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Liberty Tax

Hi,

I'm a former franchisee of Liberty Tax and I am writing in this forum to give a warning to anybody considering a Liberty tax Franchise. My tale of woe started a few years ago when I made the error of joining the Liberty Tax system. I am an accountant for a fairly large Boston area corporation and have some reasonably good tax experience along with a few tax clients. I wanted to have my own business and to do the income tax thing full time for myself instead of someone else. I thought Liberty could have been the answer. After visiting them in Virginia Beach, VA and being wined and dined by the company, I made the dumb decision to pay $25K for the rights to a territory along with a 19% royalty fee based on gross sales paid every year.

You can't make money with this concept because of the excessive franchise fees. If I had gotten at least the smallest amount of support for what I paid, I think I could have lived with them, but I did not! After numerous complaints, oral and written, that were completely ignored, I decided to let the franchise lapse. They came down on me like a fly to manure! They tried every bit of harassment in the book from opening a new store down the street from my old location,spreading the rumor that I was in jail, telling my existing clients that I had passed away (evidently, I got better), sending lawyer letters and having me followed by a private investigator. Why did they go through all this trouble? Because their franchise agreement has a 2 year, 25 mile radius non-compete clause in it! They felt that I should not be allowed to do business with my old clients even though they had no right to their business.

These are slick hucksters that are only concerned taking money from unsuspecting franchisees. Pleas be warned about their terrible and unfair practices!

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retail tax service employees - advice from BEEN THERE

IMO, the most difficult part of operating a successful retail tax franchise is obtaining, creating, AND keeping good employees. A new franchisee will tend to be approached for employment by preparers who might have trained with the big boys (H&R, Jackson Hewitt) but weren't good enough to be kept for the entire tax season, or rehired for the following season. You'll also get prospects who think they know everything, because they've been doing kitchen-table tax returns for their family, friends and neighbors; these will want to keep their old clients at home and not bring them into your new shop. Getting brand new but teachable prospects through a Tax School is iffy, especially in smaller markets. Since the preparers are part-time and you will be paying them only slightly above minimum wage in order to conform to your Franchisors model, they generally won't give your staffing needs first priority when the kids are sick, or have a school day, or when the snow is upwards of 2 inches deep. Be sure to do a background check - the more extensive the better, although your state's free Dept of Corrections (DOC) website is at least a start. One employee ratted on another is how I learned of a felony to be found on the DOC website. Even if someone admits to a felony and you think they have good references for a second chance, the risk of you looking negligent if anything should happen is too great to hire an ex-con to work around financial and tax data, not even or especially a ex-con relative. Consider bonding EVERY employee, because a tax or accounting shop is the perfect place for identify theft (yes, I know from sad experience).

I talked to the master

I talked to the master franchise guy for new jersey and he was one rude bastard when I told him I still had questions...if the fruit smells bad ...its probably spoiled

For those of you who are on

For those of you who are on this forum touting how to be successful and how you’ve made 10,000 dollars by today –

First, you need way more then 500 clients to stay healthy, and make a living – and NOT working for Liberty at slave prices. You give away 20 cents out of dollar and that’s only if you manage to NOT get over the 11,000. You can’t make it off of 500 returns. 1500 a month plus electric water and employees means life is hard.

As for not opening another office, you have no idea what you are saying. Liberty sells you a plan, they say if you do this then this will happen. They do not discourage you from buying more territorities. Your only hope of making money is to open a store in an area that REALLY has a low income. If you have a high income area, 250 is really all you will get. They do not do their homework and get angry with you when you tell them they are wrong.

Most of the AD’s suck. They have no desire to help you make money, not doing their job. Hell I went an entire 1.5 years without seeing or hearing from my AD other then to be told that a less then 1% disgruntled rate is not good enough. He had no desire to talk to me or the actual zee and had no desire to help us grow, he could sit in his comfy home ignoring us or only visit the zees he felt was worth visiting. Why would he care he’s getting his commission, pay or whatever you want to call the blatant theft.

Life savings was lost and for the life savings poured into the promise of help and guidance, which was never received we have to walk away from a client base that we built and nurtured. We get to start over and try to make a living. They didn’t pay us for that list, yet they call it their client list. Not theirs. I do not recall them here everyday nurturing, driving miles, answering phone calls, walking through the street glad handing. No .. where were they??? Not here with me. That’s for damn sure.

As for you sir who have “earned” 10,000 by now. You are so full of it. First, efiling doesn’t start until Jan 31. 2) the clients coming in are ICA/ERC clients and the bank products aren’t coming in until sometime around the 15th of Feb at the earliest. So unless someone is pumping your store, you aren’t making that kind of money

So moral here – DO NOT DO IT!!! Put me down for that class action suit. Promises made, promises broken. Money taken with false pretenses, AD’S who don’t care and not working but wanting to get paid. Paying for marketing that doesn’t exist, paying back the client if they are unhappy for any part of your service, even if it’s free. The list is endless – so think of this – think of everything that can go wrong – and then multiply it by 10 then and only then will you understand. We aren’t talking a few thousands over 500K was poured into the business to make it grow – we followed the plan, we did everything and then some. So please spare me the – if you tried crap – because we tried, we worked our asses off. Our thank you is get the f out and we keep your list

Ultimately they do not want you to suceed. They do not want you to read the contract, they do not want you to make money. They want you to fail - because they can take your territory and resell it
or thise touting how wonderful liberty is - go away this forum is not for ppl like you - the kiss ass happy I have no problems and everything is rosy ppl - this forum is for the real ppl that worked thier asses off and got nothing

Liberty Tax Service

Now that the 2014 tax season is over Liberty tax will again focus
on selling Tax franchises. Their sales people will paint a picture of
a business in which you will be doing 600 returns in your first year and
that you don't need any tax experience. The same pitch that they have sold to so many other failed franchisees. All of their claims are unfounded and can easily be disproven now that JTH is a public corporation. In 2014 they had 4175 offices, did 1,890,000 returns with an average net fee of $191.00.
This works out to an average of 453 returns and revenue of $86,465.00 for all stores. The financials also provide the number of stores by age. Using a weighted average the 1st year store did 105 returns and $20,082 in revenue and a 6+ year store did 631 returns and around $120,497.00. Besides the franchise fee of $40,000.00 you will have to pay at least the minimum franchise fees of $5,000 the 1st year, 8,000 the second year and $11,000.00 the 3rd through 5th year plus 5% advertising fee.

There are numerous reasons not to buy this franchise, but the number one reason is the minimum fee. "IF THEY BELIEVE SO MUCH IN THEIR SYSTEM THEN THEY SHOULD ONLY CHARGE ROYALTIES ON THE FEES YOU COLLECT".

BUYER BEWARE!!!

Avg location revenue

As a former franchisee, I can vouch for the avgs above.
First year, I did 125 returns.
Fifth year, 650.
I was fulltime in the business and always used my best efforts. Even I, as the owner, dressed in the iconic Uncle Sam costume and did the waving in the beginning.
In all years, some of the returns were free, as part of promotional efforts, during the lull between Feb 15 and March 31.
I walked away from the franchise, letting the agreement lapse after the first 5 year term because I was treated like a third party (which is correct) when LTS wanted to distance itself from me or ignore me, but treated like an employee when LTS wanted to impose upon me. The corporate auditor told me that he had never seen a location with paperwork as good as mine, but that and good customer feedback and retention does not count for much UNLESS you are also doing everything else (i.e., marketing) that LTS wants.

Investigating claims

Our office is currently investigating Liberty Tax Service Franchises. If you have or have had a Liberty Tax Franchise we would be interested in speaking with you regarding your experience. Please contact us at (314)522-2312 or email us at [email protected]

Thank you,

Law Office of Jonathan E. Fortman, LLC

What do you expect for 50K?

One of the greatest attributes of living in this country is the hard won ability to control your own destiny, if you don’t like where you are plan your way out it to whatever your version of better is. That being said, a vehicle is required and there are many. Amway, Kirby vacuum cleaners and Stanley mail order products are just a few examples of people have used in the past. Were they the best way to get ahead, probably not but they were affordable and provided opportunity. Laugh if you will be there have been many that changed their quality of life by using one of these opportunities to self-sufficiency. Every bucket has a hole in it; the idea is to cross the finish line with as much of the contents as possible and with some success perhaps more opportunities are within reach. Don’t be fooled, there is no free lunch and if someone is offering, RUN!
Liberty may not be for everyone but it is an opportunity like many others and for those that are willing to take the risk to become self-reliant, it is as good or as bad as any other because there are no guaranties. Keep in mind it’s all about what you’re willing to put into it. America’s promise is just that a promise -- a promise that everyone will have the opportunity to WORK toward a goal and enjoy the benefits of their labor. It’s not about who you are or what political party you belong to, it’s about how much one is willing to invest, not just in capital but in sweat equity. Do your research, ask questions, work hard, employ common sense and take responsibility for your own mistakes.
At the end of the day its the man or woman behind the business that makes it a success.

you are kidding right?

you sound like someone who works for liberty.
do you honestly think ppl who shell out 25, 35, etc dont do their homework? that they blindly hand over fistfulls of money? we did ours - they lied. this wasn't naviety - it was an empty promise

Non-Compete Clause

Liberty's non-compete clause prohibits former franchisees from doing any work in their prior Liberty territory for two years after the termination of the franchise agreement. Does anyone know if any former franchisee's have been sued by Liberty for violating this non-compete clause?

Thanks,
Doug

I hate liberty tax

Liberty tax ripped me off $400.
They took over 5 weeks to prepare my taxes....WRONG!!
Then when I asked for "Satisfaction guaranteed or you money back" they told me take a hike, and spit in my face repeatedly phone call after phone call.
Liberty tax of Hanover, PA is they root cause of my pain, but only because Liberty Tax of Lewistown, PA subcontracted them due to their incompetent nature. The corporate office of Liberty is staffed by mindless drones with no power whatsoever over their franchises. The corporate office of Liberty is useless at making their franchisee's obey corporate rules.

How do I contact Annie Fuller?

How do I contact Annie Fuller?

Anni Fullers contact

Annie I hope you dont mind and I apologize if you do but you've always been open and honest with everyone I've seen you encounter and I myself thank you for inspiring me and I know thousands of others.
The email address I have for her is [email protected]
please do not bombard this great lady, but I know she has always been available to help anyone who asked.
I visited her store and went back with a full armory of marketing techniques that helped me increase my take home dollar amount.
I hate that you are no longer with liberty (if the information I heard was correct) we will miss your enthusiastic motivation, hearing your voice on the Conf calls every day and for those of you who didn't get a chance to go spend a day with her, be sure to go visit someone who DID, if they paid attention they can teach you how to, as anni says, "get more butts in the door"!
I would like to know If you are free to help some of us with our marketing, if you are infact no longer a zee, unless of course you're off on a new business adventure?

With the rapid penetration of

With the rapid penetration of Internet communication technologies across the globe, the possibility for individuals to seek out others for advice and know-how has dramatically increased. Individuals may now cross organizational boundaries to communicate efficiently with others regardless of time and space (Hinds & Kiesler, 1995). As a result, many organizations are in the process of implementing intranet-based communication tools, such as electronic discussion networks, to promote knowledge sharing across internal organizational boundaries (Alavi &  Leidner, 1999; Davenport & Prusak, 1998; Fulk & DeSanctis, testking 70-270 1995). Investments in these technologies are driven by the assumption that knowledge is the most valuable resource of the firm and that new knowledge is created through the recombination and exchange of existing knowledge (Kogut & Zander, 1992;

Liberty Tax Service is a

Liberty Tax Service is a retail income tax preparation firm serving the United States and Canada. They are the second largest international tax service. Liberty Tax Service operates 3,200 offices throughout the United States and Canada, and has prepared over 6,000,000 individual income tax returns. The company focuses on computerized income tax preparation, electronic filing and refund loans. Emphasis on customer service including audit assistance.

mcdst certification - mcse exams - microsoft 70-270

Strong doubt on this one...

The ONLY reason that you cold possibly "fail" in a Liberty Franchise is from NOT following "the programme".  If a new franchisee will put in the (admittely enormous) hours needed to set up the business and learn the Hewitt method of doing things, there is a miniscule chance of failure. 

If you have a fire or flood, are in a war zone or have your store destroyed in mid-season, I can see how this might happen, but the system is so simple and easy that - if you put in the time and effort to learn it and use it - there is amolst no chance you'll NOT make a profit the first year and continue to grow exponentially thereafter.

I suspect that the writer simply either refused to do the requisite groundwork to become know, didn't hire wavers, or didn't learn the computer programmes... We've been in business for four years and will expand to three more stores next season.  It's a lot of time and work, but nothing is free in this world and this franchise is (IMHO) a real winner for those willing to invest themselves in it!

Liberty Tax

Do u still feel as strongly about Liberty Tax? my husband and I will fly to VB and hopefully start in the 2012 season. I am excited and scared. do you have any advice for us.

thanks
senese duhart, tennessee

you CAN Fail even If you're #1, hold every record and more

I just found out the very sad news from this Liberty Tax offices #1 record holding blue eye daughter named Annie Fuller that affter her short 4 season with them, breaking the national record, winning every kind of award and being paraded around to show "this is what you too can do" to prospectives buyers and current franchisees, she is now telling the truth.
The lies they feed are that its great to join them, FINANCE you business and you will earn equity, have new life, better quality and everything will be great. She is the latest in a line of seemingly successful Liberty Franchisees who have suddenly disappeared.
Although Ms Fuller is by far the most outrageous, greatest marketing queen and most generous giving person I have ever had the privilage of meeting, she too now is being kicked to the curb. John Hewitt has used her up, and when they made some mistakes, she turned to them for support, none was to be had. when she questioned their financing practices as they alledgedly took far more than they should have from her revenue, they started finding fault with her, and now finally have offered her peanuts to move on.. I will not reveal what, but this girl is amazing, thousands of liberty stores have increased revenue 10 fold from her help, she was rarely compensated for this but still gave it freely. Liberty tax and John Hewitt should wake up. I AM a current zee, I WAS going to expand this year, I NOW am more concerned about figuring a way out of debt and out from under the dictatorship of this corporation. An intersting question to ask Liberty when considering Buying or expanding is this :what percentage of franchisees who are established 2-3 years or more do over 300 tax returns per year (average fee is $200 or less btw)? The answer is less than 20%, See if they are truthful with you.
I would highly advise anyone to get into the business, NOT with Liberty and even if you are swayed by their dog and pony show, do NOT sign up for their 12% financing.
Once you start, you will not make enough to pay it off, and then they'll loan you more until you're too far upside down to ever get out.
Annie Fuller who is the exception and made plenty of money, owes less than half the value of her stores and they are forcing her to take a deal or let her stores die. They have all but told her they will block her selling her stores unless she gives THEM the money and then they decide how much profit she should get. Contact her to get her side and hear the REAL truth.. She is the epitamy of perfection with marketing, a franchisee we all strived to be like. she DID follow the system and this is how she was treated.. I'm selling too Miss Annie, I hope you read this and others DO learn the truth from you and open their eyes too!
God Blees you, and thanks for all you have done, keep positive as you always tell us. It will work out!
scared zee

Granville_Bean's picture

Exponentially?

Care to scale that back? To have a little credibility? You are not growing exponentially, and if your grasp of math is that bad, you shouldn't be doing anyone's taxes.

Granville_Bean's picture

But can you do volume WITHOUT a franchise?

"You can't make money with this concept because of the excessive franchise fees."


To me (NOT being in this line of business) a tax service seems to be a a prime example of where you SHOULD go franchise.  If you just put out your own shingle for "Joe's Tax Service", how much business will you do?  AFAIK, all the major tax service brands have pretty hefty royalties.  They (apparently) are worth it because the brand names bring in the business.


People will seek out and walk into an H&R Block because they recognize and trust the brand.  How long would it take for a newbie independant to build up that volume of business?  If you have to discount your fees to get the business away from the big brands, not much different result than charging more but paying a royalty.

Liberty Tax

Hello Former Franchisee of Liberty Tax.  I am a current Franchisee and I agree with your comments 100%.  I am currently going through the same problems you experienced and would love to be able to email or speak with you on how I can get out of this situation while I still have my home and sanity.  Please respond on how I can make contact.

Correction of Email

contact at [email protected] -I apologize for lousy typing.

E mail

E mail is:
[email protected]

E mail me and I'll give my

E mail me and I'll give my phone #

Share Bad Experience

I am considering buying into th Liberty Tax Franchise system and would like to hear the pros and cons as well as your bad experience with Liberty.

Liberty Tax

You signed a contract, and then thought you could violate it? Why do you suppose Liberty is the #3 franchise listed on the Entrepreneur magazine Franchise 500 list? And the royalty is not 19%, it is 14%. There is a 5% royalty that is spent by the company directly on your territory for such things as a yellow pages ad, business-to-business marketing materials, radio advertising, etc. You aren't honest about that, so I tend to think you're not too straightforward about anything else. Liberty has grown very rapidly into a national company. Hard to believe your claims when looking at the situation objectively. I own two Liberty territories and I've found their support, software, marketing plan, etc. to be top notch while their royalties are lower than either Jackson Hewitt or H&R Block.

Clearly a Liberty employee/zee. Dishonest as the day is long.

You signed a contract, and then thought you could violate it?
- you only realize the deceptions AFTER you sign.

And the royalty is not 19%, it is 14%. There is a 5% royalty that is spent by the company directly on your territory for such things as a yellow pages ad, business-to-business marketing materials, radio advertising, etc.
- The effective royalty IS 19%. A zee pays their OWN yellow pages advertising. I got a box of oversized t-shirts and some cookie tins. Wow. From $275,000 of sales I got $300 of advertising! The truth is the advertising ROYALTY (yes ROYALTY - read your email which states franchise and advertising royalties) goes to paying the Marketing department wages.

You aren't honest about that, so I tend to think you're not too straightforward about anything else.
- I think you need to look in the mirror a few more times. Check the number of territories handed back, abandoned or sold for less than half of what was invested.

Liberty has grown very rapidly into a national company. Hard to believe your claims when looking at the situation objectively.
- There are 800 entities with 3000 offices. Franchise agreement states if you don't achieve 1000 office by year four you could lose your territory. At last check, office 100 of 3000 prepared only 1100 returns. Taking into account Liberty's required 100-200 free return program Doesn't that mean about 2900+ are preparing LESS than 1000? YOU NEED 1000 PAID returns to survive. I think you're a little shady yourself.

I own two Liberty territories and I've found their support, software, marketing plan, etc. to be top notch while their royalties are lower than either Jackson Hewitt or H&R Block.
- I was top 50 and I doubt you're as convincing as your post in real life. Software - Taxwise - not even theirs for the first 9 years. Support - you have got to be kidding! Marketing Plan? - They suggest $16-36k on marketing alone! Check out the marketing plans on the right side in zeenet. Who has $30k to spare!????

They will fall to 10th next year or worse.

Granville_Bean's picture

you guys who are complaining...

Didn't you know what the royalties were before you signed up?  Those who want to bail out, didn't you know there was a non-compete clause in there?  To those who aren't making $$, what were your revenue projections?


I have nothing to do with the tax business.  Wouldn't use a storefront tax preparer anyway.  A lot of our emplyees do, even those who can file an EZ.  I pretty much view the storefront tax prep business as a way to make fees on "Refund Anticipation" loans to poor people, clientele kind of like an Aaron's Rent to Own..  But just wondering if this Zor really is to "blame".  What did you think the Zor was going to give you that they didn't?  Are the other tax prep Zors better, should you have signed up with H&R Block or Jackson-Hewitt instead?  Just wondering.

background and success

If you do not mind me asking, what was your background before entering into agreement with Liberty?  What are the highlights of your success with Liberty and what where the obstacles and challanges?  What are the things you like about owning a Liberty franchise and how do you think they can improve?  Where do you own your territories?  How long have you been in business?

Liberty Tax

I have been in franchising for 23 years. I go with people to discovery days that are thinking of buying a franchise. I went along with a young man to Liberty for the dog and pony show. The first sign of trouble was someone picked us up at the hotel in an Uncle Sam suit. We went to the office and the whole staff was wearing shorts, flip flops and other casual wear. I have been on more discovery days than I can count and never ran into such a worn looking group. We had a sales rep that was in the Navy at one time and told us some wild tales about his submarine days. More than we needed to know. We ate lunch with John H and he gave us all the good news about the company. We went in after lunch and got the hard sell , the sales rep pulls up all the H@R Block locations on his computer along with their YTD sales information. That was interesting to say the least. One thing I remember the sale rep saying was that we were getting in on the ground floor of the next Microsoft. He must have said this 5 or 6 times during the day. It was shady from the word go. I told the young man I was with to find somehting else to buy into and he took my advise and did not buy the Liberty deal. This was  in 2003 and the big push was RAL  refund loans. After looking at the fees they charged, I could not see where there was much left at the bottom line and still do not see it. This is a business model that is facing death head on. HR Block has lost money the last couple of years and they are pushing their on line business and this is where their futture will be.  50% of tax payers pay no federal taxes now, Liberty, jackson and Block are all fighting each other for the lowest slime in the bucket. If you like going to pawn shops, title loan companies, buy here pay here car lots, and bail bonding compaines, then you will do well in the instant tax prep. biz. This will be your customer base. 

retail instant tax biz customer base

in response to this: "HR Block has lost money the last couple of years and they are pushing their on line business and this is where their future will be. 50% of tax payers pay no federal taxes now, Liberty, Jackson and Block are all fighting each other for the lowest slime in the bucket. If you like going to pawn shops, title loan companies, buy here pay here car lots, and bail bonding companies, then you will do well in the instant tax prep biz. This will be your customer base."
....
As a former franchisee, and now solo practitioner, I agree that RAL business is dead for new zees and the Big Three along with others are pushing online prep to the disadvantage of the retail walk-in operator.
However, I take exception to the characterization of the lower class and middle class, non-banking, and non-computer-literate (this customer base) as slime. If you, as a zee, think of your base this way, you should market to a different demographic. Any and all clients deserve access to fast and accurate tax preparation while also being treated with dignity, until and unless an individual's behavior warrants otherwise. Most of my customers, and my employees, responded positively to a positive, respectful attitude toward prospective clients.

Granville_Bean's picture

co-branding idea:

Package up your storefront tax prep office with a Rent To Own shop.  Apply the RAL straight to a big screen TV!   Be sure to sell lottery tickets too.  And if you can get the licenses, how about liquor and cigarettes?

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