Franchisors Building Broad Push Into IT Services

Geeks In Cute Cars Are Targeting Your Clients
Cole believes in the power of the geek, but only if wielded responsibly. He is critical of competitors stuck on a purely break-fix approach to IT services or who aren't attacking the SMB market. But Cole saves his real wrath for the Geek Squad.

1 800 905 GEEK techs drive PT Cruisers, but beyond the cars and the name, the similarities with Best Buy's tech team are slim, he said. "Best Buy, honestly, is switching the paradigm back in the wrong direction. They couldn't work it with guys getting paid $10 an hour to go to you and fix your computer. So they set up their computer repair facility in Louisville, Ky. And now the Geek Squad goes out, tries to sell you a bunch of new stuff, then ships your computer to Louisville. That's no good."

--> For IT service franchisees to really make hay in the SMB space, Cole said he believes they'll have to serve as trusted IT advisors that deal from professional expertise rather than as a vested interest pushing product.

Whoever can do that has an enormous market to court, he said. "The future is in managed service agreements and in the SMB space. SMBs are a $100 billion space," said Cole, founder of the Norfolk, Va., franchisor formerly known as Geeks On Call. "Yet the penetration now is so minimal that there's plenty of room for others. It's not the lack of business but the paradigm shift, which is people actually believing that they can get their computer fixed in a more efficient manner than going and getting a new computer, or taking it to some shop to get fixed."

Market penetration numbers, particularly in the SMB space, have several franchisors licking their chops.

"With households, 5 percent penetration is huge. We're seeing that in a few markets. We get 2 to 3 percent in most of our markets. For SMBs, when we see 2 to 3 percent penetration, we're thrilled," said Brandon Disney, director of operations at Data Doctors, a Tempe, Ariz., company with 78 franchises sold.

RescueCom's Milman, whose company pulled in $10 million in revenue last year, wants more—a lot more. "Five percent market share is not a good goal. RescueCom's goal is to dominate in every area," he said.

The future for such empire-builders is bright, said CMIT Solutions CEO Jeff Connally, whose Austin, Texas, company is emphasizing managed services sales to its 84 franchisees operating 95 territories in 32 states. "We're expecting year-over-year growth of more than 50 percent through the first quarter, and it's managed services that's driving it," Connally said.

Not a believer yet? "One-third of all revenue in this country goes through a franchise business," Milman pointed out.

Next: So Many Models, So Many Markets