UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind McDonald’s & Subway. However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.
This post was originally published
BostonTax wrote:
I’m a former Liberty Tax Franchisee
I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.
Barbara Green wrote:
I too was a Liberty Tax Franchisee and I agree with everything you said.
The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.
Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.
At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2’s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.
It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.
WHAT DO YOU THINK? DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE? ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY? WHY OR WHY NOT?
.
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View Comments
Your numbers for paid preparer tax returns for those years do not match the irs data i see on the irs website
John,
Those were early season numbers.... Here's the rest
And i was wrong.. not 20% (though i said approximately) actually 19.3%
http://www.irs.gov/newsroom/article/0,,id=207293,00.html
IR-2009-46, April 30, 2009
WASHINGTON — The Internal Revenue Service announced today a record 90 million tax returns were filed electronically this year, led by a big increase in people using home computers.
For the first time, more than 30 million individual income tax returns were filed from home computers. By April 24, the IRS had accepted 31.2 million returns filed from home computers, up 19.3 percent from the same time last year.
......
E-filing Receipts:
Tax Professionals 59,444,000 59,439,000 -0.01%
And though you might add that the number of preparer returns only dropped 0.01%..
Consider this:
The IRS has issued almost 700,000 PTINs as of March 20, 2011. About 40 percent of these PTIN recipients did not previously have a PTIN (GAO-11-336 (PDF), page 6).
http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2011/Tax/Continuing_Sequels.jsp
That's a lot more preparers/offices... 40%
that information is from april 30 2009, they would not have a completely accurate count of all returns processed for the tax year 2008. if you look at a current report of the data from tax year 2008 tax year you will see that the number of returns processed by paid preparers was close to the same as the previous year.
Money Pit,
Are you forgetting you are not even required to use a PTIN before 2011. A lot of preparers used their social. I didin't even know what a PTIN was until 2010 and I have been a CPA since 1997.... Stop making stuff up to make yourself feel better....
They have been talking about flat taxes since 1968. I hope the fear of it happening keeps a lot of people from getting in the business.... It will never ever pass....
Don't buy a LIBERTY TAX Franchise!! The paid Tax industry is in serious decline, if you have kids you know how computer savy they are, only the complicated returns will be done by a Tax professional! These complicated returns are usually for higher income sophisticated people that would RARELY if EVER enter a Liberty office!
Would you enter a Liberty office because some teenager or worse (some degenerate, welfare recipient) wearing a costume standing on a street corner holding a sign? Obviously NOT!! NEITHER WILL YOUR CLIENTS!! This is Liberty's marketing strategy- DON"T BE FOOLED and DON"T BUY!!
"Would you enter a Liberty office because some teenager or worse (some degenerate, welfare recipient) wearing a costume standing on a street corner holding a sign? Obviously NOT!! NEITHER WILL YOUR CLIENTS!! This is Liberty’s marketing strategy- DON”T BE FOOLED and DON”T BUY!!"
I may not but 60% of my customers did.... Your last post proves your ignorance!!!!
Saying that the Tax Industry is in serious decline just proves that there are certain people just wanting to "even" in there mind and cause as much chaos as they possibly can. Tax Industry is heading into one of its most prosperous times and the outlook has never looked brighter.
Go to the unhappyfranchisee Jackson Hewitt site.
https://unhappyfranchisee.mystagingwebsite.com/jackson-hewitt-franchise-complaints/
Control F and type Stugotz, Testaipira and Barilla.
Amazing when you note how they sound the same and constantly agree with every blurb they post one after another after another....
And meanwhile promoting the alternative tax company in Liberty.... hmmm read enough posts and it sounds like AD marketing eg.
John Barilla on January 5th, 2011 11:16 pm
Herb,
How many offices has Jackson Hewitt closed this year? Do you think that is a good or bad thing? Do you believe Jackson Hewitt is losing customers to Do It Yourself software and Free Preparation or to Liberty Tax and independents
John Barilla on March 25th, 2011 2:14 pm
Liberty Tax passes Jackson Hewitt!!!
http://www.accountingtoday.com/photo_gallery/2_3/photo/Top-Tax-Firms-57751-1.html?ET=webcpa:e1361:166861a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_032511
Testaipira on March 25th, 2011 9:41 pm
Liberty Tax is now #2 and Jackson Hewitt #3? This has to be a bad sign for Jackson Hewitt. How is Liberty doing this?
stugotz on March 28th, 2011 11:50 am
Sounds like this is the end of Jackson Hewitt!!! I feel bad for the franchisees that are going to lose everything! Sad, very sad!
John Barilla on March 29th, 2011 4:06 pm
I am excited…. All these years JH franchisee have made fun of Liberty Tax and its marketing strategies!!! Who is laughing now? #2 Babyyyyyy…. soon to be #1…..
John Barilla on April 17th, 2011 7:30 pm
13 more days until Bankrupcty!!!! Rumor has it a lot of Jackson Hewitt locations will either become Liberty Tax or close down…… Frustrated will then still be whining on how he lost everything and want to blame someone else… You should follow Jackson Hewitt and file bankruptcy yourself….
John Barilla on April 22nd, 2011 7:58 am
I think its a no brainer to go LIberty. Yes you pay 14% royalties but you will easily be charging 14% more per return then a Mom & Pop would be able to. Company is growing fast and the name brand recognition will only improve going forward. Just my opinion.
Sorry the wording should of said "Get Even" I left the "Get" out.