ISPS
No one doubts the success of franchising when it comes to fries. Now Quik International is testing the Golden Arches model for the fast-growing ISP biz. For a $60K start-up fee, Quik provides infrastructure from its Irvine, California, offices and bandwidth from Sprint, WorldCom, and Qwest - leaving its franchisees responsible for marketing dollars and customer support, including a contractually stipulated storefront office open to walk-ins.
So far, so good: Cofounders Jack Reynolds and Murray Mead say 2-year-old Quik was profitable from the start, saw revenues jump from $800,000 in 1997 to $4.5 million in '98, and now has 75 stores in the US and another 10 abroad. The model works, they argue, because customer service is local, while quality control is centralized. Says Reynolds, "We do McDonald's one better: franchises are free to concentrate on the customer while we cook the burgers." Achmad Chadran, an analyst at Aberdeen Group, sees another plus: "Unlike ISPs that are growing through acquisition, Quik won't have to deal with a lot of redundancy."
"There's a franchising opportunity offshore and in parts of this country where there isn't high saturation," adds Zona Research analyst Jim Balderston - and Quik is his proof. Its first franchise was in Reno, Nevada; another, in Wichita Falls, Texas, is covering operating expenses with a modest 1,500 subscribers; and Quik's Guatemala City franchise claims a solid 25 percent marketshare. But even in highly saturated San Diego County, among some 250 competitors, franchisee Kurt Davey broke even in under a year and held on to 99 percent of his users.
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