LIBERTY TAX SERVICE Franchise Complaints
UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
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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Good. I’ll be the one to post the 3,000th unhappy post on UNHAPPY FRANCHISEE.
Anyone looking to “own” an LTS franchise, which you pay through the nose for (and I’m not talking about the initial franchise fee) and only “own” it as they bark orders at you until something happens and then LTS says, “Oh, it’s YOUR office, not ours”.
3,000 posts on this wonderful website, thanks Admin. At some point, the truth will come out and all the unhappy franchisees (that are posting and not posting) WILL prevail.
Liberty Tax is the absolute WORST franchise to ever sink your money into. If you don’t believe me, just read over the last 3,000 posts of overwhelmingly unhappy ex and current franchisees. Oh yeah, and those three stooges who are “happy” too. There are always freaks that are happy with this company. To each his own.
We made it to 3,000 unhappy posts way before the end of the year. Good work everyone. Now let’s begin the next 3,000. My hope & wish is for that man to be arrested and charged with millions of counts of terrorizing franchisees and as many counts of racketeering and fraud. It will happen.
Oh well, guest2! :) You beat me to it for the 3,000th post! Well, we certainly are on our way toward the next 3,000.
Love all the Block commercials this weekend have been looking for the liberty ones still waiting?
Yep, yet HR block was down 3% last year while Liberty was up. Liberty stock up 50% since tax season, HR block flat. What’ your point again?
The point is none of this helps the franchisee. Store owners are left to figure out and pay to get customers. Block store owners suffer from customers moving online. Liberty store owners suffer from lack of brand recognition. The stores in low income areas very successful. Not others.
By the way Mike, we don’t have Block commercials running. Testaipira they need to spend some money on ads. How long do you think it will take before independants get a larger chunk of low income business?
Then why was the guy wearing a block shirt pushing the emerald card?
When is tax season starting this year? John stated on his phone call that it is between Jan 30 – Feb 7th and that the IRS will not commit? How are the larger brand companies going to survive? Look’s like another rough start. Anyone know differently?
Pushing emerald card because of late start. Applicants probably getting declined. Where in the world is Jackson Hewitt?
Boy the emerald card is a huge risk due to the start of the tax season is currently in limbo. Also, will these people get the huge tax refunds they are used too?
The emerald card is only a loan, it has nothing to do with a tax return. The risk is the same for any bank being that it is from Block just looks like it has to do with a tax return. It does make the phones ring and if a client comes in the door it is an opportunity to talk to them about the return etc. it gives block a big advantage in gearing up for the season.
I know in the past, people who got the loan typically will process their tax return with Block instead of anyone else. So they probably write some more tax returns because of this bad consumer product.
Emerald Card: According to banktech.com “the under banked population in the US is estimated to be 68,000,000 people. In 2011 that population paid around $78 billion in interest and financial service fees”. Regardless of your feelings about such products they do meet a need and that same individual is an ideal candidate for the retail tax prep. industry.
Current franchisees: Do you see any changes this year in how Liberty is offering operating loans to their franchisees as opposed to what they have done in the past.?
Guest2/Testaipira: Jackson Hewitt based on Liberty’s marketing material has 3% of the tax preparation market followed by Liberty which has 2%. Considering their both based on the same business model the future looks bright for Liberty Tax!
Wondering if liberty is going to have the ICA this year.
Is that still going to be the competitive advantage for liberty this year like last year?
Also, with the 500 new stores last year and only 15k more returns does that mean that the same store sales were lower? Because if same store sales were higher by any number that means that nearly all of the new stores lost big time.
Are there any same store sales figures from last year?
The math says the new stores/new franchisees were very very unsuccessful in terms of revenue if they didn’t pull some from existing stores
In my area – Most stores were down 10 to 20% from the year before. Then there were a couple of stores up that amount. Overall this area was flat.
Supposely ICA will be available but the particular info is not available.
@Bill,
Yes, Liberty has not only sold stores to people with felonies, but they financed them 100% as well.
IMO, they were vulnerable pigeons.
Trisha :-)
^^^Right you are Trisha. This co. and this man have done tons of sleazy things to franchisees over the years………many franchisees are not even aware that they are being scammed and watched so closely.
Can’t wait for it to all come spilling out. They are a group of despicable people who prey on your vulnerability and capitalize on it over & over & over again. They make you buy their products that they pay pennies for and charge you 3,000 times what they paid. And that’s just the beginning. Just try to mess with them and they will flatten you out like a pancake. You sign your life away and ALL rights when you sign their contract.
We have some ICA training webinar. Yup, another scam for the poor. But like people have stated, those people need those products. So sad!
Still looking for information about operating loans to franchisees, i.e. same as last year or better/worse?
The company is on paper profitable but really has a cash flow problem because they need to fund these operating loans to franchisees to kept stores open, I’m waiting for the day when they decide that they can’t continue to offer as many loans and when that day comes I believe you will see an acceleration of stores closing.
With the current cost of restating the financials and the inability to sell franchises during the restatement period also hurt the company’s cash flow position. Cutting back on operating loans would offset the loss of those sales.
With the economy improving and the affordable care act in place the 2014 tax season should be much improved over the past couple of seasons.
@Bill – I hope you are correct on being a better tax season. I am not sure about the operating loans, but with the later start in the tax season and they are expecting the zees to open by Jan 2 instead of the Jan 8th, with possibly no money until Feb 10th or so, it is a going to be a struggle. They are having the zees stagger their pay roll for a week past the last date of working. So you work from Jan 2 to Jan 15, you would have the first check around Jan 22 or so, Then the second check would be approximately Feb 6th or so. So the employees work 3 weeks prior to the first paycheck. I am not sure how legal that is, but they want you to stagger the dates of paychecks. So Hewitt is not expecting a big chunk of change until later in Feb. The Feb 15th paycheck to pay on Feb 22nd. This is their estimates until money flows in.
Apparently this is Howwehewitt!
Don’t staff up until January 15th. Close at 7pm until January 15th. First full payroll end of first week in February. Makes more sense. Pay February rent 2 weeks late. Catch up end of February. Place any ads mid January on a credit card.
How about just not opening until the 20th full time because if the IRS opens as late as 02/07/2014, you are still 3 weeks or more without money. I am sure your landlord will not mind that you can’t pay any rent by that time, but cash in a flash is starting to pay out on 01/16/2014 according to Hewitt.
As I stated before – That is howwehewitt! Go into debt for Hewitt!
^^Franchizee:
It sounds like you are gearing up for another tax season. That means you’ve signed another 5 year contract? My condolences. That was a fatal mistake. Better to leave and endure the non-compete than to be beholden to this co. another day.
Nope not at all. I still am receiving their emails. :) And listened to the last phone call.
^^^Yay, thank goodness. I was really worried for you. Excellent choice. :)
It’s all one sided. What was the name of the spyware used by LTS? Does anyone know?
Extremely one sided. Always was, even way back when. I have no idea how other franchises operate, but this company is SO NOT WORTH IT on any level.
I do not know the name of the spyware, but I can tell you the only way we even knew about it was because it caused our computer system to crash and our computer guy said that it was 100% definitely spyware, installed probably by their IT dept.
I would agree with SFran about the spyware or whatever it was. As soon as we installed the Liberty software, my server slowed way down and almost crashed. When we put in firewalls, the Liberty software wouldn’t work and of course I got a nastygram from Liberty.
The other issue I would advise is not to open your stores until the IRS is ready. If you feel compelled to do so, do it with only 1 person there. You are not going to see any money until mid Feb at the earliest. Don’t spend money you have no chance of recovering. Overhead and labor are your biggest expenses after the royalties. Control what you can. Don’t forget there are still fee intercepts involved no matter when you collect your money. This could be a very lean season, indeed.
Texas Tee,
Your solution to late IRS is to not do any marketing? No wonder you are a failure.
You should have 15 wavers at all times starting this weekend!
I know when ever we updated Windows it would mess up “their” network systems and they had to go remotely into the machine and move things around. I have cleaned some old computers, of anything that had a LTS publisher and all tax wise and their programs. The computer works so much better.
Mike, why would anyone take advice from you, a self admitted failure? Yes, i will have 1 waver out starting January 2nd for 10 hours a day and 2 wavers starting January 25th or so.
Staffing up for jan2nd should really increase your expenses. Expect to need more people/hours for the end of Jan crunch. Expect lower profit. Preparers using all that time to web surf and text. Will open but close early for 2 weeks.
Just a quick drop by – it seems you guys are still unhappy. Had to laugh – I thought this was satire, but now I think TT is serious:
The other issue I would advise is not to open your stores until the IRS is ready. If you feel compelled to do so, do it with only 1 person there. You are not going to see any money until mid Feb at the earliest. Don’t spend money you have no chance of recovering.
I will not even comment further – I think the brilliance here is evident.
Everyone – enjoy your Holidays!
Testaipira and qctibs = one in the same
Maybe they are not part of the 3 stooges, but instead one of the 7 dwarfs. Dopey.
Thanks for adding to our “unhappy” total post count! :)
SanFran Mike, Bill and Franchizee,
Obviously if you keep reposting with the same name you will easily get to 4000. Much closer to your ultimate destination, Shock Therapy for your Paranoid Schizophrenia.
Hahahahahahahahahaha!!!!!
Get a life
Happy Holidays to all and Good Luck with your season!
I will be here for 4000 5000 10000 or more! If it keeps anyone from buying a liberty franchise! Testiclepirate or testaipira whatever your name is I am glad you are here you are the best cheerleader that iscrewitt has.
^^Guest2:
First of all, let me say that MY season will be superb, because I’m no longer in the Tax business on any level…………best move I’ve EVER made! :)
Mike:
That is the best post I’ve read in a long time!
If ANYONE reading these posts STILL signs on to be a franchisee with Liberty Tax after reading all these posts, god help you. Let’s just say you’ve been warned!
I would be concerned about having only one person in the office (depending on your neighborhood, of course). Maybe with one person inside and a waver outside you can both watch out for one another. Block company policy is that there always have to be at least two people in the office for safety reasons (and maybe to prevent one from skimming). Might be best to have one tax pro and perhaps the owner or a family member just sitting there surfing the net or whatever. Something to think about.
Really, people, the only way to make money with Liberty Tax is to own the company and have no conscience about how you screw people. I love the name “Testiclepirate” a very fitting name and quite humorous.
As for issues regarding the one person office: yes, it would be smart to have 2 people in there, especially in the types of neighborhoods that Liberty populates. You have to spend money on 2 wages, so I would think it would be smart to wait until W2’s are ready as well as the IRS. It make no sense to anger your customers over promising refunds when you have to depend on a third party to deliver (the IRS). With a huge uncertainty on scheduling acceptances for electronic refunds this year, why go through the expense and heart ache of promises made and not kept? If you have a good group of regular customers, just call them and tell them about the delays, they will appreciate it. If you are worried about those potential customers who want their refund now and before the IRS starts processing, you should worry. These are the customers that have already gone to your competitors and have been advised of the delays and are just coming to you to see if you will do better. When you process their return, there is almost a certainty that these will be problem returns like duplicate dependents, back liabilities, already filed elsewhere, any any other numerous pitfalls that come with these returns. We all have seen them, so I’m not telling you anything different than you already know. No amount of alleged marketing can change this. No prowess in software or gimmicks will change it either. The Liberty system is a dinosaur that evolution has left behind. The time have changed.
They should rename this website the “loserfranchiseesunited.com”.
You guys come on here to make each other feel good about sucking at what you did. This website was around in 2009 when i got in and it had no affect on my decision, actually made me feel better, as I realized the people that failed were real morons.
You don’t want to schedule one person in your office because you think they might steal from you. You don’t want to schedule two because it would cost too much. Your solution is to not open at all until February 4th. Really smart strategy…. I hope all my competitors do that. Complete dummies.
Well, well, well. The three stooges have reappeared in their complete glory.
Testicle pirate (gotta love that!), qctibs and John Barilla:
Their claim to fame is hanging out on these forums to put down anyone that has an educated thought or idea on why Liberty Tax Service is a huge rip off. Yes, these three stooges are here to make sure they get the word out how WONDERFUL this disgusting franchise is. Let’s keep bashing posters and telling them they are losers because they have a brain and figured out what a complete scam artist Hewitt is and his company is nothing but a front for terrorizing innocent people and finding new ways for them to part with their money. These three stooges, who will be career franchisees, parting with their money faster than they can bring it in. Yay for you.
The rest of the posters you continue to bash and call losers have moved on and are in a waaaaaaaaaay better place now then they ever were with this so called company. Right. You continue to believe people are losers and they suck for leaving the LTS system.
I sucked the minute I signed on to be a franchisee. I learned my lesson the hard way and GOT OUT of that cult like atmosphere. So you continue to lash out at posters who HATED their LTS experience and are warning others of what they face. WE KNOW THE REAL TRUTH AND SO DO YOU. Calling people losers and dummies shows just how desperate you are for someone to listen and tell you you are right. Just continue lashing out at us. That shows real strength and maturity. NOT.
Ya John Barilla – Can give out the CIF $50 or $100 to everyone who writes a return with him only to find out they scammed many others prior to coming into his office. Better you are having your money parted from you and being charged interest than my hard earn money. Congrats on being open to just perpetuate the fraud that the IRS is trying to combat. One day the IRS is going to do a sting on the LTS stores giving out money and find out they are not in compliance with the SEC/FINRA and will be going down the road to perdition. Or prison which ever comes first.
Also LTS is so bad, they have to “pay” people to file taxes with them. What type of great business plan pays people to buy something? Go to a furniture store, I am sure they will give you a couch for buying a bar stool, prior to paying for the bar stool. Maybe because the real world actually has to churn a profit where LTS just need to make it to the next borrowing season.
Franchizee,
Yep don’t do Cash In a Flash or Send a Friend but then blame the system that you don’t follow because you criticize it before even trying it. What a joke you are.
Thank you guys. Keep posting. I learned from your comments that there is a section of the market that I do not want as customers, the shysters who are looking for the middleman; they will cost money and are not worth more time than to say “bye.”
Thank you,
My office will be open 9 to 6 starting January 2nd new clients won’t know about the irs debacle.
John Barilla says “You guys come on here to make each other feel good about sucking at what you did.”
Hmm… a guy comes onto a website named UnhappyFranchisee.Com.
He hangs out on a post titled “Liberty Tax Franchise Complaints.”
Then he complains that people are posting “Liberty Tax Franchise Complaints.”
Perhaps the site doesn’t need to be renamed; perhaps you need to join a bowling league or a support group or some activity where people will give you the attention you so desperately need.
Why else would you be here with a bunch of losers if you didn’t desperately crave attention? I bet you were the kid in the playground who pulled the girls’ pigtails cuz you thought getting any attention was better than none.
The complaints on here are very valuable to people doing their due diligence on buying a franchise. No one needs to agree with every complaint, but at least they indicate what issues prospective franchisees should take a hard look at and investigate before making up their own minds.
Only a franchise salesperson would have a problem with prospective franchisees doing that.
John Barilla and goons just prove how much of a “terrorist” organization LTS is to anyone who disagrees with their company. They just prove everything we state about them to a tee. Thanks for all the posting proving that this company abuses and uses their money making machines.
Anyone who wants to join this “mafia” outfit should take note that someday they will be abused just like John Barilla, Testicle pirate and everyone else stating we need medication. They are correct, we need medication after dealing with this evil outfit.