Here’s How One MSP Is Finding Success Through A Franchise Model
Cinch I.T. CEO Rick Porter contributes his company’s exponential growth to its unique franchise model rather than expanding through M&A.
WORCESTER, MA, December 15, 2023 – “We didn’t start as a franchise,” Porter told CRN. “We started in 2004 as a traditional MSP and grew over the years. We got to the point where we had clients in 34 states across the U.S. and then started to look at more and more ways to provide better, faster service to them.”
Worcester, Mass.-based MSP Cinch IT, which is on the 2023 CRN Pioneer 250 list, looked at a bunch of different models to grow, including opening up satellite offices and M&A, but found that having a franchise model was the best fit.
“We did bring in some consultants and I went to several M&A conferences and franchise conferences, and what I kept coming back to over and over again is on the franchise side is our franchise partners,” he said. “They are owners. They own and operate their own small business. We get to help them grow and guide them along the way. But they have skin in the game. It’s their business and they are so dedicated to their clients, growing and growing the right way. It’s unique, there’s not too many.”
[RELATED STORY: MSP M&A Value Peaks In Q3, More Deals May Come In 2024: Report]
Award-Winning Revenue Growth from Franchising
And the model has worked. In the last two years, the MSP has seen 84 percent revenue growth. Porter said the company will close this year with 54 percent sales growth.
Today, Cinch has franchises in 13 states and customers in 34 states.
Porter spoke to CRN about the growth Cinch has been seeing, what he wants to see more of in the channel and his secret sauce to seeing more growth in 2024. Here’s some of what he had to say.
Cinch has seen 84 percent growth over the last two years. Where do you think you’ll land this year in terms of growth?
We’re definitely double-digit growth again. This year we’ll see about 54 percent growth. What we found within the franchising model is growth becomes exponential. It almost feels like compound interest because when you are growing an individual MSP you might bring on two, three, four new customers in a month, and you think that’s an OK month. But when you have 13 locations, and each of those locations has the exact same month…three to four new clients, we’re adding a massive amount of clients a month to the brand. We have great franchise partners who, believe it or not, are not technical folks. They are usually sales professionals who wanted to open their own business. We put them through, what we call, Cinch University and by the time they graduate we’ve taught them everything there is to know about the MSP business.”
Cinch I.T.’s Secret Sauce
What happens is we handle 80 to 90 percent of all the technical issues for them, the centralized help desk, and the networks operations center. What each one of our franchise partners does is they actually focus on sales in their local markets and on-site support if and when they need it. So what we’ve done is bring in these franchise partners who specialize in sales, then we taught them how to sell in our industry and then we handle 80 to 90 percent of the technical issues so they can just focus on growth. So it really gives them a laser-focused approach on growing their business while we handle the vast majority of the technical issues. I think that’s really what helped them grow so much.
Where did your customers have the most I.T. spend this year?
I would say a mix of security and cloud. Most of our customers at this point have already or are in the process of migrating to the cloud. Then also hot button topics like security, specifically training. We’re working with more and more clients now who have accepted and realized the fact that employee education is so important to protecting their network. We have several programs and we’re starting to see customers adopt it more and more every day.
Where is Cinch in its AI journey?
What we’ve utilized so far is in our network operations center. They’ve instituted different versions from small-scale stuff, starting off on the AI side. And now we’re starting to integrate it more on our helpdesk side and using AI in different integrations to help users with some of the more basic issues that they have so that they get a faster response. Things like AI-driven chatbots that are connected to systems to reset passwords, things like that.
What’s your biggest challenge in the business right now?
If I’m being super honest I would say the challenge is with our vendors. We spend so much time and investment into our partners where we integrate our systems and design processes for not only our support but our monitoring. Everything is based off of our vendors. As we see M&A with our vendors as well, there’s a lot of change and a lot of movement on that side. That’s what keeps me up at night. If one of our major vendors was acquired and now the product changes, or the quality of support changes, it makes a dramatic impact to my business and to a lot of MSP businesses. So we’re making sure we work with great partners that have longevity and stability.
So what do you want more of from your vendors?
We need our vendors to confidently be innovating, that’s a big piece. We work very closely with most of our vendors to the point where I feel like we’re almost involved in their research and development. We’re talking about things we see every day where there could be improvements in their products. So its vendors who are open to that feedback, if it makes sense to all of their customers, to integrate some of those things. One of the things I think MSPs never want to hear is, ‘It’s in development.’ A lot of times when we hear that it means, ‘We’re in development for a few years.’ Vendors who are really on the forefront of innovating is something that we definitely love to hear.
What are your thoughts on M&A in the vendor space?
It’s scary. If there’s anything that keeps me up at night, that’s it. On the flip side, I think there’s some really great collaboration and partnerships through M&A that have worked out really well. But sometimes there can be others where you’re worried about the level of support. We’ve seen that before where their support was fantastic but then after an acquisition, while they’re working through that transition, the support was less than stellar or maybe some of the products may change or the pricing may change. It’s that instability that’s scary for all MSPs.
What is your biggest ask from customers? What do they want from you the most?
It depends on the type of customer we’re talking about. With some of our enterprise-level customers it’s all about leveraging the best possible technology out there. In other words, they don’t want the technology just to work, they actually want the technology to give them the competitive edge. For us it’s understanding the latest and greatest out there. I’ll use Microsoft as an example, it’s staying up to date with all of the new integrations, all of the new features and understanding each one of the components. There’s so many of our customers who maybe used three different software platforms in the past to host a virtual meeting, share their screens, create polls…all of these different things make a real dynamic remote meeting. Now we have opportunity to educate all of our clients on all the features and all the benefits of Microsoft.
For our smaller customers, it’s still the fear of security. It’s still worrying about if they have the right technology in place and even if they do, are their employees educated enough to identify certain things. They’re at the point where they want an IT partner who will truly protect their business.
What do you want to see more of in the channel?
I would love to see individual MSPs collaborating openly and sharing data more and more to make each other better. I think there’s a lot of people who will look at that and be worried about competition. I’ll use Datto as an example when they put out a report that said, ‘Here’s all our collective data across our partners in the industry.’ It could be average KPIs for MSPs across the country. I think with a lot of MSPs, when they got to see and witness that information it was useful. They could improve their own individual businesses or they simply benchmark themselves against other MSPs in the market. I would love for MSPs to come together and openly share information with each other to improve. I think it’s really great to learn from each other.
In terms of tech trends, where are you placing your bets in 2024?
I think you hit on it with one of your earlier questions and that’s AI. In our company we are investing a lot of time and money into integrating different AI features and platforms into our systems, for a variety of things. We have AI integrated on our marketing side and we have AI integrated on our helpdesk side. The more and more we integrate it without losing that personal touch, the more efficient we get to become and the faster we get to help our clients. That’s really where we’re investing a lot of time and attention this year and into 2024.
You said you’ll end this year with more than 50 percent growth. How do you keep that momentum in 2024? What’s your secret sauce?
Our franchise model, we have some phenomenal salespeople out in the market and it’s one of the things that fuels the growth. The second thing I’ll say is there is such a thing, in my opinion, of growing too fast and you want to make sure you continue the same level of support. For us, where our headquarters are in Massachusetts, we’re surrounded by some phenomenal universities that have a really great talent pool of college students. We actually have three internship programs with local colleges and as they’re nearing graduation we’ve been able to integrate them into our company. We’ve been able to educate them, witness how well they do and we get the opportunity to offer jobs to the best in each one of those classes. Our strategy with internships is a massive improvement to our recruiting here at Cinch.
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About Cinch I.T.
Since 2004, Cinch I.T. has provided customer-focused I.T. support for businesses of all sizes. Cinch I.T. is known for its fast and friendly service as the country’s fastest-growing I.T. franchise. Also, Cinch’s franchising service consistently ranks as the best franchise to own in business publications. The company has been voted the best veterans franchise in the Worcester Business Journal, Inc. 5000, and the Channel Co. CRN. To learn more, visit cinchit.com, or for more information about how to buy an I.T. franchise, visit cinchfranchise.com.
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