Roberto Galoppini has often stated, “open source software is found by users, but it’s not trivial to turn them into customers“. Open source franchising is an idea that Roberto puts forward as an option for vendors to “appropriate returns” on their OSS investments. Matt Asay also posted his thoughts about Roberto’s idea.
Roberto suggests that a vendor and its franchisees (which help the vendor achieve greater scale) could deliver migration & implementation services in a better fashion (price, time, quality, etc.) than an enterprise’s internal IT staff.
I’m playing devil’s advocate here but two things come to mind:
On paper, very little prevents a 3rd party vendor from providing paid support, services, training or documentation for an open source product. I’ve written previously about how pure-play OSS vendors pronounce: “it’s open source, so you can take your business elsewhere if you don’t like how we’re meeting your needs”. In reality, very few open source projects have a plurality of vendors with major participation in the project. As a result, customer choice is often limited, albeit more open than in the case of a traditional software product.
Being able to choose between franchisees could help with customer choice. But there would be a limited number of franchisees per geographic region. More importantly, if you have a beef with the open source software vendor, a.k.a. the franchisor, having access to any number of its franchisees doesn’t really give you increased choice in to voting with your wallet and spending your IT dollars with a competitor.
My bigger question is what happens when a franchisee decides that they don’t want/need to renew their franchise license. Let’s suppose a franchisee decides to offer the same services and maybe even new ones (like technical support) that they were not able to previously as a franchisee. The only difference is that the franchisee is not going have the “Certified by Franchisor” logo anymore. Would this matter much to customers that the franchisee has been able to build relationships with? Would the certification matter with customers who have firsthand experience of the franchisee’s work? The franchisee could take the percentage they were paying the franchisor and split it between a lower price for the customer and higher profits to themselves (i.e. the ex-franchisee). Now, the new regional franchisee(s) would likely go back to the franchisor and ask for some form of concessions in order to compete with the lower priced vendor who was the previous franchisee for that region, who also owns many customer relationships. This could impact the franchisor’s bottom line.
The lack of competition within most open source projects is central to the controlling vendor’s ability to extract the optimal level of revenue possible from customers. Introducing potential (future) competition into an open source project needs to be balanced against the potential revenue and product penetration achieved through franchising.
Could today’s franchisee become tomorrow’s competitor?