Are LIBERTY TAX SERVICE Franchise Owners Happy?

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• I suggest calling Liberty Tax Franchisees to see if they are profitable or not. I doubt many are with as rapid expansion as they are claiming. They are also not a public company so verifying their growth in returns split by online and storefront will not be public information.

• Get your facts straight. John Hewitt did NOT sell Jackson Hewitt as you stated. The board of directors replaced him as CEO when the company was within days of bankruptcy because of the poor financial decisions he made. After being replaced as CEO, Hewitt then resigned from the board and started his two year non-complete.

  If anyone measures franchisee turnover, my guess is that Liberty Tax would rank on the bottom. They churn and burn their franchisees. Since the company often finances them, this is a way they make money. They sell a franchise at X dollars, the franchisee spends their own money getting it through a tax season but doesn't have enough cash to make their note payment to the franchisor or Hewitt himself. The franchisor then terminates their agreement and sells their unit to the next franchisee who pays them 2X.

  The Liberty franchise is cult like. Franchisees are not allowed to make negative comments about the brand, Hewitt, or any of his in crowd or they are deemed non-team players, so you will not likely find them posting comments here. Franchisor retailiation would likely result in a termination of their franchise.

• An Insider wrote Get your facts straight. John Hewitt did NOT sell Jackson Hewitt as you stated.

  Interesting. The copy on Entrepreneur's franchise listing states "“In 1997, after selling Jackson Hewitt Inc.–the tax-preparation service company he founded 15 years earlier–John Hewitt..." If not supplied by the company, it was certainly approved by it.

  The Liberty Tax website isn't as direct, but implies Hewitt sold Jackson Hewitt: "Under Hewitt's tutelage, Jackson Hewitt grew from a local six-office operation to 1,345 offices when it sold in 1997 for $483,000,000. Hewitt established Liberty Tax Service in Canada in September of 1997 when he acquired a Canadian tax franchisor."

  It's still not completely flattering that he created a direct competitor with the mission of taking business away from the JH franchisees he established, is it?

  Herb Melonby wrote I suggest calling Liberty Tax Franchisees to see if they are profitable or not.
  If you know any Liberty Tax Franchisees or ex-franchisees, please invite them to comment here - pro or con. This way they may share their insights anonymously.

  IMHO, Liberty Tax must be ponying up big advertising bucks to have landed the #3 spot on the Entrepreneur 500. Insider insight into the contentment of these franchisees can help prospects make an informed decision.

  Offline comments can be submitted in confidence to unhappyfranchisee[at]gmail.com.

  Thanks for your participation.

• Here's the correct history if you'd like the truth.

  http://www.answers.com/topic/jackson-hewitt-tax-service-inc

  John Hewitt was fired as CEO of Jackson Hewitt in 1995 and resigned as Chairman of the board three months later. Cendent Corp bought the company in late 97 or early 98 - two full years after Hewitt left.

  It's not surprising to insiders that John Hewitt is claiming credit for the sale. When he left Jackson Hewitt was days from bankruptcy, but that fact doesn't play well into Hewitt's story. Fortunately for Jackson Hewitt franchisees and shareholders, talented people were able to turn the company around and they came out stronger as a result. Hopefully for Liberty shareholders,he learned some valuable lessons from his mistakes at Jackson Hewitt.

• On the advertising comment - remember Liberty franchisee pay into the ad fund, yet they get virtually no electronic media - IE TV or radio. The company chooses to spend their ad dollars for clowns to stand on the street instead. I would venture to guess that leaves lots of ad dollars in their ad budget for the company to use to sell franchises and promote the brand nationally. I'm sure their franchise agreement allows the company to use the ad dollars any way they see fit. Most franchise agreements do.

• Is LIBERTY TAX SERVICE a Great Franchise?
  http://www.bizzia.com/franchisepick/is-liberty-tax-service-a-great-franchise/

• An Insider wrote:I would venture to guess that leaves lots of ad dollars in their ad budget for the company to use to sell franchises and promote the brand nationally. I’m sure their franchise agreement allows the company to use the ad dollars any way they see fit. Most franchise agreements do.

  Most franchise agreements allow franchisors to use the funds as they see fit to promote the brand and unit-level sales - but not directly for franchise sales, which is a corporate expense. I do not believe that using an ad fund for franchise sales ads would be legally defensible, and franchises we've worked with keep those funds clearly separated.

• Looks like An Insider had it right about John Hewitt:
  "At the end of the 1995 filing season, Jackson Hewitt, "battered" by the effect of the tax rule changes, according to CEO John Hewitt, was hanging on by a thread. The firm's franchisees reportedly had not paid $3.5 million in fees to the company, which soon was nearing default on several loans from NationsBank. During the remainder of the year, 96 offices were closed. There was a management shakeup as well, and the firm began seeking a new CEO, with John Hewitt shifting his focus to long-term strategy from day-to-day operations. In June of 1996 newcomer Keith Alessi, who had most recently served as vice-chairman of supermarket chain Farm Fresh, Inc., was appointed to the top post. Three months later John Hewitt resigned from the company. Vowing to remain in the tax business, Hewitt later announced plans to form tax preparation services in Canada, England, and Australia, with the United States to follow when a two-year noncompete period was over."
  Sept/Oct 1996 Hewitt resigned. It was December 1997 when HFS (Cendant) made the $480M purchase.

  So the Entrepreneur history is wrong.

  Still haven't heard from franchisees as to whether they're happy. Any out there?

• I am a Liberty Tax Service Franchisee. Yes, I am VERY happy being a franchisee. I have hit some bumps in the road along the way, but it was caused by my inability to follow a given system.

  I have discovered that when I listen to proven suggestions and followed said suggestions AND believed in the system that I bought into, I became profitable.

  I am not sure who began this thread, or even to what purpose, but if it was a "prior" franchisee, be honest with yourself in that if you had done the proven techniques, then you too would have been "happy" and successful.

  And to touch on another topic on this thread: Is this about being a happy franchisee or just someone mad at the CEO of Liberty Tax Service?

  Thank you,

  Happy Franchisee in Roanoke, VA

  • T Roberts wrote: I am not sure who began this thread, or even to what purpose... Is this about being a happy franchisee or just someone mad at the CEO of Liberty Tax Service?
    Thanks for your insight. To answer your question, the thread was started by me - a neutral 3rd party - with the intention of providing an unedited, unbiased forum for franchisees and ex-franchisees to share their experiences (especially for the benefit of prospective franchisees) both positive or negative.

    Industry insiders and savvy observers know that high rankings in the Entrepreneur 500 are meaningless - or worse (even grounds for suspicion). Many of the top franchises they list (also top advertisers) are also the most highly litigated. The UPS Store, Quiznos, Jan-Pro, Jani-King, Curves all enjoy high rankings yet get many negative comments from franchisees. Others are solid opportunities with happy, successful franchisees and dedicated franchisors.

    Which is Liberty Tax Service? Encourage fellow franchisees to share their experiences. If the comments are overwhelmingly positive this thread will only reinforce the positive image of the Liberty Tax Services franchise opportunity.

• Don't know if they're happy, but Are Liberty Tax Services franchisees honest?
  I just read http://hamptonroads.com/2009/07/liberty-tax-penalized-116m-case-over-its-advertising
  "A California court imposed $1.16 million of civil penalties on Liberty Tax Service, saying Liberty engaged in deceptive practices when promoting its refund anticipation loans to tax-return filers..."

  "In a decision filed June 15, Superior Court Judge Curtis E.A. Karnow said Liberty falsely portrayed its refund anticipation loans as tax refunds from the IRS. Liberty also failed to educate its staff about the legalities of advertising and failed to control its franchisees, he said."