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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Come on "Curious" even Hewlett Packard is listed on that Buyer Beware List along with other very large and well known companies.
In the retail tax prep business (in any business in fact) your gonna have customers complain, most of them are going to want there money back or say you didn't disclose proper information thus wanting there money back. And most of them will want there money back after they find out that their friend got there taxes done cheaper by someone else. And personally I don't believe in getting your money back or a free anything for all complaints. Some yes but not all especially in the tax business.
Finally, this forum isn't about whether or not Annie Fuller was a good franchisee, or for that matter whether any one of us was/is a good franchisee. It's about whether or not Liberty Tax Franchisees (former and current) are happy.
And as a former franchisee I can tell you I was never happy with Liberty Tax Service they lied from the start about everything, and then tried to say it was me that I misunderstood, well I know for a fact I didn't misunderstand because other franchisees (current and former) have told me that they were told the same things.
All I know is that Karma is GREAT.. She will one day appear to collect her debts. And John Hewitt and his minions have there fair share coming to them, because she (Karma) knows all they have done.
Bankrupted:
Did you read this complaint on Rip-off Report? It's one of three specifically about Annie Fuller
http://www.ripoffreport.com/liars/liberty-tax-annie-fu/liberty-tax-annie-fuller-o-26edf.htm
The customer alleges that Annie Fuller's Liberty Tax filed her tax return without her knowledge or signature. After she complained, a company investigator named Amy called her. The customer found out later that "Amy" was allegedly Annie Fuller posing as an investigator from corporate.
Two others allege overcharges and deception. Check out this one because it appears she humorously (unintentionally) proves their point by posting comments as both herself and happy customers attesting to her honest character - only it appears she didn't realize her screenname (Getyurgun) would appear on even the phony comments.
http://www.ripoffreport.com/income-tax-service/liberty-tax-annie-fu/liberty-tax-annie-fuller-ow-2d95f.htm
Comments under that complaint also include one from an alleged ex-employee describing how they hid deceptive acts from corporate at her direction.
Could it be that Liberty Tax was not forcing out an innocent blue-eyed darling but was cleaning house of someone using deceptive and fraudulent practices? Just curious...
Looks what's happening in Pittsburgh, terrible, absolutely.
Like most of the people on here I was envolved with Liberty Tax Service for 4 years and have had a similar experience. It was my decision to purchase the franchise and I failed to take into consideration that there was no brand recognition ( in my region), no corporate commitment to any regional or national advertising campaign, and their business model was modeled after Jackson Hewitt and better suited for the urban enviroment not for the location I was planning to open in. While my business did fail, I showed continued growth in both number of returns and net fees each year but just not enough to overcome the expenses and the built-in royalty fees associated with being a franchisee. My point on posting here is to let other potential franchisees know the truth.
As stated, the corporate office does not believe in a national or regional advertising campain. So I find it somewhat hypecritical for the company to run ads on CNBC hawking the purchase of a tax franchises, when they where unwilling to do any advertising for their franchisees who pay them a royalty and advertising fee. The company is dependent on the sale of franchises to provide needed cash flow. evident by their financial statements.
I don't know if Rob, Jdogg and Dawn are company plants, but the timing of their comments and how their comments read like infomercials leaves me suspicious. Remember that during the off season is when JTX Inc. markets and sells its franchisees. Also Rob never answered the question whether he was an AD and in one of his first post states: "This site and these comments are just downright sad. For anyone looking to purchase a franchise please do not listen to these people because these same people will fail at most things they try in life."
For anyone looking at buying a tax franchise pay attention to moneypit's comments and analysis. He is giving you an accurate read of what is needed in terms of tax return volumn, pricing and the cost of running a seasonal tax office. If you already have the tax preparation knowledge you might ask yourself why you would need a tax franchise, if you don't have the tax knowledge or don't thing you have the ability to market your self then you should ask yourself which tax franchise gives me the most for my money. Who has the most brand recognition, which one is right for the demographic I'm trying to market too, Do they have any kind of regional or national marketing campaign. .
What's happening in Pittsburgh?
Anyone who listened to (wish I had taped) any of the Liberty Tax conference calls with Anna Fuller speaking about marketing tactics knows she is a loss cannon. But this kind of agressive marketing behavior is encouraged by Liberty. On one such call Danny Hewitt talked about sneaking into a hospital to hand out coupons in the Liberty custom.
When you have this type of corporate culture encouraging franchisees to challenge and even disregard rules, would it be a suprise to anyone if there is some sort of IRS investigation going on regarding her tax practice. Liberty is dumping her so they can protect themselves. Currently the laws are written to protect the franchisor from liability resulting from franchisee behavior.
bill wrote that "Anyone who listened to (wish I had taped) any of the Liberty Tax conference calls with Anna Fuller speaking about marketing tactics knows she is a (loose) cannon. But this kind of agressive marketing behavior is encouraged by Liberty."
Here's Annie Fuller explaining how she sneaks brochures into schools by acting as if she was expected:
"My method I used successfully was to walk in looking worn out and say "I'm sorry I'm so late with these, I didn't realize how many kids were in our neighborhood". I then drop a stack of the well designed booklets on the counter at school, daycare, church, the Ymca, etc. They will have a bewildered look on their face and will say something about they dont know what you're talking about. ACT SURPRISED! "Oh gosh, its a city wide contest for all children, and we promised we wouldn't leave anyone out, I'm so sorry again for getting these to you so late I know we were suppose to have had them to your kids yesterday, last week something..." http://www.shoppfm.com/MDFA
While this might not seem like a huge deception, where do you draw the line? When you do business as if the truth is just a tool to be bent and shaped to get a sale, doesn't the line gets blurrier and blurrier til its impossible to find?
Do you think Liberty Tax corporate is to blame for encouraging franchisees to do whatever it takes to get the sale? Or did Annie Fuller just take deception to the extreme beyond what LT condones (or says you can get away with)?
La Libertad: Your questions are where the problem lays in... Liberty DOES ALLOW this behavior, otherwise she wouldn't have been on practically all their conference calls. Now that she's had a falling out with them over financing (money), now the Corporate plants come out that she was a deceptive marketer and this shakedown isn't about money (but you know its always about money, ALWAYS)...
I'm of the Common Sense philosphy, so common sense tells me this: Liberty lost there deceptive law suit in CA on or about Dec 2009, if Liberty was so concerned over deceptive marketing practices why put her in practically every conference call from January 2010 to April 2010 and then have her be a guest speaker (or so I was told) at this years' convention? Makes you wanna go hmmm doesn't it?
Also, why would Annie not fight to keep her territories if all we are talking about is marketing practices, nah, this shakedown smells of money to me all the way. I don't care what the plants say...
For anyone wanting to buy into the Liberty Tax franchise I say WALK AWAY. Don't listen to what they tell you, if you do I we will see you in a couple of years in this forum saying what some of us here say "They told me not to do it, I still did it, and look at me. Look at what John and his minions have done to me."
I too have the same issue. Pretty much bakrupt after trying to make this franchise work. I know 3 other franchisee's in the same cituation. For years the only ones that have made money is LTS and the people I hired to work. My losses are big and I have lost all my investments.
Annie Fuller got everything she deserves. She is fake, pretend, a scam artist, disloyal, dishonest and truly a crook. If you feel sorry for her, you are sorely mistaken.