Open Source Franchising (more)

Open Source franchising is aimed at delivering to the market IT basic services using OSS, with a fixed-time fixed-price methodology meeting clearly defined performance criteria (SLA).

Open Source franchising for customers is about getting business value with a shorter time of deployment, getting reliable solutions and services through certified franchisees instead of waiting for local resellers, known to spend little time management customers’ problems.
As seen with Geeksoncall, there is space for growing in computer services franchise arena, and no one has explored yet such potential market using commercial open source software.

Appropriating returns is not trivial for ventures making business with open innovation, but Sun could profit from running a partnership franchising program, offering franchisees the following services:

  • training;
  • certifications;
  • global marketing;
  • subscription services;
  • value added services (indemnification, benchmarking and stack assurance, mediation, etc).

Sun besides fee incomes, will be fueling a profitable mechanism for selling its hardware products along with subscription services and value-added services through the franchising channel.

Franchisees, delivering basic services with a standard methodology, can be perceived as more valuable then VAR channels, representing for the vendor a more effective distribution mechanism to medium-to-large buyers.

Becoming a Franchisee require investing time and money to become proficient with Franchisor’s products and procedures, in order to be able to deliver services on time, on budget and respecting SLAs.

Who might be interested in joining the OS franchise program?

The Observatory of European SMEs noticed that:

Small firms have a short-term perspective and expect quick and concrete results.

So existing ventures are unlikely to apply at the very beginning, since small firms can’t afford to offer its personnel intensive training, as employees are needed in day-to-day activities.

New ventures instead could join the franchising program, forming their business strategy without worrying about any earlier decision. Moreover Start-ups might apply knowing that belonging to a franchise can affect positively newness and smallness liabilities, and lower market entry barriers.

Newness. Start-ups lack of relationships with any kind of stakeholder, while the Franchisor, as established firm, has the level of access, legitimacy, track of record and reputation required to aid effectively the franchisee to develop relationships. Otherwise the entrepreneur must somehow absorb any risk a customer should take to do business with her start-up.

Smallness. A small firm can’t employ many people, and often is missing the required skills; a limited market presence and therefore a limited market power put small firms in a weak position in negotiations. The Franchisor’s network of enterprises can be helpful to locate skilled resources, where the fixed price policy defined by the Franchisor makes easier contractualization.

Market Entry barriers.The skills and experience of the Franchisor, along with a strong brand and an international advertising and public relations programs can help start-ups to get into the market.

Last but not least the cost of entry might cost less than ordinary computer service franchising business fares, see Geeksoncall fares to get an idea.

Previous others’ posts and comments on open source franchising:

Matt Asay’s post on his blog (my answer)
Frank Hecker’s comments

Matt Asay’s post on Infoworld
James McGovern’s post
Savio Rodrigues’s post
Sergio Montoro’s post (spanish)