What’s the fastest way to become a managed service provider? Many solutions providers are exploring the Master MSP business model, where they leverage hosted services from third-party technology providers.
But a growing number of companies also are exploring the franchise approach, which typically melds on-site services with hosted managed services.
A case in point: TeamLogic IT, a nationwide network of businesses that specialize in outsourced IT support services, doubled its size in 2007 and continues to grow rapidly this year, according to a prepared statement from company president Chuck Lennon (pictured).
I met Lennon during CompTIA’s Managed Services Summit in early 2007. He and several other attendees were evangelizing the franchise model for managed services. At the time, Lennon conceded that he had made a key mistake early on in the managed services market.
Initially, he tried to build an MSP platform. Essentially, he was reinventing the wheel. Later, an engineer convinced him to buy a platform instead. TeamLogic IT’s current platform, branded as SystemWatch IT, is built on a third-party MSP offering.
Ever since moving into managed services, Lennon’s company has been growing rapidly. In fact, TeamLogic IT recently made the Fast 55 ranking compiled by Franchise Times magazine. Here’s a map of current and forthcoming TeamLogic locations.
Of course, there’s a lengthy list of items to consider before you sign up to be a franchise in any industry. Here are 10 questions to ask as you mull potential franchise opportunities.
Posted In: Finance | Platforms | Sales
Tags: Chuck Lennon | Franchise | Managed Service Provider | Managed Services | MSP | TeamLogic
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How much does it typically cost to be an IT franchise? And how much control of my company do I give up vs. what are the benefits?
Joe,
Good to see you recognizing some alternative paths to managed services. Having started and ran N-able for 6 years before I launched The Utility Company, in my opinion these new alternatives like franchising, master MSP or even SaaS distribution represent the market maturing and providing the channel more options.
What I would recommend to any entrepreneur that is in or getting into the MSP space is to ask yourself “How do I build an MSP business that I can one day sell?” Next, is partering with someone that actually markets, sells and services the end SMB customer - that defines expertise. Believe me, it is much more difficult to build a scalable, cost-effective new customer acquisition strategy then it is to put the tools together in the back-office. This remains the greatest challenge for the MSP industry as a whole…
Joe - First off, thanks for running the article on Managed Services and Franchising and informing your readership about the opportunities that franchise companies can provide to the right candidates who are interested in getting into the business but unsure of doing it alone.
Manny, to address your question on costs, in the case of TeamLogic IT, there is an initial Franchise Fee of $25K that covers your training costs and many of the tools and materials you need to get your busienss established. Then there are a variety of other costs but those depend on your current business. As far as control, you really do not give up any control - this is your business and you run it on a day-to-day basis. The role of the Franchisor, in our case, is to provide you with operating systems, marketing tools, programs and materials, sales training and tools, and the support to help you implement everything that we give you. But it is your business and you control all the hiring, managing and day-to-day decision-making.
And Mark, I completely agree with your comments about building a marketing and sales strategy. In my opinion, the technology is just one component of deploying an effective Managed Services effort. Far more complex, time-consuming and costly is developing the systems and tools to build awareness of your offering and actually aquiring and retaining customers. And I feel this is where franchise organizations offer the most benefit in helping entrepreneurs be successful in Managed Services.
Joe, thanks for providing this forum for discussion. Hope our paths cross again soon.
Best wishes,
Chuck Lennon
President
TeamLogic IT
clennon@teamlogicIT.com
I think that most of us (IT franchises) have moved to managed services models now. I was just at the SMBNation conference last week, and had the opportunity to speak with two franchisees from Expetec as well as the CEO of CMIT, and all of us are doing something called “managed services” (and interestingly all three of us have worked with Erick Simpson at some point too - Erick being the author of “The Guide to a Successful Managed Services Practice”.
From Computer Troubleshooters’ perspective we see managed services as the foundation for any successful small business IT consultancy, so it’s no surprise that most of us IT franchises have moved to adopt the model. We created our B.E.S.T. program in 2006 after almost a year of R&D, not realizing until late in the process that others were using programs along the same lines or that the term “managed services” exists.
I think that although a successful “managed services” program is a key reason why people buy into a franchise these days, an equally compelling reason should be “What’s next?”. Five years ago the SMB IT space was primarily break/fix-oriented. Fifteen years ago it was primarily hardware/software sales-oriented. As managed services becomes more of a commodity solution, the key question is how do firms distinguish themselves from the competition, and then move to the next level? Obviously high-quality service, marketing solutions, nad vendor partnerships play into that, and those are also natural fits for the franchising space. But I think the greatest success will come to the ones who anticipate the next big “something” and begin planning for it today.
Regards,
Chip Reaves
CEO, Computer Troubleshooters
http://www.comptroub.com
chip@comptroub.com
Mark, I met Satish, your Atlanta franchise owner last week and got to see your offerings. I was really impressed. Satish and I have clients in common since I finance HW, SW and network appliances. In fact, Satish told me he was going to get in contact with you about a couple of things we discussed in our mtg.
He’s a great guy and I think he’s going to be very successful. I also really like your utility program and that you don’t ignore the SoHo market.
Stu
http://southernlendingsolutions.blogspot.com