Managed 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.
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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Joe/Amy – Sorry I missed you yesterday. As you witnessed, Ottawa is Snow Central as well as a hub for managed services. In terms of your overview on The Utility Company, I would add the following:
1 – Managed services franchising is an alternative model to the various “Do-it-Yourself” approaches which require an enormous amount of time and money to do properly – the tools are actually a small element of the cost.
2 – Our model provides our partners an MSPAlliance accredited NOC, including the helpdesk personnel resulting in a 95%+ remote remediation rate – the less onsite, the more profit and scalability.
3 – Sales and marketing, which remains the #1 challenge in the industry, is another key differentiator. Our marketing campaigns range from vertical markets to our monthly The Utility View newsletter that educates 10’s of thousands of SMBs on the benefits of remote technology services and utility computing. Our 1-866-My-Utility Per Minute live helpdesk provides our partners with a great new customer acquisition tool to introduce remote technology support first then managed services later.
4 – Partnering is another key strategy for any business targeting the SMB market. Our Powered By Utility program provides our franchises and master resellers with a complete toolkit to partner locally with vertical channels (like telecom and office equipment) to offer our menu of services to their customers.
One final note – we recently added a master reseller option, which provides the same “business system” as our franchise model to market, sell and deliver remote managed IT services and utility computing (software-as-a-service, virtualization) to the SMB market. The difference is master resellers can co-brand and have the ability to invoice the customer directly…thx
mark: greetings from Boston. Our road trip continues here today. Thanks for the points of clarification above. Keep us posted as new franchisees emerge.
is there a map of existing franchise locations and available zip codes? Also how many scquare miles does each franchise have under Its charter?
Travis: Shoot me an email and I will send you an up to date listing. We work with each partner to build a custom territory that works for them – it is based on # of SMB’s in each zip. Thanks.
jcreally@theutilitycompany.com