LIBERTY TAX SERVICE Franchise Complaints

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• I prefer not to provide details of my store but next year (my third year) I will operate at a 30% margin or more and will do 1000+ returns. My rent is $1,000 a month. Therefore I will make a nice profit on my one store. I am also highly considering expansion. If three years from now I duplicate the success of my first store and have two stores each doing over 1,000 returns and operating at a 30% margin, well I assure you that will be well over the $100K that you seem to think is not possible. And then what happens when I have 3 stores, 4 stores, 5 stores, etc. My wife runs the store FT and I work FT elsewhere.

• Mike. Not questioning your personal success. Just consider if 2900 stores AREN'T doing 1000 returns then making 100k isn't a possibility. Think if you rent was $800 more. Month you would be making $20k less. That is what most of us details with. Try finding an office in LA for under. $2000 a month and wages are more.You are not thinking about other sees. You are trying to use your example as the template. A zee I know in NY pays $5000 a month!
  Apples with apples my boy.

• Again, many Zee's on this site are not disagreeing that making a profit is not possible. I am in the boat with money pit. I cannot rent a place that Liberty will accept for less than $2500 per month in my territory. My houly wage is $10 per hour, which includes decent marketers. My wavers go for $9. To get my 300 returns this year cost me over $25,000 in marketing costs. You may ask how I know it takes that much, because I tried and failed in years one and two with less. My gross was $69,000. Doesn' take long to do the math. I recently tried to sell one of my franchises to an individual who has been interested in Liberty for a long time. Knows the score has he has been doing taxes on his own for several years. He made a lot more in his personal shop than I am making at Liberty. He said, why should I buy a store for $40K and do all the work when I can do my own thing and make more money. The point is, Liberty produces part time income but expects a full time commitment. Add to that the lack of local support, poor software and support and you have what you have. A poor investment.

• To potential Liberty franchisees:

  Brand recognition and strength of brand are a big part of what your buying along with that franchisors system they developed. This brand recognition is what is suppose to drive customer to your store vs you opening your own named business. This brand recognition is especially important in the tax preperation industry because your season is so short. However, while the other two major tax preparation services do have a large national advertising program Liberty Tax Service does not. This is a major disadvantage and one of the reasons I believe that so many Liberty Tax franchisees struggle.

  I know current franchisees will talk about how wonderful gorilla marketing works, but what is the point of paying a franchise fee and an advertising fee to Liberty if gorilla marketing works so well. Just open your own tax business and market your own skills.

  It's funny how John Hewitt doesen't believe in national advertising. Did anyone see the commercial last fall with him touting the benefits of owning a Liberty Tax Franchise. Talk about a face made for radio.

• The answer to why you may be unhappy, in this or any franchise, lies within what was expected of the franchisee in the first place.
  I expected a brand throughout the life of my offices, a basic idea of how to operate the business, within a correct and legal nature, support until I understand it, as well as some financing, when needed. I got exactly what I expected and more with Liberty. I never changed my expectations of the company as I was learning how I would perform as an individual. I cannot blame Corporate for my performance while my own personal faults were unveiled. They kept their promises and I continue to have an open sign hanging. I have to make it brighter and more noticeable and make the right choices.

  What is great about this particular franchise is that we have 8 months to regroup and work on our issues to get it right! You can't just close a Subway down until you figure out how to control payroll or market effectively. When kids go back to school from a break, they are fresh, new clothes, new style. Get your style together and quit wearing the same shoes every year...you outgrow them or they go out of style. Just look right now at your shoes, if they are beat down...then work on yourself before getting into any business. A person who won't go to the shoe store suffers his look to spare a little time...not realizing that it has made 1000 impressions on people just today. If your shoes are worn, you may be unhappy in any business as you would let your image (brand) change before taking the time to make a small change which was long overdue.

• To 5yr.improvingzee:

  First of all I doubt you paid $40K for your franchise, I doubt you have 6 other Liberty Tax locations within a 10 minute radius of your office, and I also doubt the IRS was giving free returns to those whose income was less than $57K. Read the notes above. These are not whackos. These are intelligent business people who poured their hard earned money into a franchise and were promised decent returns. What they got was far from that. The fact is, most franchisees are averaging somewhere in the 300 return range, not the 900 to 1000 they talk about at the Liberty Tax meet and greets. Most are struggling to make ends meet, and most thinking they were sold a bill of goods by John Hewitt who is still thinking/wishing that it was like it was 5 years ago when you bought your businesses. This is a part time business with full time responsibilities. Unless you can combine it with other accounting and tax products, you cannot make a business out of it, pure and simple. Good luck with your stores.

• I have to agree completely with Frustrated and Disgusted.
  I introduced four people to Liberty and all but one has either sold their business or has it listed. All are intelligent business people with other businesses but ran their Liberty offices full time.
  Most exceeded 700 returns after 3 years. And still they needed financing from Liberty or did not have the funds to continue.
  Consequently, I speak to only one of them nowadays. Don't blame them as I was a second year zee with hopes and dreams and my excitement at my second year growth was a turning point for them.
  Sadly I should have waited two more years before mentioning this "opportunity".
  If you're making money then woohoo. But there's a scam here that only mature zees can understand. Newbies don't have a clue and are swept up in the buzz.
  God help those in Jackson Hewitt whose dreams were just as real with a share value of $0.85 cents. Down $6.50 from a year ago and from a high of nearly $20.00.

• Well this thread is going nowhere so I will end with this. Yes the Z who posted does have 6 Liberty Locations within 10 minutes which amuses me like Libertys are really competing with each other and that their is a limited number of clients that Zs have to share when 98 percent of returns filed are non Liberty returns. Sure clients move around but I have never felt like I was competing against other Zs for clients. Also the Z you know so much about has a free tax prep office one of the bigger ones 2 doors down from the Liberty Office.

  I think we know both MoneyPit and Frustrated see a conspiracy theory here and I imagine you have black helicopters flying over your house every night....lol

  Is Liberty perfect....Nope...But no franchise is.....Has John Hewitt ever lied to me?....Nope not once....Has John ever not answered one of my questions to my satisfaction?.....Nope, he has answered every one....I feel Liberty is a better opportunity now than it was 5 years ago. Mainly because of lessons learned and now those lessons are being passed along much better just because of the increase in numbers of franchisees. So the opportunity has stayed the same the increase amount of Zs and the increased communication is what has made it better.

  Go talk to some mom and pops and see what kind of profit margin they are running!!!! I know many of the ones people think have to be doing great are not doing anything close to me!!! I know of a large one who has since sold out that everyone would of thought was crushing it because of no royaties or ad fee but in reality they were running around a 11 percent profit margin.

  If your interested in Liberty do your homework and do not be afraid to go to Va Beach and ask John himself your direct questions. The next 5 years are going to one of the most exiting times we have ever seen in the tax business in my opinion. Now I know MoneyPit and Frustrated has a story of doom and gloom on what the future holds, so I will just acknowldge their gloom in advance. Have fun all and it was interesting posting here sometimes but I think all that can be said has been said.

• Just a question...keep in mind I'm researching this as I type...but has anyone considered the revenue an accountant could generate running their own shop and pumping $56k into their own buisiness? This is what I'm deciding between: paying Liberty $56k or taking that money and building my own practice....just wanted to see what y'all thought..

  Mike

• I think we need to put things into perspective here for Rob's sake.. For someone who has no business accumen, wants to start a business, and wants a better shot at being successful, a franchise is better than the alternative. Where Liberty fails is the attitude of their organization. They are so focused on selling franchises, especially their AD's, that they forget they need to support them after the sale. John Hewitt wants to be the biggest tax preparation franchise in the country, and he is going to do it with your money, not his. So when you go to Va. Beach to learn about LT, they trot out their Top Guns who tell you that you can do 800-1000 returns a year. Fact is you would be in the top 5% of all franchisees if you can. Most are doing 300 or so a year. In many areas you will be lucky to get that many. Add to that, their marketing system is inefficient, ie; if they took the money all of their franchises in an area spend on marketing, the number would be staggering. So what you end up with is a poor investment because you will spend thousands of $$, lose a good portion of it, sell your territories, the next person will do the same, and the cycle continues. That's why it is like Vegas. You keep thinking you will win the big prize. My opinion for what it's worth, if you are looking to build a good tax business, park yourself in a low income, high EIC area, market yourself well, and give good service, you can do as well as LT does in the same area without the hassle of their ridiculous demands.