LIBERTY TAX SERVICE Franchise Complaints

5,730 thoughts on “LIBERTY TAX SERVICE Franchise Complaints”

• Everything about LTS is about clear as mud. After 5 years, just still trying to figure out what is holding this company up. Apparently, the Feds are trying to figure it out also. At least we are not the only ones that can’t figure out the smoke and mirrors.

• I was looking at last years financials and you see the Note payable to the Area Developers is $21,896,000.00 and this note is tied to the AR that the franchisees owe Liberty. Somewhere there has got to be an AD that feels their getting screwed.

• You raise a couple of interesting points about how Liberty and Hewitt do business. It still appears to me in my humble opinion, that Hewitt and Liberty are a front for something else. There is just no concrete financial foundation to keep this bunch of crooks afloat legally.

  As for the AD’s, I think a lot of them are too stupid to know how badly they are getting scammed or, most likely, they know exactly how bad they are getting ripped off but are afraid to say anything so that others can be left holding the bag. Kind of like a Mark Twain story. You don’t want the others to know that you were made a fool of until they are made a fool of.

• If you are currently looking into purchasing a LTS franchise-don’t! You’ve come to the right place if you want to save your hard earned $$. Do NOT get involved with this franchise–you will be forever changed and sorry you made such a stupid move. (Like I have so many years later)

  There are franchisees out there that are reporting that their Corporate office is very helpful to them to help them achieve their goals. This franchise is definitely NOT one of them.

  The head of this franchise is a piece of garbage. If I could, I would knock him down and stomp on him. He is finding “out of the box” ways to bring in more $$ like going into Walmart stores because people are finding out what a scoundrel he is and not paying their good $$ to open up one of his franchises.

  GOOD! Somehow I would like to think that this board we are posting on is turning people away. People—save your $$ and look for other franchises/businesses to own, not this one!

• There have been quite a few possible franchisees that have contacted me and I was able to steer them clear of the swindlers at Liberty Tax. I keep a running tally of those that have contacted me and have decided that Liberty was not for them. that number stands at 19 right now. A good score of those that I was able to save from the evil of John Hewitt. I feel good about that and hope to add to my tally. That is 19 people that Hewitt has not ripped off. That is 19 that can go on with their lives because Liberty and Hewitt are not involved. There are 19 individuals out there that did not make the mistake of their life by buying this franchise. That is money out of the bank of Hewitt! I feel good about that.

• TexasTee,

  Great job. Sounds like it was 19 people that had no business thinking of opening a franchise if they could be influenced b y you. This website was here in 2009 when i bought my franchise and i laughed at the same losers that were posting on here. Turns out it was the best decision of my life as I keep growing in revenues and profitability each year. Liberty Tax is a great investment and I would recommend to any of my family members as I know the system works.

• What will you do if the IRS and DOJ are able to bring LTS to trial? Do you have another plan? Are you saving and investing in other businesses? It is a matter of time that something will happen with this company. This idea, “too big to fail” is a misnomer. Enjoy while you can because what goes up always comes down.

  LTS has done wrong to many people and they are not serious about taxes, but extremely serious about marketing. Hewitt should really just become a marketing machine and get out of the serious business of taxes. He has no business being a tax professional when all he talks about is “executing his marketing plan”, nothing about being a tax professional.

  One just wonders, why he is doing LTS when he could just be a marketing machine for anything else. Maybe it’s the fast cash of EIC that has kept him going.

• Let’s see………….this website has been here since 2009 and during that time over 2500 posts OVERWHELMINGLY call for the downfall of Liberty tax and it’s leader John Hewitt.

  On occasion there are a few happy people like yourself. VERY RARELY.

  Soooooo, would I want to buy into a National franchise where there are many, many, many ,many unhappy franchisees and an occasional one or two happy ones? NO!!!!!

  The system sucks, the people suck, the so-called models suck, the corporate offices suck, their lawyers suck, their AD’s suck and everyone associated with this company sucks.

  Texastee: That’s awesome that you talked 19 people into saving their money and investing elsewhere. Good for you! Keep up the good work!

• Guest1974 – I was hoping you were posting to tell us where your territory and how many returns you do etc… These types of facts would help you support your position that it’s a good investment.

  Here is two facts: In 2012 liberty provided operating loans that averaged over $16,000.00 per store because most stores don’t make enough money to carry the cost of the store for a whole year..

  In 2008 Liberty stores averaged 540 returns in 2012 that was down to 498 returns.

  This franchise is not a good investment!

• Guest1974- I’m glad that I was able to persuade 19 intelligent people that the kool aid they just drank is tainted. I’m proud of the fact that these people were smart enough to ask questions to get to both sides of the presentation. I’m glad that you think you are making money in this venture since most are not. I know you don’t want to provide details of your success because, like everything else associated with Liberty and Hewitt, they are an illusion. Its great to be able to survive in such a sick, corrupt and outdated system such as those set up by Liberty, such as you claim to have. But, when you really think about it, after you have paid the royalties and other expenses of this franchise, you are left with little, if anything, for your hard work. That is the truth of the system. Yes, you are making money by creating EIC tax returns that taxpayer’s are too ignorant to question. Yes, you are making money by charging high fees that Liberty gets a substantial piece of. And yes, you can make money by having receivables waiting to be collected from deadbeat clients. Where you don’t make money is the errors you have to correct because Liberty’s training is fraudulent. You lose when you borrow to stay afloat at 18% interest from Liberty. You are behind when you pay your payroll, your taxes, your rent, your phone and your other overhead. You go bankrupt and your and Liberty’s lawyers suck you dry because they WILL sue you. Liberty will steal your clients and tell lies about your character. Don’t just listen to me, ask around. Most franchisees have had this same experience. There is a reason that this thread is well contributed to in this website. You’ll learn.

• ^^WOW. Well said Texastee!! :)

• Very well said. The lack of instruction on tax code and spotting fraud’s trying to take advantage of the tax refunds is rampant in all big tax houses. The big three take more and more taxpayers money and transfer them to the lower income. The IRS still needs to block children’s and other people SSN from receiving EIC after 5 years. The IRS is just getting started. If it was not for the EIC market, none of the big three would be in business or have as much money.

  EIC is the problem which needs to be addressed and make everyone pay some form of tax even if it is $50. instead of not working and trying to stay at the lower income levels just to get $4,000 a year or more by not working, while at the same time taking from the feds and states on all fronts. EIC needs to be blocked, like if you only make $9,900 a year, you only get $500 in EIC even if you have 3 children instead of $9,000 back. That type of refund just is begging for fraud which there is no way of getting back those missing funds. Only the people actually working should receive EIC not the other way around.

• I’m in agreement in that the EIC should be reformed. I would probably eliminate it. That would put Liberty out of business and keep most of the fraud away. Liberty has designed their system to actively promote this fraud. My experience was that people who qualified for EIC knew exactly how much to make, how many children to have and what marital status to be. This provided a great part of their income tax free. This point was not lost on Liberty and was repeatedly pounded into us by John Hewitt by saying “its free money to them, so they don’t care what we charge. Just get it and as much as possible for them.”

  I’m glad that TexasTee was able to get 19 people away from these crooks! I think I was able to guide about 5 away. Between th 2 of us we prevented Liberty from making $1million. That works for me.

• For potential franchisees: The EIC and bank products where the engine that drove the Liberty Tax business model. But now with the elimination of RALS and the activities of such groups as acorn the model is no longer effectives. This organization is a one trick pony that it has pretty much run its course.

• The trick pony went to the glue factory.

• I’m a long term Zee, my current agreement is up within the next couple years (I won’t pinpoint so they can’t narrow down any to ID me). I really have no desire to renew with corporate, but for totally different reasons than most. I’m not going under, I just think I can do as well without them and the 19% chunk they take for very little in return.

  I wish to honor the rest of my term, as I honor my deals (unlike them), but I wish to continue in the business afterwards. Does anyone have success stories on how to beat the non-compete? It’s seems it couldn’t be enforced as it unfairly burdens someone from making a living. I’m open to suggestions, as I’d like to take the time to plan how best to exit. It would stink to walk away with nothing, but would stink even more to walk away for nothing and not be able to operate the business either.

• Anon: You got problems. As far as I know, the non-compete will stick as long as it is in the Eastern District court. I heard of some change of venues being pursued, but I don’t know if they were successful or not. Best advice is to get away from the territory for the required 2 years and then come back and kick their butts. Stay in contact with your clients. They will follow you. If they don’t, then you don’t need them anyway. Maybe you should leave Liberty now and do the 2 years sooner. You’ll enjoy having that extra 19% anyway.

  I would separate myself from them ASAP and adhere to their letter of their law. Don’t open an office within 25 miles of the old one. Liberty is very vindictive and relentless in their litigation and you will be sued no matter what! Even if you are outside the old territory. That is how they do business.

• Why would you need to set up in the current area? Wouldn’t you sell your stores and then set up outside of compete agreement agreement? You don’ t need the current customers if you sell and move on. You have to get new customers every year anyway, unless you have 100 percent retention. This gives a clean break.

• @Anon – Can you somehow set up a small business to compete with your current Liberty business, under a family member. If you are not required to give them your tax return, you could set up another business and funnel people you want to the new office and do that for a couple of years. Get an efin, and small location and put a small ad in the phone book and use the swipe card off a pad or smart phone. It might just work…..Just working from the back end.

  It is true, you have to start from ground zero every year. Just set up an office to compete with your Liberty, which once those people have not been with Liberty for one tax season, they are not technically their client. They cannot call them anymore only send out mailers.

  That is what I would start to look to do.

• I agree, it’s a problem, and that’s why I was asking about ideas. Moving storefront outside the 25 mile radius wouldn’t work so well, as we are more rural, and to move to another sizeable town would require either a long commute, or moving my primary residence. Plus asking your customers to drive 30 or more miles to come to you, even if they want to stay with you, is a recipe for losing most of them. My retention isn’t 100% obviously, but it’s way higher than the average Liberty store. I’d hate to lose that business base I’ve built up over time.

  I’ve thought about putting it in my wife’s name (she isn’t on the franchise agreement), but they’d still sue. I also thought about keeping a “notory/messenger service” business at my location, simply as a collection point where someone could scan the material and send it electronically outside of the 25 mile radius to a home office where the returns would be prepared. Wonder if that would fly? They can’t stop you from offering non-tax prep services inside the territory right? You could have the material collected and sent, the return prepared outside of the compete area, and then the signatures gathered at the notory/messenger office right? Seems a bit involved, but for 2 years it might work. Haven’t looked to see if that violates any IRS regs though. I know Liberty would be pissed, but I don’t think they could stop that. Then after 2 years, I simply move whole operation back in.

  Also, if I didn’t sell (or couldn’t sell at a decent price I should say), and just walked away, there wouldn’t be Liberty office or Liberty Zee that I’d be competing against, as corporate wouldn’t open a corporate office here I doubt.

  I really dislike the bind that these franchisors can put on you. You are stuck with them, and then if you want to leave it’s almost impossible to get out with anything, and even more difficult to get out and continue in the business in any way, shape, or form. I agree with paying them what they are due, and any contractually obligated sums, but it just isn’t right that once you’ve honored your term, that they can continue to stifle your opportunity to earn a living. Sucks…

• One good thing about Liberty, they don’t let you advertise with your own face and name, I would look at branding yourself in some way shape or form in your newspaper, and other advertising. That way, you are branding your face and name separate from Liberty. It will take several years to do depending on the area. The key is really think outside the box from Liberty’s guerrilla marketing and guerrilla market yourself or wife etc. Of course it will cost a little more, but if you have two years to go anyways, I would start in that direction.

• Franchizee:

  There is not one good thing about Liberty. Anon: They watch you like a hawk when you leave. You cannot open anything in a spouse’s name or will get sued. You need to take your business 25 miles away. Just have you customers mail or email their tax returns to you. But you need to physically move your office or you will be sued. No doubt about it.

  They will definitely open up a Liberty Tax office in your old territory, either by selling your territory to some poor schmuck for three times it’s worth or by opening a corporate office there.

• There are some good things. Sounds like what’s bothering Anon is feeling like there’s not enough coming back. The other store owners are the good thing.
  Just a thought but a tax business can be set up as a company. Company member or business partner can be apply for EFIN. Getting into using software from another source would be a concern. You run your store without thinking about it. That will change. If you would’nt be stabbing another person in the back because you sold them your store and you don’t use bank products?

• Read this article for information on Liberty store failure rates and loans to John Hewitt.

  http://www.franchisepublicity.com/liberty-tax-service-fiscal-2013-first-quarter-results/

  Liberty Tax franchise sales activity is up 27%

  The Company reported that its franchise sales season is off to a good start with leads, conference call attendance and seminar visits all up by more than 27% from fiscal 2012. During the previous two years, approximately 10% of the Company’s yearly territory sales and new franchisees closed during the first quarter. “Although the economic climate has reduced the amount of available investment capital for new and existing franchisees, I am very pleased with the interest levels shown during the first quarter by potential new franchisees and the eagerness of our existing franchisees to consider expanding,” said Mr. Hewitt.

  JTH Holding lent franchisees $68M at 12% interest, John Hewitt $750,000 at 4.5%

  According to UnhappyFranchisee.com commenter Bill:

  Looking over the 10K and you see that Liberty tax lent John 750,000 at 4.5% meanwhile they sock it to the franchisees at 12%.

  341 Liberty Tax locations (8.8%) closed in 2011

  Bill states:

  The 10K will also show you the 341 stores closed in 2011 a failure rate of 8.8% based on number of stores open in 2011. 2012 results show the average store did 523 returns. The net average fee was $173.00. The average store revenue was $85,847. These figures are an average. A new store is more likely to have a return count of around 150 to 200 and grow around 15% per year over the next couple of years. For people that already have the tax knowledge, the purchase of any franchise doesn’t make sense if that is the kind of return volume you are going to do.

• Can you get out of (give back,)or sell your store if you don’t owe them money, but still have time left on your franchise agreement?

• There was no “balance of payments” on the royalties due if you close the store in the franchise agreement.

• I definitely wouldn’t stab anyone in the back. If I actually sold the store, I would only do so to get out of the business, not to compete with new Zee. I wouldn’t ethically feel right doing that to someone (unless it’s a corporate store, then game on!). My thing is that I don’t want out of the business, just out of giving LTS 19% of my money that they aren’t earning. I haven’t aggressively tried to sell my store, but there are many others in the geographic area that are/have, and have had little success in selling at all, let alone anywhere near a decent return.

  I just get increasingly more disturbed each year as their ineptitude grows. Their tech support stinks, their bank support really sucks, and their marketing return for your 5% is getting smaller, and smaller, and smaller (as a percentage of that 5% you get back). I honestly feel that paying them 5% total of royalties and marketing, would be too much for what they provide. Software and use of a name that has no real national or regional name recognition isn’t worth 19%. Sorry to be the negative nancy here. Before the Kool Aid drinkers come on to say I’m a failure, I’m far from it. I’ve actually made money, in increasing amounts, for over half my time with Liberty. I assure you it has nothing to do with anything they did though, it’s all me. Hence my dissatisfaction and search for a good exit plan.

• Anon:

  We were exactly in your shoes several years ago. We were early zees. We also were not failures either. Just sick & tired of a very inept company who we were giving our hard earned money to with almost nothing in return. We knew their software was bugged, probably even more so today. We had a very bad exit and it backfired on us. Needless to say we were sued and lots of ugly things ensued after that. LOTS. So just be careful and protect yourself and don’t think for a minute that they’re not watching you, because they are.

  Again, anyone reading this message board…..there is nothing that Liberty Tax gives you for your money except aggravation. Their AD’s are all getting rich off of your hard earned money. DO it yourselves! Open up your own business would be far, far easier than to pay money to these jackass rip-off artists. DO NOT get involved with these scoundrels…..hopefully they are all bound for jail soon.

• Anon: also profitable but I’m tired of paying for everything. Planning to work out of system slowly. They are’nt doing anything except giving direction on what to buy or pay for.

• I also made money, initially. Liberty tried to take my existing clients and sent letters, phone calls and other communications that I was out of business. Once my full royalty payments kicked in, there was no way I could make a profit. Very similar to what SanFran described.

• @Texas Tee – Same here, with the minimum royalty has really bit into any profit to none. It seems to be set up just exactly right.

• Does anyone know of someone who sold ther franchise (not back to the company) and what kind of value they received.

  What are the minimum royalty fees set at now? It must be higher for the try before you buy program or when you only put $2500.00 down?

• @Bill – I have heard of sales from Zee to Zee, which seems the norm.

  Minimum royalties are as follows – 1st year $5,000
  2nd year – $8,000
  3rd year – $11,000

  I think the royalties on the $2,500 try to buy is 30%. That is what it was several years ago. Of course according to this month’s call, 1,100 Walmart store are open for LTS and it is a fantastic opportunity. Yea……Jackson Hewitt is leaving for what reason, oh ya, they did not make it.

• I wonder why Wal-Mart would allow Liberty in their stores and tarnish their reputation? Liberty Tax has consistently been able to sell to naive franchisees that they have a system to make money. Yes, they make money only for Hewitt and company.I don’t see Liberty selling 1100 Wal Mart locations since they can’t sell regular locations. Has Liberty ever sold 1100 stores in a year? I don’t think so. I can’t see getting my toilet paper while doing my taxes is a great concept. But toilet paper and Liberty seem to fit well together.

  It still looks like minimum franchise fees are at the same levels. These practically guarantee the franchisee to be in the poor house. It also guarantees that a reasonable purchaser of a store from outside the system would question the extreme costs associated with running this franchise. From a business perspective, you want to always buy a business without encumbrances You got large liabilities with Liberty. Change their name to “Liability Tax”, that will fit them much better.

• @Scammed – Liability Tax, I wish I would thought of that one. The new contract is coming out and it looks like more of an employee to employer contract than an independent contractor contract. I bet the IRS would love to have a good look at that one. Maybe we could get them to pay for Obamacare and have a 401K system, since they are blurring the lines of this new contract. Most will have to sign due to the fact they “owe” their life and their first child to this liability.

  The scuttle is they are doing well in selling franchises’ so only time will tell if that is true.

• Seems like instead of unhappy franchisees you guys are the Loser Franchisees.

  Anyways, looks like between the Walmart deal and new territory sales we should be looking at around 5000 locations this year. Definitely going to pass Jackson Hewitt and on its way to being Number #1 by 2020.

• Agree. Should reach 4500 to 5000 for 2014. Nothing in it for store owners. Decline in profits or increase in debt because franchisee pays for everything. Company may even have more money to loan. Probably make more money on the stock.

• It seems LTS makes most of it’s money from loaning to poor Zee’s who works to fund the lifestyle of home office. Too bad the owners work themselves to the poorhouse and Hewitt and his ilk party hardy like it’s 1999. It is obvious that LTS can careless about it’s Zee’s or they would not stack territory upon territory to wipe out the store zee’s profits all the while enticing them to take out loans, because LTS sets up a perfect storm to sell more territories all the while giving out loans to those they over sold too. What a perfect plan. Hewitt really did it right this time compared what he did to Jackson Hewitt.

• #1 by 2020? No way. He’ll be in jail way before then.

  Liberty Tax and John Hewitt are slick marketing operations that have found a method for over 40 years to rip off unsuspecting people signing up to be a franchisee.

  IRS and Dept. of Justice: Keep doing what you’re doing. At some point, you will have all the evidence you need to put this guy and his cronies in jail for a long time.

  He bullies everyone, including members of his own family. HE WILL BE STOPPED. At some point money will stop buying his freedom and at that point justice will finally be done.

• Anyone wanting to sign up to be a Liberty Tax franchisee, take note:

  This website has been around since 2009 and during that time over 2500 posts overwhelmingly are NEGATIVE to be a Liberty Tax franchisee.

  The ratio is 99% unhappy, 1% happy. Are those the ratios that make you comfortable enough to plunk down your hard earned money for a nasty, bully of a franchise? NO, I didn’t think so. DON’T WASTE YOUR TIME OR MONEY ON THIS VERY, VERY BAD INVESTMENT. You will be forever grateful there are many people on this website telling you to save your money and look elsewhere. You will never see your money again and you will be plagued with lawsuits.

  I wish this website was around to tell me what I’m telling you folks. RUN away from this money pit and don’t look back.

• Guest1974
  I agree that liberty may have more stores than block does
  Right now ther are a little over half
  The problem is, liberty does about 10% of what block does
  Say that bumps up to 15%, which tax company would be the better investment if you wanted to buy a franchise?
  So same expenses roughly but only a tenth of the revenue? Yup liberty is a smart move

• Interesting reading. I know I said I was done here – but I got bored and so have skimmed through. I am somewhat impartial – but will always come down on the side of the truth. Congratulate yourself on on the number of posts – but to say 99% negative as if that’s a scientific survey – come on, check out the name of the website. Duh.

  The reason there is no news from Jerry Arrington is there is no case – Liberty did not and is not pushing zees to do illegal activities – that was Trish and Annie, not John and Danny.

  Some zees, like the 5 or 10 of you who keep posting here day after day, have lost money. Guess what? It’s a business – there are no guarantees. And of course Trish was terminated mostly because of the fraudulent returns she was filing – then she blames Liberty.

  Yes, I think some franchisees are let in who have no business owning a business – and they lose money – that’s true in most franchise systems – but with Liberty’s low cost it’s easier for the incompetents (that’s mosf of the posters here) to get in.

  Minimium royatlies. They are not designed to drain a zee of money – they are designed to motivate success – if you can’t make the minimum royalty you are not performing. Either learn and improve, or get out.

  10% of what block does? Where is that? Again – either improve or get out. Glad you chose to get out.

  Good luck to all of you – I encourage most of the posters here to get W-2 jobs where you don’t need to run a business – and perhaps you will find your own success.

  Good Luck!!!1

• qctibs and guest 1974 (one in the same person):

  Yes, we’ve established you are the one person that is happy. So why are you posting on this website again?

  Being a successful zee & being ripped off by Liberty Tax are two totally different venues……I was a successful zee and I was ripped off by Liberty Tax.

  John Hewitt WILL face jail time. Everybody has their day in court. He will be brought to justice eventually. What goes around comes around.

• The only time Liberty terminates a Zee is if you owe them money and don’t pay. Liberty actively encouraged me and my managers to create tax returns that made the highest fees. The Hewitts and their employees guided us into making false returns. That is the truth. Liberty has a culture of deceit. They are designed to rip off anyone who comes in contact with them.

• qctibs: You post anonymistly and offer only conjecture with no facts. The reality is most zee’s are not making money that’s why JTH Inc. has o issue operationg loans. In 2012 that amounted to over $16,000.00 per location.

  Another fact is Liberty just issued a statement that the revenue it listed on it’s 2012, 2011 and 2010 financial statements can not be relied on and have to be restated. Considering that there are loan covenants that must be kept this could impact how much Liberty can borrow. And if Liberty can’t borrow they are not going to be able to fund there stores with operating loans which more stores witl close. This is just another of a series of mistakes that this company has made.

• The SEC cannot rely on the past 3 years of Liberty’s financials since they were booking revenue when NOT received. I wonder how many other irregularities Liberty is hiding? Oh, we know a few, don’t we?

• Cooking the books baby, cooking the books!!

• Just like they cook the books on how much someone who buys a territory will make and how many tax returns they will complete. And the big kicker, how much money they will make once they sell their territory. Don’t worry about being paid now, it is an annuity! You will reap the money at time of sale. Ya, that doesn’t pan out very well, only for the franchisor. Oh and my very favorite one is, this is “your business” except when you don’t do what we want you to do. Listen very carefully, LTS business you market, work, slave over and pour your money into, is John Hewitt’s not yours. They lie at their marketing seminars about it is your business, no it is John’s and John’s alone.

  Remember the laws with the Feds / SEC or Finra have changed drastically since he took JH to public in the 1990 or so. He is obviously using the same tactics. It doesn’t work so well.

  Wonder what would of happened to LTS if he did not take it public? Was he running out of money and/or credit? I am not sure, but possibly.

• I am looking to franchise with liberty and this would be my first business venture. I am not sure what liberty is or isn’t doing right but I do not want to lose my money. So if you all would educate me about Liberty I would greatly appreciate it.

• Along with having to restate financials for 2010, 2011, and 2012.

  JTH Holdingl had to have a “Standstill Agreement” with bank lenders until August 31st, 2013. This will temporarily prevent the banks from coming after JTH or limiting it revolving credit. This can and will have a greater impact on JTH Holdings revolving financial door.

  This will not affect Liberty’s capability to loan new franchisees money to cover the purchase of new territories. But existing franchisees will find it more difficult to borrow lines of credit to pay monthly bills beginning in September.

  Expect Liberty’s stock price to fall tomorrow as investors learn that Liberty’s value will be declining sharply for the past 3 years. Would not be surprised if shareholders and investment firms begin to dump the stock holdings. This could be a very “black week” for John Hewitt.