LIBERTY TAX SERVICE Franchise Complaints
UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
with the Liberty Tax franchise, please share a comment below.
Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind McDonald’s & Subway. However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.
This post was originally published
BostonTax wrote:
I’m a former Liberty Tax Franchisee
I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.
Barbara Green wrote:
I too was a Liberty Tax Franchisee and I agree with everything you said.
The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.
Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.
At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2’s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.
It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.
WHAT DO YOU THINK? DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE? ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY? WHY OR WHY NOT?
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Uphillbattle, et al – I’m not going to address your questions above…I’m not trying to be snarky, really…its just my purpose in posting here is to correct obvious falsehoods for the unsuspecting reader and I’m going to stick to that. The nay-sayers here are “unhappy” for whatever reason and nothing I say will ever change that. So, I’ll save my keystrokes.
Your questions are very reasonable, though. Liberty has a discovery process where John will personally answer any question you have. Give it a shot, you’ll learn a lot.
But not sure why all the hubbub about “R&D.” I’ve heard John Hewitt say several times that if you want to do R&D, Liberty is not the franchise to buy. Liberty is about a proven, cookie-cutter system of business.
According to John Hewitt himself, John Hewitt is a shameless copier of successful ideas…he is the first person to admit. When he created JH, he copied the best of the Block operating system. When he created Liberty, he copied the best of Block & JH. The model has really been the same since Block invented the business: “Do Taxes. Make Money.” As far as all the other nuances, finallygone is absolutely correct: good franchisees invent most of the stuff we do, that’s part of the power of belonging to a successful franchise. I don’t know why that’s bad. Pioneers take the arrows…I’m fine with being a close follower. And others will certainly copy us…JH is right now rolling out their answer to Cash in a Flash, they are promoting a $50 Walmart gift card with every return. Good for them. But I know its not going to hurt me because cash is king. And when they figure that out and switch to cash, we’ll come up with something else. Advantages are rarely forever.
BTW, to one of your questions above, my net profit was 32% of $650K net revenue. I’ll take that for working about 6 months a year and vacationing the rest. When I want to make more $, I’ll just open more stores. I’m taking a break from that this season.
Thank you Bloch. You definitely know what you are doing. You make $416,000 a year (factoring 6 months times 2). And there is no limit to the amount of money that you can make because all you have to do is open more stores.
Bloch, what is so special about the cookie cutter approach that justifies a market to book ratio of over 6 on the stock?
Bloch, what justifies the $40K franchise fee and the royalties if it is a cookie cutter approach and anyone using Google can copy the practices?
Congratulations on your success. I know many people who have put in tremendous amount of work (some are physicians, optometrists, PHD holders, and professors) and they do not make anywhere near the amount of money that you are making.
It looks like Liberty is the way to go.
Just saw a Jackson Hewitt commercial on True Tv Hd advertising the gift card. Very nice, waiting for the crap in a flash commercial from I screwitts. I would imagine that Danny’ s new title shop will probably have more advertising than liberty tax. Happy new year…..and remember you can deduct some of your losses when you lose your money! !!
How successful one franchisee is, is meaningless to the franchisee that is losing money and eventually bailing out on their investment. If making money with a Liberty franchise territory was so easy, we would be seeing them open up everywhere. Fact is, it is not a business model that breeds success. Try to be honest, many have failed and a franchisor that was truly concerned about the failure rate Liberty has would address it. There is no incentive for Liberty Corp. to address it, they are not the one losing the costs to start-up a new location. Liberty will milk this cash cow (for them) for as long as they can.
The object of this site is to let potential investors know that their chances of success when buying a Liberty territory are slim. This business model will die out. Every product has a life cycle and the storefront tax business is on the downward side of the bell curve.
^^^Uphillbattle, Mike, Sad but true: AMEN!
Right you are on all fronts. This company was designed to take, take, take, and they accomplish that all too well. Where were they when the computer software crap broke down during the height of the season? Where were they when my employees were outright stealing from me because I couldn’t be in more than one office at a time? They were busy sending “notices to cure” from an AD who sat on his ass and collected my money for my work? Or fee intercepting?
This is mild compared to what I endured for well over 5 years of being associated with this terrorist organization.
Again, for the umpteenth time, whatever money I made was due to MY OWN HARD WORK and it had NOTHING to do with Liberty and their so called “system”. If you are a tax professional, you DO NOT NEED LIBERTY TAX whatsoever. If you are NOT a tax professional, you really have no business buying this piece of crap “territory” anyway.
As uphillbattle so eloquently stated: this so called business model is a farce. Pieced together from other sources like a bandaid, seeing what will stick. Selling territories to anyone with a wallet.
They suck. They are more than dishonest. They are con-artists. Stay away. Your sanity and pocketbook will thank you.
Mike, SBT, SFD: Just keep chokin’ on your own bile! Rave on, people, rave on!
When people fail, there 2 choices for whom to blame: themselves and somebody else. Sadly, you are doing what most losers do: blaming somebody else. There are far far too many people successful with Liberty for your rants to be true.
Uphill: “….I know many people who have put in tremendous amount of work (some are physicians, optometrists, PHD holders, and professors) and they do not make anywhere near the amount of money that you are making.” BINGO!! We have a winner! Before Liberty, I was a practicing DDS for 20 years. Net from my practice in my last year was about $250K (I’ll surpass that with Liberty this year). What it took me decades to figure out (because I’m a little slower then other posters to this forum) was that what I had was not so much a business but a rather high paying job. The difference is this: in my DDS job, if I decided I just wanted to travel for a day, a week or a month, I made no money. With my current well-managed business, I can and often do just walk away for long periods, even in season, and my offices make me money without me around.
You also seem to be hung up on Liberty’s last quarterly loss of $11M or whatever. HRB in same quarter lost $113M. Their decades of history is the same (big off-season losses) but yet yesterday’s close was near all-time high. No one seems to be running for the exits and most analysts rate them “outperform.” Maybe they understand something you don’t? You understand taxes is a seasonal business, right?
SBT: “..the storefront tax business is on the downward side of the bell curve.” Great point! Except all the underlying data contradicts that. And this season should be sensational…ACA should be renamed The Tax Expert’s Full Employment Act. But, you’re probably right and all the professionals wrong…you should go way short on HRB shares, you’ll make millions!!
Anyway, thanks for a great visit here at the Pants-In-A-Bunch forum…I’m headed back to the Life’s Pretty Good forum.
I will settle with going short on Liberty stock.
Bloch, I am not “hung up” on the $11M loss. I merely suggested that there is a $7M adjustment that investors should inquire about.
I am reposting a few of the other questions that way there is no confusion as to what they are. (I copied and pasted them.)
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?
Bloch, it does not take much to understand what “seasonal” means.
I even factored that into your salary.
“Thank you Bloch. You definitely know what you are doing. You make $416,000 a year (factoring 6 months times 2). And there is no limit to the amount of money that you can make because all you have to do is open more stores.”
Since you are fanatical about the stock price, why do only a few hundred shares trade daily (on some days, only 100 shares)? I am not suggesting that the buying and selling is a coordinated effort to artificially inflate the price. I am sure that when substantially more shares are offered for sale, the market is going to buy them all.
Thank you for your input. I will definitely use the “Cash in a Flash” concept in my business.
Barf villa and Bloch: Both the same person. (what a surprise)
He needs to drive home the concept of “failure” over and over again. What he doesn’t realize no matter how many times it has been pointed out: NO one failed. As a matter of fact, I made money because of ME and my own hard work. Not Liberty’s at all. I could have done this without Liberty’s help just as well. I should have but their marketing dribble was enticing. That’s how they get people in the door. They are there to sell you a “territory” and then make thousands of dollars that you yourself can make on your own. Of course, someone with a DDS degree (hahaha) that goes into the Tax business with a franchise, you have to wonder if all their marbles are there in the first place. Anyone that has a DDS and is now a Liberty franchise owner would not or should not be coming onto a public internet forum to tell people they are losers because they happily left the Liberty system.
I am one hundred thousand percent happier to be away from that terrorist organization. I am much more successful in another business where I actually call the shots and not have someone watching over me waiting for me to write them royalty checks without so much as lifting a finger to support the franchisee.
This Tax season is about to begin. I feel bad for the 45 new franchisees about to get their asses kicked. They will undoubtedly be here soon enough posting about their experiences. Oh yeah, according to Barf villa/Bloch, they will all be losers. :)
Remember potential buyers several things to keep on the forefront:
1. You may purchase a territory that DOES NOT make any money for whatever reason. It is a crap shoot on a good territory , bare in mind, most of the good territories are GONE.
2. Zee’s like our dentist Henry Bloch, uses his territories as side income. Out of his six territories (according to his admission), there could be a dog or two in there where it balance’s out the others. The problem is, you as a purchaser of a territory could be saddled with a “DOG” territory and go broke. Of course, our good Mr. Bloch does not have that problem, yet.
3. ACA is going to be a big hype. Most people have health insurance and there is not going to be a 1095A for them or anyone. The grand scheme of the tax world, it is a very small percentage, but your territory MIGHT have a ton of 1905A, then again it may NOT. So another crap shoot.
4. People like our good Mr. Bloch, would in a heartbeat sell his “DOG” territory or two for a premium dollar to anyone willing to pony up to counter and plop down their hard earned money. Not that would be ethical, but according to Mr. Bloch it would be pretty good for his end to unload a bad territory.
5. People like Mr. Bloch are few and far between. Like any business not just franchise’s, but insurance, State Farm, Allstate, Farmers etc, some do real well others just fair to midland.
HR Block why not tell us where your stores are located. Your comments about making more as a Liberty franchisee vs. a DDS is a Liberty marketing pitch taking from the book “Rich Dad Poor Dad”. You should disclose that your an AD or Liberty employee.
You talk about all these successful and happy franchisees but the numbers don’t bear that out.
Currently The average Liberty tax franchisee operates about 2 offices. That works out to around 2,131 franchisees.
In 2013 there were 4262 US offices. According to the 2014 annual report “In fiscal 2014, our franchisees opened 558 new offices in the U.S. compared to 596 such offices in fiscal 2013”. It further states “because of franchise terminations and other reasons, 566 offices that operated as U.S. franchises in the 2013 tax season were closed before the 2014 season”. So at the end of 2013 the company had a net gain of only 30 offices. Not a great success rate.
We seldom have the real successful franchisees post on this site. Even they would admit that 19% to Liberty is too much. Say, they collect $200k and are paying $38k back to Liberty. Are they getting $38k in services/advertising back from Liberty? No, is the answer. It is even worse if they make more money than $200k. I am just throwing a number out here to prove my point. If you are doing well at this business, it is not because of Liberty, so, why give them so much of your hard earned revenue?
The comments promoting Liberty are done by a few who do not want the good times to stop. Sorry guys, it will end and you know it. You just have to keep trying to convince the unlearned that a Liberty franchise is a good investment. Even you know what you are doing is that you are trying to fool the unlearned. We are here to help those who are considering buying a Liberty territory. Listen to the people who have your best interests at heart and have nothing to gain or lose from your decision. As I said before, this type of business model will not last. I could elaborate on why I feel that way but many already told you why (read most of the 4000 plus comments). Some call us dumb or losers, but please consider carefully the negatives of buying into a tax franchise, such as Liberty. If you buy and fail, the great successes here will gloat over your failure. What side do you want to be on?
Mr. Bloch said his income is about $200 on $650. Reasonable if you already have territories. Missing part – franchisee needs money to get $650K. Takes a few years. I’ll make $80K on about $325K. Takes a few years. Not easy. Same if Jackson-Hewitt or independent. He will stop posting – tax season started. Efile announced. Early this year.
Happy New Year, all.
Thanks for making Liberty Tax the liveliest and one of the highest traffic discussion pages on UnhappyFranchisee.Com.
Thanks to you all, many will individuals and families will have better 2015s after having made more informed franchise decisions.
Here’s to a great year ahead, with heavy helpings of Karma, good and bad, for those who deserve it.
ADMIN
Thanks Admin. Really shooting to make $400k the next 3 and half months. Good luck everyone!
^^ADMIN:
LOVE your last line. God willing, what karma is out there will be displayed in 2015. I firmly believe what goes around, comes around for those who DESERVE it. AMEN.
Meanwhile, my goal for 2015 is to ignore stupid posters who add nothing to this forum except agitation (Barf villa/Bloch) and concentrate on the posters who bring in real numbers, real examples of everyday folks signing on to be a Liberty Tax franchisee for a 5 year contract and following them to see what evolves.
Liberty took away from me so much more than just $$. They took away my faith in paying a company good money for something in return. It was more than a violation, it was scandalous.
My hope for 2015 is that the potential franchisees out there come over to this forum to complete their due diligence before signing a contract and then put the pen down and walk away. They will be SO much better off. To whomever I’ve discouraged from signing in the past: Congratulations! You dodged a huge bullet!
Thanks ADMIN! Happy New Year!
LTS is lucky to have a couple of the top zees making money, unfortunately, it is not consistent.
My AD stated, that LTS set the stupid 12 hour days for everyone, even though they knew over 50% would wipe them out in payroll and overtime. When looking at LTS, only 30-40% can even say they make any money. The rest just struggle and struggle until they can get out of their lease’s to move on.
Remember potential Franchisees – LTS has a system of one size fits all. Most people don’t fit in the one size fits all. That is the failure of this system no matter what a couple of posters say to the contrary.
LTS treats everyone the same, except when they decide to give favor to another zee without consideration it could hurt other zees in the same area. They load up people on top of people just to have more of a presence with no consideration to the individual they could possibly destroying.
People who post here, are stating the truth. There are tax returns to prove anything that are other people post of the loss of income not including past the point of wrecking marriages, relationships and more that is not financial. Lot’s of marriage’s have been destroyed by this company and other franchise companies in general.
Franchising is not what it is cracked up to be and it is set up for the franchisor to be the winner not the franchisee. All franchise agreement’s are one sided with no regard to the individual plunking their life savings and life and soul into a business plan that is not workable.
Being an independent is way better and getting a title from the IRS will be even better.
Best of luck!!! Let’s stop 45 people from signing up with LTS this year. It would be interesting how many of the 45 people are actually current zees. Do you know Bill?
wow..Just what I suspected..I am a retired teacher and decided to take the supposedly short course and figure taxes for Liberty..Haha.. They are not interested in honest hard working smart people. They want you to train forever at their office for FREE..Then after paying out $ for book and gas ect. They crack the whip and tell you you have to come in and practice until you can do a return in 5 min.. HAAHAHA that’s after you give the customer some personal attention and market Liberty for them..All for 8 bucks an hr. I really didn’t belong there anyway, afterall, I’m a college graduate, i take a shower everyday and I have actually had a career..I wouldn’t recommend these people to my worst enemies..
Thanks Margaret. That s how they are trained from the top. Some of the people I have spoken to and hired during my tenor, were told they would have a full time position and then turns out they work here and there. Which was hard for them to plan and waste gas to go to an office, just to be sent home an hour or two later.
The biggest offices are the worse abusers of this. Also, how accurate is a newby doing a tax return in 5 minutes? They have to have that low of a minutes if they are writing 1,000’s of returns in a couple of weeks.
Sounds like Margaret didn’t get the job. Those who can — do; those that cannot — teach!
For potential franchise owners.
Liberty wants that first peak client. Less than 30k income, 3 kids, EIC and Additional Child Tax Credit. They charge a lot of money for those returns. You have H&R Block and Jackson Hewitt also chasing these clients. They do national advertising. Liberty does not do any national advertising.
H&R has been advertising already.
The scary part is that in Southeastern North Carolina, the only JH advertising is being done by Wal-Mart. They are not using the normal JH colors of Red, Black and White, they are using the normal Wal-Mart colors of Blue. This advertising is talking about having a $50 dollar amount on a Wal-mart card. It has been talked about Wal-Mart starting a tax service. What would you do if Wal-Mart does take over as a first peak tax provider? They will undercut H&R, JH and Liberty.
The first peak client is looking for price over brand.
This means you can buy a franchise and have an even greater chance to loose you investment.
Darlene, As per the Navy “Those how can do. Only the best teach.”
If your wondering what’s keeping Wal-Mart from just going ahead and having their own tax prep. co. Think about this; 1) their getting paid rent by all of these companies that lease from them, 2) the tax business is responsible for training and staffing the location, 3) ultimately any misconduct regarding the preparation of the return is the tax prep. business responsibility.
Wal-Mart advertising a $50.00 dollar amount on their pre-paid debt card is direct competition for the tax prep. business whether in Wal-Mart or not Basically this just adds insult to injury to those renting in Wal-Mart. HR Block already pulled out of Wal-Mart because it was a bad deal. Liberty Franchisees on this site have also commented how it was not a good deal for them. Now the company your paying rent to is going after one of the company’s most important income producing product the pre-loaded debt card. Could really effect the bottom line for Liberty.
Which would make me very happy.
Darlene, Part II; Margaret is actually very smart – she got out fast. Rapid Class – Rapid Exit! Good for you Margaret!
The conference calls are probably going strong right now – what flavor Kool-Aid do the remaining franchisees get this year?
Again the brilliant Marketing minds at Liberty have been skunked. H&R with their early loans, and, now Jackson Hewitt with their Walmart ads are doing early advertising just in time for the early filer, while Liberty hopes the franchisee can make a similar dent with some clown on the street. Kind of wonder if they are all on crack or something. At some point you have to think they would wake up and smell the coffee. My local Liberty is as dark as night, and has been since April. Can’t wait to see if they open sooner than the mid February date they did last year.
Hey F&D, been a while, I hope all is well. One liberty in my area has a new sign on the window Jackson Hewitt Coming Soon!! Absolutely, hilarious!
Uh oh, looks like passing Block by 2020 just got a little tougher to reach. Let’s see, adding 45 new territories a year will take them just a wee bit longer than 2020.
Wish I had found this site BEFORE signing that Franchise Agreement. Would have saved me over $80k! Unfortunately the territory I purchased is more than ready to be euthanized.
Yes, MadRiverMama, that is why we are here, to help the fortunate that come to this site before they buy into the Liberty loser vortex. Hopefully they heed the warnings.
Johnny and the few employed at Liberty to deceive, get the unfortunates $40k and royalties. The unfortunate ones plunk down another $40k to get going on their road to misery.
Yes, sad but true!
MadRiverMama: I’m sorry to here of your misfortune but encourage you to tell
your story on this site. I have been out of the system for 5 years and my story is not as relevant as someone like you who is trying to get out from this nightmare!
MadRiverMama;
I like you found this site after I had plunked down $50K for two adjoining territories, only to find that there wasn’t a chance in hell of ever seeing enough income to stay open, let alone make enough profit to support myself. I have since moved on, found a real job, and enjoy getting on here to alert those who may have looked into this non-opportunity. Unfortunately it isn’t only Tax Preparation franchises, it’s many franchises that you will see on this site having issues. Liberty was built on the false premise that you could actually make a business that produced enough income in 4 months to pay for 12, while paying the franchisor 19% of your revenue for software that you can buy on the open market for a $1K per year. I guess you have to give JH credit for coming up with a scheme and the ability to sell it to unsuspecting people like us. Unfortunately the revenues from tax preparation have dropped, brick and mortar especially in strip malls is very expensive, and at the end of the day, there is little to no return.
Good Luck and hopefully this venture did not take your life savings. I’m out over $100K, but I have been able to recover and while extremely pissed when I think about it, will do whatever I can to keep people from suffering the same fate that I did.
TO ANY AND ALL PEOPLE THAT WERE LUCKY ENOUGH TO FIND THIS WEBSITE:
The fallout from being a Liberty Tax franchisee for one 5 year contract is SO not worth it. This company is EVIL. They are incredible con-artists, rats, sharks and will step on you and squash you down even though you are paying them good, hard earned money to help get you set up & established.
PLEASE step back, re-evaluate, do not sign and move on to something else. You will be dodging a huge bullet.
Do your due diligence properly. There are way too many question marks hanging over Liberty’s head. There are way too many lawsuits. There are way too many Lawyers working in their corporate office making sure to bring you down.
They need to be stopped and WILL be stopped. Hopefully sooner rather than later.
SanFranDan – Easiest way to stop LTS is not have anymore or very little sign up with the POS. That in it’s self will eventually catch up with them. Thanks goodness for this website. Too bad it was a year too late for me.
Can anyone tell if the new 45 Zees were current (like most) or actual new blood into the system.
They are always peddling off cr@ppy territories to existing Zees.
I again think it is funny that they continue to keep sending me emails asking me to come to one of their “Franchise” seminars. They clearly don’t clean up their lists !!
Frustrated and Disgusted;
Maybe they hope you developed Stockholm Syndrome and you want to come back for more abuse.
On a more serious note, it is certain that they will sell anyone any territory that has a poor chance for success. They do exist all over America. But, if you just follow the ten steps to success, you will magically make money and want to buy more territories. Well, I guess if only 45 territories were sold last year that this means the magic is gone. The potential buyers have awakened to this fact.
There is a new bill that is going to give the IRS complete authority over tax preparers.
The voluntary IRS compliance program will soon be mandatory. The IRS knew what it was doing when it made the compliance program voluntary. The IRS put the program in place to have it ready to make it mandatory in the future.
‘‘Taxpayer Protection
5 and Preparer Proficiency Act of 2015’’
Very soon, a tax preparer will have to be in compliance with city, state, and federal regulations.
^^uphillbattle:
To be honest, I think it’s great that tax preparers will be regulated and in compliance. It will do damage to Liberty, who will sell to anyone with a wallet and it will cut down on the amount of fraud that takes place.
Anything that hurts Liberty’s bottom line, I’m all for it! :) They are the ones that participate in the most fraud of all. I cannot WAIT for something to explode. :)
SanFranDan, we are on the same page. I am waiting for the regulations because then the people with professional licenses will be able to leverage their expertise and earn reasonable fees. I welcome the regulations.
I think more regulations on small tax prep companies will only benefit Liberty, JH and Block. They have the pockets and that is precisely why they lobby congress to get this done. I want Liberty to fail as much as anyone but putting more regulations on the mom and pop competitor will only stregthen the big three. The way to stop Screwitt is to continue to warn possible zees and I think we are all doing a fine job of it. It will take time but eventually Liberty will fail because of the culture, in my area alone the are declining. The fact is there is not enough sales and margin for a franchisee to succeed if they do less than several hundred returns.
Mike;
You so speak the truth. But anyone who is a serious tax preparer can take the compliance tests and pass. It will be a lot harder for Liberty or any franchise to get qualified people if that becomes law. It will also force them to pay more to get “registered” preparers which will kill their bottom line if is any bottom line to begin with. It is my opinion that the IRS is trying to force the retail tax business to become legitimate, which will be a lot more expensive, causing the weakest to close. Liberty is extremely weak, so it will either combine or be bought by Jackson Hewitt. Wouldn’t that be ironic.
I agree with Frustrated and Disgusted. Serious tax preparers will do whatever it takes to make a living. The type of preparers Liberty gets varies, with most working one year and gone. I cannot see a seasonal, let’s give this tax prep job a try candidate, committing to testing to meet this job requirement. H&R Block has a good training structure in place. Jackson Hewitt I cannot comment on. Liberty leaves it up to the franchisee.
This is another reason why you should NOT buy a territory. Who is going to train them to pass the test(s)? Who is going to pay for the tests? The franchisee will need to do both if they want to stay in business. Again, this speaks to the negative nature of owning a tax prep business that is a franchise. All the work, all the costs, all the responsibilities, and often no profit.
Read and understand this carefully; signing on with Liberty is much effort, much grief, for what? Don’t do it.
I really enjoy hearing everyone bash the crooks at LTS. You have a great page here, I live in Norfolk and I must say its very tempting to hang a banner on my box truck with this site on it. When the corporate bus rolls around in the summer time, I could just park my truck next to the Liberty store so all the new suckers have a chance to check your page out and maybe not get brainwashed into going into debit. Hewitt is clearly in the resale of territories not the tax business. I really don’t understand the borkers buying the stock? I think there must be some smoke and mirrors there? Liberty is the next Blockbuster, or Yellow page book, or a phone booth. This is an old idea and technology has taken over. LTS will be a thing of the past soon enough. Hope sooner than later. I feel for the new franchisees.
Troy, I chuckled when I read your post about putting the box truck in front of the liberty store with a sign saying check “Unhappy Franchisee Web Site” before you buy. Than I realized how ironic it would be to use a tactic so “Liberty like” to inform others about the pitfalls of investing with this company. In the past I thought about getting everyone to write to their elected officials and hope that we could get some action. But now I think you have come up with the perfect solution.
As a franchisee, current or former, you have to be aware of your contract that requires you not to speak negative of the franchisor. However, if we advocate for Unhappy Franchisees we would have a forum to at least educate people to what franchising is about without jeopardizing our own contractual obligations.
I’m thankful to this site and will gladly volunteer my time after tax season to work events in my area supporting this web site.
^^^Troy:
It took me YEARS to step foot in Virginia again. I only did one more time because I had a good friend who moved there a few years ago. I got in and out of that state as fast as I could. :(
^^^Bill:
I don’t give a s— about the contract ‘requiring’ us not to speak negative of that piece of crap company. After what they did to me, and I mean over the top unnecessary stress, I could care less about jeopardizing a contractual ‘obligation’. It’s been so many years, there has to be a statute of limitations anyway. If not, then too bad. Anyone that has asked me about it, I have told them the truth. The good, the bad & the ugly. (Oh wait a minute, there was no good!)
All I can hope & pray for is that this CEO’s time will come very shortly. He has flown under the radar for years. It’s time to bring him to justice. The amount of abuse and fraud is rampant among the top managers and money lost by the franchisee is obscene. NEVER AGAIN.
Back away prospective franchisees. It is SO not worth it. Look elsewhere PLEASE!
SanFranDan:
In addition to a statute of limitations, is the fact that what can be construed as negative by one party may just be stating facts (truth), as you alluded to. If you look at their annual report, there is plenty of “negative” language in there too. Most of their own negative language speaks the truth about the pitfalls of their business.
Now that they are a public company, some of what has been said on this site is also in their financials and disclosures. We just want informed potential investors to hear from former franchisees so they can at least know what challenges they will have.
Right you are, Sad but true.
What they have done is perfected the art of ‘FEAR’. So by threatening all this nonsense about disparraging them, they’ve instilled fear in people NOT to talk negatively about them. Well, that worked for a couple of years and that went waaay out the window as word caught on that this company was NOT at all what it claims.
How this guy can sleep at night is beyond me. How he can look at himself in the mirror is beyond me.
He was able to get away with this nonsense BEFORE the internet. Now people who do their proper research will see lots & lots & lots & lots of dirt on him. It was always about selling territories and re-selling them. NOT training people to undertake a legitimate franchise and begin preparing taxes. Yuccch. We all fell for his marketing schemes and smoking mirrors. After 42+ years, he perfected the art of ripping people off quite well. Now he needs to see the inside of a padded jail cell :(
What potential investors in Liberty Tax need to be made aware of is that the financial success of the franchisor, does not equate to success for the individual franchisees.
The business model, Liberty Corp., takes in revenues from franchisee fees, royalties, interest on loans to franchisees, ad fees, bank fees, etc. They can thus control their expenses to be less than revenue, and they do. Two of their major advertising expenses is their large post card mailings (with only their 1-866 number) and to give back a portion of the 5% advertising dollars,collected from the franchisee. There may be some promotional junkets and other advertising expenses but no national TV advertising. They often show quarterly losses during off-season months but their yearly reports show profits. These profits are all from the franchisees hard work. Liberty gives the franchisee software, very little ad dollars, and tech support. So, with no national exposure, what benefit is there in buying into this business model? H & R Block is number 1 in this industry. Sure, they have the bucks to advertise and it keeps them at number 1. The executives at Block probably laugh at Liberty and the once bankrupt Jackson Hewitt. Liberty and JH are like gnats to them.
So, if you are thinking about buying a territory, ask Liberty how they expect to grow market share. The future is not pretty for Liberty. Sure, Liberty Corp. will continue to make money but the number of franchisees will continue to dwindle. This will cause their profits to fall to breakeven and maybe someday below breakeven. If I was one of the 1900 (approx.) franchisees with 6 plus years into this venture, I would be afraid, very afraid of what all my hard work will result in???
Sad But true as you point out the number of franchisees dwindle and that is part of this company’s business model. The company knows that to be a successful franchisee you need multiple locations. They also know for an office to be successful they will need do 500 to 600 returns. They also know it takes time and capital to build that business volume. To facilitate their growth they need the individual franchisees. By selling a franchise to anyone in any location puts immediate cash in the corporation’s coffers through the franchisee fee. It also provides a source of capital as the individual franchisee put up all the financing for running the business i.e. marketing, rent, payroll etc. plus their own time commitment. The company makes sure to monitor the franchisee to get the most out of them, At the end of 5 years franchise agreement if not sooner three things can happen. 1) the franchise is successful enough that the franchisee renews. 2) The franchise is just about breakeven doing 300+ but the franchisee is financially and mentally exhausted and either can’t or doesn’t want to renew. At this point corporate will take back the location and sell it to a new franchise or sell it to one of the larger franchisees. for a market up price or 3) The franchise is doing so poorly there is no market as an established business so the company will take back the territory and look to sell it to someone new.
Don’t be Liberty’s next unhappy franchisee!
My territory was a dog, even the top gun’s would not take it prior to my purchasing. It was up for sale but there is no where to set up shop, that is not on a second floor, small enough office and affordable.
I am hoping the territory will just stay up for sale for years to come, because the first AD screwed up everything for greed.
When looking at this company as a franchise, make sure you see how long a territory has been available and google that little town etc, to see if there was a location prior to anyone looking at that area.
Remember even if there has not been an office, that the other zees are advertising in that location, so if some office is close enough, it is not a “new” territory it is usually stolen long before anyone “legally” buys the territory rights. Happened to me. It has happened to others.
Just got an email this morning from John Hewitt about his new book! Can’t wait! LOL