Franchisee “Joey Black” claims that the unhappy franchisees (and ex-franchisees) of Liberty Tax who vent here are “over the top” and in need of a reality check. What do you think? Excerpts highlighting his main points follow the full text of his comment, below.
Here is Joey Black’s comment, posted on LIBERTY TAX SERVICE Franchise Complaints:
The comments here from people who did not make it as Liberty franchisees are frankly over the top. I spent $70k on each of the offices I’ve started, and that was it. Why someone would expect to spend three times that is beyond me. People complaining about the royalty are particularly suspect. Jackson Hewitt charges more, and H&R Block charges its frachisees a whole lot more. Same for the ad fees. And this year, Liberty gave back half of the ad fees to the franchisees to spend on marketing materials. They paid for my yellow pages ad. They produce all the ad copy, graphics, etc.
But none of this was hidden when I signed the contract. It was all right there. And what franchise business doesn’t charge royalties and advertising fees? And interest on notes you’ve signed? Didn’t you read what you were signing? Again, it’s all there in the contracts you sign. Good grief, at least complain about legitimate things. Otherwise you end up looking worse than you’re trying to make Liberty look. You didn’t know what the interest structure was on your note, but you wanted to do peoples’ taxes?
Now, most people who fail as franchisees are people who are not suited to own their own business. And they could be identified up front, but Liberty will accept your money and sell you a territory if you can fog a mirror. They pretend theirs is an exclusive club and you’re lucky to be let in, but that’s a lot of hype. They have a large tax department to support franchisees, software development, technical support, operational support, marketing, etc. to the idea that most of the company is the legal department is ludicrous. I know their VP of legal and corporate counsel. It is not a big department, but yes, they are very willing and eager to litigate. You need to know that going in. That’s why it is important to talk to real franchisees, both current and former, successful and unsuccessful. I make good money as a Liberty franchisee, but I have had to learn what is real and what is BS. They leave me alone for the most part, which is all I want now that I understand the business.
Yes, the franchised business is harder to sell than Liberty would lead you to believe. Yes, buy one and run it for a year before buying multiple units. Yes, 12% is a very high price to pay for money. If you have to use Liberty’s 12% money you probably should not be going into business. Most financially sound people don’t have to pay 12% to borrow money. Yes, many of their Area Developers are useless and you just want them to stay out of your way but they are your only conduit to the corporate office for support sometimes. You have to deal with that. And yes, if you are profitable at all, just a little bit, in your 2nd tax season you’ve done very well. If you have to have profit to sustain yourself in tax season #2 this is not a business for you. These things are true. But there’s a lot in this thread that is not true for most Liberty franchisees. A lot of it is failure looking for something to blame.”
Joey Black’s Reality Check: Main Points
Startup costs: “I spent $70k on each of the offices I’ve started, and that was it. Why someone would expect to spend three times that is beyond me.”
Royalties & Fees: “Jackson Hewitt charges more, and H&R Block charges its frachisees a whole lot more. Same for the ad fees.”
Advertising: “…this year, Liberty gave back half of the ad fees to the franchisees to spend on marketing materials. They paid for my yellow pages ad. They produce all the ad copy, graphics, etc. “
Due diligence: “…none of this was hidden when I signed the contract. It was all right there.”
Franchisee failure: “…most people who fail as franchisees are people who are not suited to own their own business.
Sales hype: “Liberty will accept your money and sell you a territory if you can fog a mirror. They pretend theirs is an exclusive club and you’re lucky to be let in, but that’s a lot of hype.”
Franchise support: “They have a large tax department to support franchisees, software development, technical support, operational support, marketing, etc. to the idea that most of the company is the legal department is ludicrous.”
Litigation: “…they [the franchisor] are very willing and eager to litigate [franchisees]. You need to know that going in.
Profitability: “I make good money as a Liberty franchisee, but I have had to learn what is real and what is BS.” “if you are profitable at all, just a little bit, in your 2nd tax season you’ve done very well. If you have to have profit to sustain yourself in tax season #2 this is not a business for you.”
Financing: “12% is a very high price to pay for money. If you have to use Liberty’s 12% money you probably should not be going into business. Most financially sound people don’t have to pay 12% to borrow money.”
Area Developers: “…many of their Area Developers are useless and you just want them to stay out of your way but they are your only conduit to the corporate office for support sometimes.”
Blaming others: “…there’s a lot in this thread that is not true for most Liberty franchisees. A lot of it is failure looking for something to blame.”
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