LIBERTY TAX SERVICE Franchise Complaints

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• First of all, let me say that I am a new poster and not a ‘plant’ for Liberty or any other tax service. My wife is a franchisee on the West Coast. She purchased a 2nd store. I was always against her investing in the Liberty franchise, because to me it just reeked of a too-good-to-be-true stench. That, plus I’m just a conservative who would never take such risks. However, she had tax preparation experience. Plus, she seems to be in JTH’s ‘inner circle’, so perhaps she gets a little bit better support than many other zees.

  She works extremely hard to make it a successful venture for herself, and who knows, she might actually come out okay in the end. But I have my doubts, because I still don’t trust JTH and the Liberty way. When my wife purchased her store, she had visions of quick profitability with lots of time off — work 4 months and take the rest of the year off…yay! It doesn’t work that way people. If you want to be successful, you have to work your TAIL off…12 months a year. Because there are tax schools, marketing ideas to consider, and staffing issues (this is a high turnover business so she is constantly having to find or replace preparers and managers — and reliable wavers are almost impossible to find).

  Because she works so much, it has taken a toll on her family, and we rarely see her anymore. It’s put a significant strain on our marriage to say the least. The point I’m trying to make is, in order to be successful with Liberty’s franchise vehicle, it takes an EXTRAORDINARY amount of dedication and effort. You can’t just magically make money by following the Liberty system — you have to be creative, and you have to work many long hours. All that said, I still think her business world is probably going to crumble at some point, and both of our worlds will be crushed. And I too see what many of you have observed. Her business is starting to slow down to a level that’s very disconcerting, I think because the masses are seeing Liberty for what it really is — an expensive scam…for both clients and franchisees.

  It troubles me how this company seems to prey on the unsophisticated, uneducated clients who pay the high fees with barely a thought, because all they want is that quick tax refund so they can go buy that new motorcycle or ATV or whatever. There’s no reason that I can see why Liberty would have to charge that much to prepare simple tax returns. Yes, I guess to cover the cost of the royalties — which I agree 100% are completely exhorbitant. In fact, 19% royalties are insane. I fear my wife will someday have to file for bankruptcy, and in the process take her unsuspecting family down with her. Thanks a lot, Mr. Hewitt.

• Next I'd like to address 'Mike' and 'Frustrated and Disgusted' and others who so adamantly and repeatedly bash John Hewitt, the Liberty concept, and the company in general. I understand why you do it -- I assume you were burned by the system and want to do your part to ensure others aren't similarly taken in. That's admirable. However, what I don't like is your persistent preachyness in the way you try and bring your point across. You say over and over and over again that Liberty is a bad investment! Okay, we get it. Horse dead and severely beaten. And I believe you're probably right. But you need to understand that there are indeed franchisees out there who are successful with the Liberty model. Maybe, as you say, some of the posts are actually from corporate employee 'posers' (if it were your company, wouldn't you be doing the same thing to try and defend its name from such attacks?), but based on what I've read some of them are from legitimate zees who work hard and earn a good living. And God forbid anybody ever disagrees with you -- you guys absolutely skewer anyone who has the gall to try that. That's not constructive banter, it's just needless berating and it's tactless. I'm assuming one or both of you (Mike and F&D) are the administrators of this site -- that's great, it's a healthy vehicle for people to vent their frustrations. But please don't be so condescending to the people who are actually happy and doing well with their Liberty experiences.

  One other thing, I've seen referenced at least a couple times your desire for the Liberty Tax entity to eventually 'fail'. Maybe this would take down John Hewitt as is your apparent desire. So be it. But please remember the hundreds of franchisees out there that would have all their hopes and dreams come crashing down if Liberty were to fail altogether. That is an awful lot of families and lives that will potentially be ruined. Please be considerate of those people when you make those types of comments.

  Thanks for creating this site as a way for people on BOTH sides of the argument to voice their opinions.

• It's a bad investment. Period

• Forgotten man,

  you make a lot of good points and I believe you speak the truth.

  That being said, their are hundreds of families and a lot of lives and dreams that will be ruined, and John Hewitt will be just fine. He doesn't care about anyone, just his own company. You admit you don't trust him, you think you're destined for bankruptcy and YOUR world and marriage (you have kids!) will be ruined?

  I hope those future potential franchisees heed your warning and avoid the heartbreak this business will bring most people.

  Those not in John's 'inner circle' have almost no chance of making it, they just hang on to the 'dream,' borrow money and slowly crumble....what a way to live, that is terrible and I wish that on no one. Your wife works her tail off 12 months a year, had tax preparation experience, and is John's 'inner circle' and is still looking at failure?! How do you think anyone who doesn't have so much going for them will ever make it in the Liberty system? They're not going to!

  It's a bad business, stay away!

• Forgotten Man,

  If 50% of new offices can't reopen again in their second year, how much have they lost? How is that IPO working out, what about the all those comments from customers on Liberty's fb? Are they fabricated? If you are willing to lose your wife over a Liberty franchise I feel sorry for you, that should never happen but it does and will. If Liberty was a good investment then most of us would still be passing out donuts.

• Mike:

  Just to be clear, obviously I am not 'willing' to lose my wife over a Liberty franchise. Your remark implying just that is cruel and unwarranted. She went into this business despite my urgings not to do it -- she's her own woman who makes her own decisions. She's always wanted a business of her own and at least had the ambition to TRY something -- I can't fault her for that even if I don't agree with her choice of franchise.

• Re; Forgotten Man

  No one wants bad things to happen to your family. We have all been there. I hope that she re-evaluates what is going on at the end of the season and realizes the stress she is putting on her family, not to mention herself.

• This is crazy. I just have to post again. Why would anyone go into a business with borrowed money? If you don't have the money save it up or don't do it. Has anyone heard of Dave Ramsey? I know that's not what Liberty is selling but take some personal responsibility. This is a business model that takes 5-10 years to mature. Don't count on the income any sooner. Once again that is not how it's pitched but do some research. Find out what average first year offices are doing, second year offices, etc. Do a pro forma on your expenses. Forgotten man I'm sick about your situation but the idea of taking out a $500k loan on a chance is not rational. Why would anyone risk so much? Don't put in what you can't afford to lose. Most businesses fail because they are over leveraged and the owners can't survive the lean years. Stop the insanity.

• Texas Zee:

  Borrowing money to start a business is a normal thing -- that's just how it works -- banks lend money to individuals so they can keep their businesses going. Anybody that thinks otherwise is out of touch with reality. And certainly it's only a select few that are able to follow Dave Ramsey's no debt model -- most cannot. Still, some of your points are valid. Yes, it probably does take 5-10 years for a Liberty franchise to mature (though my wife's first store was already mature and is located in a low-to to moderate-income neighborhood, so it's been a cash cow for her). And agreed, taking out a $500k loan is insanity -- as I said I was COMPLETELY against it. However, the loan is unsecured, which makes me feel slightly better. And John Hewitt "said" to my wife...and this is the part I'm very leery about...that she can just walk away from this note at any time, no questions asked, if she ever gets to the point where she can't handle it anymore. In other words, they'd just find some other sucker to take on the role and note. Don't get me wrong, that damn note scares me to death. But at least so far she's been successful, and the royalties she's gotten from her area stores were plenty sufficient to pay the first annual installment on the big note.

• Forgotten Man
  There may be some truth in what you heard about forgiveness of the loan. I had 2 franchises for two years and when I started my AD had just purchased 10 franchises and the AD position for my area. One Million dollars. After 2 years he like myself went under. He signed the notice to cure and his dept was forgiven. How much he lost in the long run I don't know. Good luck I hope your wife makes it, It is alot to take on at one time but all people are different. I decided to get out after 2 years and signed the notice to cure and my remaining dept was forgiven, I only lost about $90,000. It's not the franchise fee that cost as I purchesed one outright and had the other half paid. But when you add upo all the cost over those two years trying to survive it adds up. Once again good luck to you both.