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?
.
I just realized we are all working from the wrong premises here. Sad but true stated, “The IRS reported Tax Professional e-files increased 72,000 thru 4/17, or a small .1% increase from 2014. The self-prepared e-filings increased 2.725 million thru 4/17, or a 5.9% increase from 2014. The trend is more taxpayers are filing their own returns.” The statistics do not support the last sentence.
These IRS published stats only show the growth in EFILED returns. Of course paid preparers had a miniscule growth from the previous tax season because they have been mandated to efile for a few years now. That .1% doesn’t reflect the number of returns DONE by paid preparers but the number EFILED by paid preparers. In other words, a few who still clung to paper and pencil or used software but had their clients mail in paper returns changed their ways. The numbers only show that self-prepared filers are turning to software and efile instead of paper returns, not that more of them are doing their own returns.
The IRS used to publish stats on the numbers of returns completed by paid preparers, but I haven’t seen those for awhile. The Taxpayer Advocate’s annual reports still cite around 60% of taxpayers use paid professionals, but I seem to recall the percentage has dropped a bit over time. It’s hard to get a handle on when millions of fraudulent returns (all “self-prepared”) are being filed by identity thieves each year. How much of that 5.9% increase is due to fake returns?
That said, I do believe that more people are trying to prepare their own returns. A major reason is that the cost of tax prep at the chains has chased them away. If someone will mow and trim your big lawn for $60 a week, you might hire him because it will save you 4-5 hours plus gas, maintenance for the mower, etc. If he instead wants $200 a week, you’ll find the time to do it yourself.
SaraEA, you are assuming that more paper returns are done by paid preparers? I would say that many paper returns are either old school taxpayers (doing their own returns) that have 1040EZ, 1040A, or 1040’s with a simple Schedule A or paid preparers that are required to mail in the return due to some reason they cannot be efiled.
Paid preparer efile’s were 60.4% of all efile returns in 2014. Paid preparer efile’s were 59.1% of all efile returns in 2015. That is a drop of 1.3%. I believe we will continue to see this trend continue. Not sure where the VITA returns end up and they may be in the 16,326,000 amount that are total receipts greater than efiled returns. Total receipts, as of 5/2/2015 are up 687,000 from 2014. Total processed are up 666,000 from 2014.
As younger taxpayers enter the job force, these taxpayers are computer literate and will take time to search the internet for answers they may need to file their individual returns. 1040EZ’s, 1040A’s or 1040’s with a simple Schedule A will more and more be done by the taxpayer, online. These were the franchise operations gravy customers; in and out and they made a quick buck. This customer is most likely a major share of the 1.3% drop in efiles by paid preparers over self-preparers.
We will see what happens next year. Not sure how immigration reform will impact all of this but I would guess the paid preparers would benefit from any reform that increases new taxpayers from that potential market.
Thank you everyone for your information.
Also, immigration reform will increase the demand for preparers because the immigrants will have to be up to date with their taxes. Also, if the tax credits are made available to the immigrants (and retroactive for three years), then many people are going to amend their returns.
Do not forget that the strict tax preparer regulations are coming. There will be a trifecta of regulations in some areas (city, state, and federal).
Sad but true, I am NOT assuming more paper returns are done by paid preparers. On the contrary, paid preparers who file 11 or more series 1040 returns are MANDATED to efile and have been since 2012. That is why the GROWTH in efiled returns by paid preparers is so small–likely 99% of them efile already. The statistics you cite show that among taxpayers who prepare their own returns, 5.9% more than last season efiled instead of sent in paper returns. It does not mean that 5.9% more did their own returns, only that more self-prepared returns were efiled. See the difference?
As an analogy, say two towns of 100 households each are compared on participation in recycling. In one town 100% of the residents use their recycle bins. In the next year their participation growth will be zero percent because they can’t grow anymore. In the second town no one recycles. The next year 10 people decide to participate. Their growth rate is 10%. Same with efiled returns. Almost all paid preparers efile so can’t grow their participation much, while self-prepareds are increasingly getting on board.
As I said, the more meaningful statistic is how many returns were done by paid preparers vs. how many were self-prepared. The efile stats do not address that difference. I do agree that Liberty’s target population of lower-income taxpayers are the ones most likely to switch to free preparation places or do it themselves. Unless Liberty does something to attract a different client base they aren’t going to have one.
SaraEA, thanks for the explanation, I see what you are saying.
What is interesting is that many paper return filers transitioned to efiling their own returns. They bypassed the big three franchise operations and did them on their own. That is bad news for Liberty, the bottom feeder of the three big tax prep businesses. Block’s loss of client’s is surprising because they had a good promo, the 50% off last years fee, after first peak.
Liberty needs to replace the franchisees that will be discontinuing their operations with them. What sales line they make, now that ACA was a flop, should be interesting. Anyone thinking about buying a tax franchise territory should consider what happened this past year and what the future trend will be. Now is not a good time to get into this business as a franchisee.
Block promotion did’nt work because it was’nt good for their franchisees or their existing customers. I’m wondering how you spend time on the new customer with the 1/2 off and not make the existing customer angry.There is lots of price sensitivity.
I agree, you are right, this is not a good time to get into this business as either a franchisee or an independant if you don’t have any background or expertise.
ACA issues are still coming up because about 2 weeks ago, the IRS started sending out letters to people who did’nt complete their returns correctly. Those customers are calling their preparers over the last 2 weeks, or anyone who will answer the phone.
ACA is’nt even close to being over. Those are the first letters, the second letter will probably come in June.
^^^Up Hill Battle:
Stricter tax preparer regulations are awesome. It has to be. Right now Liberty will sell to anyone with a wallet. In the future they will have to be more selective. (Awww) It’s about time! :) Great news on the city, state and federal levels too.
The RAL’s are gone. So is Liberty’s opportunity to go after only the poorer communities. The only people that will survive are the ones with the strongest Tax backgrounds. (IF they even want to stay & associate themselves with this pigsty of a company)
Because of Liberty’s record of fraud and suing current and ex-franchisees, I hope that they get bashed and get a little taste of their own medicine by more & more cases as the one in S.C.
Anyone thinking about joining this hair brained company that can read through these 4000 posts can see that many, many good, honest, hard working people paid good money to this franchise and were not only squelched, but steam rolled over in sleazy marketing tactics taught to them by the King of Tax himself. Don’t fool yourself to think that this company will help you achieve your goals. People with plenty of Tax experience have been raked over the coals and scammed. AND WORSE.
^^^Up Hill Battle:
Stricter tax preparer regulations are awesome. It has to be. Right now Liberty will sell to anyone with a wallet. In the future they will have to be more selective. (Awww) It’s about time! :) Great news on the city, state and federal levels too.
The RAL’s are gone. So is Liberty’s opportunity to go after only the poorer communities. The only people that will survive are the ones with the strongest Tax backgrounds. (IF they even want to stay & associate themselves with this pigsty of a company)
Because of Liberty’s record of fraud and suing current and ex-franchisees, I hope that they get bashed and get a little taste of their own medicine by more & more cases as the one in S.C.
Anyone thinking about joining this hair brained company that can read through these 4000 posts can see that many, many good, honest, hard working people paid good money to this franchise and were not only squelched, but steam rolled over in sleazy marketing tactics taught to them by the King of Tax himself. Don’t fool yourself to think that this company will help you achieve your goals. People with plenty of Tax experience have been raked over the coals and scammed. AND WORSE.
I spent a few days up in NY and NJ this week. Every Liberty I saw was either closed or the store front was For Rent. One was an old house with grass growing so high it was clearly abandoned. I saw at least 6 locations, all gone. I think the future for this organization is pretty bad. Betting that they will see massive drop in locations next year.
I would have to believe that with the very small growth in storefront returns that the majority of the franchisees in years 1 to 5 are in trouble.
Liberty Corp. can lose franchisees down to their break even point. They can then downsize and hope things turn around. If they fail to gain new franchisees, their reputation will take a big hit.
San Fran Dan, I am looking towards the regulations, I am already in compliance.
I have learned a lot from this website.
Also, I am looking for a building to set up my practice for next year.
I just made a contribution to this site. So, please if you have benefitted from this forum, then please contribute to keep this source alive and well.
Thank you everyone.
When a business plan is based on failure, such as Liberty’s, there is bound to be many franchisees and shareholders being left to take on the debt burden of its failure. This is the fundamental theory behind Hewitts method of extracting as much money from the franchisees as he can. Liberty is not in the tax business, they are in the franchise business. You know this to be true since anyone with enough money can buy into this racket. You don’t need skill. You don’t need knowledge, You don’t need experience. You only have to have the ability to line the pockets of Liberty Tax through huge fees and royalties. With the increasing complication of preparing your taxes, considering new incentives by which way the wind blows in Congress, you cannot expect some limited intelligence individual to prepare a tax return. A lot of CPA’s are quite reluctant to expand their practices for tax because of the increased risks associated with preparation. There is no more easy money in this business as Liberty and others will try to sell to an unwary investor. The world has changed, but the Liberty business model hasn’t.
We bought a franchise 3 tax seasons ago and after this season we want out. We have had very little training or support. Our office is 75 miles from our home because we were not told of an available territory near our home. So we had to buy a condo near the office.
Does anyone understand the contract for terminating the contract before the 5 years are up. Due to the distance of driving my health is very poor.
Any suggestions out there.
cnj bookkeeping –
When I had our contract, as long as you were up on your royalties and mainly your lease is up, you could walk away, by sending them a letter of your intent. They will in turn send you an agreement to sign, can’t think of the name right now. Once signed, then you are able to walk away. Now they may have changed their franchise agreement’s since then, but as long as you are current you can walk away. You cannot do any taxes within a 25 mile radius, unless they have changed that in a new contract.
Make sure you have everything paid off and you won’t hear from them again.
Cnj…now you can open an office where you live!
CNJ, I have a couple of questions.
1. After 3 years, were you making money from your location?
2. Did you take over an existing territory, or was it a new territory?
3. Can you tell us how many offices and returns you completed last year?
The reason I ask this is I want to, is to look at the thought process.
They could have sold you the territory that far away, so you spend the money developing the territory. They can this resell it for a higher price if you leave.
Or if you were doing well, and had drank the koolaid, it would be easier to sell you the local territory.
According to Liberty’s website their office count was 3890 this past tax season a decline of 313 offices. Of course these are Liberty’s numbers so you know there is
built in fluff. One example is in NJ they list 2 offices in Vineland NJ. When you click on the City you find the address for the two offices are 703 and 705 Landis Ave.
CNJ: thank you for sharing your experience. Wishing you the best.
Thank you for your answers.
1. We have made nothing at this. When we started the business it was Dec 2012. I asked over and over if we could wait until the following year due to late season start, no employees, distance and was told via emails we would have plenty of support and help. Did not happen. The 8 hour training in the contract was 2.25 hours from our AD.
2. The area was new. In a medium to high income area.
3. The royalties we have paid is way over our returns. To date about 60 returns. Area we are in has been under construction for 2 years.
4. We have just the one office.
We have an attorney working on getting us out of this.
The training was so poor that after taking about 40 minutes trying to figure out how to get on “Zeenet” I had to call the AD and ask how. Was then told it is http://www.Libertytax.net.
We called Corp and gave them an ear full then emailed Corp and told them we want out that this is a disaster and no training. We had the AD call and come meet us and assured us we would get plenty of help and support. Did not happen.
CNJ:
Sounds like an opportunity to sue them for fraud. I hope you have documentation regarding this action. You will have to sue Liberty for a change of venue away from the VA courts. Argue about your health being a factor. Have you thought about a chapter 11 bankruptcy? That could also force a change in venue to a court nearer to your home. That would make it more costly for liberty to litigate. They love to litigate as long as it is in a friendly VA courtroom. Good Luck.
The annual spin doctors will be starting on Thursday. The next Convention starts. I would love to hear the garbage.
CNJ: I hope you continue to post here and tell your store. While all of us share the same experiences it is important that (unfortunately) current franchisees collaborate what has been stated on this site. The goal of all of us is to see this pariah of a company out of business.
The Liberty convention is like a bunch of pirates celebrating the booty they just got. To be successful with the Liberty model, many customers need to be overcharged for their prep fees. Or, just commit fraud until you get caught like those two this past tax year.
Not saying Liberty promotes fraud, but the Captain will take your 40k franchise fee and royalties and leave you on your own to succeed. Sure, they have a marketing plan, the one Danny made up in kindergarten.
^^Sad but true:
You’re not saying that Liberty promotes fraud, but I AM. I am 100000000% certain that they have promoted fraud for years and then sent the feds after their own franchisees. I know this to be a fact. They can deny it all they want, but it’s true. They are a HUGE BULLY and PREDATORY franchise and it wasn’t until this forum began that any of us had a way of communicating factual information. They bully you and threaten you with all kinds of lawsuits to keep quiet and not divulge information.
THEY SPY on all their franchisees-FACT. They promote fraud-FACT. They need to be shut down-FACT. Their leaders need to be held accountable and go to jail-FACT. They overcharge you for everything-FACT. They rip you off-FACT. They are crazy for Notices to Cure-FACT. They hire AD’s who sit on their ASS and collect your $$-FACT. They are finding ways to survive now that RAL’s and ERC’s are gone-FACT. There is NOTHING redeeming about them as a company-FACT. They just had a whole bunch of insider trading and they should be arrested-FACT.
There you go potential franchisees, Liberty’s burned many of bridges, SanFranDan being one.
So, if you potential franchisees find this site, start reading from the first post before you buy. There are more than disgruntled posters on this site. The positive ones are probably giving you much of the same lingo they (John and ?)gave from day one of their operations. If you buy after you get to 100 posts, shame on you. If you buy after reading 4000 posts, shame on you, no one should feel sorry for. If you do buy after reading most of these posts, you will fail, you drank the kook aid and it is to late.
Don’t forget, when looking at e-file stats, to take into account (sorry) the IRS Volunteer Income Tax Assistance (VITA) program and the corresponding one for the elderly. Low-income clients are able to have their taxes prepared for free, provided they aren’t massively complicated, and we e-file all those returns.
Just came back from visiting my sister in IL. Happened to see a closed Liberty Store and she remarked how she didn’t see that many wavers this year. More victims of this franchise and proof of what happens if you invest with this company.
As we head into Liberty’s season for selling franchises I encourage everyone to continue to post information on this site that will inform potential franchisees that this company is not a viable franchise model and has become a scam.
Buyer Beware!!!
Re; SanFranDan
I am 100000% sure that Liberty ignores fraud if it may put them in a bad light. I had several situations where people had come to my store after they had been to another Liberty that had closed. The other Liberty had a preparer that clearly added miscellaneous deductions to increase the refund. It was done after the client left and before it was filed with the IRS which of course increased the margin for the overall return. The amount was then added to the cost of doing the return and the customer never knew it. I brought this to the attention of Liberty, and guess what, they asked me why I told the customer about the discrepancy.
Hmmmmm
In just the last two months of April & May, there have been numerous new posters. Who are they? Did they post only once or plan to post again? Whatever happened to our beloved Barf villa?! (We miss you so! NOT)
We’ve heard from a ‘Jimbo’, a ‘Mary Smith’, a ‘Mario’, a ‘Trouble’, a “getintouchwreality’, a ‘guestwhatshappened’, a ‘Vinny U’, a ‘Jim’, a “William Yates’, a ‘Ralph Collazo’, a “happyexfranch’, a ‘guest2’, a ‘CNJ’ and a “KaliW’. Whew………
If ANY of you are current franchisees, let us know! However, I’m sure with the Feds breathing down their necks, they’ve cleaned up their act.
How many have reached their 5 year contract ending and plan to renew? Plan to leave & tell them to shove it?
If there was a way for me to contact each & every potential franchisee & ask them “WHY”, I would do it in a heartbeat. Maybe people like losing thousands of dollars with nothing to show for it. If so, then sign right up!
It sounds like this website is making a dent in the number of new offices each year. If so, then hooray to all of us. Let’s keep that momentum going!!
I ALSO HAD CTC WITH LTS. THE 1ST ONE STARTED IN 2001 ENDED IN DEC 2006. WE WERE USING TW SOFTWARE FOR THE FIRST 4 YEARS. TW SOFTWARE DOES EVERYTHING. WE WEREREQUIRED TO TEST LTS SOFTWARE IN 2006. LTS WAS THE WORST. IT WAS NOT AS GOOD AS OR BETTER THAN TW. LTS WAS SO BAQD I ADDED 3 PAGES TO THE NEXT CTC. CALLED LTS RESPONSIBILTIES AND ACCOUNTABILITY. IT MADE LTS RESPONSIBLE FOR PROVIDING GOOD TESTED SOFTWARE. IF THE Z DID NOT FEEL THEY GOT A GOOD SYSTEM/SUPPORT THE Z COULD TERMINATE LTS WITHOUT POST TERMINATION REQUIREMENTS.
LTS DID NOT LIKE MY 3 PAGES…SAT ON THE 2ND CTC FROM DEC 06 UNTIL JUNE 5 2007, THEN REMOVED MY PAGES, SIGNED THE 2ND CTC AND PUT IT ASIDE. WE THOT LTS HAD AGGREED TO MY CHANGES ..UNTIL WE DECIDED THE SUPPORT AND SOFTWARE WAS NO GOOD. CHANGED OUR NAME, WENT WITH TW … NOW IT LOOKS LIKE WE ARE GOING TO SUE LTS FOR NOT AHEARING TO THE CTC.
WILL KEEP YOU ALL ADVISED. IF YOU HAVE ANOTHER CTC COMING UP YOU SHOULD ADD MY CHANGES…
JOHN
Liberty can draw some lines on a map and sell you that location for 40k. Guess what, you cannot operate outside of those lines and when you fail, you cannot run a tax business 25 miles in all directions from those lines. Failing is almost guaranteed. Do yourself a favor and save your 40k and you have no boundaries at all.
Another Top Liberty Office in South Carolina busted by the FEDS!
Greenwood and Clinton, S.C.: The U.S. has filed to bar a preparer Julie E. Hueble from preparing federal returns for others.
The civil complaint alleges that Hueble owned and operated three Liberty Tax Service franchise locations in South Carolina and that she and the employees of her prep stores prepared federal income tax returns that improperly understated clients’ tax liabilities or increased claims for refundable tax credits.
The complaint alleges that Hueble and her employees prepared returns for clients that, among other things, falsely reported on Schedule Cs
non-existent businesses or inflated income or deductions. The suit further alleges that Hueble and her employees fabricated other deductions,
claimed improper filing statuses and falsely claimed dependents, all of which resulted in fraudulently inflating refunds or refundable credits or both.
In one example in the complaint, Hueble fabricated a child-care business for one client even though the client did not own such a business and gave
Hueble no documentation showing that she did. The fabrication enabled the client to receive an inflated EITC.
The complaint states that Hueble’s stores prepared 2,165 federal income tax returns between 2012 and 2014, and that she prepared 904 returns
during this period. Analysis of returns filed in that time revealed that the harm to the U.S. Treasury caused by Hueble’s conduct might
exceed $1 million, according to the suit.
Here is the article that came out in Accounting Today that NC Hillbilly is stating.
http://www.accountingtoday.com/news/tax-practice/tax-fraud-blotter-a-year-and-a-day-74830-1.html
How long can corporate keep skating out of responsibility for this type of fraud.
The real story here isn’t the fraud.
She did about 2200 returns in her three stores over three years. That is less than 250 per store per year.
Let’s assume she paid the 45k for each store. Add on royalties, rent, payroll etc etc…
She realized she had been taken for a ride. She really had no choice to recoup her money than to do fraudulent returns for big tax prep fees just to break even. She had to facilitate $1,000,000 plus of theft from the treasury just to pay john Hewitt.
She was robbed by liberty and one good turn deserves another.
The story is that liberty is a bad investment.
Greg: I echo your thoughts and hope anyone who is thinking of buying this franchise heeds your advice.
As to the issue of fraud and responsibility, with more of these franchisees being shut down by the IRS lends evidence to a culture within the organization that these kind of actions are acceptable.
Greg,
The same thoughts went through my mind: 3 stores, 3 years, 2200 returns. No way to make a living, let alone a profit on that. I think some people are driven to fraud due to the enourmous amount of investment loss and likley debt incurred along the way. I know Liberty offered me loans to open more stores, etc. Thankfully I didn’t need thier loans and didn’t bite. But how many people invested thier 401K money, thier savings, etc.
Bottom line for any potential buyer: Liberty will take your hard earned money and sell you a territory with little to no chance of success. I’ve said this before and I will continue to state: if the system worked so darn well. .why are there franchises owned by “top gun” franchisees that are simply not profitable? Because the good territories are long gone and the business model is outdated and going from bad to worse.
Drop in a big bucket. Tax fraud is an epidemic the IRS can control with elimination of the earned income tax credit. The credit is being reviewed. Ms. Missy from SC just decided to get more money. Greed is the bigger problem. Funny how the customers just throw you under the bus when the IRS interviews them. 85 returns $500 fine is $42,500 owed to the IRS. Fines can be for multiple years and don’t include the money paid in refunds. This stuff is scary. More scary than Liberty.
Yes, I agree
She was greedy to get that money back she spent on the territories and royalties
Greed did play a part. John was greedy with the franchise fees and royalties and she in turn was greedy to make enough money to pay them.
There is money to be made in tax preperation. A smart person would never consider purchasing a franchise if they just sat down and ran the numbers without listening to the hype being sold. The royalties and Advertising fees that is charged compared to what you actually get for paying that giant amount is shocking. And we are not even taking into consideration any interest on loans you may owe either because of financing a store or an inability to pay all your royalties and ad fees. You get 2k To 3k of real value for all that money given away, and a lot of times that means giving away 100k plus each year. There is no reason to pay the franchise fee then pay all the fees for the system when anyone with any sense can implement a like system for next to nothing. We live in a age where all these systems can be copied for nothing, it’s not like it was 30 years ago. Franchising is corrupt and that is sad but it is true. After learning the most expensive lesson in my life I would never be associated with franchising of any sort ever again. The saying “In business for yourself but not by yourself”, is not a positive thing because the not by yourself means they have the right to force you to do what is in there best interest even when it’s not in your best interest at all.
http://finance.yahoo.com/news/liberty-tax-partners-irs-fraud-152407055.html
Omg, this is so laughable. THEY are the ones that created the fraud, not the franchisees. IRS: Wake up & smell the roses.
Admin: I’ll write “in my opinion”……..
In my opinion, who better to show the IRS the fraud than Liberty themselves?
This is definitely NOT a matter of greed on the part of the franchisee, guest2. Believe me, I’ve had an education in corporate greed, fraud and governmental greed to last me several lifetimes. Things do not always appear as they seem.
Funny how the IRS and Liberty Tax Service have formed a PARTNERSHIP on going after fraud where we know they are certainly the experts in that field! Makes me nauseous.
If you are honest and have integrity, this is absolutely NOT the franchise for you!
SanFranDan,
Liberty is trying to work with the IRS not in preventing fraud by a tax office (bogus Schedule “C”‘s), but in Identity Theft.
Liberty can then spin this into saying that they are vigilant in combating tax fraud.
If you click on your link, then go halfway down the announcement and click on the embedded IRS link, you will see it only deals with Identity Theft.
This is just Liberty’s way to spin things to get more territories sold.
^^Out & glad:
Thanks for pointing that out. In my mind, it doesn’t change a thing. It just makes my skin crawl knowing that Liberty Tax is teaming up with the IRS on ANYTHING. Especially anything to do with FRAUD. Liberty wrote the book!
I wouldn’t say anything about this on a public forum unless I have experienced this first hand. Fraud with a capital “F”. Starting at the top on down.
It’s all a game and a way for the government to make money. Otherwise stricter regulations would have been in place. I can almost guarantee that the franchisee from SC, Julie, was doing something to make Liberty mad. That’s how they re-pay their franchisees for their hard work. Anyone that doubts my posts, I can prove it. Don’t mess with Liberty, the next thing you know the IRS is breaking down your doors. And guess who taught that fraud????? Hmmm, I wonder.
I’m not sure what this means regarding JH’s position in the company but on Friday
they announced that he has taken a salary reduction. His base salary will be $1.00
this year.
“For the fiscal year of the Company ending April 30, 2016, the Company shall pay Executive a base salary of $1.00. The Board shall review Executive’s base salary annually during the Employment Period (beginning after the fiscal year ending April 30, 2016) and may alter that base salary from time-to-time, based on its periodic review of Executive’s performance in accordance with the Company’s regular policies and procedures….
I think John is trying to say to his franchisees–“I too will work for free” NOT! Money must be getting tight, though..just my hopes.
Just another Liberty gimmick.
Mike and Sad but True: I agree 100 Percent with your assessment. First, you have turnover of CFO’s, then the CEO allegedly reduces his salary. Signs of a sinking ship.
Mike,
I agree it is a gimmick. Do you really think that the board would not give him a bigger bonus? Also, JH has all of the tier 1 stocks. They set up the two tier stock system so no one could vote him out like they did in Jackson Hewitt back in the 90’s.
The key reason for John H’s salary reduction is to calm his investors. Liberty’s dismal growth will be reflected on June 18th when the 4th quarter results are posted. Liberty will not be posting the growth in both sales and number of returns that John was touting a year ago. Investors will only accept excuses for a short period of time. In addition to using to John’s salary reduction, Liberty will use HR Blocks decline this year as an example and that will also help calm the investors.
John will be compensated by additional stock options if the company performs and that will make up for any lost salary. –
Liberty results are reported and while Liberty Corp. made money, you have to wonder how many and how much the individual franchisee’s made this past tax year.
Overall storefront tax returns increased 17,000 or about 4 (FOUR) returns per office. Average number of returns per office were 469 (1,907,000/4069 stores). Average net fee was $217. This means, on average, each store made $101,773. Royalties and advertising fees on $101,773 = $19,337, leaving the average franchisee with $82,436 for; rent, payroll, payroll taxes, utilities, marketing, supplies, etc.
The mantra that if you want to make more money, say $80k per store, so buy more territories, is not true. You are fortunate to take home $20k after expenses.
Liberty storefronts dropped from 4175 total in 2014 to 4069 in 2015. So, less stores did more returns (17,000) but this is little consolation since 4 more returns per store is not making the franchisees any better off.
Sadly, some of these total returns may include fraudulent ones and Liberty still makes money on those too.
A drop of 106 storefronts means 2.5% of your offices from 2014 were closed in 2015. Individuals looking to buy into a tax franchise business are wising up to the fact that a Liberty franchise is not a good idea. Now, the numbers prove it. Why, because not all stores averaged 469 returns. The stores way below that 469 average number will soon close and the drop in stores will continue. John Hewitt will retire someday and I have to think that the #3 tax franchise will be absorbed by #1 or #2.
Buying into a business where the franchisor makes most of the money is not the way to go. You do all the work and they reap your hard earned cash.
So John said that they put a lot of money into healthcare reform and hinted that expenses would be higher now expenses are reported lower. What’s the deal? Which one is true of this guy.
Shuck and jive.
What was his salary? I guess that if it was a million or two per year that can account for 5-10% of the profit if it dropped to a dollar a year.