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
@ Dodgerdawg,
You got away with your shirt, now get a BBQ stain on it for us all. I am glad you are pleased at your outcome, even though it should have been better for you. Remember, that everyone's stores has value, those who differ are making a big mistake in saying so or undervaluating it's worth and costs.
@ bill,
of course there are suits and class action suits, more importantly, do you realize the IRS has been investigating what they have been doing and see this site as well? Secondly, if you are Bill Latham, do not speak at or to me.
@guest 9,
Do you suspect just some insider trading and reselling market territories is the moves made right now, they are making some fast income suddenly, knowing what is coming on their heads. Hefty bonuses and options were given out this season to the executive players. Many have been ignored on financing issues, many have been termed. They took it off for a good reason, facebook had nothing to do with their IPO decision...they know what they are doing and they believe they have time to do it.
PS> Cendant is in the top 10 class action suits after buying Jackson and Hewitt just before John and others' departure who let's not forget are so new to the Liberty Tax Executive/Director roster. What they did? Look it up. Inflated revenue for over 10 years through acquisitions and got caught up in it.
-Trisha
no comment.
That would be the best thing that could happen if Liberty was investigated and shut down! Hypothetically speaking, what would that mean for a Zee? Obviously we have to find out software and wouldnt get support from Liberty, etc. But would we be able to just continue business with our 'former' Liberty customers as if nothing happened?
IF ANYONE IS CONSIDERING BUYING A LIBERTY FRANCHISE, THIS BOARD SHOULD SCARE THE SH*% OUT OF YOU! DONT' DO IT!! JUST REMEMBER ALMOST 50% OF NEW OFFICES DON'T MAKE IT IN TO THE SECOND TAX SEASON!!
To Whom It May Concern:
We are currently researching claims against the Liberty Tax franchise. If you currently own or have owned a Liberty Tax franchise we would like to speak with you regarding your experiences. If you are interested, please call or email us.
Thank you,
Jonathan Fortman
314-522-2312
Thank you Mr. Fortman,
First,
Can you tell us your intent and if you have a relationship on Liberty Tax if any? Are you seeking class action for the franchisees or other investigative research?
Second,
Another attorney is also interested in speaking to everyone. Not meaning you may not join firms, but we have a large base of contacts. You can contact me for his information on the Franchisee/AD/Corp EE sides. I have full info permissions granted, you only need to contact Admin to get my information or look me up on FB.
Third,
Mr. Fortman, you may want to speak to the IRS regarding where they are in the matter. You may also contact me via admin permissions or through fb as everyone else which I granted contact info permissions.
Fourth,
Please be prepared to let us know what type of cases you have represented, where, and what cause and natures upon conference. It is like putting together a ball team together of which players are worth the time, so you can understand we are selective. Thank you very much for reaching out, but expect a few twists and perhaps a call from Corporate soon with perhaps (speculation) an offer.
Last, as a personal request on behalf of all subscribers who are less fortunate under critical circumstances placed on their financial resources:
Please consider to make financial donation to this website, which makes all of these contacts and communications possible. I assume it would be greatly appreciated to make such an honorable gesture to the owners of unhappy franchisee which we are all thankful to have access to.
-Trisha
A few days before the convention, I advised all of you that we were proceeding with our plan to become a public company, and hoped to have additional news soon. The purpose of this email is to let you know that we officially became a public company earlier today, and tomorrow morning, our Class A Common Stock will become available for quotation and trading through the OTC Bulletin Board system, under the symbol “LTAXA.” We have also filed an application to list our stock on NASDAQ, and that application is pending.
The new public-company version of the Investor Relations portion of our website is now available at libertytax.com by going to the Investor Relations section from the “About Liberty Tax” link.
The success of Liberty’s first 15 years is attributable to the hard work of our many franchisees, area developers and employees. I look forward to sharing our future success with you, as well.
John
Financial statements were released. Revenues up! Net income up! Cash up! Borrowing capacity up! The future looks brighter than ever!!!!
Liberty Tax Press release:
LIBERTY TAX IPO: Fiscal 2012 Full Year Results, OTC Trading
https://unhappyfranchisee.mystagingwebsite.com/liberty-tax-ipo-stock/
Stores up, overall store average down from 462 to 457. Fees down frrom 191 to 188. Growth in stores 9% Grown in returns 7%. As I stated on this board last year if the IPO didn't go off they would need to borrow, which is what they did borrowing $25,000,000 in long term debt. Without the loan they would not have had enough cash flow to service all their obligations.
I don't see the company offering the try and buy idea in this fiscal year. They need the revenue from the sale of the franchise.
What is a new franchise selling for?