Utility Company Adds First MSP Franchise

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Mark Scott, president of the Ottawa-based Utility Company, said Tuesday that Ormac Digital, a Web development, hosting and content management provider in Georgetown, Ontario, has become the company's first franchisee.

The formation of The Utility Company was announced in August, four months after Scott resigned as CEO of popular MSP platform vendor N-able. The Utility Company's services platform, Connected Office, provides franchisees practically everything needed to offer remote, managed IT services through a usage-based utility computing model, Scott said. The Utility Company also takes care of back-office accounting and billing.

Getting to where The Utility Company could begin signing up franchises became a relatively lengthy ordeal, in part because of the legal measures that had to be put in place to protect the franchises, the Utility Company and end-user customers of a franchise's services, according to Scott. "It's almost like going through a public offering," he said.

For Ormac, becoming a franchise took only about six weeks, said president Mark McIntyre. The hosted IT monitoring and management services delivered by The Utility Company give Ormac new capabilities beyond its traditional Web hosting and development offerings, he said. Ormac's legacy customer base isn't necessarily a fit for the new services, so the effort will be to leverage its newly acquired MSP skills to recruit new customers, he added.

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As an MSP, the target market for Ormac are SMBs staffed by between 20 and 40 employees and which are on the verge of having to hire an IT administrator to handle their growing technology networks, McIntyre said. Part of the reasoning here isn't to approach potential MSP customers with a proposition that could lead to the termination of an IT administrator but instead help customers not have to hire one, he explained.

Becoming a Utility Company franchise was a pretty straightforward process, said McIntyre, who consulted with owners of other types of franchise models in the run up to working with Scott. Compared to, for example, the 350-page contract the owner of a Subway restaurant franchisee can be required to sign, Ormac's contract with The Utility Company was only 35 pages, he said.

Ormac negotiated a downpayment of $10,000 toward the $30,000 franchise fee, with the balance financed by The Utility Company, McIntyre said. The entire fee should be recouped from new customer revenue in about six months, he added.

As part of the franchise agreement, Ormac gets protection from any other Utility Company franchise opening up shop in the Halton region of Canada, an approximate 900-square-mile area outside Toronto, Scott said.

The Utility Company aims to give all its franchises protection from competing Utility Company franchises. Protected areas should have about 2,500 SMBs with employee counts of under 100, and total area populations of about 150,000, Scott said.

Beyond the sales and marketing programs and back-office support franchises receive, the Utility Company encourages franchise owners to lease a Cooper Mini automobile dressed with The Utility Company logo, according to Scott. Ormac will wait until it builds its MSP customer base to a level that requires a more constant degree of field services before leasing a branded Mini, McIntyre said.

Several other franchises in the U.S. are slated to be unveiled in the coming months, Scott said.