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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You have an office on the N.E. corner of 80th and Wadsworth Blvd. Arvada, Colorado . You have a young man bannering your services on Wadsworth Blvd. just north of 80th Ave. I pass him every day going to the bus stop just north of him Each day he tries to start a conversation with me , addressing me as "buddy". "Hi buddy", " Hey buddy , won't you stop and talk, Your going to miss your bus buddy, you better hurry up. I 've gone into your office and complained about him. This did no good. I know by city ordanances he isn't supposed to be starting conversations with the public.
What is really scary is how cozy Hewitt and his clowns are getting with the DOJ. If this doesn't smack of coercion, I don't know what does. As I said before, Hewitt has no qualms about throwing any of his franchisees under the bus. Interesting that the DOJ finds themselves in bed with these idiots. It makes you wonder who investigates whom. Too bad none of us had the presence of mind to record the late night training sessions that were put on to show us how to make fraudulent tax returns. That would make the government a little nervous about their new friends. It is also no accident that Liberty does not lose a case in that Federal 4th circuit court in VA.
What I find humorous is that there are still some institutions willing to invest money in this scam. Just goes to show, there are those still willing to drink the cool aid.
If franchisee's colluded with Liberty to commit fraud, you would think both would be criminally charged. The franchisee for committing the fraud and the franchisor for being the conduit.
It is like the bank robber and the driver of the get away car. Both are involved in the crime.
Too many have posted on this site as being eyewitnesses to being instructed on how to commit tax return fraud. Trust me, Liberty's reputation with the IRS, the public, and franchisee's is not good. Stay far away from them.
I've been away from Liberty for 7 years but on my way in this morning I had one of those flash backs to my first couple of seasons. I was thinking how current new franchisees are all gearing up on the bs the company is telling them about the second peak, encouraging them to staff up and for the second peak and get your wavers out. Many of them are counting on it to help save their season. Unfortunately most of us on this site already know how this story ends.
For those of you franchisees leaving the system even though Liberty has the no compete etc clause your clients will still follow you. When I closed I went to work for a firm and my clients followed me here. I have still have clients from my first year at Liberty. They have been with me for eleven years. 4 at Liberty and 7 years here. While my investment in Liberty was a mistake the client's that I obtained while owning the franchise are still paying off.
Thats good to know, but there are two sides to most stories. Hopefully you did'nt sell your store and then take the clients with you. There are some ex-store owners who've done just that. One thing still important in this world is values. It would be great if those leaving just remember their problems are between the company and them.
If you sell a store at least be a man - or woman about it and leave what you sold.
Taking clients and records is stealing if you sold the business to someone else.
Corporate continues to screw all Maryland Zees. They let this franchisee in Baltimore commit fraud while they were making 19% off her revenues and now the whole state is paying for it because of the bad publicity it has caused now that she got arrested. The whole state is down about 30%. You would think they would do something to help all Maryland zees who have nothing to do with the fraud done by that zee. How can they sit there and let this happen. All they have done is hire a law firm to protect themselves. What about the MD zees?
I don't think very many people can sell their stores. They just quietly fold and go out of business. Corporate has no interest in helping anyone sell an existing store.
@Keepyourword - Dude, very few people EVER sell a territory, so what you wrote is like a 5% chance maybe less. Most people go out of business just as Don't be Fooled noted above.
The only people that stay with LTS are a very specific type and they don't leave EVER. The average person who like having a relationship with their tax person will leave with that person no matter if the territory and/or store is sold.
^^^Don't be fooled & Franchizee:
Exactly right. Great postings. How about the other way around? How about Liberty taking all of your pre-exisitng customers even though you could prove which ones were yours before you joined that hellhole for 5 years?
How about Liberty admitting to the news press that they call the IRS on their own zees? NOT just rogue zees. Also zees that make them mad. They do it to get even, even if the IRS can't find a thing wrong with the zees books, they will keep digging until something is found no matter how small it is. After all, Liberty must be in bed with them paying them a pretty penny for info. on going after zees and taking the attention off of the real culprits---themselves :(
Altogether I had a freakin' 14 year nightmare, including the mandatory 5 year contract. They WILL come after you no matter what. You have to be EXTREMELY vigilant when leaving. No matter how much I tried to leave, they kept pulling me back in. I cannot say enough how disgusting they were and are.
bill: If there ever is a class action lawsuit, I'm all in.
To the potential franchisees who are looking at Liberty as a potential business to run-------run alright. Run away as fast as you can and don't look back. You're welcome :)
Not only are the Zees in Maryland paying for the bad press, so are the Zees in the surrounding areas Virginia and Pennsylvania. Corporate has not reached out to any of the Zees to ease the pain.
You need to remember that last year John Hewitt, himself, praised what Vanessa Dickens was doing via a January conference call. He should be held accountable for promoting what Vanessa Dickens was doing. Maybe the Department of Justice should begin connecting the dots between Georgia, South Carolina, Maryland, Nevada, California and Tennessee. Once they begin to do this they will notice that there is a pattern and the key element between these cases is John Hewitt. I am not sure what constitutes Racketeer Influenced and Corrupt Organizations Act (RICO) for the Department of Justice. Most or all of these individuals have been used by John Hewitt on conference calls or for marketing training promoting what they were doing.
These conference calls are mandatory for all Zees to listen to by corporate. This type of behavior is being promoted and organized by John Hewitt.