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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Just wanted to say hello to the UnhappyFranchisee Posters and the Admin who has done a fantastic job with this site. Everyone here CAN speak out and it is great that they are. Have no doubt your identity is protected under screen names to avoid Corporate misconduct. The Admin has taken great measures to ensure security so that we can be open in this forum, unlike the Corporate Discussion Board where senior or new franchisees are banned for simply asking if they can disable their signature pads until the Tech department figures out how to make them work.
In times of doubt, urgency, losses and stress, this is real support and an effort for true resolve.
Not everyone agrees on some topics, but everyone agrees to be open here to the extent of their own protection using practical logic and giving accurate information of their experiences and concerns. It is unfortunate and negligent that Liberty Tax Corporate and Area Developers could not offer proper support that we paid for and failed us on many promises.
Liberty Tax has lost many fantastic franchisees who took pride in promoting the brand and the man who was a great conspirator and facilitated such a scheme, (IMHO as people are presumed innocent until proven guilty).
With mostly great people recruited, even some vulnerable, this company could have been a legendary success, but many now feel they were hoodwinked into an American Greed story and the numbers are large.
To address a few posts, there are contract mistakes, workarounds and legal actions you can take against anyone when you are wronged. You may challenge anything and anyone in a proper fashion and with proper venue and representation.
The poster who was questioning the documents of recent lawsuits against the Hewitts is welcomed to email me. With some aggressive research, you will find many plantiffs and defendents regarding this company. You will also find where some went wrong and some went right in getting justice. If you have been wronged, do not give up.
To those who would like to discuss the legal interviews and complaints being worked on and have a complaint, please email me if you would like to be included.
Those still waiting to be contacted, I thank you for your patience. I am pleased with the progress and the number of people who have come out of silence. We all know this takes time with such a large number of people needing their statements taken. You will get another phone call from me, before the firm contacts you as they schedule your interview. Those who would like to only be a witness may also contact me.
FYI- I have not heard from Rob Koons for a few months. Last I spoke to him a couple months back, he says he HATES Liberty, John Hewitt, Danny Hewitt as well as many others in the Corporate office. He is still a franchisee and is keeping his head low in order to make it one more season without them stealing his territories, as he owes his father's mortgage back to him.Then he is running for the hills and running his own company with better software and never looking back, even if he makes no money by leaving the Liberty "cult" in his words. After several years, he has still not seen a profit and still in debt to his ill father and to Liberty and cannot get out fast enough. I do not feel I should hide this information from you all and I feel no pity for him. He did not hide his involvement well enough with turning and burning of many of his own franchisee recruits for personal gain of selling his stores to young, broke and even terminal prospects. There are at least three franchisees who were booted here which he gained their stores within a very short period and he became an Area Developer for a short time in the process of being that trusted mentor.
I have also been contacted via facebook by a franchisee from Detroit and he did not seem pleased about an opinion being expressed openly about what is "going on over here" regarding the female tax preparer who is being prosecuted and sentenced for tax fraud. He expressed his anger, then blocked me. I do not think he is a happy franchisee.
Have a great evening everyone and keep posting and supporting this site and each other.
-Trisha
If you are a veteran and considering purchasing a Liberty Franchise run for the opposite way. Being a retired Marine and Liberty Zee for 5 years I saw many veterans lose their life savings in a very short period of time. This is not a franchise that you want to be part of. Do do not believe or trust anything that you are being told. Stear as far away as you can.
Liberty is out in full promotion to sell the "Dream"
Before you buy a Liberty office READ ALL THE COMMENTS ON THIS BOARD!! Don't buy into the HYPE!!!!
IF YOU ARE CONSIDERING BUYING A LIBERTY FRANCHISEE, READ ALL OF THESE POSTS!!
Trisha;
It is great that you are dealing with this clown. I have not been on this site for awhile, but still have the same opinion, it has just been reinforced so many times over and over. I have talked to at least 100+ franchisees, most have left the system, and a few who still have their stores but are making no money. Strangely Liberty still has me on their mailing list and want me to purchase one of their stores. Good Luck. I would rather have a root canal. Run away as fast as you can. This is nothing but a scam, and the more you look at it, the worse it looks.
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So now they are selling whistles for $20,000.00 hahahahaha run dont walk away from these people. This is coming from someone that it going on the 4th season.
Trish:
PLEASE keep doing what you do. I cannot think of a WORSE company to get involved with than this one.
To whomever is reading this forum and wants to invest in a LT Franchise.......SAVE YOU MONEY and your headaches and your stress. IT. is a dump of a franchise.
Whoever is praising this company, just wait till you finish the end of your 5 year contract and then see how you like them apples.
So what will happen at the end of 5 years? At the begining they sound like it is just a simple renewal of the same terms. PLEASE share any insite.