The Utility Co. Gets First MSP Franchise Rolling

Ormac Digital, a six-year-old Web development, hosting and content management provider in Georgetown, Ontario, has become the first to don the branded blue-and-yellow logo colors of The Utility Co. as a franchise of the managed services provider, said Mark Scott, president of The Utility Co., Ottawa. The official ribbon-cutting for Ormac as a Utility Co. franchise took place Oct. 31.

The opening of its first franchise comes just as The Utility Co. nears the official announcement of a technology partnership with network monitoring vendor IPswitch, Lexington, Mass., Scott said.

IPswitch's flagship WhatsUp network monitoring and management product is being added to fortify The Utility Co.'s hosted, software-as-a-service (SaaS) remote IT network management offering. This SaaS offering, called Connected Office, is designed to provide franchisees practically everything needed to offer remote, managed IT services through a usage-based utility computing model, Scott said. Back-office accounting and billing also are taken care of by The Utility Co.

The formation of The Utility Co. was announced back in August, four months after Scott suddenly resigned as CEO of popular MSP platform vendor N-able. From there, getting to where The Utility Co. could begin signing up franchises became a relatively lengthy ordeal, made so in part by the legal measures which had to be put in place to protect the franchises, The Utility Co. and end-user customers of a franchise's services, Scott said.

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"It's almost like going through a public offering," Scott said.

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

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

Becoming a Utility Co. 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 with, for example, the 350-page contract the owner of a Subway Restaurant franchise can be required to sign, Ormac's contract with The Utility Co. was small—only 35 pages, he said. Ormac negotiated a down payment of $10,000 toward the $30,000 franchise fee, with the balance financed by The Utility Co., McIntyre said. He added that he expects the entire fee to be recouped from new customer revenue in about six months.

As part of the franchise agreement, Ormac gets protection from any other Utility Co. franchises opening up shop in the Halton region of Canada—an approximately 900-square-mile area outside Toronto, Scott said. The Utility Co. aims to give all its franchises protection from competing Utility Co. franchises. Protected areas should have about 2,500 SMBs with employee counts of less than 100, and total area populations of about 150,000.

Scott has said from the outset that The Utility Co.'s SaaS model will allow for seamless inclusion of new technologies to Connected Office without causing any headaches for franchises.

The addition of IPswitch's WhatsUp product—a version of which is straight off the shelf—exemplifies this ease, said Pat Loring, director of business development at IPswitch.

The partnership with Scott's group also is a win for IPswitch, which is rapidly bolstering its own efforts in the MSP market, said Gary Shottes, vice president of worldwide sales at IPswitch. "[The Utility Co. has] redefined the market and truly understands what MSPs need to succeed," he said.

One extra thing The Utility Co. suggests franchises need to succeed is a leased Mini Cooper automobile dressed with The Utility Co. logo, Scott said.

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 Cooper, McIntyre said.