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
http://www.irsmedic.com/wp-content/uploads/2011/01/liberty_tax_complaint-filed.pdf
How is the case going? I remember reading about it last year, I hope it goes well for the victims!
Trisha, didn't Liberty settle with Annie for about 300k?
First time I ever read that case. I was a franchisee when Anne would be on the daily phone calls and some of the things she said made me question her ethecs. The best one I remember is she was at a gas station one morning and I guy was buying beer she bought his beer for him and had him go with her to do his taxes. There is no way that John Hewitt, self-proclaimed master of the tax prep. industry, shouldn't have know that what she was doing was fraudulant.
Todd A. Peterson:
You are right on target all of these franchises are targeted at the small investor and there is no protection for us.
Is some one actively suing Jth in a big way or are we all just helpless victims ,I too have a ton of dirt on LTS. Anyone going to convention ?
When and where is the convention, we should all meet at a bar near it!! Let's have an anti-Liberty BS convention!
Does anyone realize why it is hard to fight these franchisors?
It is because everyone is bought off. From franchisors to attorneys to politicians to the media franchising is protected. The IFA was, originally, an organization to protect franchising which included FRANCHISEES. But it is now an organization which has BANDED together all the people who are PROFITING off of franchising into a force that can not be reckoned with.
The ONLY way we as SCREWED franchisees can get change to happen in franchising is to BAND together!
A good start at change would be the IFA Legal Symposium May 20-22 in Washington D,C.
If all of us unhappy franchisees were to show up and voice our opinion at this convention people would take notice. But the facts are we are doing what our government trained us to do. Be a WORKING America. It is hard for any of us to represent ourselves at ANY of these meetings where people are grouping together to decide how to screw the next round of franchisees USING our legal system to do it. That, my friends, is exactly what will be taking place on May 20-22 in Washington D.C.
Want to educate yourself further go to this 16 page brochure that is found on the IFA's web site.
http://www.franchise.org/uploadedFiles/LegalSymposium2012_web%204-16-12.pdf
Learn that on May 21, 2012 these attendees of the Legal Symposium will be learning all about how to deal with us pesky franchisees.
It says franchisees are even invited. All you have to do is come up with $1475 to cover your non-membership of the IFA. A room rate of $306 a night (Standard) and a $50.00 registration fee. I see a lot of franchisees going to this convention DON'T YOU?
Another way to fight the IFA and make them hold franchisors responsible is support of my petition. Please read the petition and if you support my cause for holding the IFA responsible for its franchisor members actions please sign and share. The link is here:
http://www.change.org/petitions/veterans-deserve-success-not-matco-tools-franchise-failure
@Mike, the case with Annie is still going on, several cases still going on. Another zee just filed a case on April 26th. The 3 attorneys in the case link above are still taking depositions in South Carolina, but that is small compared to what else is pending. Call them, they would love to hear from you all about how we were trained to uphold our guarantees like getting the highest possible refund, etc. They will fly out to you. You still need to get with other franchisees to get the lawyer for your breach of contract matters, etc and I am willing to share info. So who needs a lawyer?? Who are contributors and who is just whining or trolling?
@mike They did not settle for 300k with Annie as in it is over with, they settled a portion of that case to shut her up from helping customers come forward and add more franchisees to the suit to collect the money set aside to claim for damages.This was all before there was a special rule in the renewal contracts that say we are not to join any class actions and forgive any wrongs Liberty has done to us in the past and never sue anyone ever. Read your renewal contracts for those still in!!!! They push you to sign it fast for a reason, they don't want you to notice the changes they threw in there. She still has OTHER cases going for contract law matters, etc...and she is very happy and in good hands. Annie did what she was told and paid to do. Her ethics told her to come forward and that is when it got ugly and she got gagged along with others.
There are huge cases pending right now. Many Many Many of them. You just have to know who to talk to and NOT to talk to.
@jon I am easy to find on fb for anyone interested in speaking to me about that is not with Liberty Tax Service or JTH inc. I will give you the info and a checklist. There is a reason Liberty is #2 in the Top 25 Unhappy franchisees. And to corporate, Trisha has no idea I am posting this for her, so don't send her letters about this forum in the future, her children check her mail and she may not get it for a long time. She is busy with other business so I am helping her out of my own free will and right of speech while she is away from the harrassment. She won't be taking any mail for a long time and her attorney can let her know if you need anything. Ask John Hewitt or Robyn Hurych for her lawyer's number.
NOBODY here is helpless unless they are just lazy and distracted. You have rights.
@Mr. Peterson, what makes IFA any different than the BBB subscription services, it is not really out there for protecting customers either. And how can they be made to do anything, they are just a business too? I do not know how this type of petition campaign can help any of the victims or should I say people who need to take action. I would assume focus should be kept on litigations direct to the responsible party. Maybe I am missing something??
anyone with who was a zee last year of Liberty is welcome to go to their Liberty Tax convention, Annie did. :-)