Former N-able CEO Heads MSP Enabler Franchise


Mark Scott, who abruptly resigned as president and CEO of Ottawa-based N-able in April, said for a franchise fee of about $30,000, The Utility Company will provide practically everything needed to offer managed IT services and usage-based utility computing for SMBs.

"Managed services is such a complex business that having a franchise system and being able to have the NOC, all the business processes, and the marketing and sales messages nailed down makes the math work in terms of revenue and profitability," Scott said.

The first phase of the franchise offering arrives in early September and will develop over the next year as The Utility Company adds communications services and other management tools to its Connected Office (CO) platform—the technology at the heart of all franchise services, Scott said.

From the get-go, franchises are outfitted with sales and marketing programs; back-office support, which includes billing, collections and human resources operations; and customer portals that connect to remote help-desk and remediation services, he said. A leased Cooper Mini automobile—dressed with The Utility Company brand—is provided as part of the franchise package, he said.

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Like the Mini, franchises will have to bear The Utility Company brand and will not be able to private-label their offering, Scott said. However, established MSPs can become franchises and use The Utility Company brand to only represent, for example, their smaller clients while maintaining their traditional brand for their larger, more lucrative customers, said Scott.

Scott did not make available any upstart franchise for CRN to speak with. The project has been kept closely under wraps, he said.

Those that do become The Utility Company franchises will likely not have an existing solution provider business, said Bill Crowsey, CEO of O-Tec, an MSP in Dallas. "When you build value into your company, you want to build it under your own name," he said. Growing by adding a franchise component could create future obstacles that complicate or prevent selling a mature company, or merging with a second company for combined strength, he said.

The Utility Company will partner with hosted application vendors to grow the number of hosted applications, such as Microsoft Exchange, that franchises can resell. Remote, usage-based server and storage capacity will also be available for resale through franchises, said Scott. Based on a fixed price list, basic network monitoring will cost end-user customers about $300 per month. More proactive MSP services will be priced at a per-user, per-month rate, with full-blown utility computing and network management costing $175 per user, per month, according to Scott. Franchise owners are paid by The Utility Company after it deducts its monthly network and support costs, royalty fee, and back-office expenses, Scott said.

For example, $10,000 of gross monthly franchise income could typically net a franchise owner 47 percent of that income, he said. Franchises carry their own insurance on the Mini, he said. The goal is to add 100 franchises over the next 16 months, and become "a juggernaut in the SMB space for IT services," Scott said.

An IT services franchise is not a new idea. Fast-teks, Tampa, Fla., has been offering IT services franchises for about three years, said Cari Diaz, director of franchise support. Fast-teks franchises are meant to target businesses of between 10 and 20 employees, but several of the 50 or so nationwide franchises service much larger customers than that, Diaz said.

For a base price of about $19,500, Fast-teks franchises get territories based on population counts of about 50,000—territories that do not overlap with other Fast-teks franchises, said Diaz. Marketing support and lead generation are provided, as is consulting services.

Fast-teks does not offer utility computing or hosted application services, said Diaz. Still, Rom van der Zee, area director of a Fast-teks franchise in Evergreen, Colo., already offers remote, managed services and is considering expanding into hosted services. Thirteen months ago van der Zee, a former sales and marketing manager for an Internet service provider, paid a higher franchise fee of about $25,000 for a territory of about 100,000 people, he said.

"We've been profitable every month, and it took us only about three to six weeks to get up and running," he said.

The Utility Company's Scott said his new company could become an IBM for the midmarket as far as IT outsourcing goes. "The SMB market is ready for this type of service," he said.

Former N-able channel chief Janice Siddons, who left N-able in July, has joined Scott at The Utility Company as vice president and general manager and will direct field and back-office operations.