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
John Barilla got quiet lately.....I wonder if he happened to watch the Chick-Fil-A Bowl the other night....which was sponsored by H & R Block. Lots of advertising dollars spent on the game by Block, but then again, millions watched the game. Block seems to have it figured out, Liberty, not.
Steve:
This is a question for your lawyer. My situation was significantly different, although had I given up at the same point you are at, I would have been much better off. The problem is in your situation, you are screwed no matter what you do. If this is going to cost you a substantial amount of money by opening, get out now. The amount you owe will only go up exponentially.
Don't Be Fooled,
You are hilarious, Barilla probably choked his Chick-Fil-A! When he saw that your comment!
Sorry guys, actually doing work opening up another couple of offices this year and already getting a bunch of clients in. Busy busy....
I think the siutuation Steve brings up is a good example of what not to do when buying a business. If you are looking to buy yourself a job DONT!! Buying a franchise just to buy yourself a job is not a wise thing to do and a big reason many fail. Buying a Franchise is a tough thing to succeed at even if your a commited business person but someone thinking that they can buy themselves a job usualy always fail and cannot understand it why it happens, and as most employees do, they blame everybody but themselves because it is not their fault.
Steve I am not sure the financials behind what you have done so far but I will agree with others and state that you need to cut your losses and not open if at all possible. If you plan on opening and giving it 20 to 30 percent you will do nothing but bury yourself. Hopefully your not commited to a long term lease which can make this even more difficult. Seek legal help and good luck with your job!
Laughable;
Geegoshwilligers, why didn't I think ot that. I guess they forgot to teach that in EOT. I agree with you 100%. It is much easier to absorb the losses you are going to incur if you have an income against which to take those losses. And at the end, you have more money to give John Screwitt for his overpriced royalty fees.
Laughable:
"Buying a Franchise is a tough thing to succeed at even if your a commited business person." Especially a "Liberty Tax Franchise"
"Someone thinking that they can buy themselves a job usualy always fail and cannot understand it why it happens, and as most employees do, they blame everybody but themselves because it is not their fault." Where did you get your psychology degree?
I was on HRB website and they talked about stores lossing prepares has this been happening at Liberty? Are franchees helping pay the staff registration fee?
I got an e-mail from Liberty wanting to know if I wanted to be come a tax animal. I tried calling the 800 number but no answer, tried the website and it just shows you how to locate an office. How much was Liberty billing the franchisees for this service?
Again, this is a loser franchise. Please read all of the posts. You will get the real picture of an organization that is nothing but a screwed up mess hoping to find their next victim. I hope it is not you.
Having just gone thru a tax course in Phoenix area, I agree with much of the above. I am an early retiree, have a degree in Bus Mgmt, and have had my own business in the past. I thought 'doing taxes' would be a great part-year job. After seeing the extremely poor quality of staff (no one with ANY tax knowledge other than the 4-day course!) being hired by this new franchisee, finding out the low wages, the emphasis on tricking low-income EIC clients to file and sign over their $249 tax fee - well, let's just say I go back to my previous initial impression of Liberty when I saw the costumed wavers leaping around on the streets - it's a joke, and I'm not working anywhere that I couldn't recommend to my friends and family.
Shari;
I think you nailed it pretty well. There are some decent people out there doing taxes legitimately and doing well with it. Unfortunately the retail tax business is nothing but a bunch of scam artists posing as legitimate business people, Liberty Tax probably the biggest offender. No doubt there will be some Liberty naysayers out there who will disagree, but just look at all of the complaints both on this board, and every other complaint board on the internet and you will soon realize the purpose of this franchise is to rob everybody and anybody, the more, the better.