Leveraging Franchising to Sell Technology

Leveraging Franchising to Sell Technology

Most segments of technology are on the rise….unless your technology happens to be something like a payphone booth.  If the market you are in is growing and the business needs distribution, many times a franchise system is one of the quickest and most efficient ways to develop distribution.  With the growth in technology and opportunity for expansion this translates to the franchise opportunity.

From a franchise perspective, the business model seems appealing for a variety of reasons: 

1. If the home-based model could work, the investment range would be extremely attractive.  We generate a significant volume of leads every month primarily through the Internet, the large majority of these leads looking to invest in a franchise have less than $50k in cash.  Although financing opens up the investment range for these candidates, a low investment business always has higher volumes of candidates to present to and ultimately close. 

2. Residual revenues are always at the top of the list being one of the primary drivers for any franchise or business investor and if the model offered here could be structured in a format that did lend itself to a franchisee building that residual revenue model, franchisees would have an opportunity to build an income stream which would in turn tie them more tightly to the franchisor and also make the system more attractive to prospective franchise buyers. 

3. The typical franchisee has changed over the last ten years.  With a transition in the overall job market, the six figure W-2 positions are either gone or in short supply which has pushed higher qualified, well-educated traditionally “white collar” people into business ownership.  This profile candidate generally makes a great fit for franchising if they haven’t owned and operated a business in the past.  They also understand systems, structure and the value of a validated business model.  These candidates tend to be interested in professional services and businesses that might be more “office setting” oriented as opposed to flipping burgers.

4. Technology is hot.  Everyone wants to be involved in a high growth market segment and although the tech-services segment of franchising has grown pretty significantly across a variety of segments for some time, there still are many categories that haven’t been covered yet, Entrepreneur walks through some of these here:  https://www.entrepreneur.com/slideshow/217857

5. With the transition to virtual cloud computing, there has also been a transition to virtual businesses.  Better technology and better systems along with a transition in the perception of home-based businesses have allowed people to build big businesses from home office locations.  The home-based model is attractive from a lifestyle and profit margin standpoint making the potential franchise offering appealing as well.

Big picture, the opportunity is there for more growth through a franchise system and the channel seems to continue to prove to be viable to expand the sales network with vested, dedicated owner operators.  All customer support, tech, delivery and management should come from corporate.  WSI did this well (http://www.wsicorporate.com ) – they sold over 5,000 franchises to develop their distribution network which in their case was selling digital marketing services, web development, etc.  Franchisees paid a fee of $49,500 for the rights to a territory where they sold the services and represented the brand in their market.  WSI corporate from Toronto delivered the services and provided the back end of the delivery. 

The franchise model needs to be put together in a way where there could be additional support beyond just access to the technology and products to be sold in order for this to be attractive as a business model.  Given the appropriate structure and business model, franchising can be an extremely effective way to develop a distribution network for technology sales.