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
@Trisha Grabert
Have you looked at what the IFA does?
Have you read any of my posts?
Do you know what the IFA was created for?
The IFA IS the problem with franchising! It educates the franchisor on the latest trends of how screw its franchisees!
The IFA has lobbyist which strategically promotes its interest to congress getting franchisors TAX BREAKS, more SBA loans and more protection from being sued by franchisees.
Have you read your franchise agreement?
Doesn't it say like mine that you can become a franchisee but you have to give up your right to a FAIR TRIAL?
Doesn't it say that litigation will be in the state of your franchisors choosing?
Doesn't it say that you must mediate first or go through binding arbitration?
Where do you think companies have learned or been educated how to screw their franchisees?
Do you think that each franchisor just thought up on his own how to make a DISHONEST contract, which keeps him out of court, and robs the franchisee of due diligence in a trial court?
What do you think a Legal Symposium offered by the IFA is going to do for 45 years consecutively?
Do you think they discuss the same thing year after year? Or do you think that they stay up with the CURRENT legal trends of franchisee attorneys and come up with ways to make sure their protected RING stays PROTECTED?
Trisha,
Did you recieve the Mutual Termination letter yet? Don't sign it. Do they claim you owe them any money? Start calling all your clients and let them know what is going on. Liberty will send them all sorts of coupons etc. Do you still have a lease?
@ Todd, I am getting a better understanding now of what you are saying. Yes it says that we would have to go to their State for Venue and we are not protected under their states Fair Franshisor Act so basically that means we can say they are meanies and it gets thrown out because my territory is outside of Virginia.
But as I have read so many of their cases, they almost pray we take them to court in our state and use the fair franchising rules of our own State which only allows less damages depending on the date of term. For example: If your state says you had to get a 60 day notice of term, they are held liable of 60 days of projected income. If you don't have business in off season when they termed you, then damages are so small if they did not give you proper notice. Then there is question of who is considered an expert witness, if you have been in business, you are an expert of your business but your numbers better make sense.
@Mike, I have not been offered a mututal term. The AD first said I had like an hour to decide if I am interested and if so they would send me paperwork but first before any of the things I wanted to discuss, she wanted me to sign amendment to the lease of my store so they can have access (which they already broke into and changed locks on). I refused so she said, then this will be unilateral and we have nothing further to discuss. I would not sign a thing without a lawyer anyhow. I still have 2 leases of 4. The two in Louisville were up for renewal and they tricked the landlord into signing as if they work for me. They have not been open for business ever since. Just some number of a ladies cell phone. Nice customer service.
Has everyone read every case published? Do you all know how to get them? I have read 18 cases so far, interesting stuff.
Todd, I have to start from beginning of thread to get to your posts. Were you a Matco zee?
Trisha,
If the lease is in your name, call the landlord and then the police. They are tresspassing. Then (if you haven't done so yet) take all the furniture and the exterior signs down. Keep the phone lines in your name and continue to make the payment. Take all the physical files and keep them as long as you can, and for fun SHUFFLE THEM, between offices and years!
mike you crack me up, why are you not a fb friend of mine yet, eh hem?
The police were called. The charge is actually called forcible entry under Kentucky Revised Statutes and any who abetted is under a Class A Misd. 323.200 I believe is the statute. They have to answer in Ky for those charges alone. They had no right to be here and not follow laws here.
They changed the locks to get access, I don't have access to the buildings they got into while they thought I was minutes away from there and I told them I could not meet them to get them in the building that day as they claimed I HAD to. However, 4 people watched everything and my landlords are shocked they were tricked thinking they are with me. They would have never signed a May1 lease with them had they knew the truth.The ones I do have access to, I have a longer lease and landlords are aware and in contact with my attorneys if anyhting happens.
They actually stated they had no intentions to keep the Salem and Scottsburg Indiana stores open for customers. They only interested in the ones they broke in to and said the other stores are my problem. (robyn Hurych) stated that. So they don't care about servicing clients, they just want to takeover and resell stores so that I can't profit off them myself in selling to my buyer.
*instead
of letting me sell to my buyer
They just contacted my friend in another state (my homestate) by email offering her a great franchise opportunity. How interesting. How they got her email in the state I asked about buying a dma from?....faceboooook trolling likely (of course I am speculating until I get proof-not to be mistook for slander). Do they not realize my fb friends are friends and people I have know for years state to state? Dirty little deeds. Of course they will ask my opinion.
Trisha - Why did you lose your stores? What happened?
@guest 5- breach of contract of course, reasons given are disputed and not good enough in the eyes of a non-invested observer.