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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This issue came up a short time ago.
Does a preparer have to provide a copy of the return?
Yes, it must be done immediately (if a refund is being claimed). The Statute implies that the copy must be given before the signature. (A full copy must be given, including all of the forms.)
§ 1.6107-1 Tax return preparer must furnish copy of return or claim for refund to taxpayer and must retain a copy or record.
(a)Furnishing copy to taxpayer - (1) A person who is a signing tax return preparer of any return of tax or claim for refund of tax under the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer (or nontaxable entity) not later than the time the return or claim for refund is presented for the signature of the taxpayer (or nontaxable entity). The signing tax return preparer may, at its option, request a receipt or other evidence from the taxpayer (or nontaxable entity) sufficient to show satisfaction of the requirement of this paragraph (a).
This is how I see it.
Someone like Bablu Shannadin , John Balki, Jim Wheaton is going to indicted and then take John Hewitt with them? Nobody is going down quietly. These investigation by the Feds take years. Get out before it is over or don't get in at all. The company will not last more than 18 more months. Everyone knows that except the franchisees that are not paying attention. Instant Tax went down for a lot less.
More Liberty tax fun??? THIS COMPANY IS INCREDIBLE!
Police investigating fraudulent tax filings
Police news
(NWGA Credit Union) - Coosa Valley Credit Union Riverside Auto Group- Rome
Posted: Saturday, February 18, 2017 12:15 am | Updated: 12:43 am, Sat Feb 18, 2017.
dwalker
Posted on Feb 18, 2017by Doug Walker
Rome police are investigating the filing of a series of fraudulent tax returns at a local tax preparation business.
According to Rome police reports:
A client came into the Liberty Tax office on Shorter Avenue earlier this week to pick up a $1,500 tax advance on a preloaded card.
At some point, the client discovered someone had already used the card.
During the course of the investigation, company officials and police discovered several other tax returns that had been filed without the consent of the customer.
At this point no charges have been filed and the case is still under investigation.
All of a sudden there are many new posters (?!) this week that have inside knowledge of JTH's wrongdoings? I have heard many times that he bought a bank (?!) in the Cayman Islands. You mean if he flees there, he cannot be brought to justice in the US? How awful.....these feds HAVE been investigating for years already.....how many more years before they pull the trigger? They're gonna wait till JTH is long gone?!
JTH and LTS definitely brought this all on themselves. Can you imagine calling the IRS on all of your former franchisees and then bragging about it to the press and admitting that they do this? I know all too well that it's true, it happened to me. My time with LTS and the many years following that one 5 year contract have been a nightmare I never thought I'd get out of. Here it is many years later and the stress of it all is finally winding down. After YEARS and lots of money lost.
I would LOVE to read the headlines that he is finally brought to justice and made to pay back every franchisee that he wronged. That would be all of them.
Anyone else notice LTS hasn't posted an earrings call date yet TT always goes 1st usually with HRB a day or two behind and LTS a day or two behind HRB. TT and HRB set theres up a while ago still crickets from LTS. Wonder if its a sign.
Let's see Liberty Tax update its website to say that they no longer have 4000 plus offices its closer to 3500 now after all of last years closures and expulsion from the Wal-Mart Contract.
T. EA: Liberty releases third quarter results the morning of March 8th. Get your coffee and popcorn ready.
If Trump gets his way with tax reform and I believe he will get some of what he wants it will more than likely crush Libertys business model. He states he wants to put Block out of business but in reality he will put Jackson Hewitt and Liberty out first. If tax reform comes, I don't believe you will see consolidation because a massive percentage of Libertys (TAX) business will be destroyed.
Looking at its efiles so far from IRS data it does not look promising for Liberty or the income tax preperation business all around.
I agree with "Out", any tax reform will first crush LTS and JH. If you look at the tax reform he is stating, it would cut out all exemptions (meaning children) and all EIC, because most tax fraud happens from $50K on down. It would cut out worthless filings, which LTS, HRB and JH rely on the person who makes $4K a year and has 3 children. WTH, why are you filing when they are clearly on all assistance and should be blocked from receiving EIC year after year.
I was looking at my people, and I have about 5-10 filers, who would fall in that category.
But if EIC is ended and standard deductions increased, it would stop the massive fraud we are dealing with at this time. It would put a dent in identity theft. Now he congress could at more credits, which would possibly increase that fraud again, but taking away the exemptions, would be a great start and increasing the standard deductions.
With that being said, I would be very worried owning any of the above 3 and it is a little disconcerting as an Independent. Especially, we could be mandated out of most of our business.
I wonder is EA would still be a good fit?