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Doug Nebeker ("Doug")
I have a B2B software business with 3 others, they are non-software people who have their own businesses as well. We've been approached by a customer, again a non-software person, who wants to buy a franchise of the software.
His idea is that he employees a number of sales people, gives them a car, sticks our logo all over the car and then sends them off around his geographical locality to sell the software to SMEs. In the franchise model, he'd pay us a chunk of money to get trained up and to have the rights to do this. His aim would be to support and manage the new customers himself. In the franchise model, he'd keep about 60% of the software costs.
My co-owners have spoken with franchise consultants who say that this model would work for our company, although none of them have actually been involved in a franchise deal involving software companies. These consultants charge in the region of GBP20K to guide you through the franchise set up, not sure how it could be that complicated.
I've searched on the web and this doesn't seem to be a model that's in use much (at all?). Why not?
In software the options seem to be reselling, and white labeling.
With reselling, this guy would sell your software, and you sell it to him for a discount, and then he sells for whatever price he wants. Support could come to you or him depending on how you decide to structure it.
With white labeling you make a special build of the software with his company name and then he sells and supports them.
A software franchise would be like if your company was called Code-And-Crash, everyone was buying your products because of the cool name, and you came up with a specific way of turning 19 year olds into Java coding machines, while wearing paper hats and paying them $9.45 per hour (no benefits). The code would probably be universally recognized as terrible tasting and really, really bad for you, probably causing cancer (literally), but you would have such awesome marketing that everyone would buy it anyway.
If you wanted to sign up a bunch of people to use your name and techniques to open Code-And-Crash offices and sell software produced by your system all around the country, you'd be franchising (more or less).
You are talking about resellers, which is totally valid, but not really the same thing.
I agree with both the above. You aren't franchising your business. You are just having someone else resell your software. This is not a franchise and you would be wasting time and money talking to franchising people.
With resellers you have to be very careful to specify:
-discounts (sliding scale?)
-who does the support
-who gets paid for upgrades
Be wary of giving them any sort of exclusivity unless they pay a big chunk of cash up front for it.
If they put their own branding on the software, it is called "white label" software. White labelling might be a good idea in some cases (e.g. they already have a big audience), but you don't build your own brand.
If they don't already have an audience in your market, then there are only doing stuff you could just as easily do yourself.
>sticks our logo all over the car
I would definitely not want someone from another company driving around cars with my logo on, unless it made clear they were an "authorized reseller" rather than an employee.
Thursday, October 08, 2015
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