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?
.
Screwitt was probably mad at Danny because he got his comic book out first!
To all;
This is the epitome of a sadist. Writing a book !! A loser writing about a loser. I am getting online right away, and hope all the rest of you do too.
Liberty Tax Facebook
Dear Liberty Family, Friends and Future Entrepreneurs,
I am proud to announce the completion of my book, iCompete: My Extraordinary Strategy for Winning, which will be published next month. Anyone who has known the struggles of competing in a quickly changing world will value the insights in iCompete.
My hope is that the lessons I’ve learned and outlined in the book will offer an understanding of the Liberty Tax Service principles and lay a pathway to your success. One of my favorites is “Mistakes are a wise person’s education.” Now, for a limited time, you can pre-order iCompete at a discount on Amazon.
To pre-order, click below.
http://ww2.libertytaxfranchise.com/e/33302/ampsr-8-1-ampkeywords-icompete/3dczq/145878969
Enjoy the journey. Do it with pride.
-John
^^Sick man. Sick individual. All he has done for his entire professional career is rip-off people time after time after time. And no one is stopping him.
Anyone reading this website for the first time: Please read back as far as you can on this forum. Then make an educated decision to back away. Unless you have $100,000+ to just hand over to JTH. That’s basically what you’ll be doing. For nothing but headaches in return.
Life is all about challenges, learning, making mistakes, joyous times………most people that write here have been franchisees of this awful, awful “front” portraying themselves as a company. I can honestly say the 5 years spent as a Liberty Tax franchisee were “off the wall” stressful 100% due to the choice I made to join that franchise to begin with, rather than just start my own. Life is about living and learning, but in this case, also warning others……..stay away!!!
The best thing that could possibly happen is that he doesn’t sell any books at all and goes on the NY Times worst list. And locked away. And his “ex-franchises” get paid back for their money lost and suffering. I can dream, can’t I??
If you have up to $350,000 laying around and don’t mind loosing it to royalties, employee taxes, rents and general garbage, this is the franchise for you!
The people who sell this franchise lie right to your face and only show you the “good” stores in your area, not the stores that have suffered or just plain did not have the capital to keep it going because of the amount of money given to Hewitt and his family et al.
Well said Mike, that was my exact thought also. :)
I am considering purchasing an LTS franchise and was shown around and wowed by corporate. Then I found this site. After reading through some pages now I am not so sure what to do. What important info do I need to know about LTS. What advice can you give me on going with LTS/ someone else? Thanks in advance for all the help you give me.
Horatio. .it is very simple call all of the Liberty offices in your area first act as if you are a customer to see how they treat you second call the franchisees and ask them if they are making any money and how long they have been there and if liberty has met or exceeded their expectations you will have your answer then.
I would add that you look for complaints about Liberty Tax. You will find a reoccurring problem all over the US.
You would need to do a minimum of 500 returns per year to make a profit.Plus add 200 free returns the first year and 100 per year after.
Ask Liberty for the top 75 new offices per year for the last 5 years. This report will show you the offices with the most returns in their first year. Then take out the 200 free returns, and that will show you the number of returns they are doing. You will see that almost all are not profitable.
I was told to expect 600 returns for year one, but the more I read, the more I realize that this number may not be realistic…
Run away, Horatio. You were wined and dined when you met the shills. 600 is a dream number you will likely never achieve even after 5 years in business.
Do some simple math. Go with 300 returns take out a bunch of free returns, subtract all of the people with IRS/FMS debt (you never get paid, subtract 20% royalties. Add up the costs to start, financing fees, computers, employees, rent, phone, electric, licenses, business taxes….all of a sudden you are bankrupt.
Run away.
Please forgive me for this analogy; Horatio, go to your bathroom, stand by your toilet, empty all of your cash from your pockets, flush the toilet. If you do this just once, you will get the picture of where your money is going when investing in a tax franchise business.
All this week I’ve been hearing radio ads for Liberty Tax. Not for particular offices (to indicate they were paid for by individual franchisees) but something about getting paid $50 to have your return prepared by Liberty (sorry, I never paid close attention to know what exactly they were advertising). Is this a very first national advertising campaign?
Horatio – The 600 return number is a standard number. Most don’t ever get that number and to get to 750 may take 4 years, if the all the stars a line. We were told 600 and got 125 the first year, 220 the next, 275 the next, 200 the next then 195. The reason the two middle years were good was due to “work pay credit” by Obama and that increased returns that did not exist in the prior years and the succeeding years.
SaraEA – The $50 is called cash in a flash. You come to my office and I write your tax return, you sign on the dotted line and I turn around and give you a $50 bill for coming in. It is the most assine thing ever and I can’t figure out why the states or feds have not clamped down. The bill is increased at least by $60 or more just to cover the fraud cases and not being paid. So they are paying for it, just taken out of their refund. Jackson Hewitt gives a $50 card.
Being an EA you would not see this type of people who scam the tax payers and the system.
Both companies are encouraging tax fraud by giving people $50. It should be illegal, which it is in other lines of business. I suspect once the IRS makes everyone be registered, they can legally go after these companies for encouraging tax fraud. I really hate tax fraud to the max!
Franchizee/Idiot,
How is the $50 cash or JH’s giving you a $50 card encouraging tax fraud? On what basis should it be made illegal? No wonder you are a failure.
You have no idea what you are talking about. You are probably one of those franchisees that did not participate in the program but now blame the system you did not follow for your failures.
Wow, a ton of liberty haters here. I was referred to this site by a friend. i am basically a week away from signing a franchise agreement with LTS. now i am starting to 2nd guess myself and just dont know what to do.i have only heard good things about this company, but i guess i just have not been talking to the right people. every franchisee has told me they are really happy and LTS is the best. Like Horatio and everyone else i too was told to expect 600 returns in my first full year. they are trying to get me to sign now so i can still open up for this tax season.sorry for this wall of text but after reading this thread for the last 2 days im getting nervous now, and i am not sure what to do/ where to go from here. i mean i have already locked people in as wavers. any helpful advice is appreciated.
Horatio: As pointed out by franchizee the company uses the 600 return figure for all new territories. It’s pie in the sky but the sad thing about them providing such a bogus number is first year franchisees are told to budget staff and other cost based on this figure. This company has been in business for 17 years they know the average 1st year store does less than 110 returns. I understand setting the bar high to motivate individuals but 600 is just a blatant lie and an example of how little they care about the individual franchisee.
If you give us the general area you are looking in I’m sure someone on this board could connect you with individuals from that area who would be willing to speak with you. For instance if your looking in South Jersey. There are a few established long time owners in Glassboro and Clementon but if you received their disclosure doc they should also list former franchises But just like the 600 returns I’m sure their selective in their disclosure. I was a franchisee for 4 years and I have never been contacted by a potential franchisee because of their disclosure document. .
If you don’t want to tell us the territory, You could simple Google Liberty tax using the zip code for your area. Compare the Google list of offices to the liberty tax offices located on their website. Be sure to match the street address and the City. I think you will find more offices on Google than Liberty Tax, the difference represents the casualties. I did it using my zip code of 08221 google shows 3 offices in the 10 mile radius, Liberty site shows only one the others have been closed for over 2 years,
Don’t be the next “Unhappy Liberty Tax Franchisee”.
Dan,
Most Liberty Tax Service offices do over 60% of the returns by Feb 15th. You should have opened by Jan 1st. You will not do more than 250 returns. That is with doing 200 free. Who cares about waivers, how are you going to obtain and train preparers. You will have a lot of people asking for their tax prep fees back. Also, you will take time to get you office, furnishings, and installing/setting up your computer systems.
Knowing this, why would you want to try to buy a territory.
Also, what does this say about LTS. They only want your money. They do not care about you or your business. Remember that the Area Developer will get 7% of the 19% royalties that you pay. Also even if you buy a territory, they can sell a second (Hispanic) territory on top of your territory.
Run, Do not give them your hard earned money.
4117 comments, mostly negative, should be enough to scare anyone away from buying a Liberty territory. Look up to the right side of this page you are on. This site blows away, in number of complaints, all the others.
We can eschew all the facts over and over again but any smart person would see that there just might be a little bit of a problem with buying a Liberty territory.
Potential investors should be glad that many have posted real facts about the very, very, seriousness of you probably losing your money if you buy into this brand.
There is no satisfaction in seeing others fail.
Ya!!! I have John Barfarilla notice. The only idiot is you! The facts are true and cannot be disputed.
Most states have a law about giving away crap to people. Just because it has not been addressed, does not mean it is right. John and Danny’s motto is to do everything until you are shut down either by the police or county, city officials. They break the rules and laws at every and any turn. It is their flawed nature!
John is wrong and see if you sign on with this company, these are your peers and they will treat you so nicely, especially when you tell the truth!
When in doubt, don’t do it. Step back and give it a breather. They want you to sign now because they are desperate to sell and have you so hyped up on adrenaline (sp). You won’t be without money if you wait out this season, but I guarantee you will be so broke after 3 mos with this company.
Sara EA: We’re having a great year. Our return count is up. No problems due to ACA (Obamacare). Forms no big deal yet. Never expected to say it – don’t care about the ads. Here’s wishing you a great season!
out and glad: i was told the peak is early feb and it would be better to get in now then to wait till next year.
my would be ad seemed like a likeable person who the franchisees in the area liked. he even invited me to go golfing with him! I feel like this is going to be a sleepless night…..
Our AD was likeable. However it was self serving! They receive huge money for selling a territory and renewable royalties. The AD are intentionally likeable and are master manipulative people. The are coached on how to press the right emotional buttons. Everything that are considered unethical behavior.
If you have doubt the great deal will be there the next tax season.
Dan: First peak, Liberty’s best season, is over by Feb 15th. Everyone that is getting a big refund/ low income will have filed. Look at a “Cash in a Flash” flyer it ends on Feb 13th. This group wants their money fast, they will pay a higher amount to get it fast.
Afterwards you need experienced preparers. Clients will walk if they think you do not know your taxes. This group wants experience and accuracy.
You can also look at pricing. Your base price goes to 150% from Jan 15 to Feb 13th. Also from April 7th to April 15th. In between it drops to 70% of base. You are to give 30 to 50% discount from that reduced base.
Hopefully by now, you can see that you are either poring good money in to a dead horse, or you are getting a loan, at 12%, from LTS. RUN!!!
As for you AD being a good/nice person, they are getting $5,000 dollars when you sign and 7% of royalties. During the annual convention, you hear how bad the AD’s are from other franchise owners. Also the AD will only take you to franchise owners that will say good things about them.
If the territory they are trying to sell you is so great, why has another owner not bought it. Only the rotten areas are remaining.
I am sorry that you are having a rough night, but you will feel better once you drop them.
The negative commits you read about this company are true. You have several posters on hear that call real complainants “loosers” and other names, also get on the H&R/JH complaints doing the same.
Help yourself and run not looking back.
Thank you for your time.
Dan it’s to late to open this year, By signing up now the only thing you will be missing if your money. I will be glad to speak with you personally. Ask admin for my e-mail address.
Dan, ask questions about the market to book value ratio of 6.4 and the adjustment on the loss on the last quarter.
The market to book ratio is higher than Apple’s, and incredibly innovative company. How does Liberty maintain a high ratio by pursuing a model that can easily be copied?
On the last quarter, where did the large loss adjustment come from?
How is it that the stock does not depreciate despite the huge losses in the last two quarters?
Dan, before you invest in any business, consider working for the business (view that as an option to buy–your time and expenses are expenses for the premium). If you like the business, then exercise your option to purchase a franchise. If you decide to not buy, then all you lose is the price of the option.
Dan and Horatio – Remember you can’t get back the territory fee, nor can you sell a territory. Being this late in the season it really hard to make up the difference. You may get in a lease of a building that you can’t get out of without paying the 3 years up, which is what hurt most of the people here on the board, was all the fixed expenses after season ended.
I would get in the advertising and get the place set up for later this year if you think this is the grand opportunity for you and go from there. The territory will be still available.
Do either of you have any tax experience? IRS is going to start requiring all preparers to be certified starting in 2016.
I have no intentions of opening for this tax season, but being set up and ready to go by some time later this year, like October or November.
I have been in the tax prep industry for this would be my 8th year now, i have worked for a few local mom and pop shops, (1 closed down because they said they could not compete with the local HR & jackson hewitt offices.) and last year i started doing them out of my house but i only did 76 returns.
I was under the impression that by going with a franchise (like liberty) i could get more clients then i ever could on my own, as well as charge a higher fee because of their name recognition. thanks for all your input so far guys, you are helping me a lot.
Horatio – Probably with a little advertising online and a small office with a tax sign, you could double your numbers pretty easily.
With LTS, you have the people who “shop” for tax refunds and cost of prep fees. You will also have quite of bit of people who will “stiff” you because you are affiliated with a larger company. People are not the sharpest bulbs out there and think you are an extension of LTS, when you are private owner. They also take advantage of your time and resources by wanting “free” returns, information and helping with their tax return for no money.
People call all the time looking for pricing and will argue with you. By being on your own it much better.
Horatio – If you sign up with Liberty and you do your current tax clients in their system, you will lose these clients to Liberty if you get out of your contract with them. You are giving away all of your hard work you have already invested into your current clients. It will cost you around $100k or more for a 5 year deal with Liberty. You can do it yourself.
Dan – Did Liberty address the minimum royalty for this tax year. If you open your store in 2015, you will have missed early peak filing season. Did Liberty even bring up the minimum royalty subject? If not, this is a red flag because you will have to pay 5K on top of the 40k franchise fee. Can you recoup the 5K and cover other expenses in a shortened tax season?
Horatio and Dan – the 40K amount is the upfront fee, the 19% royalty and advertising fees never go away. If the 14% royalty amount does not exceed the minimum royalty amounts, you pay the minimum which caps out at $11K per year.
The American capitalist dream is to own your own business. With Liberty, you never truly own your own business.
Do not do it!
Part of the reason i was wowed by LTS was because they sold me on 600 returns. it would probably take me 5 years to get to that number if i was doing this by myself.
they mentioned financing but id just as soon only open 1 spot and not have to worry about being financed by them.
i know i have lost people by not being a part of a big franchise in the past, was told i was a scam to my face, etc. but i also have been able to avoid doing free returns. I still to this day dont understand why offer that. i guess some work is better then no work.
i guess it just boils down to that there are uneducated consumers in every field, and i just so happen to be one of them when it comes to LTS.
thanks again for the help guys, definitely a lot closer to not doing it now then i was before i found this site.
Horatio – I have told my people that 20% I take in goes out of state to another corporation. Real people, like to see their money mostly used in the market they live in.
Since I own my property where my business is conducted, I pay property taxes and pay local advertising and I am owned and operate only in the state in which I live. People like that, except the scams.
Look at your numbers from last year. With LTS, you are forced to stay open 12 hour days and longer at different times of the season. You must have an employee, a waver and pay for a space, which they have to approve. They want everyone to think they are paying for the great location, which they are not. They love the illusion.
Like Sad said, $5,000 minimum royalty out of the money you just earned. You have to buy their computer system at least $6,000 most likely more.
There are requirements to be open on the off season 8 hours a week, to sit there and twiddle your thumbs. They check up on you periodically. You must do a GRR (Gross receipt report) every month by the 5th or they will throw a fit. Must pay your minimum’s by the 5th of May and they calculate that amount. If not paid, they will send a notice to cure. There are so many requirements, I am tired of writing them. When you are on your own, you do as you see fit.
They track your computers and look at that at random. You will come in and your computers are on, even if you turned them off. Have to unplug them to keep them from snooping.
You will see Guest2, John etc talk how great it is, but reality they are not on the front lines, taking care of people, checking their tax returns. They pay people to do that work for them and take their 9 mos off or whatever they get. Most don’t get that lucky. However they are the ones on the hook with the IRS if they own the EFIN when something is done wrong. They have not got burned yet. Just a matter of time.
Wow oh wow.
Dan & Horatio:
PLEASE re-consider and then back away. Many of us us posting here are ‘old timers’, having been an LTS franchisee many years ago. We are still posting here almost everyday to warn potential franchisees just like yourselves. We started the same way as you did, by being wowed by the AD and the corporate dweebs. They sell you on a pipe dream, and then they have your money & it goes downhill from there.
What Sad but true described today is exactly what happens. They steal all of your existing clients. That is a very true statement. It happened to me. But that was just the beginning. It gets WAAAAY worse.
Believe me when I tell you: we all went into that franchise thinking the same as you. DON’T do it!!! I lost SO much money & much more than that too, and I had multiple offices. Mainly because of the lawsuits I had to deal with once I left Liberty, even though I left at the end of the 5 year contract. They are skunks, sharks, and definitely con-artists. They roll over you like a two ton truck.
You absolutely can & should continue to do this on your own. If you had 76 clients last year, this year you’ll do more. People that are happy with you will begin to refer friends & family members to you. Do NOT make the mistake of going with LTS. It will be a huge, huge stressful experience. And SO not worth it.
I cannot believe that even with all the warning on this website, there are people out these who still want to buy a LTS franchise. Why????? Haven’t enough of us warned you to stay away???
There are over 4,000 posts of overwhelmingly negative experiences, except for Barf villa. And we all know he is a company plant. If I had this forum when I first joined, I would have read these posts very carefully and asked way more questions. I would NOT have been in such a rush to buy into something where it seemed too good to be true. If it sounds too good to be true, it is.
Liberty’s reputation in the general public is so negative anyway. I almost NEVER hear of anyone going there for their taxes anymore. Most that I know use Turbotax or other home softwares. H & R Block is king around here and I applaud them for ADVERTISING on tv and for keeping up with the changing times.
Read very carefully through these pages and then my advice would be to put the pen down and back away from the contract. You will be forever thankful. And you’re welcome! :)
Thanks for the advice SanFranDan. It seems like you went through quite a lot of shit with LTS. I feel that you might be a little biased after all they put you through, but nevertheless I appreciate your advice. I will continue to do my research, and for my sake, I hope you are wrong, but I have a feeling after reading this site more and more that you are in fact pretty accurate on most of what you have said.
The thing they do with computers seems super sketchy, bordering on illegal maybe?
How come more franchisees dont speak out publicly?
Honestly, i dont even know if all the extra clients i will get is worth the 19% royalty. I guess if 1 out of 5 come cause its LTS it is worth it on paper, but. then i would have to deal with the hassle of everything.
previous franchisees, did you every get any support marketing wise for your 5% royalty? Ive been told they have little to no support on that front and marketing is pretty much all you. You are king for eitc people tho, right?
my last employer used to turn away eitc clients cause he didnt want to deal with them, and now he is out of business. i dont know if that means anything or not but thought id share.
last year when i did it out of my house i did 76 returns and charged an average of $80 per return. I guess i am just wowed that i can get a few hundred returns year 1 (LTS said 600) and charge like $150 per return. I am fairly certain i could never get away charging those kinds of prices without a big brand name like LTS or HR or Jackson Hewitt. Or so i think, maybe i am wrong. that is why i am here. to learn.
Horatio:
I AM biased after the shit they put me through. BUT I started the same way you did, thinking I would expand my existing client base. I did, but the money lost & headaches that followed are SO NOT WORTH IT. And I was the one who worked very hard to expand my client base. Not LTS. All they did was send me notices to cure if I dotted an i wrong or didn’t cross a t. They certainly did NOT help with computer breakdown support on Feb. 1st when I was on hold with their help desk for hours. Their software had spyware. The truth, Horatio, no need for me to tell you something that’s made up. The AD sat on his ass collecting my hard earned money.
What they put me through is for the record books. But I am by far not alone. They are doing these same things to franchisees and ex-franchisees all over the country. Fact.
The 19% royalty is for nothing. The 5% advertising royalty is for nothing.
PLEASE read everyone’s posts and you will see many people warning you to stay away. I cannot stress that enough. If franchisees speak out against a-n-y-t-h-i-n-g, that is considered ‘disparraging’ and they will get sued.
Horatio and Dan: PLEASE ask more questions. DO NOT rush into this. I cannot tell you how many years I have been entangled with that disgusting company way longer than one 5 year contract. And my intentions were just like yours starting out. Talk about green behind the ears! I grew up fast. This company employs mainly Lawyers. Do more digging. There is much more to it than meets the eye. Their marketing is slick and easy to get suckered into.
Good luck. Hope you both come back to report that you’ve walked away.
Google – JTH Tax, Inc as plaintiff. That will show you what they are up to. Most people google Liberty Tax but the parent company is JTH Tax, Inc. where all the lawsuits are sitting. JTH is John Hewitt’s initials. How cute.
I wish this website was available. I would of still done the tax deal, however only one office not two. I would of been more conservative in the beginning on some spending, because they stated I would have 600 returns and 750 the next year and so on. Never materialized.
About the tax fraud created by this company, how can I count the ways. One way it encourages people to file earlier than their w-2’s and 1099s come in the mail or available online. No one is suppose to file taxes without all their documentation, however the big three encourage people to be early filers and then turn around and file a 1040X later in the season for more money. It also encourages people not to give you all their documentation because they won’t get a refund or EIC, because they don’t qualify.
Many people will go to multiple offices for the $50 and filing multiple times. In my area at a different time, someone could file 6 different offices in a couple of hours and walked off with $300. It did happen. They set up the system tighter after a couple of years of that, where it would tell you this person had started a file in another office. When you give out the $50, it has not been checked for accuracy nor if the refund is correct. So they could just scam.
Free returns are the same way. John big thing is to do the free return, so that money is not in the system to help anyone do more advertising. However, it hurts the local Zee. Bigger offices will have a weekend or more issuing free returns and advertising to that effect. What happens, those people will wait until the free return week or weekend, which makes the smaller zees can’t have that money and drives them out of business in the long run. But they still have to pay the minimum royalties.
I am an independent, average is $250 in my state.
Do not sell yourself short. Since you have the experience, you can charge more than $80 average per return.
In my area, we are averaging $300 per return. We are half of the cost of the Liberty in the area. The prepares in LTS are in the middle of their first year. I have over 10 years of experience. When I talk to a client, they see that I know what I am talking about, and will pay for that piece of mind. I do inform them that I will assist them if they have any questions during the year. I also inform them that if they do get a letter, do not hold it and bring it to me so I can answer the letter.
I am not someone that lost my territory many years ago. I did believe in the LTS system while I was in. However now that I am out, what you are reading from others is right on point.
Getting away from them would be your best choice you ever made.
Do you need to use all LTS computers or can you use your own, and just use their 1 for transmitting?
How many of you guys used their financing? what are your thoughts on it?
not sure what to do but I know I need to act fast to get in on this year if I want to.
also, are they actually doing national radio advertising?
I have not heard anything yet.
i was told the min royalty this year would be 5k, and then go up to 8k next year
Dan do you already have an EFIN and a PTIN number?
bill – yup. ive also prepared taxes in the past for a small mom and pop.
never been on my own though, other then doing my families for free.
really wanted to make some money this season
its looking increasingly unlike that will happen though :(
Okay Dan and Horatio, Liberty is going to receive 86K from you for a five year contract – 40K franchise fee, 5K + 8K + 11K + 11K + 11K in minimum royalties for five years, and 5% advertising fee for all of your paid tax prep fees.
You get to pay for: Storefront sign, desks, computers, printers, copier, office supplies, employees wages, payroll taxes, business licenses, marketing, etc. – this is thousands more dollars. You get to do all of the work to make this happen. You have to train all of your employees. You have to deal with all of the clients complaints. You have to fix all of the return errors by your newly trained tax preparers. You have to deal with competitors in your area. After all of this, guess what? There is also no guarantee that anyone will darken your door to do business with you. You make everything happen and get exhausted doing it.
With more returns comes more expenses. Who is going to do all of the work to prepare, check, double check the returns? If you go it alone, you control your hours, you can limit your expenses to what you want them to be based on the number of clients you want to service. Don’t think with more returns that the big money starts to flow in.
Liberty Corp. has nothing to lose, you do. They are in business to sell and get their brand anywhere anyone else can do it for them.
meh, you would have to do that stuff if u went on your own too, the difference is ur paying all the royaltys for what liberty as a brand name brings in customer wise, which might be a few hundred more customers as they say, or not many more, like others say. and for their support. I dont know if their support and marketing is worth it anymore. I gotta figure that out and only a few days to decide.
I guess I probably have all the info I can get from here. I will post back here when Ive made my decision. Regardless of what I choose, I sure hope I do not regret it later.
Dan – If you can weather the lack of income for 9 mos and cover the expense of the office less any income with other money, then you will be fine.
Regarding people with the 12% loans, they are totally unhappy and wish they were out of the whole situation. It is servitude at it’s finest. They take your money from the first peak and pay your loan with all your available income, leaving with very little income, which in turn requires you to borrow again, just to do the same cycle over and over again. This is how they can sue you and your business, if this money is not repaid. It is very hard to get a loan for a business that is 3 mos long.
Also as a fine receiptent of the 12% loan, you must do everything they require from you, and must ask how high. If you don’t have a loan, they pretty much bug you, but leave you alone. You must file a profit and loss every month, inorder to keep your loan and for them not to call the loan on you at any time.
There is no selling of the territory. They don’t approve anyone for purchase and everything is controlled by John Hewitt himself of the exact asking price, even if you have computers and personal equipment, he will deny the request for more money. There is no “Annuity” with this business.
Best of luck in your decision. We don’t receive any thing from these posting, except hopefully someone will learn from our mistakes because a website like this did not exist, to at least question the “man”.
No Dan, you do not have to do all that stuff if you go it alone. I will not take the time to teach you how to be creative in business.
You are being personally warned about the probable difficulties and very realistic possibility of failure. That is something others did not have when they were being wooed like you.
Look in the local yellow pages, local newspapers, and go on the internet to see how many businesses do taxes in your area. If you have much competition in place already, you are in trouble. If you are in a middle-class neighborhood, you will most likely fail. Middle-class people can/want to do their own taxes and often do. Don’t buy the ACA talk. People who do their own taxes will learn to deal with it. It is not a big deal. Meaning, those who did their own taxes last year will probably take the extra time to work out the added (if any) effort with the ACA. Those who are on the exchanges, are mostly low income and EITC customers who were already having their taxes done. Those who have no income and on the exchanges will go to the free places that the local government has. My point is that if they are selling you on the ACA, the incremental extra business is not going to put any one individual tax prep office over the top rich.
Best of luck to you, I know I may have stated the obvious in my previous post, but it is the obvious we miss when blinded by our dreams of success (especially when it comes to money).
Horatio and Dan,
Ask yourself and Liberty one set of questions:
1. How many time has the territory been sold?
a. If it is many times that is a red flag since many people have not made it work.
b. If it has never been sold before that is also a red flag since the experienced
owners could see that it is not worth the effort.
2. What is the competition in the area?
Please remember that even if you sign on the bottom line, it will take you three weeks minimum to get the office, set it up and train the staff. First peak would be over. You have then lost out of the gate and have put out over 80K before the end of the season.
I hope this helps.
Dan,
If you are smart enough to realize that these 2-3 losers on here are just mad that they failed and others are doing well, you will do well with Liberty Tax. If you are dumb enough to be scared off by their arguments, then you are better off not joining Liberty as you will be on this board with them because you are not smart enough to figure the type of people they are.
This board was there in 2009 when I joined. I read the complaints and they were were very weak as they are now. People looking to blame someone else for not making money their first 2 years in business. Every business takes time to be profitable. If you think you will make money year one don’t open as you will most likely not.
Liberty Tax’s system does work. It works fastest and better in low income areas. If you will be in a high income area it will work but will be much harder and take longer but it can be done. I don’t recommend it. Then again opening a brand new CPA firm would take many years to build up but I don’t recommend that either.
I have 4 offices total. I am a CPA. All four offices are profitable after paying royalties, rent and interest. Yes, i had to borrow, most start ups do borrow money and have to pay interest. I am happy with my decision. I work very hard for six weeks a year. I work about 4 months total and make anywhere between $150k to $250k a year. I know plenty of people that have sold their office for 120% of sales. I personally would not because it is easy money. Of course if you offices is doing $32k a year, it is pretty worthless so the formula does not apply.
Finally, that crap that you don’t want to buy a territory that someone else failed in is total nonsense. I bought one last year were the guy did $17k in revenues, i did $112k in revenues the next season. The guy that owned it might even be one of the idiots posting on here blaming Liberty. Make your own decision based on getting on the information.
Barilla, how did you increase the revenues to 112K from 17K? That is an incredible story of success.
Us “losers” don’t know anything cause Barf villa said so. Yeah, he really knows his stuff and no one else knows anything!
That is one guy who is full of hot air and full of himself too.
Dan: My advice would be to slow down. Do not buy into anything this year. It’s way too late anyway. Get more advice, ask more questions and re-visit this again next year.
Horatio and Dan: There are several people telling you to back away and save your money. Just because one bozo idiot is telling you the opposite doesn’t make it a good investment for YOU. Proceed cautiously and elsewhere!