Friday, Jan 21 2011
News and Analysis
In 1989 I attended a meeting of Entre franchisees in Kauai. Among people who were there, I later learned, was Randy Johnston of K2 Enterprises fame. I suspect others from that by generation are also active in the mid-market accounting software world. The franchise companies – ComputerLand, MicroAge, Entre, Connecting Point – are a memory.
Indeed the whole specialty store channel slid into VARdom or got killed by computer superstores (which haven’t lasted a whole lot longer.) What struck me after covering MicroAge intensely and Connecting Point somewhat so was when I moved into this arena in 1991 just how similar the relationships of resellers to the software supplier are to the relationships the store operators had with corporate. The big difference in the VAR model has been the resellers keep their own names.. And establishing brand is the overwhelming advantage that a franchise provides to a local operator because these business people can take advantage of a much deeper pool of marketing dollars. In this business, I suspect joint technical support operations would be another benefit. The most important operational issue to solve is how much local operations should pay the franchisor and what services they get in return. (Well, that’s after the franchisor picks up good operations to represent it.) Set fees too high the franchisee struggles to make money. Set them too local and you’ve got a cheap looking operation that benefits nobody. Whatever the negatives, they are very similar to the negatives VARs already face in dealing with a vendor. Of course, Microsoft isn’t going to do the franchising, it’s going to be large VARs. Frankly, I think this channel has most of the disadvantages of franchising already in place. It might as well have the benefits too.
Last modified on Sunday, 16 June 2013