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?
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It is clear to all why some are unhappy. They do not want help they just want to cause trouble and complain. I was accused of being less than honest which is funny yet I have offered time an again to help. This would not benefit me financialy or in any other way. No matter what is said he finds things to be distrustful of and make accusations of never once trying to improve. To answer NJ question he plans on doing the same thing and then complaining!!! Because thats what he does!
Another issue I never blamed you or anyone for not knowing how to run a business. I blame you for not taking help and turning on people who would help you then blaming them and everyone else for your issues. It is clear that you enjoy this and you somehow convinced yourself that failing is ok as long as you have someone to blame.
So I guess the hand ringing continues and we will leave you to your own destruction since that is what your determined to accomplish. There is only one Kool-Aid club going on and its not the 3 or 4 of us offering to help, its the ones who see the Boogey Man arround every corner. I do wish you well and if at anytime you decide lashing out this way is not the answer and you want to succeed I am available.
Rob,
You say "It is clear to all why some are unhappy. They do not want help they just want to cause trouble and complain."
That sounds like Totalitarianism to me . Perhaps a little communist and fascist too!
Keep your mouth shut huh?
You say "I blame you for not taking help and turning on people who would help you then blaming them and everyone else for your issues...." When AD's send you thirty candy tins with no candy, hispanic marketing when you have no hispanics in your area and allocate the majority of the DMA marketing expense in the territories with the highest return count... well yes, I complained, to the corporate office. Who passed my complaint to my AD's, who berated me and several other nearby zees. Well that helped. And these were the people who I turned to for help.
My business did not fail because I lacked support. I sold them all.
I am on this board to warn potential franchisees on the pitfalls, not of buying a franchise (because the premise is good) but of purchasing a "Liberty Tax" franchise.
And what is the deal with your preoccupation with "Kool-Aid". If anyone is Rev. Jim Jones...It's John Hewitt and his cronies.
Focusing on the low end income earners in the worst demographic who for the most part cannot work the basic math on why they should wait 8-15 days to save $100+
I got involved in a leech business, the opposite of a Robin Hood. I stole from the poor to give to the semi poor (me).
I wanted to buy a business where I could prepare taxes, help people and make a reasonable living. Instead I "nearly" went bankrupt by following the "plan" almost to the cent. Gave out thousands of free returns, limited discounting, always had multiple wavers, had two dynamic EA's and one CPA working for me and delivered donuts by the thousands.
Had it not been for my spouse working we would have lost it all.
Don't lecture any of us on why we failed. Lecture your franchisor on why they are failing you.
And what the hell is this unhappyfranchisee.com website for, to explain our failures or share our grievances?
If you are so happy and busy with tax school, why do you bother visiting this site? Because you may not be as content as you wish you were.
I guess when facts are not on your side name calling is the only option. Fact is I do over 30 percent of my returns in March and those are paid returns and I run professional tax offices. I did not come on here trying to tear anyone down instead I have been more than willing to help and I along with others have offered to help. And no one is failing me. Sorry but Candy Tins without candy has never been one of those things that I would let hurt my performance. I do understand what your trying to say but I don't think you realize how it sounds.
I know you would rather be able to say whatever you want unchallenged and you think that the creator of this site made this for people to make any type of accusations without any challenges but if you read what the goal of the person who created this was to attempt to find out the facts.
Honestly my post was not directed at you nor was I thinking of you at all. I was speaking to the current franchisees who are on this board but since it is an open board you can jump on and scream and yell and revert to name calling if you want.
It is funny that I offer help and get nailed with all sorts of accusations and insults. My offer to help was sincere and still stands. I am not a corporate employee and my willingness to help has been the way I have operated for years. I would much rather see a franchisee turn things around and eventualy sell and make a profit than to go down the path of letting their frustration block them from any kind of success. But those are individual decisions that people must make for themselves.
Ive done all I can and will leave the board to other people. No reason to continue since it has gotten to name calling and smears. Good luck to all. Signing Off
Rob::
Fact: Liberty Tax franchise cost $40,000
Fact: Liberty has no national television advertising
Rob:
Fact: Liberty least known tax preparation service of the top three
Fact: Taxes are much more complicated then most franchisees without a
tax backgroung realize.
Fact Business model is best suited to high density low income neighborhoods.
Fact Tax preparation industry down over 6% do to economy in 2009
Fact On-line tax preparation is continuing to take market share from brick and morter stores.
Fact Rob and NJ Zee are Area Developers and have an incentive to promote Liberty more then just a regular franchisee.
My whole point of being on here is to point out the facts.
Bill - Are you still a Zee or did you sell your store(s)?
Rob:
You clearly have a much better business skill set than my AD. How do I get someone who understands Liberty Tax and the issues the region faces.
Bill, I have no incentive to come on here financialy. I have helped many many Zs that have called and asked for help nationwide and when I do that their is no financial gain or motive. I do it to continue a culture I believe in. We understand you think everything at Liberty is bad and you are not interested in any help. The tax business is changing rapidly. The opportunity is huge right now for those able to see it. I wish you well and my offer will always stand.
Frustated,
I will not get into other ADs. You do have someone who understands Liberty and for the regional issues their is not much difference when it comes to executing in regions. Yes their is some but overall the region is not that much different. I can explain that later. All you have to do is email or call and I would be happy to speak with you confidentialy. I know with the level of distrust you have that may be difficult but all I can do is offer and give my word its confidential. I have a track record and I think that should give you an idication on my word.
Mike:
The territory was turned back over to the company. As many former franchisees have experienced there was no re-sale value. As you know there is a transfer fee of $5,000 and any potential buyers have to be approved by the company.
Rob:
Your and area developer with stores to sell in your territory. The fact that you and the NJ Zee don't disclose that fact makes your comments suspect..