Comments on: Open Source Franchising (more)

By: Roberto Galoppini

Roberto Galoppini — Sat, 13 Jan 2007 16:54:27 +0000

Savio are you saying that franchising business models are not valuable?
Weather or not we talk about software I would say that franchising it’s a wealthy business: in 2001 only in US the Franchising Business provided 9,797,117 jobs, met a $229.1 billion payroll, and produced $624.6 billion of output.
What I’m stating is that it makes a lot of sense for OS basic services, for all parties.

By: Savio Rodrigues

Savio Rodrigues — Wed, 10 Jan 2007 01:30:13 +0000

Frank,

One question about your “#4 A more radical idea”:

What value is left on the table for the franchisee? The type of work that remains doesn’t appear to be valuable enough (in the eyes of the customer) to drive enough revenue or margins to make a franchise worthwhile. I could be wrong though.

By: Roberto Galoppini

Roberto Galoppini — Tue, 09 Jan 2007 12:05:06 +0000

I’m following your line of thought, and I totally agree from point 1 to 3.

I understand reasons behind the more radical idea you depicted in point 4, I see Google trying to do this, they have no concern about their channel program: they’re much alike an (the) Internet Application Service Provider.
But companies like to store their own data by their systems, at least so far, and it might be really tough to let they change their minds. And internet reliability might be an issue too, at least down here in Italy.

And yes, as you observed this model doesn’t serve the needs of a company like Sun (which wants to sell hardware AND subscription) nor Red Hat.

By: Frank Hecker

Frank Hecker — Tue, 09 Jan 2007 01:03:17 +0000

I looked at the Geeks On Call site — very interesting, and I think a good starting point for considering what a FLOSS franchising business would look like. Basically from a franchisee point of view the Geeks On Call business model appears to require only someone with the necessary franchise fee and some employees with the relevant certifications (Microsoft, etc.); Geeks On Call adds value through assistance with marketing, scheduling and dispatch, employee recruiting, tech support, and so on. Geeks On Call appears to concern themselves mainly with desktop hardware and software and networks (including firewalls, etc.), but apparently doesn’t support actual server-side applications (except perhaps stuff like Exchange).

Here are some scenarios I can think of for a “Geeks On Call”-like franchise operation that goes beyond basic hardware and software support:

1. Geeks On Call itself moves “up the stack” and begins installing and supporting server-side applications. Given there traditional orientation I suspect they’d extend their existing Microsoft partnership and do this based on Microsoft server applications (e.g., Exchange, Sharepoint, etc.).

2. A hardware vendor like Sun goes into the franchising business using FLOSS server-side software, in the manner you suggest.

3. A software vendor like Red Hat does this; Red Hat of course already has both a certification program and a growing stack of server applications software). They partner with a hardware vendor to handle the hardware part of the business.

4. A more radical idea: Why install software locally at the customer’s premises? If you have a strong franchisor with deep experience in FLOSS, why not leverage that experience to host the relevant applications centrally like SalesForce.com, Google, etc? Then the franchisee would only be responsible for initial account setup (including data conversion and perhaps limited customization), customer training, and level 1 support; they wouldn’t have to worry about dealing with the customer’s operational issues (backup, server administration, and so on).

Of course, this model doesn’t really serve the needs of a company like Sun (which wants to sell hardware) or Red Hat (which wants to sell RHEL subscriptions). However if a new company wanted to be just a franchisor (like Geeks On Call) and not be distracted by other lines of business (like selling hardware or software), then this is the model I think might work best. The company wouldn’t even need necessarily to build its own operational infrastructure; it could potentially piggyback on the infrastructure built by others (e.g., Amazon).