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?
.
Liberty charges a minimum royalty of 8,000 your first year or 14% which ever is greater. Based on John’s 1st year figure the average first year does 250 returns at a net fee of 191 per return for a total revenue of $47,750.00. The 14% royalty comes to $6,685.00. However, because Liberty believes so much in their business model and you, they charge you $8,000.00. $1,315.00 more than the royalty %. They can do this because you signed the contact and now you are stuck for the remaining four years. The next year it jumps to $11,000 and you will need to 411 returns at 191.00 per return.
Remember, Liberty owns your territory they are only giving you the rights to market under their name. If you don’t make it or if your successful doesn’t matter because at the end of five years you either re-up or walk away if you don’t owe them any back royalties. All off your hard work belongs to them.
I can not stress enough how lopsided this contract is and how little this company cares and does for it’s franchisees.
Buyer Beware!!!
Bill, much of your information is in line with what my research has revealed. Keep up the great work of sharing your knowledge.
Someone several pages back made a great observation here. The two posts at the top of this forum, from BostonTax and Barbara Green spell it out the best. Most franchisees ‘give up’ before the first 5 year contract is finished, leaving all their money behind. LTS just sells it over again to their next victim. And then again. When I left, LTS sold my territories to some poor victim for well over $300,000. Seriously.
What potential franchisees don’t realize until it’s ‘too late’ is that this company is designed to have you part with your money. It’s all a marketing ploy. They sell franchises to anyone with money to put down on a territory. The training is a joke and the rules are so stringent, there is no room to put your own spin on this business. Not to mention, the clients that YOU cultivate, market to, support and form a friendship with are NOT YOURS at all under this or any similar franchise. They are yours only if you DO NOT SIGN this contract and just obtain your own clients. Simple enough.
This ‘concept’ is designed to rip off clients, especially when they had RAL’s and ERC’s. Now maybe H& R Block’s management is more ‘human’, don’t know. My experience was with LTS, and yikes, what an incredible hard lesson learned by going with what you think would be a ‘friendly’ company. Nothing could be farther from the truth.
Many franchises, as you will see by reading other posts on this website, are designed to intimidate you, bully you, threaten you……..and all that is done in record fashion at Liberty Tax Service. They wrote the book on intimidation. They are sharks, scam artists, ripping you off left & right.
How many judges in the Eastern District Court in Virginia find in favor of Liberty Tax Service on each & everyone of their lawsuits??? All of them. Hmmmmm
By-the-way, wonder why Liberty has more lawsuits out there than anyone else, or so it seems? Hmmmmm
The time has come for a national news service to go and investigate. There has to be a way of protecting the ‘little’ guy from these corporate bullies. A federal law.
So many thousands over the years Liberty has been ‘in business’ to rip people off have lost so much money. Why hasn’t the federal gov’t stepped in and said enough is enough?
Bill: Have you done anything about talking to senators and congressmen as you mentioned? It’s time to take action. This company needs to go down. It’s leaders need to be arrested and held accountable for their sleasy actions.
NC Hillbilly, Greg and anyone else that hasn’t posted in a while………please post some more. Your contributions are invaluable. Wish we could all gather somewhere to take swift action against this company, it’s leaders and CEO.
Interesting how he took everything out of his name and bought an island somewhere. That needs to be checked to make sure he doesn’t skip town.
If I could, I would spit on him and help put handcuffs on him as they drag him away. He is a professional thief who buys his own awards and makes life miserable for countless people all over the country.
sanfran says:Someone several pages back made a great observation here. The two posts at the top of this forum, from BostonTax and Barbara Green spell it out the best. Most franchisees ‘give up’ before the first 5 year contract is finished, leaving all their money behind. LTS just sells it over again to their next victim. And then again. When I left, LTS sold my territories to some poor victim for well over $300,000. Seriously.
Wow. Wow. Most give up? 10% of zees leave the system each year, some on their own terms and some due to failure.
Leaving all their money behind? But your territories were sold for over $300,000? Perhaps you should have sold the territories instead of walking away, as it sounds like you did.
Like any franchise, it isn’t for everyone. Unfortunately, not easy to tell up front who will put in the hard work, who will follow the system, and who is smarter than everyone else, doesn’t “need” to follow the system, but then gets angry when things don’t work out.
Ahh qctibs!
How we’ve missed you, NOT
You obviously missed many posts. I am not angry because things didn’t work out. They worked out for the 5 years of my contract despite Liberty Tax Service. They worked out due to MY hard work, not their support or guidance. I couldn’t wait to get out fast enough. They were ruthless, unscrupulous, unethical cattle hustlers who couldn’t give a shit about anyone. They wanted their royalty and offered N-O-T-H-I-N-G in return. AD’s were uneducated, unconcerned, except when it came to their portion of the royalty checks. The site selectors were a joke. The conventions were an even bigger joke.
NO ONE wanted to touch a Liberty Tax franchise to buy way back then, and it’s even worse today. Liberty Tax got $300,000 for 3 of my territories that they sold to a very, very uneducated, unsuspecting individual who had to finance the entire purchase through them and they charged him an exhorbitant amount of interest, naturally. Liberty manufactured the numbers to make it look as if the business was worth that much, when in fact it wasn’t even close, despite the fact that I was successful ON MY OWN. My mistake was in going with LTS to begin with, knowing full well I could have done it on my own successfully.
They are in the business to sell a dream, manufactured in a very scripted, precise marketing plan. People fall for it every day. There wouldn’t be an “Unhappy Franchisee” website if companies acted more responsible and ethical toward their franchisees. Sadly, Liberty Tax is one of the biggest offenders.
One way that they are trying to get more franchisees is that they are having “Chuck Lovelace is the Vice President of ACA at Liberty Tax Service. Chuck has been involved in franchising for 17 years. He has worked in every aspect of the business from sales to operations. In November of 2013 he was assigned to lead the ACA initiatives for Liberty Tax. Chuck is also the cofounder of Run for Food International along with John Hewitt President and CEO of Liberty Tax.” talking at the Latino Tax Professionals Association’s convention. Mr. Lovelace is scheduled to talk in 30 min sessions on day one from 2 to 5pm.
The funny thing, is that I do not know who Mr. Lovelace is.
Liberty wants more Latino owners so they can rip off the Hispanic community.
Out and Glad:
Don’t you know?! JTH is an equal opportunity rip off artist! :(
The reason is John Hewitt is starting a new tax service called SiempreTax! he wants to open 200 new offices this season.
So for all of the Liberty offices that were pushing John’s Hispanic policy now he is planning to create a competing tax service in your own territory.
@NCHillBilly – Well ain’t that special! What is the idea of changing Liberty Tax ownership from JTH Tax, Inc. to Liberty Tax? Inquiring minds would like to know. Got the blurb from Progressive Accountant last week.
It is no great secret that Hewitt wants to target the Hispanic market since he feels that it is the most under educated minority with growing numbers in the country. What he does not realize is that the Hispanic market is considerably brighter than he thinks and would be wise to his gimmicks. That is why the Hispanic marketing program failed with the regular stores. Or, is Hewitt prejudice against Hispanics by assuming that they are low income and thus, unsophisticated? Either way of thinking puts you on very dangerous ground.
As for a competing Hispanic only tax service, that stinks on 2 levels. The first level is that it is aimed exclusively at a particular minority group. The second, this is a slap in the face to existing franchisees, in that there is another competing territory within their own territories. The first ignores the constitution and the second ignores his own contract and agreement with his franchisee’s.
So, Liberty and Hewitt stand for anything but “Liberty”. Something else to think of.
For people considering a liberty tax franchise the 10K report includes a copy of the franchise agreement. The link is http://ir.libertytax.com/phoenix.zhtml?c=233197&p=irol-sec or you can just go to JTH Inc. investor relations and click on SEC filings and look for the 10K, Open the PDF and scroll down to exhibit B. There are other types of agreements listed as well. You will see one common thread in all of these agreements, “minimum royalties”. This is the sucker play, pump you up to believe you will do 600 returns the 1st year, get you to sign on the dotted line and your hooked for nothing less then the franchise fee of $40,000 and minimum royalties over the 5 year period of $46,000.00
NCHillbilly: I wasn’t following you until I saw the agreement to operate a Hispanic office along with the Liberty Tax office included as part of the 10K. Just amazing!
Billy and Texas,
Stop your lies. Billy mentioned that first year minimum royalties were $8000 but they are actually $5k which means you probably have to do 180 returns as a minimum to not have to worry about paying the minumum. If you can’t do 180 returns your first year the minimum royalties is the least of your problems.
The new Hispanic Brand is brilliant if you know anything about the hispanic community. It will not compete with existing franchisees. If you have a territory already they will not sell that brand to someone else and you can open it without paying additional royalties. You can even sell the rights to the hispanic brand if you wish. Legally they could have probably done it but they are not that way. They really have one goal and that is to bigger than HR Block by 2020. Whether that is a good thing for franchisees is a better question. I will admit bigger is not always better.
John, H and R Block has roughly a 30% market share. 2020 is about 5 years away. Please entertain me on what the strategy to accomplish that is.
John B, I welcome your comments because there lack of substance only substantiates what we’re saying.
If you sign up with Liberty you will have a “problem”. The numbers I present are taken right from the financials. The minimum royalties are as follows 1st year 5,000 second year 8,000 third through the 5th $11,000 a year for a total of $46,000.00.
My point is if Liberty is such a good franchise as they claim why do the need minimum royalties. If you review the contract you can see they have other performance measures that can be used if a franchisee is not living up to the requirements so the only reason for the minimums is to pump as much money out of the franchisee as they can.
John B, I welcome your comments because there lack of substance only substantiates what we’re saying.
If you sign up with Liberty you will have a “problem”. The numbers I present are taken right from the financials. The minimum royalties are as follows 1st year 5,000 second year 8,000 third through the 5th $11,000 a year for a total of $46,000.00.
My point is if Liberty is such a good franchise as they claim why do the need minimum royalties. If you review the contract you can see they have other performance measures that can be used if a franchisee is not living up to the requirements so the only reason for the minimums is to pump as much money out of the franchisee as they can.
Buyer Beware!!!
John B,
If you actually believe that “It will not compete with existing franchisees.” then you are not living in the real world.
1. You are taking returns from your office, and giving them to another office. If you have ever opened a second office in a smaller territory, you will loose returns in the primary office.
2. You would have additional expenses for the second office.
3. If you did sell the rights, you will not be able to control the quality of that service.
The Hispanic community is even more loyal than communities. If you give them the same respect and service that you should give to everyone, they will wait for you. Yes they do want someone that speaks Spanish. However they if you are trying to work with them, they will work with you and come back. They want to know that you care about them.
I stop by here once or twice a week to see what crazy stories you guys are up to.
Most of the time I do not comment as alot of the stories are just your opinion, and your opinion is generally…..the sky is falling the sky is falling….Liberty is the worse company on the face of the earth.
I would argue the numbers and fact speak differently. They have grown EVERY year they have been in existence. you can definitely make good money with this company, that is a fact.
But the real reason I am commenting is regarding this Hispanic Brand kick you are on. While this is a non event in all of my territories (hispanic pop is less than 10%) I’m sure in other areas, this will put them ahead of the game. Currently, no hispanic tax franchise that caters just to Hispanics exists. I can mention other industries that hispanic franchising has been successful (banks, restaurants etc) I think this is a briliant idea.
Also, anyone who purchases a territory (or currently owns a territory) before Nov 30th. has the rights to both offices. How is this a negative for you? How are they competing against you? you can either open up a Hispanic office or choose not to. After Nov 30th, I can see it as a possible issue for new zees, but they will definitely be aware of this. Liberty will disclose this obviously to a new buyer.
I know this board has 0 common sense, but all Liberty wants to do is grow and hopefully be the biggest one day. HMMMMMMM since they are virtually 100% franchised I don’t think they get that way by deliberately trying to wreck existing or new franchises like most on this board imply.
Minimum royalties have NEVER been an issue for me whatsoever. I’m sure for most on this board they were though and that explains alot. If you can’t make min royalty in any given year, you should immediately quit and not open up the next year barring some catastrophic reason you did not meet it. I understand the principle behind them. Hopefully they make the weak franchisees strive to pull up their game are just get out all together as they are obviously incapable of running a business.
Happy July 4th ALL!!!!!
Double check your facts that no Hispanic brand currently exists. The Hispanic brand is first year and really a non-event until 2016. Fiesta Tax is a Hispanic brand with an insurance combination. Fiesta seems to be struggling but it is a Hispanic focus.
All Spanish speaking offices make sense? What about Hispanic customers who only speak English?
Corporate plants like to come out when things are slow like Ed and Barfrilla. It is the afternoon before a holiday, so why aren’t you guys off playing at John’s beach house? Not invited?
What Hewitt and Liberty are doing is an insult to the Hispanic market. It means you are singling out a subgroup of Americans for special treatment. Sound kind of like the start of the Nazi’s.
Funny how everyone that is not bashing the company must be a corporate plant. Whatever…..
Also funny is that just because Fiesta Tax is struggling “Guest” is trying to make the point that it must be a bad idea.
That is the same thinking that just because Bill/SanFran/Mike/Franchizee failed this must be a bad franchise. How about in file there are always successful people and losers. And it is obvious who the losers are on this board.
^^^^^HAHAHAHAHAHAHAHAHAHAHAHA!!!
Thanks for the compliment, John Barf villa, guerilla, gorilla!
That’s right! We’re all losers!
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!
Keep thinking that if that’ll make you happy! :)
No, of course it has NOTHING to do with Liberty Tax!
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!
For any potential franchise – now that Liberty is a publicly traded company they are required to provide factual information. So if you became a franchisee the initial franchise fee is $40,000.00 Based on the financial information provided in the financials you can calculate that the average for all stores regardless of age is $86,465.00. If you use a weighted average based on age and number of stores a 1st year store averaged $20,082 in gross fees. After the minimum royalty of $5,000.00 and an advertising fee of $1,004.00 you will have $14,078 left over to cover all your other expenses plus pay yourself for all your hours of work.
I can present all the facts there are but the reality is this comes down to both the facts/numbers and emotions. Sales people understand the emotional side. That’s why John and Ed can be still taking seriously even thought they never present a fact. When I went to the seminar in Virginia, I was an employee of a small firm and waned to go out on my own. With me at the seminar was a CPA from NY who had her own practice and was looking to expand her business. We attended all the same meetings and we would talk about what was going on. At the end of the weekend she advised me that it was not a good idea and she wouldn’t be buying a franchise. The difference was experience vs. emotions. She had the experience and understood there was nothing that Liberty could provide that justified what they were asking. Me on the other hand I was filed with emotion and believed it would be a good investment. It’s been a hard lesson to learn.
Buyer Beware!!!
^^^Excellent post, Bill.
If Liberty really provides accurate factual information (why should they start being honest now?) then potential franchisees will see enough red flags just in the amount of lawsuits initiated.
Bottom line: this company is out to sell, market and draw you in, hook, line and sinker. This is not a company who cares at all about your success as a franchisee. People should also look at ‘his’ history with H & R Block and Jackson Hewitt. Our mistake was in going with someone who we thought was a ‘seasoned’ tax professional. All he is is a ‘seasoned rip off artist’. He was thrown out of Block and Jackson Hewitt. He has over 40 years of perfected his marketing abilities. He has cornered the market on slease and money grubbing.
I’ve been through hell & back being associated with this franchise. It is SO not worth it. Please go elsewhere.
Yes, buyer beware!!!
SanFranDan, I’ve been reading your posts for a long time. I understand that you were given a rotten deal and that Liberty put you through hell. I also realize that your point in posting here is (a) to encourage others not to sign up so JH gets hurt in his wallet, and (b) to encourage others not to sign up so they don’t get hurt. You’ve undoubtedly succeeded to some extent on both goals. Yet your constant posts, all rehashing the same theme over and over, make me concerned about your own well-being. This post, from David 4801 on the Yahoo@ HRB board, made me think of you. Just substitute “franchisor” for “employer”:
“When someone leaves their employer on bad terms, it is like going thru a bitter divorce. You can dwell in the past and keep spewing hatred for your ex spouse/employer or try to move on with your life. Sure it feels good to post this invective, but what do you really accomplish?…. And in the end this hatred will just make you ill and make you a bitter person and shorten your life. Often profession therapy is called for. Then perhaps you can move on and hopefully have positive work experiences.”
I once heard a quote that inspired me about letting go of memories of some horrific event unless you want to be there again. On that day I decided it was “forward!” because I sure didn’t want to go back there.
You have definitely done your bit to warn others about getting involved with Liberty. It is time to move on with your own life. Drop the past, and when it creeps up on you, remember you are only going “forward!” from here.
Bill,
Read Sara’s post. It applies to you too buddy. Like Sara, I am also looking out for you.
Thanks
To Sarah,
You would be correct if it was an employer. Has any former employer taken thousands even ten’s of thousands from you? It is not the same, joining liberty has costed hundreds of people to lose their savings. I heard that one franchisee that even got a divorce over liberty. I think there was a franchisee that even named their kid after libery? So your analysis is wrong. Atleast when you leave your employer you can collect unemployment.
Sara;
If you saw one or two posts about a company from unhappy franchisees on this blog, you would probably assume they were just poor business people who did not follow the system. Liberty Tax has at last count 3676 posts from many former franchisees, all telling you why this is a horrible investment, (which it truly is!). This company has bilked $100’s of thousands from people all over this country. The system does not work, and no matter what you would like to claim, it is a scam. Unfortunately like time shares, there will always be someone who falls for the marketing only to find out it is a black hole. Not sure what your perspective is (would love to hear it), but I can tell you that John Hewitt is a scam artist, and a low life who has made millions dishonestly.
Hi SaraEA:
I’ll answer you, too, since you addressed your post to me! :)
I actually really appreciate your post to me. I need that sort of intervention because I am extremely disraught over this company’s predatory practices. It is, however, WAY more than just being unhappy because they gave me a ‘rotten deal’. Unfortunately what happened to me was so over the top stressful, that I am still dealing with the aftermath even today, many, many years after my contract ended. It’s so hard to put into words my experience. Stressful is an understatement. ANYone that went through what I went through would undoubtedly be ready to spit on him and seek revenge if given the opportunity.
I agree with you that it would be beneficial for me to move on. But a part of me keeps rehashing it on this forum because I feel that anyone out there that reads this post should have enough info. for them to back away and not sign on. Period. I have no way of knowing how many people read this forum and how many actually read back several pages. My thought was to keep posting the same info. so that if they missed it the first or second or third or whatever time, they would still see my posts and see how incredibly dysfunctional the franchise is by mine & other’s experiences. I also know for a fact that there have been thousands, not hundreds, but thousands of franchisees over the years who have left the system in a negative manner who have not posted their personal experiences here. I guess I want potential franchisees to know that this is not at all an isolated incident. This happens very frequently, most likely daily to innocent people around the country. It is not just a matter of parting with an employer. This is when a company knowingly sets out to destroy your world in a ‘covert operation’ because they didn’t like me standing up to them when I left.
^^Frustrated and Disgusted and all other posters that have bashed Liberty Tax are 100% correct. It is NOT at all what it appears. Bill’s term: Buyer Beware has never been more important than it is now for future franchisees. He IS a scam artist and a low life and has made millions off of all of us dishonestly. Said perfectly.
I will continue to post here, maybe not as often. My intention is to definitly make sure he is harmed in the pocketbook by my posts. My intention is also to make sure he gets what is coming to him. What goes around comes around. Revenge can be oh so sweet. Until that happens I will continue to post how negative & awful this franchise is. But I will heed your advice & continue to try to heal my life and continue to move it into a healthier direction. Thanks.
As far as John Barilla goes: go fuck yourself. There! That felt better too! :)
Well, one thing is certain
John barrilla has proven himself to be of low character and deceptive.
The posting using multiple screen names is way low rent. He has been called out on it.
If this character is any reflection at all on liberty (and I think it is…..deception and lack of integrity) it is no wonder he is successful. Low moral character is often a good trait for making lots of money.
Look no further than jth
Keep posting the numbers bill. Sorry you took the sales pitch.
I’m fortunate enough to have walked away when I had the pleasure of the snake oil pitch.
So Greg you have never been a franchisee? Why are you posting on here?
Mainly because of the slimy sales pitch.
Things like “we will be bigger than block by 2020”
Any rational person knows that’s crap
Heck, even john said is that liberty needs steady 30% growth each year to meet that goal
Liberty has never had 30% growth
And they are still saying it
It’s crap
And it’s this type of crap that bugs me about liberty and in general business and character in our country today.
Is liberty tax successful as a company? Absolutely
Are some franchisees successful? Of course
You’ve done well….you would in any thing….you’ve demonstrated that here. You cheat with multiple user names. You’ll call people dum dums. You’ll pretty much use any tool regardless of moral rightness to make your point and I have no doubt you will use that same moral compass to convince people to use your service.
Don’t give liberty credit for your success…your doing it all on your own.
Now, when you do talk about how successful you are….the number of returns divided by the number of offices, weighted by the succesful ones like you leaves very little for most of the other offices.
When you go to virginia you don’t hear this stuff
This board is an important place for prospective franchisees to get information that they will not get in virginia.
The other things that the Liberty “Dog and Pony” show fails to disclose is the abject failure of their system. When questioned about specific numbers at sales events, Hewitt and associates never can answer a direct question. Yes, I was burned because I wanted to believe. Fool me once, shame on you, fool me twice, shame on me. What is also worthy of attention is how Liberty and its duplicitous franchisees work on clients to maximize fees by out right creating tax returns that make higher EIC payments by the IRS. It’s shameful that the IRS has allowed such organized abuse of an otherwise helpful tax law to be recurring time and again with Liberty’s corporate sponsorship. Now, I understand that sometimes it is better to exploit a gray area in the tax laws than to go the straight and narrow. That is the system under which the tax system operates. Liberty knows this and knows that your chances of getting caught are small. That is why Liberty goes out of its way to teach certain franchisees how to construct a maximized EIC refund. Liberty also is a great marketing machine that knows who to target for such a deception. They have no problem selling and reselling territories and old dreams just to line their pockets. Liberty is not a tax preparation company but a territory selling company that is worse than the old time snake oil salesmen. At least with snake oil, you got a bottle of something. With Liberty, you are buying nothing. Keep that in mind . A lot of the posters here have had the unfortunate experience of being linked with Liberty as I was.This is the only forum where people like bill, sanfran and myself and many others can have their voices heard and warn the world of what a bunch of scam artists Liberty Tax and John Hewitt truly are.
Greg,
I respect your opinion even though i don’t agree with it. You may be the only person from the ” Let’s Just Bash Liberty” side that made a comment worth reading.
If you think having a goal of being bigger than HR Block (which I personally heard for the first time iback n 2008, not sure when they started) is slimy then that is your opinion, but I disagree.
Are they going to actually make it, well at this point, i would say probably not but i would not bet against them being number 1 by 2025 or 2030, would you? I honestly don’t care if they do or don’t I have mentioned in previous post that I was not sure whether them reaching that goal has any positive effect on me, the current franchisee. We all know bigger is not always better. What I always hope is that the financials are solid and that they are doing well as a company so they don’t end up like Jackson Hewitt and filing bankruptcy and being bought by and equity firm that has no idea how to run a tax business.
Would I have been successful without Liberty Tax? Probably even though I admit I have failed at other businesses before but I think each experience helped me be a better business man. Would Bill/Mike/Sanfran/Franchizee have gone out of business on their own? Probably. Do I ask myself the question whether going the Liberty Tax was the right decision occasionally over going independent? Yes I do and I think the 19% royalties are worth it for the name brand, the support and advertising (not saying they spend a lot but they spend some). I also think it is easier to sell a tax business that is part of a franchise system then one that is not. I think you can easily charge at least 15% more for each return by having a name brand over being a little independent shop. My average net fee was close to $280 this tax season for each paid returns. I would say if i was a mom and pop it would really be around $200. I believe I still come out a little ahead after paying 19% to Liberty. I also believe that i can turn around and sell my business a lot easier today since it is a franchised business than if it was not.
Thats my honest opinion, i know Bill/Mike/Franchizee will spin it some other way. The company is not perfect but has never done anything that has made me regret my decision. I have recommended it to my own brother and I think that is all the proof you would need to know that I mean what I just wrote.
Also to respond to Texastee I have never ever heard Liberty encourage its franchisees to maximize EIC and commit fraud. That would be so stupid for them to risk getting shut down by DOJ and for it all to be over. All it would take is one disgruntled Zee from like the ones on this website to report them to the IRS. So that is just a big fat lie.
Personally, I am a paranoid person and my biggest fear would be to lose my business therefore I definitely don’t inflate EIC refunds and make sure my preparers realize that I don’t condone it and don’t want them preparing fraudulent returns out of my offices. It is just not worth it and really just not necessary. You can make plenty of money doing it the right way.
Well guys, I have found your information very helpful and invaluable (especially the number of clients and average fees per office). I have access to subscription databases and I did not get as much information from those sources.
Keep up the great work.
Also, Barilla, what is the plan to get to number one by 2025? That is a very ambitious endeavor for a company that barely shows up on the radar. Block has about 30% market share.
At any rate, do any of you helpful people have any experience doing taxes in states that require licensing of tax personnel? If so, what are your experiences?
Thank you,
Barf villa, Gorilla:
^^Just because you haven’t “heard” about Liberty doing or not doing something, does not mean it’s a big, fat lie. Whether it’s true or not, you really have no idea, now do you? And what Liberty does NOW, as opposed to what they did years ago may also be very different now that they know the DOJ and IRS are watching them carefully. How would YOU know what is said at a convention, for instance, or not said at any point in time? You’re just speculating, because you really don’t know if it’s a lie or not. So I would suggest keeping your trap shut and report what you “know”, not what you speculate as a big fat lie.
That goes for your response to ‘texastee’ or any other poster. Don’t EVER accuse any one from telling a lie unless you know definitively that it’s not true.
You ask Greg why he’s on this website since he’s not a Liberty franchisee? This site is for U-N-H-A-P-P-Y franchisees. Greg at least knows numbers and can easily tell the public WHY this franchise doesn’t work. And even if it did work, which it doesn’t……..who wants to be associated with a company that claws it’s way to the top by stepping over and pushing everyone out of their way? And outright stealing and lying. At least I can back up my claims with facts and not just point out that they are supposed lies.
Sorry, SaraEA: couldn’t resist! :)
Sorry but it’s not true. Dissatisfied with the company is your business but accusing franchisees of committing tax fraud is going to far. Obviously long out of the system. You’ve gotten carried away. Those comments target the people who are trying to run their businesses. I thought your anger was at the company.
This is my last post, but don’t bother to accuse me of not knowing. That’s a waste of your time.
John Barilla, you should just quit trying to balance the conversation. Let it go.
^^^?????
Who are you directing your comments to, guest, me or the poster who wrote those comments…..Texastee?
I happen to agree with him! That’s why I posted what I did!
You really DON’T know, now do you? Again, when I say I have ‘facts’, I am talking about a wide range of subjects. Maybe Texastee has knowledge that we don’t! I would never profess to tell him his posts are untrue, because maybe they are! You can’t speculate unless you really know!
I know Guest, but I keep telling myself to stop but what these people including the owner of this website does not realize that they are hurting the current franchisees at least as much as the franchisers. I can’t sit there and read lies and not reply to them. I think before you make an accusation like franchisees are committing fraud you should at least show your proof or something more concrete and not hide behind a fake alias on this website. Please tell me on what occasion you were encouraged to commit tax fraud by corporate? Again just a big fat lie!
Mr. Barf villa Gorilla:
YOU are telling another poster on this website to come forward & tell something without sitting behind a fake alias????? YOU who have had at least 4 or 5 other names you were posting with??? Ha,ha,ha,ha.
Some nerve you have. I’d be curious as to where Texastee is coming from too. But I have no doubt it’s true based on my experiences with this company and what they put me through. They are absolutely NOT at all what they claim or profess to be. I am not the one bit surprised that he’s come up with that revelation. I could very easily see any number of jackasses from that company doing that sort of thing. Is it true or an outright lie? We’ll never know won’t we? Unless Texastee wants to come back & tell us. Again, I would definitely not put it past them. They have been stretching the truth and being completely unethical for years & years. Why should they start being an honest & ethical company now?
WOW! I see the real nut jobs have came out in full force since I last read the posts on this website. So let me get this straight…….you think a publicly traded company as big as Liberty Tax is actively encouraging its franchisees to commit out and out fraud on tax returns.
Honestly, these accusations aren’t even worth me commenting on. I have no doubt with 2000+ franchisees and several more to pass thorugh the system that on an indivudial basis somewhere along the way a zee for Liberty did cross the line, but rest assured this is far from the norm. In fact, Liberty strongly encourages quite the opposite and has the software and training materials in place to ensure all zees know the law and abide by it.
I would be very careful exactly what you say on this site regarding your obviously false accusations. I’m sure Liberty could care less about a few failed peon zees that are posting on this site, but if they did take the time to read, you may possibly have a lawsuit against you for defamation. And by the way, the reason this thread has so many posts is because the same 4 – 5 people post on here everyday (sometimes three or four times a day). you guys are really hysterical but have actually went beyond “your opinion” in some of the previous posts.
By the way John, this website is doing nothing to hurt the Liberty brand. In fact, believe it or not, I think it may actually help. For example, if anyone who wants to get into this business lets this website and a few nut jobs on here stop them, then it’s probably a good thing they didn’t buy as they would almost assuredly be one of the failed zees that pass through Liberty.
If Liberty is guilty of any wrongdoing, it is the fact that they have sold territories to nut jobs that have no business owning any kind of business. the discussion and accusations on here are usually so far to the left that anyone with half a brain knows this can’t possibly be true or Liberty would not continue to grow ever year. In fact, I would think they would be out of business by now if even half of the statements on this board were true.
So you can sleep well John knowing these nut jobs may actually be doing Liberty a favor. Thanks Guys for keeping the nut jobs like yourself out of the Liberty system all together!!
“Stockholm syndrome refers to a group of psychological symptoms that occur in some persons in a captive or hostage situation.” – John Barilla, Ed, testi..whomever,etc
“Stockholm syndrome is a descriptive term for a pattern of coping with a traumatic situation …” – poor franchisees
SanFranDan, your reactions to what happened to you are normal, the others named above have Stockholm syndrome..
just saying…
Fact – Liberty is a tax business that sells franchise locations
Fact – No one forces you to buy a tax franchise
Fact – Some territories are better than others
Fact – Some are better at running a tax business than others
Fact – It is seasonal
Fact – You will work very hard if you care about your business
Fact – Of your hard earned money, Liberty gets 19%
Fact – If you quit your business, Liberty keeps all your customers
Fact – There is a lot of competition, they want your customers too
Consider – Buy or not buy…base it on facts
Many have posted pro and con on this site…I would have to say I observe there is mostly con and they make intelligent points as to why this is a difficult business.
Before you spend your money on the franchise fee, start-up costs, and operating costs, consider the facts.
Now that everyone had a chance to vent lets focus on whether Liberty Tax Service is a good investment.
Of the 4262 offices counted by Liberty as opened in 2013, 715 of those offices were closed prior to the 2014 season and of that figure 149 offices where over 5 years in age. . Liberty in 2014 was able to open 628 new offices NS showed only a net decrease in offices of 87. As Ed points out it’s not fair to focus on these numbers because some of these offices are temporary or kiosks in Wal-Marts etc.
In 2013 there where 2073 franchisees in the system in 2014 there where 1959 franchises for a net decrease of 114.
Even with the increase in prepared returns for this season the average of all office did 453 returns and revenues $86,465. If you break it down by age a 1st year store did 105 returns with revenues of $20,082.
A 2009 study by Timothy Bates at Wayne University found that the 68% of independent businesses survived after five years while only 62% of franchises. Profit margins where also higher in the independent business.
John Barilla – I know this is your lively hood but it’s not us that are lowering the value of your franchise it’s the company. The more franchisees that fail the more harm it creates. 1) Why would they encourage you to open a kiosk in Wal-Mart and spend 7,000 in rent knowing that these sites are not profitable. 2) Why require franchises to give away free returns 3) How about spending all the money they collect from franchisees on advertising.
This company always looks to blame someone else it’s the franchisee, it’s the IRS, it’s Ruf Vanderpool or M Baumgardner it’s never John Hewitt.
While I am not a fan of Liberty, I can honestly say I was never told, trained or advised to prepare fraudulent returns or increase EIC to help increase my fees. That being said, I was advised that to help ‘close the sale’, I should suggest removing forms from the return to bring down the fee, which I obviously did NOT do. I thought this tactic was a bit slimy to show a client that you could reduce your fee by $50 if you take out Schedule A, but that will reduce your refund by $1500! As a CPA, this is a dirty sales tactic and not in line with preparing a complete and accurate tax return.
Oh, and this is not 2nd hand information, this “training” came right from Danny’s mouth while he was visiting my office. And a side note, he almost got us thrown out of a local retail store for handing out items/give aways to customers and employees of the store after he was told twice not to do that.
None of us really has any idea of what some franchisees experienced or were told. It cannot be an outright lie if that franchisee experienced it and chooses to share it here. balancetrend: you experienced other crappiness from them. That doesn’t make it a lie, it just means that your involvement with training and Danny were different or more unique than what other franchisees experienced. I know personally that they said some very slimy and unethical things to me for marketing purposes too. That’s just the tip of the iceberg. I’m not saying anything too specific because I may or may not be the only person with experiences like that. Also, because I was a pretty ‘early’ franchisee, it seems like they’ve had no choice but to clean up their act once they made it into a public company.
If people want to become potential franchisees, they really just need to research. I don’t care if people come on and read this website and believe me or not. I have nothing to lose at this point but tell the truth. I imagine other posters are also telling the truth. If they are no longer franchisees, then why would they lie?
The main thing I would look at is the amount of lawsuits initiated by Liberty Tax against their franchisees and why. That is a huge red flag there. Also, why did JTH take the company out of his name? Why did he buy a bank in the Caribbean somewhere? Why does he NOT advertise? What DOES he use that marketing money he collects for?
Sad but true: thanks for your vote of confidence. I have not said one thing on any of these posts that has been a lie and I’m not going to start now. I will NEVER encourage anyone to join this franchise. And I will tell them my own experiences and encourage them to find other ways to earn money doing taxes.
SaraEA has encouraged me to let go and find peace. I will try. However, it is not easy. I lost a tremendous amount of money & the stress has been overwhelming.
One more thing:
Again: this is UNHAPPY FRANCHISEE. I will continue to post and encourage new posters to tell the truth and post their UNHAPPY experiences. If it hurts Liberty Tax in the long run, GOOD! What they do to ex-franchisees is nothing short of a lynching. No exaageration there.
There needs to be federal laws in effect to protect each side. Not just the franchisor. Until that happens, plenty of unsuspecting people will lose tons of money with franchises.
SanFranDan, you will now leave this website. You will not post or even sneak a peak at the posts until August 1. Promise yourself. I realize it will be like breaking an addiction–like doing without that morning cup of coffee, or cigarette, or glass of wine, or Facebook. You can do it. Your goal is a happier future and brighter outlook on life–something you cannot achieve if you are shackled to unfortunate events in the past.
Remember, Liberty is like your ex-spouse. She cheated on you, lied, brainwashed the kids into hating you, filed frivolous court orders against you, tried to take you to the cleaners in the divorce, and ripped the heart and soul out of you. Well, you’re not married to her anymore. Don’t even think about those events ever again unless you want to relive that horrible past. Dwelling on that past will not change it. Find something productive to do with your thoughts. Dream, and then make that dream happen. (Not a negative dream, like destroying JH, but a positive dream like learning a new language or backpacking in Europe. Forward!
See you August 1.
^^^Ha,ha,ha SaraEA, that’s funny! :)
(I take it the EA means Enrolled Agent?!)
I’m female, so I will think of everything above in male terms. Going ‘cold turkey’ may be too traumatic for me! I’ll try to log on less often and post less often, okay?
I would LOVE to hear from recent ex-franchisees, as Bill has also asked to hear from. Would love to hear their perspectives……why they joined, why they left and their list of pros and cons.
I’ll try to ‘refrain’ as best as I can! :)
SanfranDan: Many of us on this site struggled as franchisees so your prospective as someone who was successful is important and can help explain to potential franchisees and John Barilla how lopsided this franchise agreement is. Below are the terms of the franchise agreement that most of us didn’t need to consider as we were to busy trying to survive and find a way out. As a successful franchisee you were faced with do I sell or renew. Your experience (not anger) will help explain to John, the other few successful franchisees and potential franchises how the deck is stacked against them.
Section 2 – b) Renewal – you may renew for another five year term by signing Liberty’s then current franchise agreement, if you met the Target Volume in Section 6.f of this agreement and are otherwise in compliance with this agreement…
Section 2 – c) Buyback – Between May 1 and August 31 of any year, Liberty has the right to purchase your franchise business for the greater of $150,000 or 200% of gross receipts of the territory for the previous twelve months….
Section 2 – I) Transfer Fee – if You transfer your franchised business, or a majority ownership interest in it, you must pay Liberty a transfer fee of $5,000.00 at the time of transfer.
For potential franchisees:
Section 6.f. Target Volume You must use your best efforts to promote the franchised business. Beginning in your fifth tax season and continuing each tax season thereafter, you must prepare at least 1,000 federal tax returns in your territory (target volume).
This number is unobtainable by most franchisees. As I pointed out in earlier post the average of all stores is 453 returns. This agreement is for suckers and I’m sorry to say I was one of those and can only hope to help others avoid my mistake.
Buyer Beware!!!