LIBERTY TAX SERVICE Franchise Complaints

5,730 thoughts on “LIBERTY TAX SERVICE Franchise Complaints”

• Question? Liberty contract states former Franchisees cannot state (hold out) they were former Franchisees. Is this for advertising or what does it mean and has anyone ever been sued for this? Very vague language in the contract.

• If you stated that you were a former franchisee, it would open up to questions on why you do not still own the franchise.
  With the number of former franchisee’s that have a bad taste in their mouth about them, Liberty could not halt the negative impact on others buying a franchise, or people going to them for tax prep.

  That is my two cents worth.

• Congratulations to everyone who provides input on this site, including John B. Your comments are having an impact on Liberty’s ability to sell franchises.

  Liberty came out with their 2nd qtr. results and stated: “during the first half of fiscal 2015, we sold approximately 105 new territories” The report goes on to further say “Our new brand, Siempre Tax +, will open approximately 60 locations during the 2015 tax season”. ” In cases where a new Liberty Tax Location and a Siempre Tax + locations are sold in the same new territory, this territory is only counted once in our new territory count”.

  As someone deduced on the Tax message board of Yahoo finance. This means the company only sold 45 new Liberty tax territories.

  Keep up the good work!

• I feel bad for the 45 new Franchisees. They will learn how it feels to give back 0.19 on every dollar earned.

  How many Franchisees quit? It is probably more than 45.

• ^^Sad but true:

  I agree with you! :) Those 45 franchisees will be posting here very shortly, unfortunately.

  It’s still 45 too many. I feel very badly for them too. They don’t know what’s about to hit them.

  Thanks for the update, Bill. Now we have to find a way to make that number zero.

• How many of the current franchisees were pressured into opening a Siempre Tax office?

  This business is getting harder and harder. There are many regulations on the horizon. Although the IRS has not been successful at instituting mandatory regulations, the IRS will probably succeed with the help of the Congress.

  In the meantime, the states are implementing tough regulations that hold the preparer and the owner of the business accountable.

  There is at least one city that has regulations for preparers with on the spot fines.

  Assisting people with immigration paperwork is priced control by some cities. This service does not seem profitable. Some of the paperwork has to be handled by lawyers.

  Here is the point, the tax business is not like it was in the 1990s. In a few years, only licensed professionals will be able to turn a profit because most of the restrictions will not apply to certain licensed professionals. (Keep in mind that the minimum wage is about to increase, more expenses.)

  Does anyone have any experience operation a tax business in a state with regulations? (Currently, there are four states with regulations.)

• It seems the IRS is encouraging people to become EA’s or some other titles. Just like Sara ea seems to stay busy all year long.

  Did anyone read the article in Progressive agent about LTS? Hewitt admitted the no franchise fee and higher royalties did not pan out. That’s how they grew so fast a couple of years ago. Apparently those offices failed because his marketing machine is antiquated and over done. Also, he stated offices opened on November 15th to try and take the insurance market. I know the offices in my area are only open their same amount of time and are available for appointments only. Also they lost $11 million last quarter. Could not have happened to any better company.

  Taxes are getting more complicated and complexed. A nine week course is not going to cut it. Or one week course. Plus as stated above minimum wages are going up which requires more cost to the consumer. It seems becoming a professional will be the most likely answer.

• It was Progressive Accountant.

• I just glanced at Liberty’s Income Statement on Yahoo. For the last quarter, the income tax expense was subtracted from the “income before taxes,” as opposed to added. This is not done on an Income Statement. (It is done in a “cash flow statement,” if the taxes are a depreciation expense.

  This means that the real loss for the quarter is $18,791 (over $18 million dollars). The (7,463) amount might be an unused credit that was applied on that quarter. But without any taxable, I do not see how an unused credit is used. (Even if this were the case, the income tax is calculated on the yearly income.)

  This appears to be some type of depreciation expense (reduce taxable income) that the company is planning to take at the end of the year. But this type of expense is usually not accounted for in the “Income Statement.”

  The real loss for the last quarter without the “Income Tax Expense” adjustment is over $18 million dollars.

  Simply put, people should ask about that adjustment when investing in the company. I am sure that there is a legitimate explanation.

• ^^Uphillbattle:

  Good to see you posting here again. Posts from everyone are helpful. Greg, NC Hillbilly, out and glad, sad but true, franchizee and Bill………….and everyone else too (except Barf villa) add real value to this forum.

  The franchise was in it’s infancy when I became a zee. Now, looking back, I don’t think I ever got a straight honest answer regarding their numbers, and how to handle certain levels of clients. The free return was such a joke. It added to THEIR numbers, not ours.

  Their method of franchising stinks. Many, many people have realized this and that’s why they’ve lost so much $$. They were NEVER forthright and honest. They manipulated everyone and everything to make their numbers appear greater.

  People have had serious life changing experiences by being involved with this so called tax franchise. PU-LEASE. The best advice I can give anyone that has already signed at this late date: you’re really stuck now for the next 5 years. Try to minimize your $$ lost (ha,ha,ha) and cut your losses as soon as you can and leave this heap of a mess behind you.

  To anyone reading this that is saving to join next year—–DON’T!!! Save your precious hard earned $$ and walk (RUN) in a different direction. Anything but this company. You will be forever grateful.

• SanFranDan, you and the rest of the people who are contributing are making a difference. Many years ago, I was seriously considering a franchise. The comments on this and other websites should alert an investor to do some serious research.

  I have also learned a lot about the tax business on this website. Through some serious research, I have concluded that this is a tough business. Sure, you might make some money for two or three months out of the year. But you have to pay bills for the whole year (lease, insurance, utility bills, and so on).

  The business is about to get a lot tougher. In a few years, all tax preparers will have to be licensed by the state and the IRS. (New York already implemented the requirements.) New York has a statute that protects consumers from “unconscionable” tax preparation fees.

  There is at least one city that fines the business for not disclosing the fees upfront or not providing copies of the documents. (This means that in a few years a tax preparer will have to be in compliance with city, state, and federal regulations.)

• I personally think it’s good that tax preparers will be subject to higher scrutiny and need to be licensed. It’s about time, actually. This baloney about hiring people off the street to come and work in a Liberty Tax office as a preparer is for the birds. It should be and needs to be regulated.

  My beef is not with the tax business since I’ve been in it my whole professional life on the corporate end, my beef is with Liberty tax Service as a truly sorry excuse for a professional, honest company. Yucch.

  Although my problems with Liberty began in year one…..I was able to make a living of sorts through my own hard work and determination. It was what happened AFTER I left that the shit hit the fan and their true colors surfaced.

  If anyone has ANY doubts at all about anything said on this forum, you can be assured that posters are writing about their awful experiences to stop others from similar experiences. LTS makes sure to squash you mentally, physically and certainly monetarily. No matter how much money you bring them. I cannot emphasize enough how ridiculous and stressful it was for YEARS.

  This is a company that needs to be scrutinized and then shut down. At the very least. It has been able to get away with waaay to much for too long. IRS & DOJ:
  take notice please and go get ’em!

• To all;

  I received this link in the mail. Hopefully Sean will allow it to stay. It gives great insight into a struggling organization gasping for air. Opening up with Insurance Agents ? Hoping he can sell ACA insurance ? Fewer Walmart locations ? Got rid of the Zero Franchise program that was a waste, and lost $11.3 in the final quarter.

  ACA, Immigrants to Lift Liberty Tax

• HR Block, Jackson Hewitt, and Liberty are all getting into health insurance. Per Jackson Hewitt’s website they are revamping. They now have $50 gift card for coming in. Tax prep offices have to change, franchise or not.

• I was looking into buying a franchise b/c I took their tax class and the owner made it sound so attractive. I later became wary of this business b/c I was not hired…even though I scored high on the tests and did everything that was asked of me. I then went back the following year and did the same thing at a different liberty and did not get hired. Both years I had noticed that no one got hired from either class. May I ask here why they have so many classes and why give the classes if they have no intention to hire from them. Is this part of their agreement as a franchisee? Also, I would never invest in this company now after reading these boards…so I thank everyone for their honesty.

• guest: I agree with your premise that tax offices need to change but I’m missing your point when it comes to tax offices selling insurance. Many accounting firms incorporate, if not directly, access to insurance products.

  This current wave of retail tax preps providing insurance services due to the ACA is just a marketing tool like gift cards and cash in a flash. For a company like Liberty who never puts its money where its mouth is, this is just lip service. Keep in mind that selling insurance requires a license in each state so if Liberty was to incorporate insurance into their franchise model they would also need to be more selective in who could purchase a franchise.

• HR Block, Jackson Hewitt, and Liberty are all getting into health insurance. Some of the local mom and pops are getting involved too. Retail tax prep has enough stores and offices. Now the focus is on maintaining clients. Yes, its a marketing tool.
  Don’t forget most businesses need marketing tools. Getting a license is one of the best ways to understand ACA. Probably most of these don’t care as much about selling franchisees anymore. Expanded services is good for 2015, 2016, 2017.

• ^^Emma:

  Your post is music to my ears! :) You are a very wise person to back away. Excellent choice. I know in my case, even with multiple offices, I was not able to hire everyone that took the classes with me. However, I still believe that tax preparers should be licensed and it needs to be much more regulated than it has been. If that is more difficult for Liberty going forward, then wonderful!!! Many years ago, I studied for my license in Life, Health and Variable Annuities. You need to keep it up with continuing ed classes and if tax is going in that direction, then boy am I glad to be out.

  LTS will GET YOU coming, going, any which way they can. Yes, they had requirements for holding classes before the beginning of each tax season. LTS itself is a disgusting company to be a part of. I certainly cannot vouch for H& R Block, Jackson Hewitt or any other tax franchises. LTS stinks and anyone that signs a contract will see very quickly that they are dealing with sharks, not normal business people. John Hewitt is not a normal business person, he is a shark, a rat and whatever adjective you want to use. Hope he rots in hell. That’s an understatement. They are sneaky, dishonest, and money grubbing. This franchise preys on people and people are tied up with them for years. No matter how hard you try to disengage, they still come forward and lock you in year after year after year using every legal term in the books. Someone had once posted that their legal dept. is not organized……….well my experience was the opposite. They keep hiring lawyers and their legal dept. is by far the largest dept. and the most busy.

  Emma: Congratulations to you on realizing what a con artist this company is and backing away. It is such a please to hear this from strangers!!! :) You will save your money and your sanity. Good for you!!!

• Can someone explain exactly how the chains are getting into health insurance? If they are helping clients sign up through the exchanges (they have to be registered brokers to do that) that get a small commission–hardly enough to justify the education and time. Since their target tax clientele tend to be lower income, I would think many would qualify for Medicaid in those states that have expanded eligibility, or state health insurance if they make a little more. Is there any commission at all in those programs?

  I see the big income related to the ACA coming from tax returns. The individual mandate created a bunch of new forms and a host of complications. Did the client have insurance? Is it qualifying insurance (won’t have to worry about determining that until 2015 tax year according to IRS). Did they get an advance premium credit? If so, did they bring in Form 1095A from the insurance company? Lots of extra work on every single return, and lots of people who got advance premiums will have to file even if below the filing threshold. Don’t need an insurance license to do the returns, just a heck of a lot of education.

• SaraEA,

  Do you have any recommendations for any on-line training for the ACA?

• Sad but true – I use WebCE out of Texas that has online courses for a reasonable price.

  SaraEA – I spoke with an insurance broker last week and I found out that the premium paid by insured’s are coming 80% are coming from the government. I asked the broker, what happen if they have a life changing event, they may owe back the money. The broker just looked at me like a deer in the headlights. I told them, I will have the barer of bad news if they don’t qualify.

• Merry Christmas and Happy New Year and Happy Holidays to all who used to be with LTS. 2015 looks better and better not being with those yahoos!

  Remember anyone looking at this company to help them build their tax business, they don’t help you, they take it from you once leave. If you don’t tow their specific line, then they will harass you and possibly sue you into submission. No one wants to be with a company that you freely give money to and have them turn around and sue you later in the game.

  LTS has a negative following of clients. You basically have to pay the people just to show up to write a tax return. It is an insane business model, that only put’s a franchisee in more debt with the company.

  For all of us that have left the company, BRAVO! We will keep posting as long as necessary.

• The reason so many tax school clients are not hired is because they over-fill their classes and hope to get the business from the people not hired. They already have a core group of preparers, but more in the pipeline can’t hurt.

  The Christmas before I opened my store was the last happy Christmas for many years. I was full of hope and believed in the system. That feeling only lasted six more weeks then I knew I had made a huge mistake. I feel sorry for the new ZZ’s who don’t know what they are getting into.

• Don’t be fooled: l was with Liberty for 4 tax seasons and as each season approached I felt the excitement and anticipation of a new tax season. So like you and most everyone else who was or is with Liberty, the franchisee is committed it’s the franchisor that isn’t.

  Tax school is just another way they can fleece the franchisee. It has to do with Liberty making a profit from the sale of the books nothing else. All of their marketing promos, signs, customs etc. kicked back money to the company. Nothing was ever done with the intention of putting the franchisee first.

  Franchisee: Merry Christmas to you and another happy year of working to put
  this company out of business!

• So, I’ve been associated with Liberty for a long while and I read these posts from time to time for general amusement…the misinformation is just staggering.

  For me, it’s been a very good experience. I know some that have done much better, some not as well, some who completely flamed out.

  I’m not going to argue with anybody and their firmly held beliefs, but I decided it would be a good thing to correct factual errors from time to time.

  Buyers should always beware, and readers should too.

  Take bill’s comment on supplier kickbacks. Categorically false. Any such relationship is required by law to be disclosed in the franchisor’s Disclosure Document. Many franchisors do get supplier kickbacks and disclose them in accordance with the law. Liberty doesn’t take supplier kickbacks.

  Having assisted in putting supplier deals together for Liberty in the past, our instructions were always to take any offered kickback (or, more politely, rebates) and to turn it around on the supplier…i.e. lower pricing for the zee by striking the kickback.

  Anyway, Merry Christmas to everyone! If you are in the business this should be a fantastic season!

• Your comments speak for themselves “Its been a very good experience”. “Having assisted in putting supplier deals together for Liberty”. You expect us to accept your comments as factual and unbiased but your unwilling to use your real name. Starting with my name I can support everything I have said about this company. They know who I am, where I live etc. I have never received any Attorney letter telling me to cease and desist.

  P.S. unlike past credits the ACA has resulted in a law that will most likely reduce refunds either through failing to have insurance (penalty) or understating your income in the prior year and having to refund money. This is contrary to past credits which provided for a larger refund.

• ^^^”Henry Bloch”, hahahahahahaha! :) Puulease! At least try to pick a more original name!

  You are a company troll, a company shill. Nothing more.

  I know for a FACT that no supplier would charge that kind of percentage unless Liberty was getting a kickback, which they surely did. Liberty gets a percentage of e-v-e-r-y-t-h-i-n-g, to the misfortune of the franchisees.

  You and Barf villa are nothing more than company plants.

  Bah Humbug, this company is awful. STAY AWAY! Your sanity and pocketbook will thank you.

• SanFranDan…if you “…know for a FACT” that Liberty receives supplier kickbacks that are undisclosed in their Disclosure Document, then it would be an easy thing for you to cause big trouble for John. The FTC, which has oversight authority over franchisor Disclosure Documents, has a Fraud Hotline and a Whistleblower Compensation Program. Why haven’t you contacted them?

• Merry Christmas! It is a happy time of year for; former franchisees and Liberty Corp.. For the former franchisees, their enslavement is over. For Liberty Corp., the time to make millions off the hard work of the current franchisees is ready to begin. Liberty Corp. New Year’s cheers will start with a toast like this; “and…here is to all those whom will be giving us 0.19 of every dollar they earn. May they overcharge their customers so we can live happily ever after.”

  Yes, a very happy time of year for the few and a very sad time of year for the franchisees and customers.

• And if Liberty receives supplier kickbacks, how come they don’t require zees to use any of their vendors (except their vendor for tax prep computers and processors…because Liberty has to provide tech support for those machines…and tax school materials…for standardization in teaching, testing & certifications). For most stuff I use local vendors for quicker turnaround, sometimes better pricing and always no shipping. Liberty couldn’t care less where my most of my supplies come from.

• And lastly, since your name indicates you have some connection to the state of CA, you should report your undisclosed supplier kickback information to their state corporation commission, franchising department. CA is about the toughest state in the union for franchisors to operate in…I’m sure they’d have a field day with your info.

• omg, “Henry Bloch”: are you for real?

  You write on 12/26 at 9:29am…..”why haven’t you contacted them”? Who the hell are you and how would you know what I’ve done and haven’t done? As far as YOUR concerned, it’s none of your damn business what I’ve done or haven’t done.

  This company is a piece of shit. No other way to explain it. There are thousands upon thousands of franchisees that get fleeced every year. MANY leave in the middle of their 5 year contract, many wait till the 5 year contract is over and many cannot even afford to keep their doors open after Liberty takes all their income. This company is NOT for the faint of heart. It is also not for anyone looking to make a living.

  John Hewitt is nothing but a crook. He has flown under the radar for YEARS. It’s time for the IRS and DOJ to wake up and see him for what he really: a con artist, crook, shark, rat, etc.,etc.,etc. Just like Bernie Madoff, Hewitt will be caught.

  So Mr. “Bloch”, hahaha: go back under the rock from which you crawled. You sound like Mr. Barf villa. You are probably one in the same. YOU know the truth and you are too stupid to admit it. The company sucks. Period.

  Sad but True: Right on. Sad time of year for existing franchisees and their customers. Incredibly good to be on the outside looking in, finally. Those 45 new franchisees that signed up this year will undoubtedly be posting here very soon. :(

• Man oh man where should i start, i bought into liberty tax 2 years back. I went to VA and did the whole meet and great sales pitch stuff . I met with John hewitt and sales team. I asked john was it possible to open a office late in the game end of december . He painted a pretty picture .

  I was offered a store that went out of business . They said the store already had 150 clients and all i had to do was buy and continue the libtax fantasy. Lol . Wow. If i only knew what i was getting into. Dont get me wrong i love the whole libtax culture. The positive customer relationships etc. But i was lied to by my area developer. Come to find out the previous owner on had 93 clients. Thats a huge huge problem!!!!!!

  First year was a loss for me. I figured im building the business and ill give it another year. Next year came and only had 110 clients. Lol. I gave up. I lost a lot of money trying. My advice to anyone trying to get into liberty tax. If your not located in a low income area within a big city such as NYC DONT do it!! All the major areas and best possible territories are taken!!!! You will lose your shirt and. I suggest you open a regular store front and market your area with fliers. Save your money!!!!!!!

• SanFranDan…I think your postings and vulgarity tell readers everything worth knowing about you and your credibility/agenda. Keep ’em coming! I just got a new bumper sticker: Honk If You’ve Been Slammed By SanFranDan!

• ^^^”I think your postings and vulgarity tell readers everything worth knowing about you and your credibility/agenda”.

  Right, Mr. “Bloch”. You can tell so much about me and my agenda based on my vulgarity. PUULEASE. Don’t you wish. You know NOTHING about me.

  The “vulgarity” I use is NOTHING compared to being a Liberty Tax Franchisee. Those were the worst 5+ years of my life. I don’t need to “slam you”. I’ve already been slammed by Liberty Tax Service over and over and over again. They SUCK. You don’t like my vulgarity?! Then GET LOST.

  You are the one “inviting” me to respond. Sounding so stupid with your innuendos. Just like Barf villa, it’s time for you to grow up, little boy. This is a real life problem where people pay good money into a franchise to make a living and get nothing but “slammed” in return. It’s become worse and worse over the years. How dare you incinnuate anything about me, my vulgarity, agenda or anything else about me. You have NO IDEA. Keep your lousy comments to yourself.

  There are enough people that have been posting the TRUTH about this company for several years now. It’s about time people noticed. You & John Barf villa are happy. Yeah for you. Woohoo. LTS stinks. New franchisees have no idea what they’re in for. It’s going to be a long and bumpy ride. :(

  This forum was set up for UNHAPPY franchisees. Remember that, Mr. “Bloch”. I’m not out of line-you are.

• Wow…asked to leave because I’m happy. I think that pretty much sums it up. SFD is just another loser looking for affirmation not information. Vitriol is all he’s got.

  Nonetheless, probably good advice to leave. I’ll head back to the Life’s Pretty Good forum.

  Best of luck to each of you…even SFD!

• “Caution,” thank you for your numbers. I will add your numbers to my research. Those are scary numbers. If the established store had 93 clients, then that means that a completely new store will probably have fewer clients in the first year (fewer than 93). Moreover, hitting 150 customers on the first year appears to be a stretch. That amount of income (93 clients) will not cover the lease and utilities for a decent office location.

• If you have no experience, stay out of the tax business or expect losses. This is not for the faint of heart and the inexperienced. You are going to get a rude awakening if you think it’s just buy some software and open a store front after taking some classes.

  I expect this year to really be a challenge because refunds might be delayed. If you are a new store, try to explain what happened. All smiles stop when refunds are late. Happy New Year.

• Good move Henry to leave the forum. I stopped posting here too. It is a waste of time.

  I tried to explain to SanFran, Franchizee, Uphill and Bill that there are a lot of happy and successful franchisees making money every tax season. However, they are here looking for comfort with each other and somebody to blame because of their failures. They might want to look at the mirror on why others are so successful and they are failures. I do blame Liberty for selling those morons territories. Owning a business is not for just anyone.

• ^^^I thought you said, “I stopped posting here too”??

  Barf villa, Bloch and Hewitt are all one in the same. As YOU pointed out, your posting IS a waste of time. Good riddance.

  Caution: AMAZING how much money they siphon from people, isn’t it? :(

• Barilla, I am far from a failure. I have credentials that prove my successes and the depth of my analytical and research skill.

  I have done research on this business using subscription resources for the information.

  Net profit on this business is about 11 cents on the dollar in rural areas. The profit is about a penny higher in major cities.

  Those figures neither factor the amortization of a franchise fee nor include the cost of royalties.

  Is it possible for a business to get lucky and make more money (an outlier)? Yes.

  Also, there is a storm of regulations on the horizon. Only the people who hold professional licenses are going to survive.

  Here is the point, no one should take any of the information that is posted on the internet at face value (not even my information). All of this information, however, should prompt people to do more research.

• Uphillbattle – Before I bought, I did exactly what Liberty recommended I do…dial up random owners from their Disclosure Document (by law, all owners past and present must be disclosed with contact info.) Over 4 months I spoke with about 30 owners from across the country, an hour each on average. I found exactly what Liberty told me I would find: one third were ecstatic (including some that had already executed their exit plan), one third were still on the fence with varying degrees of success, one third not happy and looking to exit (some blamed Liberty, some did not). In my conversations, i found I had much more in common in general attitude and outlook with the ecstatic ones as opposed to the others. That’s why I bought.

  In my own case, I have 4 stores of different maturity levels (oldest is 6 yrs). Not rural, but nothing resembling a major metro. My 2014 net revenue was about $650K. My net profit was 32%, after royalties and all other expenses. I made way more money then Liberty on my stores. What’s most important to most business owners is how much they keep, not how much they pay suppliers, vendors, franchisors, etc.

  Full disclosure: I am not average, never have been. But an outlier? Hardly. I know far too many who have results better, the same, or close to mine to consider them outliers.

  I also know many owners that don’t get anything close to those results. It takes me about 10 minutes of conversation with them to figure out why they failed: They didn’t execute the system well at all.

  So you can keep talking to your “subscription services.” Smart people just go straight to the owners.

• “Bloch,” you definitely are smart for having all your success. By your own admission, you took other people’s word as gospel. Also, I agree that the law requires certain disclosures.

  Of course, the whole world is honest and upfront with everyone. And no one breaks the law. Absolutely, no one is getting scammed, especially in sales.

  Bloch, Liberty lost 11 million in the last quarter. There is 7 million dollar tax adjustment that is not explained. Where is this adjustment coming from? Without the adjustment, Liberty lost 18 million dollars.

  This company definitely looks like a winner. Also, the company invests $0 (that is right 0) in R and D. That means that Liberty intends to continue the same business model and strategies.

  Anyone is free to copy the model without paying the franchise fee and royalties.

  Also, there is a disclosure that states that at least two investors are looking to cash out to the tune of over 270 million dollars.

  When the tax regulations come into effect, it is going to be even harder to compete in this business.

• Why do all the nay-sayers on this forum fall back on “well…they’re breaking the law.” With all this law breaking going on, I don’t see how Liberty still exists. You guys seem to be the only ones that know this. It certainly does’t match my experience. Liberty is highly ranked/rated by Forbes, Entrepreneur, industry equity analysts (to name just a few). These people don’t do any due diligence??

  It’s normal in this industry to lose a ton of money for 3 quarters of the year. Heck, I lose a bunch 3 quarters of the year. Block & JH do too. Much of the loss is due to their investment in the coming season. Yet, both Block & Liberty are near all-time highs (JH is not public). Go figure…

  As far as same model, if it ain’t broke, don’t fix it. As far a strategies, Liberty tests new ones all the time. Some examples: Cash in a Flash (raging success); $0 Franchise Fee (raging failure). Opening offices in November to assist with ACA (jury still out, and I’m skeptical).

  Maybe anyone can copy the model…but nobody does to any significant degree (I’ve never seen any example at all, but I’ll concede that somewhere, some small operator might be).

  I’m aware of the major outside investors in the company, there are 2. They each made between 17-21X on their investment. I’d get out too. For the institutional investor (Envest), Liberty was their all-time home run, and their charter requires they sell any investment after a certain number of years.

  As far as the adjustment, I’m not a financial statement expert so I have no clue. But clearly it is a sign of pending doom…the markets think so. Oh, no…sorry…they don’t.

  Liberty, Block & JH LOVE increasing regulation. Heck, we lobby for it. It drives the independents out because the national companies have much greater resources to comply.

  What else you got?

• Correction: forgot one major outside investor, Edison Venture Fund. They made an un-Godly return too.

• Bloch, it looks like you are definitely at the top of this game. By the way, I was not implying that Liberty is breaking the law. I merely submitted a reasonable view that there are liars, thieves, and law breakers in the world. Consequently, due diligence is a must, especially with all the commentators on the internet.

  Would you say that it is easy to find quality employees with the aptitude to complete the requirements (clean records) for minimum wage (with a bonus system)?

  How do you explain Liberty’s stock ratio (market to book value) of 6.68?

  With big losses in the last two quarters, how is Liberty’s stock immune to depreciation (it is at pretty much the same price)?

  Do you consider “cash in a flash,” “no cost franchise,” and “opening early” as the equivalent as R & D and innovation?

  Do you consider the 7 million adjustment in the last quarter trivial and inconsequential?

  Are competitors likely to copy the “if it aint broke, do not fix it” model?

  If the model is that successful and that easy to copy, why would competitors (or an individual) not copy it?

  Thank you Bloch.

• Uphill battle you raise some good questions that many readers will not have a clue how Liberty got to where they are now. Let’s take your question about Cash in a Flash, opening early, and no cost franchise and asking if these would be considered R&D. Let’s examine these one by one and I think some people may start to see the genius behind this, and I mean genius only by how they have gotten away with spending nothing on R&D yet seem to remain innovative and successful.

  First let’s take a look at what Liberty calls Cash in a Flash. Did Liberty create Cash in a Flash? They will say they did but they did not. I know the person who created it and then I know the person who made it into one of the best if not the best marketing program it is now, so good that every large tax franchise uses a form of it and many non franchise tax operators utilize it also. I’m not sayimg I like the program at all. Neither of the people responsible for it own any Libertys right now, I believe thats correct, if I am wrong someone can correct me. Liberty did not create it at all but once they realized it worked they grabbed a hold of it and made it there own. They have spent the past 4 or 5 years maybe longer training and tweaking the program and many currently at Liberty have zero clue where it actually came from. This is true with the vast majority of what really works at Liberty. Other than wavers most things were created by top zs from the past who are no longer there. And wavers may of been someone else’s idea I’m not sure. They did it by carefully creating a culture where people believed they were not only helping themselves but they were actually a part of something bigger than there own stores or DMA. They also believed they would reappreciate a reward in the end.

  Then your final 2 opening early and zera cost franchise. Opening early isn’t R&D it costs Liberty nothing for franchisees to open early but since the vast majority of there revenue is collected during peak through fee intercept it only makes sense to convince franchises to do whatever they can to bring in additional revenue even if that means loosing a small amount of money to do so. As far as the No cost Franchise I am going to just skip that because anyone who has been involved with Liberty knows how funny that is. Nothing is zero cost with Liberty if your a franchisee. It all costs and usually it costs more than what meets the eye.

  Liberty grew to where they are by what many would call shrewd business moves. Such as the income they created by loaning franchisees and area developers money and charging the interest they have. But the vast majority of the loans were just paper loans with no real capital at risk, but the reward was huge for Liberty. There have been a ton of people who have worked very hard for Liberty investing everything only to be on the outside looking in wondering what went wrong?

  Liberty created this fantastic culture at first glance but to anyone who saw the real culture and understood why things were being done either tried to join them and take full advantage also or were totally disgusted and never were the same again.

  Going forward I believe that Liberty has been trying to clean up there skeletons and they are hoping time will make some of what they did to get to this point fade into nothing. And it probably will to the majority of people. But to anyone who gave almost everything to Liberty only to be kicked to the curb broke, they wI’ll never forget. It’s a sad state of affairs how things have gotten so out of control and how big business can take advantage of slick contracts and the knowledge that they have all the power. Because once it enters the judicial system they can crush the franchisee who has already spent every dime they had trying to build a legitimate business only to find out they are powerless and the company they believed in and gave everything too is now there opponent. Not just there opponent but they have profited huge while the franchisee who gave all is broke, gaining nothing but a deep deep hole, and on the outside looking in considered a threat by Liberty.

  I’ll answer the question why don’t others copy there system in another post. But first are you talking about the franchisor system that made them a success or the system that franchisees follow?

• Barf villa has already re-invented himself over & over again as ‘new posters’. Let’s see what name he chooses to use next. How about “Jerk”?

• Hi Finalygone, I am questioning why competitors or individuals will not copy the system that the franchisees are supposed to follow.

  According to Bloch, it is very successful.

  “My 2014 net revenue was about $650K. My net profit was 32%, after royalties and all other expenses. I made way more money then Liberty on my stores. What’s most important to most business owners is how much they keep, not how much they pay suppliers, vendors, franchisors, etc.”

  (It is not clear if Bloch made 32% of $650K or if 32% amounts to $650K.)

  If the stores are that successful, then the market (competitors or individuals) will eventually bring the huge profits down. Competitors will copy the model and create competition. Put another way, H & R Block is free to implement the same strategies (Cash in a Flash) and create fierce competition.

  By the way, you are probably correct that Cash in a Flash is not specific to Liberty. Anyone can offer an incentive to bring customers in, the only obstacle might be to not call it “Cash in a Flash.”

• Some have criticized the Liberty business model as being full of gimmicks to get their customers. One could call it clever advertising, smart promotions, etc. Note; the Liberty business model does not work the same in all demographics. Liberty has failed at being successful in most middle income markets. So, buyers beware!

  If you want to risk your money (and probably lose it if you buy in), be careful! Many are trying to warn you!