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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Bill,
My store was not in the Atlantic City area. But no surprise to hear that whole areas are failing. I am in NJ but several counties north. However, this failure isn't just a NJ phenomenom.
ZeeOut: thanks for disclosing your location. The more relevant information we can provide the more valid our point. I would hope others will share approximately the area that their from. To say the lights are out in the stores near me is just to general. Liberty doesn't provide facts. The more facts we provide the stronger case we build against this company.
And more developing news in the South NJ area, a few other stores (at least 4 that I know of) did not open up this year and were given back to Liberty! In the last few years, I think they have closed at least 10 stores!
^^^Good to hear offices are closing. However LTS still makes lots of money on the initial contract and then when they get some poor sucker to buy one of those offices they took back. For usually a lot more $$.
We need to continue to hurt them in their pocketbook as they have done to so many of us. I hate to see honest franchisees closing their offices but I do want SO much for LTS to close permanently.
Potential franchisees need to open their eyes and not be so taken in by their dog & pony show and the attention of the AD's. That changes the minute you sign on the dotted line and have handed over the initial $$.
Horatio, Dan & Richard: The three of you are very smart to come on this website & read the REAL stuff about LTS. Not what they want you to hear. All of you will fare much better on your own, believe us. Good for you. I feel like a proud parent!
Anyone wanting to become a franchisee with LTS needs to just look at all their court cases against existing & ex franchisees. They are money hungry & law suit hungry. Many of this nonsense could have been avoided if they treated you like a person to begin with! A partner in growing their LTS franchises. They suck royally.
I used to be able to search the Liberty website and find a list of the States and
the number of offices in each state. Does anyone know where to find that list?
Andrea Jerome Of Hempstead Turnpike Franklin Square NY
An employee for Liberty Tax who has an exceedingly nasty attitude.
On Tuesday evening I came to this place as a walk in, in order to adjust my taxes that were already filed a week and a half before. I had the request to change my status from single to head of household. When I arrived at this location I had an interaction with Andrea Jerome, who was cordial at first but then quickly changed. She and her receptionist told me to fill out a form asking for my basic information such as name, address,etc and she told me where to sign.
After doing this, she then told me that she had to get something to eat to go on her break so she is prepared for us when she comes back so she is not sluggish and making mistakes. Okay no problem, she says this will just take from 15 to 30 minutes and she will be back. After about an hour she was not back and I went back home. When I returned home I called the assistant and requested an appointment for 12 noon, when I arrived Wednesday at that time, only myself and two other people were waiting. She was speaking to to numerous people on the phone and I was not called until 12:20(again I was only one of three people). She called me and went through my files from yesterday and pretended like what happened yesterday with her being very late never happened and didn't acknowledge it or apologize.
What she did talk about was how I came on a crazy day and how busy Wednesdays are and she is moving about constantly. Stated she is glad how this is once a year only she has to deal with this. She told me days like Tuesday and Thursday are great days and when I reminded her I came on a Tuesday the day before and how I waited a while for her, no word of apology came out her mouth, she simply just said I was a walk in and appointments are best. She then worked on my the figures for my readjustment and wrote a peice of paper what my figures would be for federal and state and then gave me her business card. I had told her previously my return arrives Thursday morning(the next day) to my bank and she told me after the refund arrives she can only just take my word for it and to call her the next day and then come in with proof that the person i am claiming is my dependent and then I should pay then. When I called the assistant's number I am told by her that "Andrea is not in the office" and asks me if I want to make an appointment for Monday. I say no thanks and realizing I dont' want to deal with this experience anymore.
So I decide to go in and ask for my Form 1040 Individual Income Tax Return. When I walk in without even greeting me she is halfway standing up on the phone and screams out " Do you have an appointment"? "I am on a conference call come back tomorrow" . I tell the receptionist who is looking caught off guard by how she is acting and tell her all I came for is my form 1040 document and nothing else. While Andrea is on the phone the receptionist goes under the desk and is taking out of the folder and Andrea snatches it from her and says in order to get my form back I have to be taken out of the system first and she isn't gonna give me back my documents.
I tell her she is not allowed to do that and all I asked for is to get my stuff and that is it and she tells me she is gonna call the police now. I tell her how nasty she has been acting this entire time and she tells me "Your the one who took a couple weeks to realize you had a child you had to claim". Bringing up something that is not her business. Andrea then told me that I came in when the place was closed. When I walked in it was 8:30 and she said well the lights were off we are closed and I told her the business is supposed to close at 9 pm not when she feels like it.
When I am not leaving yet she tells her assistant to walk over since she is on the phone and call the police and tell them to come. I tell her its okay you can tell them to come I''m still waiting for my documents and Andrea says the police wont get involved in an issue of "claim" and will only tell me to leave and believe her because "I am a tax professional". When I say to her its all about you huh? She says yes right now it is. Yes Andrea was doing all of this while on the phone with someone in her "conference call"..Or more like she is talking to friends or her boyfriend while pretending its business. As I was leaving she screamed out to me I'm never getting my form back and pointed to the assistant telling her to close the door.
When I came up to the place I just rushed and did not bring my phone with me so I could not report this myself to the police automatically.
I have already reported her for employee misconduct and holding on to documents that do not belong to her without approval towards the IRS. If you ask around, I can promise you I am not the only person who has had a bad experience with Ms Jerome at this place.
Her cell phone number is [redacted]
Bill - I have noticed the same thing. If you google a certain office, like my old one it shows up half of the time, but when you go to LTS offices for my state, sometimes it shows up and other times it does not.
I completed all the unpaid training hours, passed all the tests and practiced on my own time. I was told I would get 20 hours a week. In January I only got 30. I am a first year preparer. I am not stupid but I took more time than the practiced preparers. I have a disability which I disclosed to Peter Hanson the owner that might make me a little slower. They are refusing to supply social security with my last pay stub. In addition I work in an office which Is predominately minority. I was having some trouble with 3 black customers in a row. The supervisor told me that some blacks don't like whites. I have not received the hours promised. Don't work for Liberty Tax they are liars and cheats.l
I was Franchisee for 7 years. I can tell you alot about how they treat there franchisees! They are the worst company to get involved with ,they treat you like shit. They will make you return fees to unhappy tax payer just because they didn't get a loan on their taxes. Then you have to go through ZONES for your complutes which is about 3 times that you paid any where else.They change you 11,000.00 royalty year plus 5% advertising that you never see. The best joke of all is your area developer that you never see. I seen mine once in 7 years when I first open up. The last one couldn't drive 50 miles ( from Kansas City MO to Saint Joseph MO) to see me after stating she would be there and I taking off work to be there at $20.00 hr job. I am planning to open a Mom and Pop in a few years . So Liberty Tax you know where you can go!!!!
Hi Sara - Did someone else acquire your territory? If so how are they doing?
I'm encouraging all former franchisees to post on here information in their area regarding how the remaining franchises are doing.,