There’s a familiarity to companies like McDonald’s or Starbucks that drives their success. You know you can walk into any one of their locations, order a meal or coffee, and receive the same product no matter where you are in the world.
That’s one of the greatest assets of the franchise model.
When most of us think of franchises we probably picture restaurants or retail chains. Only a few companies have extended the model into the IT services market. TeamLogic IT ranks among them.
Forget the Box
TeamLogic IT has operated for 12 years and in 2016 opened its 100th franchise location. Now the company boasts about 95 franchisees with 120 or so locations.
When discussing franchises, it helps to look at their comparable office sales (or “comps”). Investopedia defines comps as “the amount of revenue a retail location generated in the most recent accounting period, relative to the amount of revenue it generated in a similar period in the past.”
In 2016, TeamLogic IT’s comparable office sales were up 27% from the previous year. That’s well above the average MSP growth, according to TeamLogic IT President Chuck Lennon.
It’s the company’s unique approach to the sector that Lennon says is responsible for their success. “Our positioning in the marketplace has very little to do with technology and far more to do with business operations,” he tells ChannelE2E.
“We preach to our franchisees that their job is to build relationships with fellow business owners in their community and help those clients figure out how to leverage technology in order for them to run their business better,” he says. “We never want our franchisees to say 'here's our box, do you want to buy our box?'”
The Secret Sauce
The top TeamLogic franchisees generate $1.5 million to $4 million in revenue, according to Lennon, but the size of each franchise varies depending on their maturity and execution. Recently opened locations may still be trying to break even, while the highest earners generate millions of dollars in revenue.
Franchisees pay TeamLogic a royalty of 7 cents on the dollar, excluding product. Locations don’t pay any royalties if they sell computers, servers or other products. All of the locations are individually owned and operated but fly under the TeamLogic IT flag. The parent company provides sales, financial, and employee management capabilities, as well as training, help building contacts, and a successful history growing franchises.
“One of the things we do as a franchisor is support, train, and sometimes handhold for the life of them owning their franchise,” says Denise Denton, TeamLogic IT's AVP of marketing communications. “So we make regular phone calls to see if they need any help, to maybe retrain them in a certain area, or to remind them about a particular marketing resource or tool they forgot about."
That system appears to be working. TeamLogic began 12 years ago but has seen what Lennon calls “explosive growth” in the last three years. “We've always done fine but we've grown tremendously in size. We've gone from about 50 units about four years ago to about 125 units today. So a lot of growth," he says.
TeamLogic IT operates as a subsidiary of Franchise Services Inc (FSI). The company owns five franchise companies, including TeamLogic. The four sister companies are in the printing sector.
From Printing To Solutions Provider
That’s where Lennon got his start, owning a printing franchise in New York City. After selling his franchise he joined FSI’s head office to help other franchisees grow their business.
He later moved to California to take a job as VP of marketing at Sir Speedy (another company under the FSI umbrella), but he learned his way around the tech world after being recruited to New Horizons Computer Learning Centers. “That's really where I got a good understanding of how to package, market and sell technology solutions to small businesses,” he says.
A change in the printing industry brought Lennon back into the FSI fold. As printing shifted from offset to digital, the parent company discovered it needed an IT solution for all its locations. They quickly realized there was no national solutions provider that could meet their needs, and so they decided to start their own.
“(IT) is one of the most fragmented industries," says Lennon. “There's no real national footprint and that's one of our long term goals is to provide that.”
FSI called Lennon to offer him the job of building and growing TeamLogic. His new experience working with technology solutions was an asset when it came to the new position, but he says he was confident in his abilities either way. “At the end of the day, franchising is franchising,” he says.
“I'm not a tech guy. I know enough to be conversational at the cocktail party. But I'm far more focused on the sales, marketing, and operational side,” he says. Luckily, Lennon says he has been able to hire people to provide the technology knowledge the franchisees need.
And the franchisees keep coming back. Lennon says all of the top five earners have purchased additional franchises. For now, he says the goal is to keep growing, combining the resources of a large company with the personal touch of a local entrepreneur.