Learn How this Underrated Business Model Can Help Kick-Start Your MSP
By Chip Reaves, President, Bigger-Brains.com
Let’s say you’re an entrepreneur, or a soon-to-be entrepreneur, and someone makes you this offer: For a chunk of cash, and a small percentage of your ongoing revenue, they’ll give you a proven, documented business model for success in your industry. They’ll train you on how to operate your business, give you sales and marketing campaigns, negotiate discounts from key vendors, provide ongoing support, and they’ll include you in a community of like-minded entrepreneurs to collaborate with along the way—though none of them would be close enough to be a competitor.
It sounds like a great deal, right? (Provided the price is reasonable, of course)
That’s the promise of franchising in general, and while most people think of franchises as brands like McDonalds, KFC, or ServPro, tech brands have had a substantial presence in the franchising world as well.
Franchising: What’s it all about?
I was introduced to franchising in 1999, when I stumbled across an Australian franchise called Computer Troubleshooters. At the time, I owned a 7-person IT service firm in Atlanta, and while I didn’t know anything about franchising, I knew from experience that most technology entrepreneurs were not great at business. I had seen numerous friends and contractors who were smart, talented, hard-working people fail completely at running their own business, so I thought Computer Troubleshooters would be a great way to help people succeed in the SMB technology space.
I bought the rights to the Computer Troubleshooters USA in 1999, and eventually became the global CEO, supporting over 480 franchisees at one point. (Full disclosure – I sold Computer Troubleshooters Global last year, but I do still own a Computer Troubleshooters franchise location).
That was way before Managed Services. Before VoIP. Before mobility management. Even before SEO. Back then, customers had very basic needs–software needed to be installed, networks needed to be built, servers needed to be maintained.
Today’s IT industry landscape is more mature, more complicated, and more fractured than it was when I launched Computer Troubleshooters USA. So how are the Tech franchises doing?
Some are doing really well: “We’re seeing 30% year-over year growth” said Jeff Connally, CEO of CMIT Solutions Inc. in Austin, TX. With more than 130 franchise locations, CMIT (“Completely Managed IT”) is one of the few brands that has seen consistent growth over the past five years.
“It’s increasingly difficult to be a stand-alone MSP in today’s marketplace” Connally said. “You’re expected to have solutions for cloud, mobility management, managed print services, VoIP… it’s much more complicated than it used to be.”
At CMIT, the head office (Franchisor) invests considerable resources in product development, research, and vetting appropriate vendors. So does Computer Troubleshooters, who have recently announced vendor partnerships with LogMeIn, AVG, and Continuum.
“Our vendor partnerships are a key part of our value offering to our franchisees” says Kim Weinberger, Director of Operations for both Computer Troubleshooters and Geeks On Call (both brands are owned by The Merrymeeting Group). But Weinberger also points out another key benefit of a franchise system: a centralized marketing system.
Risks vs.Rewards
It’s true that franchising can be risky, since a symbiotic relationship between Franchisee and Franchisor will quickly deteriorate if either side feels the other isn’t holding up their end of the bargain. Many new Franchisors get caught overpromising and under-delivering, which can lead to unhappy franchisees, slow or negative franchisee growth, and eventually the collapse of the franchise brand altogether.
According to numbers published in Entrepreneur’s Franchise 500 rankings of the top franchise systems, tech brands including Friendly Computers, Geeks On Call, Expetec, and Rescuecom have much smaller franchisee networks than they had a few years ago, and in some cases have stopped franchising altogether.
At the same time, there are booming franchise systems in very different areas of technology. The CPR franchise for example specializes in fixing smartphones, iPads, and Xboxes, and has seen more than 400% growth in the past 4 years, according to Entrepreneur.
For someone looking to start a new business, being part of a franchise can be a great way to get your new venture started more quickly and easily than doing everything yourself. And for existing companies, the vendor partnerships and discounts, the sales and marketing support, and the market research and product development benefits can be compelling reasons for you to partner up with an established franchise brand.
Chip Reaves is a serial entrepreneur who has been a franchisor and a franchisee. He is currently the President of Bigger-Brains.com, an online training solution.
