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LIBERTY TAX SERVICE Franchise Complaints

UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiarliberty_logo with the Liberty Tax franchise, please share a comment below.

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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5,730 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • TexasTee

    No matter how much information you give to the feds, it seems to go through a very slow process that seems to get lost in the shuffle. As we have seen with the IRS and other agencies, they can be directed by political winds. That is the same as money. As long as Hewitt can keep the money flowing politically, the apparatus of government can be slowed down to a crawl.

    I would say the quote “follow the money” is appropriate here.

  • Franchizee

    Or more appropriate, what money??? If I was going to prosecute Hewitt, I would be very thorough because once they pull the trigger and start filing, they better have everything ready. They better have more evidence than necessary. I would bet, there is a mountain of evidence, but Hewitt is very cunning and he is the perfect CEO – He delegates, delegates, and delegates. The Feds have probably more probable cause on many others in his inner circle than him. I was watching some show about the Kevin Trudeau, who is some late night tv salesman. Well he reminds me of Hewitt, just obnoxious and acting like he can’t get caught. He will someday. What goes around comes around. I love the movie National Treasure and the FBI told Nicolas Cage, “someone has to go to jail”! Could we be so lucky….

  • focusoninformingothers

    Book-cooking is being used to describe projections. The company has no obligation to report actuals for the business owners. @franchisee, you’ve got some serious losses!

  • Franchizee

    Yup at that is the wonderful AD who states you will be very well off after a couple of season’s and they will only approve expensive locations! Such a wonderful company!

    If they are not obliged to report our losses, then why do they ask for them every year and want them adjusted to show very little losses or none at all?

  • JTH Inc. press release 8/21/13 they have been given to 10/14/13 to meet Nasdaq plan of correction or they will be delisted. The company expects to meet all requirements prior to the deadline.

    Is ths a company you want to buy a franchise from?

    Buyer Beware!!!!!

  • SanFranDan

    JTH and his so-called #^&%@* company suck royally. I hope the SEC, IRS and DOJ get him good. My biggest hope & dream is for that company to go under. And JTH to end up in jail where he belongs.

    Buyer, definitely beware. This franchise, and everyone associated with it in the corporate office sucks. They are money grubbing leechers and con artists of the most sophisticated level.

    The amount of money that is lost, by being associated with this franchise, is astounding. “No experience needed”……….I cannot BELIEVE their ads to get people to part with their money.
    “No experience needed”, “No brain either”, just lots of money to lose.

  • I would like to know if franchisees are still receiving operating loans from Corporate? If not this would be a clear indication that they are in financial trouble.
    For any franchisee that is dependent on this funding can you survive for another 4 months without it and is it worth it just to pay more royalties to Liberty.

    I was basically so broke when they gave me a termination agreement showing I would still owe them fees I said I would rather file bankruptcy first before I would sign it. At that time I never had a notice to cure and if I filed bankruptcy the franchise is considered an asset and would go into the bankruptcy estate. This would mean Liberty couldn’t take the territory back before the bankruptcy is settled. I don’t knwo the reason but they did decide to give me a mutual termination agreement that let me walk away with out owing any outstanding fees.

  • Thanks. That’s information that can be used. It tells more about how to get out if you want to. Knowing that you didn’t pay can help someone else.

  • Franchizee

    What is interesting this tidbit is not on Zeenet as of today. However, I sure know about the man with Instant Tax barred from taxes from the DOJ.

  • The reality is liberty will not be barred by the IRS. If they are delisted, which I don’t think will happen, creditors will move in just like in the case of Jackson Hewitt and run the company. Because of the franchise agreement everything stays in place for the franchisee. They are still to perform according to the franchise agreement. What is needed is a class action suit by the franchisees to argue some form of detrimental reliance. You entered in to this contract based on John Hewitt and his success over the years. You were unaware of the deceit behind the man and now that you know of the lies you should be allowed out of your contract, It only works if everyone stands together.

  • Franchizee

    They could be if the DOJ has enough evidence against them. But only time will tell. It will be interesting how this plays out. You would think that his scheme’s will be ending soon.

  • SanFranDan

    Franchizee: ^^It would be great if his scheme’s would be ending soon, but he’s gotten away with this for YEARS. Why would he stop now unless he’s forced to? That, unfortunately, will also take YEARS. :(

    I LOVE the class action lawsuit. The contract “forbids it” as well as any other 1st amendment rights. Hand over your money, give up all your rights as a human being. Shut up and keep handing over the money. When you leave, we will take all the customers that you built up on your own, without ANY help from us, and you will leave empty handed.

    I’m sorry to hear that the company will live on after JTH. Getting rid of him would be oh so sweet. Keep working on it, DOJ. Thank you!

  • NCHILLBILLY

    I would not recommend the Liberty Franchise to anyone.

    Lets address some facts.

    Contract — 5 years, royalty fees 14% marketing fees 5%. Right off the very beginning you pay 19% of your revenue to Liberty JTH Holdings. Before I forget, there is a minimum royalty fee beginning at $8000.00 1st year and the amount increases to $11500.00 beginning the 2nd year.

    Franchise Agreement: is a living document for the franchisor not the franchisee. When you originally sign this agreement, you have no input at all, it is very one sided. This means that JTH Holdings can change this agreement at anytime without you having to sign a thing and you still have to be responsible for the changes in this living agreement. Liberty constantly changes this not to protect you but to protect Liberty themselves.

    In the franchise agreement the area developer is not responsible for anything they do. So if you are provided some bad advice by the area developer. Too bad they are not responsible for anything they do. Most AD’s do not care about your success at all.

    In the franchise agreement you sign away your rights to mention or speak about Liberty Tax Service for a minimum 2 years after your contract ends. If you are terminated then it is for life. Pretty hard to explain to your future employer what your have been doing for the past 5 years, almost like being in jail.

    In the franchise agreement you agree that any legal case will go through the federal court system in Norfolk Virginia. This puts you at a great disadvantage, especially when you live outside of Virginia. You will have a difficult time finding an attorney that can represent you in Norfolk or is familiar with the federal judges.

    Tech Support, Liberty promises you the sun, wait until you have to request tech support, and you quickly discover how poor the support is.

    You pay 5% advertising fee, very little of that money is spent into your territory. Instead Liberty wants you to spend your money and time advertising. Depending on where your territory is you will quickly learn that Liberty’s marketing techniques do not work. There marketing techniques are aimed for low income areas and bank product type clients (not ones that have their refunds directly deposited into their own bank accounts), instead clients that are talked into getting bank loans at extremely high interest rates, bank fees, transmitter fees and much higher preparation fees. Liberty’s practice is to prey on the low income clients, similar to vultures on dead carcasses.

    Franchise agreement requires you to do 200 free returns. If you fail to do 200 free returns then Liberty threatens you with failing to follow the system. They will also keep any bank product refunds that you may be eligible for and reverse royalties.

    Liberty does not promote teamwork amongst franchisees. Instead you use one franchisee against the other. Each Liberty office is totally independent, you will quickly learn that other Liberty offices do not work or market together.

    Return pricing there is no standard pricing between offices. Instead you may have a Liberty office offering deep discounts and you are expected to offer the same. Deep discounts do not work, instead of helping you to grow they actually destroy your business. Just carefully watch the “Closing the Sale video” or attend the Fanatical University and you will learn differently.

    After signing your 5 year contract, Liberty will encourage you to sign a 5year plus lease on a space. Even if you terminate your agreement with Liberty early this does not necessarily mean that you can terminate your contract with your landlord. Which now leaves you on the hook to continue to pay the rent until your contract has expired or until the landlord finds a new tenant.

    If the reasons I have listed or all of the previous posts do not convince you to stay away from Liberty. Then sign on, however you will most likely will loose your life savings, retirement plans, cash value in your life insurance policy and maybe your own home. The failure rate is extremely high or the expected income is far less and the expenses are far higher than expected.

    Liberty Tax maybe a franchise, but it does not automatically draw in clients.

  • Franchizee

    @NC Hillbilly – Excellent Post. When you listen to John and his RAH RAH junk, he seems to leave the most important tool with Liberty – REALITY! The reality is, you will go broke unless you are the first in the system and have a ton of uneducated taxpayers. However, as John states, “Tax School is the most important part of your tax business.” What a joker, he is has been out of the realityville, all that does is train people to do tax returns for your EIC people and you loose the customer or better yet, you train other preparers for the mom and pop’s in your area or other franchisee’s in your area and you still are wasting, time, energy and money for no return.

    The lease on the building’s that they require is what really breaks a person along with writing every tax return that walk’s through the door, no question’s asked. No due diligence need to apply. Also payroll because of writing everyone, kills and most franchise’s spend more on payroll in 3.5 mos than a full time business does in 12 mos. Due to the overtime.

  • Peter S

    I considered buying a Liberty Tax franchise in 2005-2006 and went to the home office in VA to find out more about the opportunity. I didn’t have the benefit of this website at the time but just thought John and his whole “management team” smelled to high heaven. I couldn’t get out of there quickly enough. Glad I listened to my sixth sense about John.

  • Peter S

    Why is it that all the the “guest (pick a number)” posters on this site are in favor of John Hewitt and LTS? Just asking?

  • Franchizee

    @Peter – I think it either is John or one of the employee of month posting!!

  • SanFranDan

    OMG, NCHillbilly! Yes! Perfect-exactly what happens.

    We are quite familiar with the Eastern District Court in Norfolk, VA, the “rocket docket” Court where every sitting judge “amazingly” finds in favor of LTS 100% of the time. Imagine that. We paid out to every Lawyer imaginable. LTS then did the unthinkable to us. Just when you think it can’t get any worse, it does. They kick you when you’re down.

    The Ad’s sit there and collect your hard earned dollars and NOTHING else. Everyone at that Franchise has their hands out for $$. NO support, NO kind words, NO appreciation…….just hand me over your $$.

    Peter: Good to hear from a new poster. I’m so envious of the people that walked away before joining. A mistake of a lifetime. Thousands lost. We were too trusting and too “wet behind the ears”. This is with an MBA and tons of Accounting and Tax backgrounds. We just didn’t think we’d be so conned.

    Someone said earlier “what goes around comes around”. This is the time for JTH to be scrutinized and found guilty of everything and put away for as long as possible. It would be awesome to see that his money can no longer buy his freedom.

  • Franchizee

    @SanFranDan – I expect that, if NASDAQ delist’s them, the money will be drying up. On my end, there are hardly anymore seminars or AOT or IOT funded via the company this year. None in LasVegas or any other city. Only occasionally in Virginia Beach. They also list how many seats are available on webinar’s which was never the case years ago. They are the walking dead financially. Just need a little nudge to fall over the cliff. Only two webinar’s so far this year and everything is called Liberty College. Last year guerrilla marketing, we got hardly any money for two stores. Used to be a minimum of $500 per store, not anymore. I suspect this year, we will have to pay them! HA! Also the guerilla marketing junk they had last year, was worthless, high price junk! So without going public, they would of folded last year.

  • Evil Hewitt

    I learnt from the website that the racketeering case in NC has ben dismissed and settled. I wonder if anyone know what the Dept of Justice is still investigating. I was a former zee and was contacted by DOJ and am planning to call them next week.

    I am just curious and want to prepare myself to give whatever information I can provide to assist with the investigation. Hopefully, we all can see the Justice to shut LTS and JTH down one day to stop it from ruin people’s life and savings or abusing the legal system to sue people in the court.

  • NCHILLBILLY

    Part II: Why I would not recommend Liberty Tax Service:

    Liberty convinces you that you are purchasing a business. That is far from the truth, let’s look at what you are being told that you purchased. You do not own the customers, if you decide to leave before your contract is up, Liberty wants your processing equipment and any customer lists that you have. They provide no deed or document that says you physically own a territory. If you sell your business to someone outside of the Liberty system, Liberty will come after you, like a big dog. You are basically leasing a system for a fixed period of time. You are purchasing a very expensive lease.

    Not only are you banned from talking about Liberty Tax Service for a minimum of 2 years when you leave. You are prohibited from filing taxes within 25 miles of the territory you once owned. Don’t expect the right to work laws to protect you, because they will not. If you are caught doing taxes, be ready to pay some steep fines and be prepared to go and visit the federal judges in Norfolk, VA. This also means that you cannot own or operate a business doing taxes within 25 miles.
    Liberty’s financing sounds too good to be true. Read the fine print, Liberty has a very aggressive fee intercept program. What this means that they intercept you bank product fees first. This means that when you do a bank product for a client, “Refund Anticipation Loan/Instant Cash Advance” or “Expected Refund Check” your fee will be intercepted and applied to your debt. The big issue with this concept, a large percentage of your income in first 6 weeks of tax season is from bank products, so instead of receiving any income from the work you are doing to help continue operations and increase your marketing efforts. Instead Liberty intercepts your fees and extremely limits you’re the remainder of your tax season. Liberty gets paid first.

    Your will be mislead on what are the number of returns your competitors are doing within the area that you are considering purchasing. The reason Liberty uses these numbers is it helps sells territories. John will stand in front of you and will tell you that 40% of tax customers are always on the move, looking for a new tax preparer. I guess John needs to explain where these 40% clients were this past tax season, as Liberty only grew by 15000 clients in the brick and mortar stores. This averaged out to 3.75 new clients per office.

    Retention is a key factor in growing any type of service business. Just ask a financial, insurance, real estate agents and many more service industries. Liberty offices have a very poor retention rate. If 40% tax clients are on the move that means the industry retention rate is around 60%. There may be a couple of offices that have a good retention, but the majority of Liberty offices have retention rates in the 40’s.

    When you do not meet your inflated projected budget, it is quickly determined that you are not following the system. Liberty does not have a defined system. It is constantly in flux, depending on what hot item is working at the moment. John has conference calls, but he says very little. It is usually some Zee that has been selected and they will tell you what they are doing and suddenly it is the new system. That is Liberty’ advantage of owning a living document, their system was originally designed on low income, cheap rent areas, but most or all of these territories are gone. The Liberty system is not designed for middle income America.

  • Evil Hewitt

    I cannot agree more than 100% of NC Hill Billy comments. Excellent analysis.

  • Franchizee

    Yup all is true, however it does not stop them from taking money even when there is no way you can make it. Just I have stated, only the first in a territory area makes any money with Liberty depending on the amount of low income people. Once there is one or two office’s the low income people all dry up and they have very little need to more to another office, except to screw them over due to they owe money to child support or to the IRS due to a Liberty office gave them EIC and they owe it back.

  • I’m posting NCHILLBILLY’s last 2 comments as a Liberty Tax franchise warning posts:

    LIBERTY TAX Franchise Warning Part 1

    Thanks NCHILLBILLY, and thanks to all the commenters.

    We’re closing in on 3000 comments. Keep it up!

  • NCHILLBILLY

    Part III: Why I would not recommend Liberty Tax Service

    When you first meet John Hewitt, you will be highly impressed with his implied knowledge, name recognition and so called celebrity status. You will be impressed with all of the awards that he has won. Accounting Today magazine has named Hewitt one of the accounting profession’s top 100 most influential people eleven times. The International Franchise Association honored Hewitt as its Entrepreneur of the Year in February 2006. When you investigate how these awards are won, you will discover it through a voting processing, which John’s employees are instructed to vote for John until he wins the award. John has no experience in accounting, nor does he hold a college degree.

    Until you become a franchisee, John Hewitt appears to be your new best friend making you feel like you are a member of his family. Once becoming a franchisee you will discover that you do not have direct access to John. He sells you on idea of becoming a CEO, but there is no direct communication between CEO and CEO. John Hewitt is a master in deception at every stage from being introduced to Liberty Franchise until becoming a Liberty Franchisee. John takes full advantage of franchisees for his own personal gain, and once he is done with you he tosses you aside like a piece of garbage.

    Tossing individuals aside why not ask about his son, Danny Hewitt that was tossed aside in 2012. Danny was one of his hard chargers, promoting and marketing Liberty Tax 24 x 7. Danny was once an area developer and individual store owner and all of this was taken away from Danny. Liberty Tax sent out a mass email stating that Danny was leaving Liberty Tax to start his own advertising and marketing business. If Liberty Tax was so great and offered monetary opportunities, what happen here?

    Reselling of territories, John Hewitt’s business plan is not about long term franchisee ownership, but a constant reselling of the same territory every three years, and each time the cost of territory continues to go up. If it a establish territory, the likely prospect will be convinced to even pay more. This not only applies to territories, but also to area developers. He is not truly interest in your long term success at all. This is Liberty’s major income source selling and reselling territories, not just royalties or marketing fees that are taken from franchisees.

    Liberty’s 100% SATISFACTION GUARANTTEE, beware Liberty Tax as whole does not honor this guarantee; it is the franchisee responsibility. It does not matter if it is a preparer error or even Liberty Tax software, the franchisee becomes totally responsible. This guarantee not only includes the interest and penalties being imposed by the IRS or State, but it also means refunding the cost of the return and if it was a bank product that includes all of the bank related fees involved. Once the franchisee honors Liberty’s 100% SATTISFACTION GUARANTEE, the franchisee will not receive any royalty or marketing credits for honoring Liberty’s guarantee.

    Liberty’s in house tax preparation software, Liberty Tax does not accept any responsibility for software errors in determining incorrect refunds or balances owed. The franchisee accepts all of the responsibility. Often the franchisee is not aware of this mistake within the software, until 2 – 3 years later when the IRS or State does a computer audit of the return and catches the mistake.

  • LIBERTY TAX Franchise Warning Part 3

    With nearly 2700 comments posted so far, it’s a good time to recap what you all recommend prospective Liberty Tax franchisees be aware of. NCHILLBILLY has made the following points in this series of comments. What else do you all recommend we include in an LTS complaint summary?

    High royalty fee,
    One-sided franchise agreement,
    Lack of AD accountability,
    Unfair dispute resolution,
    Inadequate tech support
    Ineffective marketing,
    Mandatory free returns,
    Lack of systemwide teamwork,
    Non-standardized pricing,
    Lease liability,
    Higher expenses than expected.
    Lower income than expected.
    With Liberty Tax, you don’t own a business
    Liberty Tax uses gag orders & noncompete agreements
    Liberty Tax gets paid before franchisees
    Liberty’s financing is too good to be true.
    Liberty Tax gives misleading sales numbers
    Liberty Tax has a poor customer retention rate
    The Liberty Tax system is constantly changing and ineffective.
    Liberty Tax awards are bogus
    John Hewitt uses franchisees, then discards them
    Liberty Tax churns franchise territories
    Franchisees are responsible for Liberty Tax’s mistakes

    At the same time, are there any points here you disagree with… and why?

    Thanks to all commenters for an informative and lively discussion.

  • TexasTee

    What needs to be addressed here is the poor quality of the LIBTAX software. When I first joined the system, Taxwise was the software used. Now, it would be fair to say that most tax software has its own peculiarities and bugs. When these were pointed out to taxwise, they were addressed fairly quickly. That is not so with the Libtax software. Many errors were committed by the programmers of this software as well as a ton of spyware installed into this system. The spyware was designed to see all tax returns started but not completed, looking into other books and records maintained on your main office server including personal files, and spying on any online banking you conduct. It is fairly obvious that Liberty wanted to have a piece or knowledge of any other business you were conducting so that their prime objective, getting paid, is accomplished. This also involved them searching for your assets so when they sue you, they know how much to ask for and where to find it. Please notice that all their litigation exceeds the $75K limitation imposed by the federal court. When I installed the Libtax software, my computer immediately crashed and my computer networking vendor pointed out the various causes which included the spyware installed.

    We also need to mention that Liberty has some special relationships with vendors. You will notice that you are not getting that great a price for office supplies, furniture and other services from the “recommended” vendors of Liberty tax. We know why-Liberty takes their cut as well to further the hole that franchisees dig for themselves. This was true of the bank products offered by Republic Bank where Hewitt had an ownership interest in.

    I can collaborate on all the information provided by NC Hillbilly. What has been described by former franchisees on this board are accurate and reflective of the practices by Liberty Tax and John Hewitt. This company is designed to falsify tax information and sell this system as their secret to franchisee success. It will only get you into a heap of trouble with the government and line the pockets of Hewitt. Too bad the government does not have the ability to stop this company. I guess money talks an BS walks.

  • Franchizee

    @Texas Tee and NC HillBilly – How does Hewitt and his croonies find out if you are processing tax returns after you leave the system?

    1. Are people using the LibTax computers?
    2. Are people using the same EFIN’s and Lib Tax still have access to their numbers.

    On the spyware, is it only on the processor or all computers? All computers are now required from Zones, their exclusive vendor. They recommend, not to put any quick books or anything personal on the Lib Tax computers. That was per Rufe several years back.

  • balancetrend

    bill, I was an NJ franchisee as well and they did not give me any problems with a mutual termination and they forgave all the back due money. Mine was fairly easy and thankfully, a year later, pain free!

  • balancetrend

    franchizee, EFINs are set up with the IRS, I do not believe Liberty has any access or visibility over the returns filed by EFIN since they do not own the EFIN.

  • SanFranDan

    Wow, has this message board been busy. Admin: Thank you so much for posting NC Hillbilly’s posts separately! They are spot on. I agree with everything said and more!

    I would add: Yes, the software is definitely bugged as others have pointed out. To add to the list that Admin created: It isn’t just the high royalty fees. It’s the fact that you get NOTHING for those high fees! We paid for our own marketing and Yellow Pages, way back when. LTS encouraged guerilla marketing so they didn’t have to use our marketing $ for real marketing. As others have pointed out, the cost of LTS promotional items was 1,000 times more expensive then getting it on our own. Now, they make you get EVERYTHING from them. That’s because they have deals with everyone for a percentage of the action.

    The AD’s were totally useless. Not held accountable for anything. The Franchisee was always the one that was held accountable for e-v-e-r-y-t-h-i-n-g!

    Inadequate Tech support??? How about NO tech support?? Waiting on the phone for hours as they attempted to look like they were troubleshooting.

    Their fee intercept program has gotten MORE & MORE stringent over the years.

    I agree ONE THOUSAND PERCENT that John Hewitt and Liberty Tax are in the business of selling and re-selling territories. NOT TAX RETURNS.

    ^^That is why it doesn’t surprise me at all, balancetrend, that they gave you no hassle to return your office. They re-sold it again for thousands profit. When I left, they re-sold my territory for over 3 times what I paid for it.

    They are a bunch of lousy, rotten scoundrels who prey upon people like a pack of wolves.

    This is NOT a company who helps their franchisees to succeed, but rather the total opposite. I am waiting patiently. Their time will come and they will be brought to justice.

  • It is public information where EFINs are located. You can go online and enter a zip code and find all the active EFINs in the area. I found this out because we received a solicitation from some jerky place that mentioned how many returns we had prepared. The number was close so we asked the IRS how the advertiser knew this. It turns out they just extrapolated from the number of returns filed from our zip (also public info) and the number of EFIN holders there. If you keep your EFIN, Liberty will have no trouble discovering whether you are still in business.

  • Franchizee

    Thanks SaraEA – What if you get another EFIN? Does the info include your name and address?

  • balancetrend

    but is it illegal to file tax returns? i thought the basis of the noncompete is that you can not solicit their customers or open an office to directly compete with them? i had grandfathered clients and i still file their tax returns eventhough i terminated my agreement

  • Franchizee

    @balancetrend – I think the grandfathered clients are okay. Also you probably don’t have a store front. It seems the people who either work for someone else or work out of their home’s don’t seem to have the problems as ones who had a very large office and set up shop elsewhere.

    I still can’t figure out how they would find out about certain office’s and not others. I suspect he size of the business is crucial.

  • TexasTee

    Liberty will compel you through litigation to disclose your client numbers as well, especially if you were doing over 500 returns. They use the VA federal court as the muscle to do this. It is pretty obvious Hewitt and the VA 4th district have quite the cozy relationship.

    As for spyware, Libtax was able to get into my server and extract everything that was connected to it. Their computer technical staff may be terrible in customer service, but they are the best in hacking. Maybe that was why you could never hear from them-they were too busy hacking into our computers.

    The one computer that I had to get from a Liberty vendor turned out to be so inferior, I had to replace the mother board twice. This also seemed to occur at peak processing periods as well.

    It should be quite apparent now that with close to 3000 posts about this company on this site, that there might be reason for concern about doing any business with this company. They are crooks and should be dealt with. The best way is to stay away.

  • Franchizee

    I had the same problem several years back. During my peak time, my processor failed 3 different times in one month. I told them I wanted a new one, but they just wanted to fix the old one.

    I am wondering is the processor is taken off the grid when you are working on other computers that are not Liberty, will they still be able to hack your personal one?

    I suspected you would have to have a certain number of returns for them to think you are taking from them. If you are doing far less than 500 returns, I am sure you are just a gnat bugging them!

  • Hello everyone. great to see all of the postings it is awesome that it looks like the word is getting out about this despicable company and its leadership I hope all is well keep up the great job.

  • You guys are comical on here. Do you realize this company is growing faster than any tax prep chain in the world? Do you realize the stock price is at an all time high? Do you realize with the new health care law, more filers will flock to these type prep stores?

    Libertys biggest problem is it will let any bozo open a store and fail (as is evidence with this discussion board). The problem is it only takes 50-60k to get a store going, which is a very low initial investment for the opportunity to make decent $$$.

    does Liberty have problems? Of course it does, some problems are big, but so does any company the size of Liberty. I have been in the system for 6 years now and own multiple stores and this company has helped make me rich.

    Let me guess……I’m a plant……a corporate spy…….whatever new term you morons have came up with to call me. “The sky is falling, the sky is falling!!!” Oh wait it’s not falling on everyone, just the failures that are on this DB.

  • SanFranDan

    Hey Mike!
    Where have you been?! :) Glad to see a post from you. You described this company and it’s leadership perfectly…..despicable. There is no other way to describe them. ANYONE reading this message board that is thinking of joining up with LTS—read through these pages and then back away. Save your hard earned money. There are thousands of other Businesses to get involved in. This one sucks royally.

  • Ed: When you can’t beat us with facts you throw insults. The reality is you should thank us for keeping other potential Bozo’s from opening a franchise near you or is that how you got multiple stores? They come in invest 50-60k trying to build a business, can’t make it and you get the store with Liberty financing.

    Do all companies the size of Liberty have these problems:

    Receive “Notice to Cure” on it’s line of credit?

    Need to restate there financials for the current year and prior two?

    Will incur significant accounting and administrative cost to restate financials?

    Face possible SEC fines?

    Face possible delisting by Nasdaq?

    Have multiple pending lawsuits by State attorney Generals
    for WI, IL and Ca. Just settled a Lawsuit with South Carolina?

    Have a failing business model (not franchisees)?

    Have to offer franchisees for $2,500.00 that are suppose to be worth
    $40,000.00?

    Have to provide operating loans to most of their stores to keep them open?

    In it’s respective industry needs an online present so it Invest $2,000,000.00 in a software company and then has to write it off as a mistake?

    This company is poorly run and has cash flow issues that could get worse in the next couple of months. If our posting on this site can add to that pain then all of the insults are worth it!

  • the financial restatement is simply a GAAP reporting presentation issue. This is nothing in my opinion and evidentally nothing to the current shareholders. Everything that stems from this is a formality. SEC letter, NASDAQ delisting letter, line of credit notice to cure and so on.

    I would think an indivudial of your intelligence would know this unless you are just trying to scare people. Like I said earlier any company this size has made huge mistakes including Liberty.

    I’m sure for every 2 or 3 that make it, 1 doesn’t. That does not take away from the fact Liberty offers a realitively inexpensive dynamic opportunity to anyone wanting to own their own business.

    If you don’t understand the tax industry, then cash flow can become a major issue in a big hurry. (this goes for Liberty, mom and pop, HRBlock or anyone in the seasonal tax business). I look at it as a blessing Liberty will offer its franchisees short term financing to make it until tax season if you need that option. 12% interest is high, but is actually lower than most “hard money” lenders require. Liberty does not force this loan on anyone. In fact, they actually encourage you to seek financing from an external source in hopes you will get a better rate.

    I currently owe Liberty nothing and generally don’t need to borrow from them, alhtough I ave borrowed from them in the past but always paid it back that current tax season (only needed the loan for 1 or 2 months so 12% is no biggie)

    I understand this is “unhappy franchisee” website so I would not expect alot of success stories on this site (belive me there are plenty or else Liberty would not be growing at such a fanatic pace in this recessionary buisness enviroment we are in)

    I stop by here maybe once a month just to read on what’s going on, and just thought it was amusing the posts here. I guess time will tell if I am right and Liberty continues to grow or if you are right and they go out of business. I’m pretty sure I’m going to be right and 1,3,5,10+ years from now they will grow grow grow.

    Of course I’ve been wrong before, but don’t think that’s the case this time. Does joining Liberty automatically mean you will succed in this business. Obviously not or this board would not be here. Do I think it helps give you a better chance ot succeed……..Definitely!

  • Evil Hewitt

    Bill, do you know what lawsuit still going on in CA with the State Attorney General? Where can I find or read about this case? If you are talking about the false advertising case (Refund Loan), that was settled in 2009.

  • Franchizee

    @ Evil Hewitt – It just was finished in January 2013 – It should be under Justia website – JTH Tax, Inc. They (LTS) appealed and lost again in 2013. Not sure what their next step is or that they actually paid the fines imposed by California.

    Just listened the “fearless leader” and we are suppose to keep on with the planting season and get those tax schools up and running next week. Of course it seems that his portion is some type of a recording, possibly weeks or months earlier, so nothing about the misstated financials or anything that could possibly affect current franchisees.

    I wish I had the eternal optimistic outlook as “ed”, may god bless your soul for being so postitive!

  • SanFranDan

    ^^That’s funny, Franchisee, that he pre-recorded his message. Sounds like what Bin Laden did, and we all know what happened to him!!! :):):) My hope & wish is that this guy has the same fate. Yeah.

  • Evil Hewitt

    You should say ‘every 1 make it, 2 or 3 doesn’t’ using Liberty system. So, if the failure rate is 70% or 80%, what’s the point to buy a franchisee?

    I was one of the top franchisees but still decided to leave Liberty for obvious reasons that have been discussed here and I don’t need to repeat. If you think only those who did poorly at Liberty are writing bad about Liberty, I can represent the ‘Top Gun’ of Liberty and testify here how Liberty franchise is the worst investment period.

    I am sure Liberty will continue to grow and expand but all these are at the expense of its franchisees (losing their living savings, retirement funds, file for bankruptcy, etc..). I have heard many of those stories.

  • SanFranDan

    ^^^AMEN

  • I’m sure the failure rate is not 70 to 80 percent, but I’m also sure you can borrow hard money for 4 to 6 percent. The debt loop is what burden’s many franchisees. For those who stick to one location, it can be profitable. Independent’s make more money and don’t have a cash crunch.

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