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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View Comments
CNJ:
Sounds like an opportunity to sue them for fraud. I hope you have documentation regarding this action. You will have to sue Liberty for a change of venue away from the VA courts. Argue about your health being a factor. Have you thought about a chapter 11 bankruptcy? That could also force a change in venue to a court nearer to your home. That would make it more costly for liberty to litigate. They love to litigate as long as it is in a friendly VA courtroom. Good Luck.
The annual spin doctors will be starting on Thursday. The next Convention starts. I would love to hear the garbage.
CNJ: I hope you continue to post here and tell your store. While all of us share the same experiences it is important that (unfortunately) current franchisees collaborate what has been stated on this site. The goal of all of us is to see this pariah of a company out of business.
The Liberty convention is like a bunch of pirates celebrating the booty they just got. To be successful with the Liberty model, many customers need to be overcharged for their prep fees. Or, just commit fraud until you get caught like those two this past tax year.
Not saying Liberty promotes fraud, but the Captain will take your 40k franchise fee and royalties and leave you on your own to succeed. Sure, they have a marketing plan, the one Danny made up in kindergarten.
^^Sad but true:
You're not saying that Liberty promotes fraud, but I AM. I am 100000000% certain that they have promoted fraud for years and then sent the feds after their own franchisees. I know this to be a fact. They can deny it all they want, but it's true. They are a HUGE BULLY and PREDATORY franchise and it wasn't until this forum began that any of us had a way of communicating factual information. They bully you and threaten you with all kinds of lawsuits to keep quiet and not divulge information.
THEY SPY on all their franchisees-FACT. They promote fraud-FACT. They need to be shut down-FACT. Their leaders need to be held accountable and go to jail-FACT. They overcharge you for everything-FACT. They rip you off-FACT. They are crazy for Notices to Cure-FACT. They hire AD's who sit on their ASS and collect your $$-FACT. They are finding ways to survive now that RAL's and ERC's are gone-FACT. There is NOTHING redeeming about them as a company-FACT. They just had a whole bunch of insider trading and they should be arrested-FACT.
There you go potential franchisees, Liberty's burned many of bridges, SanFranDan being one.
So, if you potential franchisees find this site, start reading from the first post before you buy. There are more than disgruntled posters on this site. The positive ones are probably giving you much of the same lingo they (John and ?)gave from day one of their operations. If you buy after you get to 100 posts, shame on you. If you buy after reading 4000 posts, shame on you, no one should feel sorry for. If you do buy after reading most of these posts, you will fail, you drank the kook aid and it is to late.
Don't forget, when looking at e-file stats, to take into account (sorry) the IRS Volunteer Income Tax Assistance (VITA) program and the corresponding one for the elderly. Low-income clients are able to have their taxes prepared for free, provided they aren't massively complicated, and we e-file all those returns.
Just came back from visiting my sister in IL. Happened to see a closed Liberty Store and she remarked how she didn't see that many wavers this year. More victims of this franchise and proof of what happens if you invest with this company.
As we head into Liberty's season for selling franchises I encourage everyone to continue to post information on this site that will inform potential franchisees that this company is not a viable franchise model and has become a scam.
Buyer Beware!!!
Re; SanFranDan
I am 100000% sure that Liberty ignores fraud if it may put them in a bad light. I had several situations where people had come to my store after they had been to another Liberty that had closed. The other Liberty had a preparer that clearly added miscellaneous deductions to increase the refund. It was done after the client left and before it was filed with the IRS which of course increased the margin for the overall return. The amount was then added to the cost of doing the return and the customer never knew it. I brought this to the attention of Liberty, and guess what, they asked me why I told the customer about the discrepancy.
Hmmmmm
In just the last two months of April & May, there have been numerous new posters. Who are they? Did they post only once or plan to post again? Whatever happened to our beloved Barf villa?! (We miss you so! NOT)
We've heard from a 'Jimbo', a 'Mary Smith', a 'Mario', a 'Trouble', a "getintouchwreality', a 'guestwhatshappened', a 'Vinny U', a 'Jim', a "William Yates', a 'Ralph Collazo', a "happyexfranch', a 'guest2', a 'CNJ' and a "KaliW'. Whew.........
If ANY of you are current franchisees, let us know! However, I'm sure with the Feds breathing down their necks, they've cleaned up their act.
How many have reached their 5 year contract ending and plan to renew? Plan to leave & tell them to shove it?
If there was a way for me to contact each & every potential franchisee & ask them "WHY", I would do it in a heartbeat. Maybe people like losing thousands of dollars with nothing to show for it. If so, then sign right up!
It sounds like this website is making a dent in the number of new offices each year. If so, then hooray to all of us. Let's keep that momentum going!!