A range of Internet consulting franchisors have sprung up promising to make “Internet business experts” out of franchise holders.
However, industry insiders caution that – much like other schemes on the Net – Internet franchises too are a “buyer beware” industry.
One of the better known firms offering such Internet franchise services is ‘WSI Internet Consulting and Education’ based in Toronto. Google the words “Internet consulting franchise” and the name of the 11-year-old firm appears on first page, in several entries.
The WSI site says the organization has more than 1,500 franchises in some 87 countries. For an up-front fee that starts US$49,7000, WSI says it trains and supports franchisees and certifies them as Internet consultants (ICs), who can in turn help small and medium-sized firms with such tasks as creating a Web site and developing and implementing an online business strategy.
The IC assesses a potential client’s e-commerce needs and then contacts one of WSI’s so-called Global Production Centres that provide the client with the necessary Web-business software and hardware.
The IC or franchisee earns money by marking up services provided by the Global Production Centre.
The WSI Web site claims this is an attractive model as the WSI franchise requires very little overheard and no inventory or staffing costs.
Another company, however, claims this franchise model constrains the franchisee. “We found the channel model used by companies such as IBM and Microsoft for partners more appropriate,” said Thomas Harpointer, CEO of Atlanta-based AIS Media Inc.
Harpointer says his company offers similar services to WSI but, unlike franchisors, does not charge royalty fees. He says the upfront fee of US$ 19,999 to US$29,000 can be recovered through a “rebate scheme.”
The AIS Media chief says his company also trains people to become Internet business consultants but offers them greater freedom in selling products and services. “We are more flexible because while we offer proprietary e-commerce software, our partners are free to sell products and services from any vendor.”
One Canadian industry observer says a model that permits the franchisee to sell only the franchisor’s products and services is restrictive. “If the product or service doesn’t turn out to be any good, you end up stuck with it,” noted Tim Richardson, e-commerce professor at Seneca College in Toronto.
Harpointer also noted that most Internet franchise schemes require franchisees to pay the franchisor a “transfer fee” of around US$10,000, should the franchisee decide to quit the business.
In the “partner model” there’s no such requirement, he said.
The AIS Web site says Internet business consultants can mark-up AIS products and services to as much as 70 per cent.
While opportunities offered by firms such as WIS and AIS appear enticing, IT analysts say potential franchisees should be careful.
“Research the firm you want to sign up with carefully,” warns Carmi Levy, analyst at Info-Tech Research Group Inc. in London, Ont.
He said the e-business “has almost no regulations and virtually anyone can hang a shingle.”
“Make sure that you are not locking in your money and that you have an exit strategy if things don’t work out,” Levy said.
Potential business operators to study the e-commerce carefully before taking the plunge, Richardson and Levy said.
“If you don’t know anything about making shoes, why would you go into the shoe business,” said Richardson.