LIBERTY TAX SERVICE Franchise Success Story

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• Bubba Says "Compare their royalties to Jackson Hewitt or H&R Block for a real eye opener, folks. They’re lower."

  Compare Liberty's Average Unit Volume to Jackson Hewitt and H&R Block and you'll find the real eye opener! The average Liberty location brings in a SIGNIFICANTLY lower volume than either of the other brands, as you can see in the data the IRS publishes each year.

• Entrepreneur magazine most likely only spoke to franchisees that Liberty put them in contact with. The same thing Liberty did to me when I was looking at becoming a franchisee. The area developer lied repeatedly to me and would only let me speak to certain franchisees.

  As for royalities, 19% is high...extremely high when you do not get any real support. My first year with Liberty, I needed "tax support" from them. I was new to this business, went through their "tax classes" , and was told not to worry that the software would handle the rest. LIE! I called Libertys "tax Support" and was given information on how to handle a specific tax issue. Come November, the client came back with a letter from the IRS because the issue had not be handled correctly and now they owed back taxes with penalties and interest. Libertys policy is that when a mistake is made the franchisee who must pay the penalties and interest for the client. So I as a franchisee paid the $2300. Liberty's "tax support' was never reliable in any way. So tell me Bubba why did I have to pay for "support" they never provided?

  As for the Liberty software...it's a joke. It's unreliable, incorrect and not very user friendly. Liberty expects you to train a person to become a trained tax preparer in 12 weeks of classes. the classes are about 3 hours long twice a week. There is no way anyone truly understands the tax code or even simple tax returns in that amount of time. Especially considering Libertys "tax school" does not go into detail about any tax issues.

  I was a franchisee for over 4 years. And in that time I did not make a dime. I followed all of the Liberty ideas for marketing, employees, tax school ect , no matter how completely ridiculas they were.

  Plain and simple Liberty Tax Service is a scam. John Hewitt is an out and out liar. He's running a cult with the people he keeps closest to him. If you disagree with him in private or public you are automatically fired. Check out the turn over of his closest employees.

  DO NOT INVEST A PENNY WITH LIBERTY TAX SERVCE!!.

• Look folks, for all I know Bubba could be a Liberty plant that blogs alll these web sites. The truth of the matter is that Liberty guides perspective franchisees to favorable people who will give them a glowing report. I made money in my franchise with them, but I had absolutely no help from either a greedy corporate structure or an incompetent AD. They take your money and you get nothing back. When you want to leave they sue you. They have a friendly group of judges up there in Virginia Beach so they get away with as much abuse of their franchisees as possible. They do not like dissenters and are not open to any other ideas other than those management can invent that further soak the franchisees out of money. I was too naive when I originally signed up. Now I'm smarter in hindsight and am able to warn people not to engage into any business agreement with this group.

• I too was a Liberty Tax franchisee for 3 years. They provided no support and always demanded money. They are threatening to sue me even though I opened my tax practice 27 miles away! They try to intimidate all their franchisees and do not like to be asked questions about their marketing plans. I know that Liberty does monitor these blog boards and actively try to dismiss negative activity by blogging more hits for positive notes on the search engines. Please, stay away from these people! Did you also hear that John Hewitt is in the process of rebuying the shares of his old vompany, Jackson -Hewwitt? I wonder hoe this would effect current franchise holders? I'd be upset if I were still in their system! Stay Away from these people!

• Is Liberty a publicly traded stock or do they place any securities to the public? If so, maybe the SEC would be interested in their practices!

• When contacting these guys, all they want to do is to invite you to VA beach, VA where they are headquartered. They feed you well and then allow you to ask some questions. At one that I attended, John Hewitt was asked about the profitability of franchisees, or, more likely, the lack of profit. His answer was to emphasize the number of tax returns that are done in each store. He was also questioned about how many were required to be given away or so Called 'free returns' 100 was the number that he provided which he also includes in any stores return count. One of the accountatnts in the audience deduced that a free return does not bring in any revenue. Hewitt said that the free returns come back each year. When asked how many, he said about 50%. Ask current and former franchisees how many wer retained-the number is more like 3 or 5. Lets all beware of what a bunch of liars these guys are!

• Thanks for the info guys. My husband and I are currently retired and thought we would invest some of our current savings into Liberty Tax. We are both accountants and always wanted to own our own business. However, time, lack of money and family responsibility prevented us from doing so. Now that we have the time and the money, we thought about Liberty Tax.
  There was one thing that kept bothering me though. I kept asking my husband, why would John Hewitt open Liberty Tax to compete with the people that bought his Jackson-Hewitt franchises? Doesn't he care about these people? It seemed unethical. Now I understand his thinking. Keep making money for himself and hell with everybody.
  I am so glad I read your blogs. Thank you!!!

• I have been a Liberty franchisee for 6 years and now own 7 offices with a partner There are many factors involved in the success of an office. I have some great ones and some poor ones. Joining with a franchise only increases the liklihood of success and does not guarantee it.

  Over the 6 years I have seen many come and go. The ones that have gone did not have realistic expectations and did not effectively market their business. There will always be some of these people coming into the system and they would probably fail no matter what business they were running.

  Liberty provides a tremendous level of support, however as a business owner you must be able to apply that support. Support is just that. It is not operating the business for you and the business owner must still take responsibility for the success of the business.

  With each new territory I received a list of all franchisees and contact information in the Circular. I could call any current on former franchisee of my choice.

  No system is perfect but Liberty had helped me build a succesfull and profitable business.

• Liberty and every other franchisor is out to maximize their revenue. That should not shock anybody. Not everybody has the temperment or aptitude to be self-employed. Liberty will still take your money and sell you a franchise. I've seen them sell the same territory multiple times and collect multiple franchise fees, so they get paid whether you succeed or fail. Keep that in mind too. To say they lie is a little bit exagerated, but they will certainly present everything in the best possible light and yes, their claims about the free returns are very inflated. What people need to do is figure out if they're able to operate a business or not. Liberty won't tell you, and if you buy the hype and get all puffed up when they tell you you've been "chosen" or "selected", well, that's how people lose money. They don't turn people away who have money and are willing to sign a contract. Period.

• Do your own maths.

  $40,000 + for franchise fee + other start up cost = $70,000 start up. Then 19% royalties fee annually.

  How many tax returns do you need to prepare just to breakeven? Average operating cost per year is $70,000 - $95,000. Say average tax prep fee is $150 per tax return, you need to prepare 466 to 633 tax returns just to breakeven. Ask Liberty Tax how many of its 3,000 + offices have prepared 650 + PAID tax returns in their first, second, and 3rd year. Don't just listen to the top 10 franchisees.

  The top 140th office prepared about 1,000 tax returns (included free tax return). About 5% of the 3,000 offices actually breakeven or make a profit. 95% of the franchisees is losing money. What do you think is your successful rate with Liberty Tax?

  If you are willing to take huge losses for at least 3 - 5 years, pay $7 - $8 per hour to your employees and expect to have new employees almost every year, Liberty Tax will be an excellent business for you.

  What can't you compensate your employees well? Because you have to pay 19% royalties fees. There is not much room for you.

  Do your own maths!