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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Great, Great advice on this website! IF ANYONE IS CONSIDERING BUYING A LIBERTY FRANCHISE DO YOUR HOMEWORK AND READ ALL OF THE POSTINGS ABOVE, AND CALL ALL YOUR OFFICES IN YOUR NEIGHBORHOOD, THE TRUTH MUST BE TOLD!!!
Kelsey:
How are you going to feel when you lose your investors' money on a bad business venture ?
Look at how John Boy did good.
JH is now bankrupt.
Liberty folks are a cousin to JH.
No innovation just a copy.
1-800-Mr-Refund.com at least has a product: A LEGIT REFUND. and now IW-2.com where people will be able to photo their W-2s and get refunded without going to see anyone.
MR REFUND
Thanks for the info guys. With that resolved, have any of you heard of good franchises worth investing in?
I am salute and show respect to all who voice and tell the truth about LTS here (especially Mike, FD, Bill and all who post often).
I am doing pretty well with LTS (through my own effort NOT LTS) but I will still advise people to stay away from this franchise. I can't talk too much for obvious reason. I was naive when I get involved in this business. I wish there was a website like this to inform me about the truth back then. One of the reasons I choose Liberty because I don't know how to run a tax business even if I have the tax knowledge (or if u don't have the knowledge). I am sure some poople who look into Liberty is in the same boat as me.
What I want to say here is there are many options out there and you don't need Liberty (and save you the ongoing 19% royalties fee). It is easy to get in but it is hard to get out.
If you don't know how to run a tax school or even tax business or need to train your employees, visit
http://www.theincometaxschool.com or Google People Income Tax
(Liberty Tax used their tax school materials before they have their own tax school materials)
If you need help to market or develop your tax practice, visit
http://www.newclientsinc.com or
http://www.taxmarketing.com
If you need tax support, visit
Nation Assiciation of Tax Professional
http://www.natptax.com
and use their support program or the irs website
You can do better and well spend your money on your own and use the support I listed above rather than paying $40K franchise fee and getting crappy support. The worst is you will likely file for bankruptcy like most franchisees will.
Good luck.
Nice try.
100 million get REFUNDS.
Those links do not get you paying customers. They take your cash in smaller amounts.
If you want online customers, where their are 30 million of em you need to supply online REFUNDS.
PEOPLE want cash and no IRS issues.
1-800-Mr-Refund.com does it all.
JTH,
Excellant post and VERY good advice and information. I am glad that your are doing well with Liberty, it looks like your real success was because of your hard work and that is commendable! Thanks for speaking the TRUTH, please don't be a stranger on this board and spread the word!
I owned two territories. I took out two home equity loans, a first and a second. I put over $300,000 of my own money in and lost all of it. I sold both territories and ended up even with what I owed Liberty for off season financing. I have been a business person for thirty years. It is impossible to make money if one isn't in a metro area or a small town where one is the only game in town. Even under those two conditions it is very difficult to turn a profit. Liberty charges 12% for the use of their money. Use their financing and owe the "company store" forever. I wish I had called former franchisees before I bought but John "snow me" Hewitt worked his magic and I BELIEVED. My bad! Just glad I'm out and not gem orating money anymore.
Tried it...
Sorry you had to go through what so many have gone through, it is horrible what has happened to you and others like you. Keep spreading the word, atleast we may help others avoid this POS!! THE TRUTH MUST BE TOLD ABOUT LIBERTY!!!
Mike and others who is reading this,
Yes, my success is through my own effort and NOT any helps from Liberty (except some tax support which save me some times to do my own research). But I still have to pay the on going 19% royalties fee even without any helps from them (what a joke!). I actually helped to build the Liberty brand in my town and they use it to sell more franchises. Good for the Corporate and I felt really bad for the other franchsees who bought into this franchise.
One of the franchisees I talked to ended up filing for Bankruptcy and lost everything after his first tax season. He told me he has followed 100% of the system but failed. He has spent over $125K in his first year.
Franchisees who fails and files for bankruptcy is not uncommon at all in Liberty. I have heard it over and over again.
The truth is it takes time to build a tax business. There is no 'magic' or 'system' that can really be offered by Liberty but to cost you minimum of $40K franchisee fee to start.
Again, if you don't know how to run a tax business, use the websites I mentioned above to train your employees, marketing your business, tax support, etc. Make mistakes the first year and you will learn from it. You will have a better successful and surviving rate to try it that way. Remember, if you use Liberty system and fail, it will cost you ten of thousands of dollars, emotionally stress (becasue they will give you high expectations), own them money forever if you are using their financing, and file for bankruptcy eventually (unless you have 100K+ to burn and expect no profit for at least the first 3 years).