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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2 Liberty Tax franchise territories for sale by owner:
LIBERTY TAX Franchise for Sale – Raleigh, North Carolina – 2 Territories
For more information on this opportunity or if you'd like to list your franchise for sale, email UnhappyFranchisee[at]gmail.com.
Thanks. ADMIN
A very big warning to those interested in buying into a Liberty Tax Franchise.......
DON'T DO IT!!!!!!!!!!!!!!!!
It has been the biggest mistake of our lives. Thank goodness, almighty, we are FREE AT LAST!!!!!
This company is the biggest shlock operation going. The man at the helm of it all is a rip-off artist at it's best. We can't wait for him to come full circle and get a piece of what he's given to everyone else. We will watch him come crashing down, sooner than later.
We know there are decent franchises out there, who care about the success of their franchisees...........this is NOT one of them.
RUN, don't walk, as far away from this as possible. DO NOT sign a contract or you will have tightened a noose around your neck.
The fact that Liberty is based in Virginia says it all. You cannot get any Judge there to give you a fair trial. They are all working together with Hewitt.
DO NOT, I repeat, DO NOT sign on to be a Liberty Tax Franchisee. The 900+ comments on this board should be enough to convince anyone out there to run in the other direction.
There is NOTHING at all that I can think of that was positive about our Liberty Tax experience, except, of course, we are no longer a part of it and are FREE AT LAST!!!!!
Free at Last I know how you feel. I just seperated from them after 2 years. Just signed paperwork. I hated to loose the 90,000 I had invested but wasn't getting any support at all from corporate. They are a joke. Everyone on this sight needs to file a class action law suit against John Hewitt the lying piece of sh'''. He needs to have his day and I hope it's not too far away.
The thing that really po'd me is that you can not even sell out if you want to because Liberty is devalueing the franchises by letting others try the franchise for a deposit and they get to walk away if they are not successful. Why would anyone buy a franchise up front now. That's another way that corporate screwed their franchisees. They just don't care about the people out in the field as long as they get what they want. Fair warning folks if they gave you the franchise stay away from it. It's not worth anything. Every year I sat there watching all the H&R advertising on tv and never once in 2 years did I see a ad from Liberty on any media. Name recognition my as'!!!
My experience with Liberty Tax and JTH has shown me that there are definately businesses out there that are still preying on thedreams of people who want to own their own business. JTH and LT are amongst the leaders of this depicable conglomerate of scammers and fraudulent flim-flamers!
I have been sued several time by JTH with the court always finding in favor of JTH. In fact, the court system in VA habitually ignores any testimony or commentary by the former franchisees when you actually do go to court if you can find a lawyer to represent you there. Please look at the list of lawsuits theat JTH Tax Inc. has initiated against former franchisees. It is a long list, certainly longer than the more reputable franchises like Mc Donalds or Dunkin' Donuts. Also remember there is no Federal legal protection for a franchisee. The franchise agreement also bars you as a franchisee from joining any class action group of litigants against the franchise. They also forbid you to "disparage" them which, I believe is a violation of the constitution's right to free speech
The happiest day of my life is when I got out of this franchise. They had a complete lack of competency and support for their franchisees. Read these posts-you will see there are a lot of disgruntled franchisees. They took my money and gave me no support. Their AD's are not much more than a harrassment vehicle if they are even bright enough to do that!
Do yourself a favor, listen to and study the comments made here and take the advice of 95% of the postings: RUN AWAY FROM THESE CROOKS!
Free at Last/Richie B: Thank you for your comments. It is important for us to continue this campaign to explain to potential franchisees the problems with this organization. Many of us on this board went into this business with a desire to succeed. We put our money up and did follow the so called system only to find we made a bad business investment.
Very true, Bill C.
John Hewitt and the rest of the people at Liberty are great SALESPEOPLE. They sell franchises and don't care about telling the truth. Like any good salesperson, they paint a rosie pictures, have you talk to 'top guns' and over project the amount of returns you will do and thus, the money you will make....
It's really sad to think there are so many new Zee's this Christmas who are comitted financially and emotionally at this point, and they don't realize how their lives are going to change for the worse in a hurry very soon. Bankruptcies, finanacial strain, anxiety about the future, etc, etc.....it's going to hit them soon, I just wish them well at this point.
Dont Be Fooled,
Very well put, there are many new zees celebrating the holidays and thinking how wonderful and prosperous the New Year will be, I can only say that I wish them and all on this board a very Merry Christmas and prayers are with you all especially the new zees.
People need to realize the pitfalls of this organization. I have wanted to rid myself of these thieves for over a year. In good faith, I purchased territories with the idea of earning a living after losing my job. I went to Virginia Beach, talked to the LT folks and trusted that they were people who cared about me, and wanted to help me build a business. They had all the answers; we'll be there when you need us, we can help, we understand this business and can make you successful. I signed the franchise agreement, came home and called my Area Developer and asked for help finding locations. I called several times with no answer, and no response. Finally I called someone at Liberty and asked for help. They promised to have someone call me. Again, no response. Finally went out on my own, found locations and sent them to Liberty. They approved them and I signed the leases after 4 months of waiting for approvals. Started advertising, marketing etc. First weeks were slow, so I asked for help. They asked me what I had spent on marketing and I told them. They said it was too little. Continued my marketing through March like they advised. Still very few customers. Started to slow down my marketing as I was running out of money. Ended the tax season with 1/3 the customers I projected, in serious debt, and frustrated because I had no idea what I did wrong. While I understand a lot more than I did then, had someone at Liberty spent the time to analyze the situation, I may have been able to salvage a bad situation. Everything is communicated through emails, and the answer was always spend more money. This organization is not interested in your success. Through the next two years I tried to make it, only to lose more and more money. They kept saying that the debt was small and that I would make it up. What a bunch of BS. Please read Free at Last, he is telling the truth. This organization is a scam. Do not be fooled, do not be fooled. I am slowly getting my life back, but it has cost me $175,000 to do it. All of my savings and most of my retirement are gone. Not sure if I was lucky staying out of bankruptcy or not. I have my life and health, but that's about it. I still get bills. I tell them I have no money, some go away, the others don't. Please, please, please stay away from this organization. I cannot stress the pain you will go through when you fail, and you will. I pray that no one has to go through what I did.
Yesterday I turned on the television to see H&R Block halftime show on ESPN. Today I googled information on Jackson Hewitt and see they will have 2800 stores in Wal-Mart and increase of 40%. I then googled Liberty Tax Service and the big story is the free tax classes that their doing in January. This is the best Liberty can do! It's the same old store. Right after tax season John Hewitt tries for some free press by making some outlandish announcements. This year is Liberty is going public, last year he was offerring to merge with H&R Block, the year before he was going to take over Jackson Hewitt. The reality is this one trick pony is starting to run out of gas. By this time next year Liberty will start to show some cracks. They will try to go public but their offering will be marginally successfull and they company will need to start taking on debt. For all those potenial franchises remember there is no "paid advertising" by this company. They can talk all they want about the benefit of querilla marketing but name me any national company that doesn't advertise and is successful. "Buyer Beware".