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?
.
Recent developments have left franchisees worried and uncertain about their futures. To advocate for greater…
The Building Kidz Worldwide franchise is an opportunity to own a preschool & childcare center…
PAINT NAIL BAR has undergone some significant changes since franchisees contacted us with their complaints,…
U.S. Veterans magazine has removed JDog Brands as its #1 "Best Franchises for Veterans" list.…
More than 400 Veterans & military families who invested in JDog Brands franchises have failed,…
Genevieve McDaniel is a former franchisee turned franchise researcher, franchisee advocate, advisor and fiercely honest…
View Comments
Also, Our AD would have days of free returns and heavily advertise that, which just killed our little piece of the rotten pie. They would give away 100's of free returns, which if we had just half of them, we could of balanced our books.
But the AD and the other office just didn't care. Horrible corporation and horrible people involved with LTS.
Trisha, I hope your holidays were also good.
As per AD's, they come in the same range as franchisee's. Some were good some are terrible. As for you questions, here is what I know.
1. The AD's get 1/2 (or 7%) of the Royalties that are paid to corporate. That is the incentive for them to help franchisee's.
2. Their general role is to assist the franchisee in site location, contract negotiation, be a conduit between the franchisee and corporate, assist the franchisee when problems arise that they cannot resolve, review and approve all operating budgets/ P/L statements.
3. The cost of an area differs depending on the number of offices and returns completed. I believe the base cost (When I was in) for an undeveloped area was $500,000.00.
At times it was very hard to get a hold of the AD, other it was not. As for your last question, yes the AD did.
I hope this helps.
My AD refused to accept any budget I submitted. He insisted that the numbers were not accurate and that my P and L was too low. I showed him all the entries and gross sales I had with expenses (I did not hide anything) and he refused to accept my financials. Corporate and him decided to make up PL's that were fictitious since I was congratulated by JH himself on being one of the most profitable stores in the region. I knew what I had submitted and that it did not even suggest any semblance of a profit. I guess they made it up as they went and in direct contradiction to the actual returns and fees my entity generated. It makes me wonder just how accurate their corporate financials really are, now that they are a public company. Maybe the SEC should look into this before more investors are defrauded.
I see this forum was deleted from the Unhappy Comments section due to inactivity. C'mon people! We need to keep this forum front and center at all times!
Has anybody noticed that the stock has taken a nose dive? They're down about 10% for a few weeks............lots of selling, no buying............
Tax season is now beginning. (yucch) How many franchisees will survive this year? How many new franchises were sold for this season? How many were sold a fake bill of goods? How one sided has the contract become? How many have bought Siempre Tax locations? How many are competing with themselves? How many franchises got their Insurance licenses for that all important ACA? Not.
What a racket. This is not even a Tax business that Liberty is in. It's a "how quickly can you part with your money" business. :(
Stay away. Far, far away. You will have dodged a bullet.
I went to liberty tax Monday today is sat 9th I held there sign on conor for 6hrs last Monday She put me out there as soon as I went in around 9 30 am Today she said human resorce did not bring money for me yesterday Friday. So she would pay me a couple of hrs out her pocket. I say if Liberty Tax on broadway by KFC rob me I would not recommend trusting them file my taxes It was very cold standing there those hours from 10am to 4pm Beware usin Liberty tax world. Cant be honest pay me 6hrs Then what are they capable taking from your taxes
Betty, go to the state Department of Labor. It is illegal not to pay people for time worked. My hunch is the franchisee does not know the law and made a mistake. She likely didn't make enough money that week to afford to pay you. Too bad for her, the law says she has to. Why is Liberty trying to drum up business on Jan 4??? Way too early for anyone to have their tax docs yet. Is this what "the system" recommends?
SaraEA, a couple of large companies have the w-2 online. Wal-Mart is one of them. They can log in, use a specific amount from the last paystub of 2015, to access the w-2. It can then be downloaded.
Also the Liberty in town has one waiver out this last week.
My phones ringing daily. Setting appointments and answering questions. Some of the W2's are out and the local mom and pops are open. We don't have time to complain. Also, hrblock stepping up their game. I just saw the worst commercial they've every had. Giving away 1000 a day to 1000 people, but the commercial sucks. Insurance is a great attention getter. Expect it's gonna be a very good season. Block also giving away gift cards. This means all three going after early customers liberty, jh, and block. Don't think you'll see much posting. No time since all three are mixing it up with promos. Gotta to keep marketing or be left out. Exciting!
Same here phones are ringing and appointments are being made, with real tax payers. Small business and professionals. Nice not to have to work on the "crazy train" people who run from one promotion to another. No relationships being built and not real business being built upon.
You may be busy, but you are a hamster on a wheel just running after a group of people who don't care and possibly LTS, JH and H and R don't care either about them, just bribing them to do a tax return.
Guest: The HR Block and JH offices haven't even started regular hours. Your using the same old stick that Liberty always uses and its old and tired.
As a former franchisee I don't route against any individual franchisee. I understand the frustration of dealing with this company and I also understand you wanted to protect your own investment. Guest of course is not a real franchisee she/he is a company plant.
Buyer Beware!!!