K (95000@12% for 5 years)
Royalties: 17K
Marketing $12K
Store front $18K
Labor: 15K
Net: -$2K
And finally in year 3 decides to pack it in, as he will continue to have so much debt service, that he will only be solvent by year 5.
Sounds like a good plan to me…………..
The way I read it, you get a chance to purchase it after the first 7 weeks. So, say the store does 300 returns and 1/2 are done in the first 7 weeks. That would be around $30,000 of revenue.
Service companies to not sell for 1.5 multiples. The majority of accounting practices I have looked at sell for 1x. So let’s just split it and say a 1.25 multiple. That would be $37,625. I believe the franchise fee is $40,000. So purchase it for $40,000 plus equipment of $5k. Total puchase price of $45,000. Debt service in susequent years would be $14,400. Hmmm changes year 2 quite a bit.
But I guess the main point of the offer is this – If you do not have a lot or ANY money, this gives you a chance at ownership. Otherwise you are off working for someone else, earning money for them instead of youself.
Not a terrible deal:
“if you do not have a lot or any money, this gives you a chance at ownership”
The saying goes “To good to be true”. Just like you can make money stuffing envelopes at home. If these stores where so profitable why wouldn’t a company just keep them for themselves and take all the profit. Think about it.
My quess is that none of these territories are new territories, these are stores/territories that the company took over. This is just another way to get staff in the store, give them this incentive that if they do well they get a chance to buy it. But why would a company want to sell a store to someone with little or no money.
It dosen’t make sense from a business standpoint and John Hewitt is a business man.
“Too good to be true” is implying that it is easy. Anyone who owns their own business, franchise or not, will tell you it takes a lot of time and effort on the owners part and it is not easy.
Your guess is probably right regarding that these are probably existing stores and not new stores.
Jackson Hewitt and H&R Block have sucked in performance the last few years. I know the majority of H&R Block stores are company owned and I believe a lot of Jackson Hewitt stores are company owned as well. I would imagine that the performance of Liberty’s company stores is probably the same and these stores are not/minimally profitable.
For anyone looking at a Liberty franchise, Liberty has all the data on how first year stores on average perform but they choose not to disclose it. That in itself should be a warning to the people looking to buy a franchise.
If you are thinking about purchasing a Liberty Tax service run to a CPA and pay the money for the CPA to run the numbers for you, he/she will tell you they don’t add up. JH is not in the business of giving Tax Services, he is in the business of selling franchises and separating you from your money. I purchased two territories did everything I was told to do and was in bankruptcy by the end of year two. The marketing plan did not work, wasted precious resources marketing the the hispanic market, prior owner opened up shop right down the road and took all of my clients by sending out a mailer telling them we had moved to her location and changed our name. Legal did not do anything, not one damn thing to get her to stop. Now, I am a CPA…like they say, if I only knew then what I know now. Run, run as fast as you can from this scam.
To: Liberty Sucks
Another great testimonial to the Liberty nightmare. It was based on the Eagles song Hotel California. They will drain you dry with no hesitation, just for signing on the dotted line. And what’s worse, if you read one of the postings, some guy died and they still wanted his widow to make good on his debt after they took his locations. FOLKS, THIS IS ONE OF THE SLIMIEST FRANCHISE ORGANIZATIONS YOU COULD EVER GET CONNECTED WITH. DO SO AT YOUR OWN RISK, AND DON’T SAY YOU WEREN’T WARNED.
DO NOT BUY A LIBERTY FRANCHISE, THEY GIVE YOU SOFTWARE AND THE ABILITY TO BUY A LIBERTY COSTUME! YOU MUST SPEND ALL YOUR TIME GIVING OUT PIZZA AND FOOD TO EVERYONE IN THE NEIGHBORHOOD! IF IN THE FOURTH YEAR YOUR OFFICE IS NOT DOING 1000 RETURNS THEY CAN TAKE YOUR STORE AWAY FROM YOU, CURRENTLY THERE ARE APPROXIMATELY 3500 STORES THE COMPANY IS ABOUT 13 YEARS OLD. THERE ARE ONLY ABOUT 150-200 STORES DOING OVER 1000 RETURNS, THINK ABOUT THAT!! NOT ONLY DO THEY EXPECT YOU TO DO ROADSIDE PARTIES ETC. BUT THEIR OWN COMPANY STORES RARELY HAVE WAVERS EVEN THEY KNOW IT DOESN’T WORK, BUT EXPECT FRANCHISEES TO SPEND, SPEND, SPEND AND IN THE END YOU BUILT THEIR BRAND WITH YOUR MONEY AND HARD WORK, YOU WALK AWAY BURNT AND THEY LAUGH ALL THE WAY TO THE BANK!!!
I thought each territory is large enough to have 2 stores, therefore you would only need 500 returns in each store. I would think if you are not doing 500 returns in an office after 5 years you would want to not renew anyways.
testaipira
Most territories are large enough to have two stores, heck most territories are big enough to have 10 stores all doing 100 returns, or better yet, 20 stores doing 50 returns. Maybe you would like to visit my territory. I cannot put a store anywhere in my territory that will be farther than 2 miles from another Liberty franchise store. Again, you are drinking the JTH kool-aid.
Frustrated,
Why did you pick that territory? Who do you blame for that? Just curious what your conspiracy theory on that is?
testaipira
No conspiracy theory, just someone who didn’t disclose to me his connection with JTH and Liberty Tax. I went and talked to several franchisees who were less than pleased with LT. Rather than being upfront, he claimed they were poor business people and my results would be significantly better. I asked a lot of questions, and thought I was getting honest answers. Instead I was getting a lot of lies. Hence you maybe understand my frustration. This organization is not above doing anything to sell franchises.