LIBERTY TAX SERVICE Franchise Complaints

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• Clap, Clap, Clap!

  SaraEA:

  What an idiot you are! Just go ASSuming things! My case is so incredibly complicated, you really have NO idea. This has been a struggle of a lifetime. If you really have NO idea, because I am certainly NOT going to go into detail, then you really can only wager a guess now, can't you? Believe what you want, honey. It's not at all what you think. But you go and make sure you come to your own conclusions and bash me on this forum.

  This is and has always been an incredibly dysfunctional franchise. I do know. I was one of the first.

  Liberty is 10000000000000000000000000% behind my woes. You can guess all you want. But I am not at Liberty (pun intended) to give you ANY information that would lead you to believe I'm at fault. FAR from it lady!

  If I didn't just lose a couple of hundred thousand I would sue the living daylights out of them. In fact, that's how I lost so much $$ to begin with. They will sue you and make sure that you have NO chance in winning or even get a fair trial with the rinky dink rocket docket Eastern Virginia court system.

  This entire franchise is rigged. Don't for one minute think that anything they do or you learn is honest. Maybe they've cleaned up their act in recent years, but I've been fighting and struggling against them for years.

  Don't you DARE tell me to leave this board. You can tune me out if you want to come to your own conclusions on what happened. They are manipulating and fraudulent on ALL levels. No doubt in my mind. I now have the proof I needed. I have met with the appropriate officials who know all about my case and many others similar.

  Your last comment is comical. "Your own nightmare is self-inflicted". There is nothing that I can say to that stupid, stupid comment. If only you knew the real truth. Say what you want, missy. I don't give a shit about you.

  This franchise sucks royally and I have all I need to carry on with the proper authorities. Looking forward to the downfall of Liberty Tax and JTH.

• Please, please understand one thing potential investors in a Liberty Tax territory or territories; The troubles Boston Tax, Barbara Green, (see top of page for these posts), and SanFranDan have had might be yours too.

  Gone for now are John Barilla and Henry Bloch. My gut feeling is that these two people are John Hewitt or someone John Hewitt is instructing to post messages on this site. Investors; Barilla and Bloch try to minimize the really negatives new investors will most likely encounter if they buy into this system. The majority of the posts are negative and true statements of the difficulties good people have had trying to make a go in the tax business with Liberty Tax.

  Liberty's quarterly report comes out soon. Look closely at the number of stores that they have now compared to last year at the end of the same quarter. I will be surprised if the number has increased. Even if it has, that means nothing but more failures for more franchisees. We will see.

  You pay 40k for a territory, start-up costs, and do all the work for this business you might buy into. You pay 14% royalties and 5% ad fees. Minimum royalties start your first year you open a store. No national ad program and no local TV or radio unless you pay for it. It is a win-win for Liberty Corp. and you pay for their salaries and rich living. You have a slim chance to succeed. By success, that would be measured by a return on your investment and profits. That is such a pipe dream with this outfit that I have a hard time even considering it happening. Even if you do succeed, 19% of every dollar you make is a tough nut to swallow.

  You are better off considering banking your money at 1/2% interest.

• SanFranDan: Take a step back and read what you write.

  "They’ve already connected the dots to Hewitt. He is either paying them off or/and deflecting their own fraud by pointing out others, small franchises that do something out of place. I know this because 1) it happened to me and 2) it is way easier for the IRS to go after little guys like me and others "

  Its your post and the above statement clearly sounds like you did something out of place with EIC and Liberty reported you to the IRS. I know your passionate about your feelings towards Liberty and I'm sure you didn't intend to have it come off that way but unfortunately it did.

  This franchise is a nightmare. The decision I made in 2005 still haunts me to this day. My goal and most everyone else on this site is to help you avoid this nightmare.

  Buyer Beware!!!

• ^^Bill:

  I was NOT engaged in fraudulent tax returns. Period. Unfortunately there is much more to this than was said. When I was there very early on, there was an official training that not only showed us how to construct and maximize EIC but encouraged us to do so. We were invited to "private" cocktail hours after training classes and told how to maximize our fees by way of being aggressive on the EIC.

  I never said I personally OR anyone in my offices engaged in anything fraudulent. What I am saying is that I personally had many fights with Corporate & the AD's and they escalated those argument issues to JTH himself. At that point is when all the harassing began. Many, many, many issues were experienced by me at their hands, for example: AD audits constantly, notices to cure for the most mundane things, corporate telling me to spend my own $$ on marketing instead of using my advertising royalty for these purposes. Those I've listed are the most calm part of what I experienced next.

  I regret it was misinterpreted that I was doing anything fraudulent. That has NEVER been what I'm about. At one point during the years of harassment, the IRS audited a great number of my clients. It is my "guess", and a very strong one, that Liberty was behind these audits. Since so many of Liberty's clients are EIC, it stands to reason that the IRS would see a pattern in these types of Tax returns that they would interpret as questionable. The minute there is more than 3 of this type, the IRS assumes that there is a pattern of fraud, even if there isn't any. My guess is that Liberty is behind this because they want to eliminate dissident franchisees.

  Bill: I agree with your last sentences. This franchise IS a nightmare and the decision I also made many years ago still haunts me to this day as well. Not to mention all the harassment, stress and money I lost in fighting a Goliath.

• SanFran, I'm sorry if I misinterpreted what you said. This is YOUR STATEMENT that I was responding to: "In my case, it was so small but yet it has turned my world upside down for YEARS and has cost me a couple of hundred thousand. Something that Liberty verbally taught to me and thousands of others. EIC – Bingo." You must admit, that sounds like you were engaged in fradulent EITC filings. Please tell us what you really meant.

• SanfranDan: If you had tax experience prior to becoming a liberty tax franchisee then you understand the rules as outlined in IRS publication 17. There is no way for individuals who's only source of income is a W-2 to constructed and maximize EIC after the tax year has ended. The credit is based on earned income/AGI and number of dependents, both of which can't honestly change after the year end. I understand in the real world there legitimate situations that do effect the credit such as taken care of a niece or nephew but these are events that are out of your control. If you follow the regulations for EIC the taxpayer's situation dictates the EIC, you should not be constructing or maximizing anything with regards to the credit.

  My only purpose here is to help potential franchisees avoid the mistake that all of us made.

• Bill:

  I had corporate tax experience, not individual. In these "cocktail parties", Liberty trainers suggested that the creation of a side business can manipulate the EIC through the profit or loss on a Schedule C. They called it "optimizing". I call it fraud. Liberty was giving me bad advice and I was not following it so I got into trouble with them. I will not be specific.

  Liberty and JTH harassed me constantly, many issues I cannot say here because they would identify me. When I went on zeenet questioning them on several issues, I was shut down from posting on zeenet in the future. After that, I was subject to all kinds of stress and harassment, some small, most large and all to squeeze me tightly and quiet me down. Honestly you would NOT believe some of the things I've lived through from them.

  It has lasted way longer than my 5 year contract. I have felt the repercussions for years. They are very good at what they do. They hire the best lawyers and the nastiest people in corporate. It has been a very long time since my 5 year contract has ended so I have no idea what they are telling people these days about anything.

  Frankly I am exhausted with this discussion. So please move on from me and discuss ways to warn potential franchisees. The everyday headaches are bad enough to warn people to stay away and go elsewhere. Everything I've talked about is true: from wavers selling drugs on street corners to employees stealing from me to not able to be in each office at the same time so many dishonest happenings occurred with employees and with clients. Clients are pretty brazen people and are very vocal as to what they want and don't want.

  The bottom line is that this experience has been wrenching. My case is probably unique enough for me to try to remain anonymous as much as I can. I don't trust anything about that franchise. I, along with you, Bill, plunked my money down on something that I thought would build for my future. That was so far from reality. I lost it all and then plenty more.

  I warn potential franchisees any opportunity I get to do their homework about this franchise. Talk to many franchisees, both current and ex. Come to your own conclusion. However, if your conclusion is to go ahead and sign a contract with Liberty Tax, good luck to you. I can say you've been adequately warned.

• Lawyers are gathering information from clients (e.g. Tycko & Zavareei). They are seeking people who were allegedly overcharged or allegedly charged a higher price than quoted.

• For anyone looking to buy this franchise please utilize the information from this site along with the information that Liberty Tax Service puts out on its investor relations site under financial information. Also take advantage of conference calls like the one Liberty did today when it released it's first quarter results. The call is available until Sept. 4th. The excerpts from todays conference call was published on yahoo.finance, under Liberty's stock symbol "TAX".

  On this site you hear about the lopsided franchise agreement. The minimum royalties and the 5% advertising fee that doesn't go to a real advertising plan.
  i.e. no national or regional television advertising.

  By going to the investor relation site and clicking on financial information you can view the company's Annual report. At the end of this report you can review the franchise agreements so you can read the these agreements prior to attending any of the seminars. Get a feel for the language. See the minimum royalties, understand the amount of control that the company holds over you. i.e. site selection etc. Do all this before the sales force works you up into believing that you will do 600 or more returns a year. The annual report will also disclose the number of locations, the number from the prior year along with the number of returns and average net fee. From this information you can back into the information provided on this site.

  On today's conference call John Hewitt referred to this past quarter's franchise sales activities as "This planting season" and that "The height of our sales season typically doesn't happen until the fall". My goal is to help you avoid having your life savings harvested by him.

  If you review the company's financials you will see that in the last three years they spent $18,308,00, 15,124,000 and 15,293,000 on advertising. However they don't breakdown this number down between selling franchisees and AD territories and what they actually spend on advertising tax preparation. Keep in mind that franchisees paid to Liberty in advertising fees during those years between 16,000,000 to 17,000,000. Again Liberty does not breakout royalties and advertising fees separately. For the last three years the combined total was listed as $80,496,000, 78,426,000 and $73,149,000. So what do you get for your MONEY!!!

  To add insult to injury Liberty now pays a dividend of .16 cents a share. Based on the number of shareholders for this quarter the dividend will be $2,276,346. Of course more then 51% of the shares are held by insiders.

  As a potential franchisee you have the option of joining us in this purgatory or walking a way. Don't let John Hewitt harvest your life savings by exploiting your own wishful thinking.

  Buyer Beware!!!

• Please heed Bill's advice about walking away and Buyer Beware!!!

  I hope to add some educational value here for those thinking about buying a Liberty territory. Note; this site was not up and running until 8/11/2009. Think about this; many of the people warning you about the difficulties operating a Liberty Tax storefront did not have information that you now have. If you bite the bullet and buy in, well, you were warned!

  Latest from Liberty's 1st quarter reporting:

  John says:
  "I am pleased with our sales efforts thus far, the progress we are making to expand our office count, and our ability to engage closely with our franchisees and area developers to improve return counts in existing offices," said John Hewitt, CEO. "We have developed several new pilot programs and continue to see progress and expansion with our SiempreTax brand."

  Pleased with sales efforts; 37 new US and Canadian territories sold compared to 30 last year. No word on how those breakout in US/Canada. No word on how many franchisees left the system. An increase of 7 is pleasing? We have 50 states in the good ole USA and that is less than 1 per state. Pleasing?

  Table A from financials;
  Receivables up $5 million - not good - loans to franchisees or franchise fees due?

  Table B from financials;
  Revenues:
  Franchise fees down -13.6%
  Area Developer fees down - 12.1%
  Financial Products down -32.6%

  Table C from financials;
  Operating loans up - which may explain increase in Receivables
  Payments on loans down - not good!
  Borrowing up - not good!

  Overall, it is not a good 1st Quarter report - in my opinion.

  Buyer beware!