Managed Services Franchises ExplainedManaged Services Franchises Explained
How does a managed services franchise work? I posed that question to Jason Creally, VP of sales at The Utility Company, during a late-afternoon meeting on December 9. Creally walked me and Amy Katz (my business partner) through The Utility Company's business model -- which extends managed services out to more than 60 IT service provider franchisees across North America.
December 10, 2008
How does a managed services franchise work? I posed that question to Jason Creally, VP of sales at The Utility Company, during a late-afternoon meeting on December 9. Creally walked me and Amy Katz (my business partner) through The Utility Company’s business model — which extends managed services out to more than 60 IT service provider franchisees across North America.
I realize that there are multiple managed services franchise models. Here’s a look at what The Utility Company offers — and doesn’t offer — to its managed services franchisees.
Let’s start with the basics. The Utility Company typically targets small break-fix VARs — those with five or fewer employees — as potential franchisees. So far, roughly 65 of those VARs have signed up for the franchise program.
It starts with a franchise fee (I believe about $30,000, but you should double-check that figure). For that, you gain a virtual NOC (network operation center), and the right to offer those NOC services to end-customers within your territory (a selected number of ZIP codes).
While The Utility runs the NOC, you continue to offer on-site break-fix services and IT project work. In other words, you don’t actually have to become a managed service provider. You don’t have to choose or master managed services tools. You simply need to resell The Utility Company’s NOC services to end-customers. Generally speaking, I believe you retain about 45% of each managed services sale, with 55% of the engagement money flowing back to The Utility Company.
Creally described a range of marketing, branding and education tools that The Utility Company offers to its franchisees. And he says more than 90 percent of customer help desk calls can be handled by The Utility Company’s own NOC. Issues that can’t be resolved remotely are delegated back to the customer’s VAR.
Not Another Master MSP
When I first heard about The Utility Company, I assumed the organization was a Master MSP that hosted services for subscribing VARs. But I no longer think that’s the case. In the Master MSP model — evangelized by Do IT Smarter and Ingram Micro Seismic (among others) — the VAR winds up embracing and using managed services tools hosted by someone else.
In The Utility Company’s case, the VAR provides localized, on-site services while The Utility Company’s internal staff offers the remote managed services. The tricky part: The VAR still must understand how to sell and evangelize The Utility Company’s NOC services.
Creally promised to keep MSPmentor updated as The Utility Company lined up new franchisees and launched new initiatives. We’ll continue following franchisee opportunities as new models emerge.
And we certainly realize alternative franchise models are emerging. Check out TeamLogicIT for another potential approach.
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