UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind McDonald’s & Subway. However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.
This post was originally published
BostonTax wrote:
I’m a former Liberty Tax Franchisee
I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.
Barbara Green wrote:
I too was a Liberty Tax Franchisee and I agree with everything you said.
The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.
Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.
At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2’s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.
It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.
WHAT DO YOU THINK? DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE? ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY? WHY OR WHY NOT?
.
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View Comments
Online Refund fraud is killing Liberty.
There is no way you can pay $10,000 a year to do 300 returns.
Volume wins the game.
Online refund fraud kills the us.
Just learned about another multi-site franchisee who called it quits after two years. Couldn't make it. Used up all of the equity in his house, savings, etc. Had one site that was doing very well, two that were failing which caused them to lose bunches of money. Kind of blows the theory that it is the franchisee who didn't understand the business. Again, go to Vegas, your chances are the same.
Frustrated,
just found out you are not even a franchisee. Rumor is you tried to buy a franchise and they denied you because of your not too bright and now you hold a grudge against the company and all the other franchisees. Get a life!
Hi Frustrated,
Sorry to hear about this newest addition to the group, I am sure he was promised the world, any idea what area of the country he was in?. Hopefully, he will post on this board. I do wish that there was some way we could all contact each other.
Mike,
Contact each other and do what? Keep whining and crying? Misery loves company.
If you are considering buying a Liberty Franchise just remember 316 Liberty offices closed last year, that is around 10% of the total US offices. Not ONE Liberty supporter that comments on this website provides any valuable insight as to why anyone should purchase a Liberty office, and for all the co-detractors, keep up the good fight, for I know of several possible franchisees that changed their minds due to this website. Keep up the good fight, next season that 316 should double.
Stugotz:
Unfortunately I am a franchisee. And even more unfortunate for you, I am going to post on this site until John Hewitt either dies or retires. He has robbed so many people out of so many thousands of $$, and it continues over and over. He refuses to realize that you have to do more than supply software for $40,000 and 19% of your revenue. What is even more unfortunate is that he gives at least half of that to A/D's who have no accountability whatsoever. When you talk about not too bright, my A/D is positively worthless. John Hewitt considers him one of his shining stars which tells you how not too bright John Hewitt is. The next level in the organization is his son, who thinks marketing is nothing more than being a clown in front of your building. Again, "bright strikes again". Look in the mirror, the next time you call someone not too bright, I think you will find that in most cases the person pointing the finger is usually just jealous of what someone else has.
How come no one has a better way to do a million 1040s.
No brand.
No online.
No teledotcom.
MR REFUND has all you need for free.
LTS better start doing criminal background checks.
Frustrated,
Look in the mirror, the next time you call someone not too bright, I think you will find that in most cases the person pointing the finger is usually just jealous of what someone else has.
I agree 100% with you!