Good marketing can get the better of anybody, even a guy like Michael Levine, a CPA and financial planner for more than 40 years. Levine recently gave up his Liberty Tax Service franchise at 2025 Old Trenton Road to return to his own private accounting and financial planning firm. Three years ago, Levine opened his franchise office because he figured it would be an easy way to stay in business doing what he knew so well.
But, he says, he fell prey to an idea that seemed good in the marketing literature, but turned out to be much more than he had bargained for. Liberty, after all, is a franchise, a term he has come to dislike, as it carries with it obligations that do not necessarily match the hype.
“I felt that tax preparation was the right step,” Levine says. “I’m quite fluent in it, I have been for 40 years-plus. But with that type of franchise you find out that it’s not what you know, it’s getting people to see what you know.”
Levine says he bought into the franchise because it was marketed as a 13-week operation — the length of tax season. But he quickly learned that, like any other business, it was a 52-week operation; and one for which he needed to spend much of his time promoting and marketing. The rub, though, was the competition.
H&R Block and Jackson Hewitt own the bulk of the tax season market. Trying to penetrate their hold, Levine says, requires enormous energy and devotion — something he learned he was not willing to give to the degree needed in order to sustain the operation. It is worth noting, though, that Jackson Hewitt was built by the man who made H&R Block a household name, John Hewitt, who left Block to build the No. 2 tax service in the country. Hewitt then left Jackson Hewitt to found Liberty, which is headquartered in Virginia Beach.
Levine, a native of Brooklyn whose parents were in the garment industry, graduated from Long Island University in 1971. He worked for Amper Politzner & Mattia for seven years before going out on his own.
Liberty bills itself as a low-cost franchise, estimating that getting up and running requires $57,000 to $70,000, according to its website, www.libertytaxfranchise.com. Apart from the initial franchise fee of $40,000, the largest single item in the startup budget is $5,000 to $7,500 for initial advertising. The company offers support and marketing advice, and does announce on its site that “the days when a small business owner could hang an ‘open’ sign in the window and wait for customers are gone. No matter how good a product or service is, it won’t sell itself.”
The marketing department also says that it has developed a program tailored to work specifically within the tax industry.
Levine does not dispute any of this, but he cautions would-be franchisees of any kind that franchises are, in effect, retail. They are vehicles to build a major brand.
What marketing they do offer, he says, is often general, rather than tailored to the individual. All bad-case scenarios have been thought out and answered, but it is like the difference between knowing a subject and understanding the answers in an FAQ page.
Even with help from the franchiser’s marketing department, he says, a franchisee must develop its name.
“It takes four to five years to build a brand name,” Levine says. “The first two years I worked side by side with Liberty, and I started to lose a little steam. The amount of time I was devoting to the franchise was starting to affect my other business.”
Primarily, Levine was losing ground with his financial planning services. He is a licensed financial planner who offers accounting and tax planning services, as he has for decades.
After three years, Levine says he had had enough. He was tired of pouring his energy into the franchise at the expense of his own work. He now operates his own office in East Windsor, unassociated with Liberty.
Levine refers to the experience as “an expensive lesson” into an avenue that could be right for someone looking to build a tax preparation business, but not for someone like him. He is willing to take his lumps on the investment and accept that the experience has taught him something worthwhile.
“At least now I know the back-office operations of a franchise,” he says. And, he says, he will be better equipped to help would-be franchisees see through their dreams and into the reality of running a franchise.
No matter what, he says, it takes a lot of work and a lot of time, and should not be entered into without understanding all the pluses and minuses.
Levine is hoping to sell the franchise license and says he is working with Liberty to find someone who would be a good fit.
Someone with the interest and energy to devote the time it would take to make the office a successful one.
Michael E. Levine CPA, 1625 Henderson Place, East Windsor 08520; 609-249-2457; fax, 609-632-1233. www.melcpa.com.