Franchisors Building Broad Push Into IT Services

It's that sort of mind share that R.K. Black hopes it can build with the Utility Co. "The plans they have for branding are exciting," said Cynthia Black, COO of the company. "We want them to become a household name."

Those sentiments aren't typical of most would-be MSPs, said Mark Scott, CEO of the Utility Co. Scott, formerly CEO of MSP platform vendor N-able, said he thinks many VARs entering managed services are too locked into building their own infrastructure and brand in a rapidly crowding field.

--> To that end, the Utility Co. doesn't necessarily target the systems integrators many MSP vendors see as their natural constituency to sell managed services. Instead, Scott said, he wants franchisees like R.K. Black, which had $14 million in revenue last year and has a sales-first philosophy, regardless of their IT backgrounds. "The DIY-Home Depot approach resonates so well with VARs and tech people because that's their comfort zone. Frankly, when they get some tools, they think they've bought an ATM machine that they can plug in and cash is going to come out," Scott said.

"If you told me back in 1999 or 2000 what were the typical capabilities of people in the channel to do managed services well, we completely overestimated their capabilities. So today you have to ask, why are people in the IT channel, who've invested so much money in managed services, struggling so much?"

Scott contends that the cure for that pain is not just to resell a third-party network operations center—a service offered by channel-oriented MSPs like Do IT Smarter, ClearPointe Technology and InCompass IT—but to also buy into the existing brand of a franchisor.

Scott hesitates to completely rule out solution providers as a fit for franchising. He points to QuickFix Computer Support of Brunswick, Ga., whose owner, Andre Jones, struggled as a VAR trying to build an MSP profile before opting for a Utility Co. franchise.

"I'm not dismissing the IT channel. We call what we do 'franchising' but it's still a channel approach," Scott said. "Everybody says, 'It's going to take away my independence' and 'I'll have to wear a uniform.' But it's more about sales. In managed services, strong sales is mandatory. If you're talking about that 10-person MSP that's bought some tools, well, they're not salespeople."

David Milman is more blunt. The CEO of Syracuse, N.Y.-based RescueCom said he thinks smaller VARs and MSPs are going to have to find highly specialized niches, join up with a franchisor or disappear. "You're got 65,000 mom-and-pop shops that make $100 to $250,000 a month. But growth is elusive for them. They're getting squeezed by Dell, by Lenovo going direct, HP on one side and the franchises on the other side," Milman said. "Those who are not affiliated with a franchise are going to have to do something to grow, to affiliate themselves with a brand name that will give them some cachet."

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