FDD Talk: TeamLogic IT Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the TeamLogic IT franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a TeamLogic IT franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a TeamLogic IT franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned TeamLogic IT outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of TeamLogic IT’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average hourly services revenue; managed services revenue; product resale; project, consulting, and other sales; total sales; gross margin; tech payroll and related; selling expenses; general and administrative expenses; total selling, general, and administrative expenses; and net owner’s compensation for the 40 locations operated by TeamLogic IT franchise owners with single locations open 2 or more years as of December 31, 2018

• 2018 average hourly services revenue; managed services revenue; product resale; project, consulting, and other sales; total sales; gross margin; tech payroll and related; selling expenses; general and administrative expenses; total selling, general, and administrative expenses; and net owner’s compensation for the 41 locations operated by 13 TeamLogic IT franchise owners with multiple locations open 2 or more years as of December 31, 2018

• 2018 average hourly services revenue; managed services revenue; product resale; project, consulting, and other sales; total sales; gross margin; tech payroll and related; selling expenses; general and administrative expenses; total selling, general, and administrative expenses; and net owner’s compensation for the 81 locations operated by 53 TeamLogic IT franchise owners with locations open 2 or more years as of December 31, 2018

Section I – Background Information

17 Things You Need to Know About the TeamLogic IT Franchise

Achieves Record-Breaking Year in 2018

1.  In early February 2019, TeamLogic IT said that while the company had experienced explosive growth for the last three years, 2018 was by far the best one yet. The size of the franchise network grew 25% and now encompasses more than 160 independently-owned and operated locations across North America. Additionally, same-location revenues grew 30%, and the company ended the year with a 74% increase in EBT.

2.  Dan Shapero, president of TeamLogic IT, said, “Our network growth is due to a number of factors including cybersecurity, cloud and business continuity, which are very much on the forefront of business owners’ minds. We’ve ramped up our security offerings because of the rise in cyberthreats to companies of all sizes and because most business owners need our assistance in building an IT infrastructure to meet their needs.”

Named Fastest-Growing MSP

3.  In early May 2019, nearly 1,800 leading IT professionals, business owners, channel partners, and industry leaders gathered at Caesars Palace in Las Vegas for the Kaseya Connect IT event, where TeamLogic IT was named the fastest-growing Managed Service Provider (MSP). The award was given to the MSP that demonstrated the fastest growth on a year-over-year basis from 2017 to 2018.

4.  Dan Shapero, president of TeamLogic IT, said, “It was a distinction to be a nominee for MSP of the Year, and we are honored to receive the Fastest Growing MSP award. Our network of franchisees serves the IT needs of the small- to medium-sized business. Overall IT spending is trending toward the SMB market, and together with Kaseya we are capitalizing on this opportunity.”

5.  Kaseya is the leading provider of complete IT infrastructure management solutions for managed service providers and IT organizations worldwide. Connect IT is an annual event where IT professionals learn, grow, collaborate, and obtain industry training and certifications.

6.  Fred Voccola, CEO of Kaseya, added, “TeamLogic IT outpaces the industry. Their franchise model and national footprint puts them on the fast track for growth.”

7.  Shapero continued, “In addition to our company receiving the Fastest Growing MSP award, we are very proud of our vice president of technology alliances, Mike Celayeta, who was nominated for the MSP Techie of the Year award which acknowledges the MSP engineer or technician who demonstrates extreme technical aptitude while going above and beyond for internal and external customers.”

Hosts MSP Industry Thought-Leadership Event

8.  At the end of March 2019, TeamLogic IT hosted its first symposium for technology industry executives to discuss trends and the future of the industry. This first-ever event, named TechConnect, was held in Mission Viejo, California at the headquarters of TeamLogic IT on Thursday, March 28.

9.  TechConnect was an invitation-only event that brought together industry thought-leaders, including leading MSP operators from the TeamLogic IT network, for a full day to review and discuss trends and strategies in the industry.

10.  TeamLogic IT is a rapidly growing franchise network with nearly 200 MSP offices across the country. A key focus of the discussion was around opportunities for maximizing growth and profits for the nationwide network of MSPs.

11.  Dan Shapero, president of TeamLogic IT, said, “It was such an honor to participate with a distinguished group of leaders in our industry. I am looking forward to leveraging the insights that were delivered at TechConnect to help guide our network of franchisees and shape the future of our company, and the way small businesses consume IT services.”

12.  The event kicked off with a welcome reception and dinner on Wednesday, March 27. The full-day meeting on Thursday, March 28 featured discussions led by Dan Shapero, president of TeamLogic IT. Four leading TeamLogic IT MSP franchisees from around the U.S. and executive staff from TeamLogic IT participated in the discussions.

13.  Art Gross, president and CEO of Secure Now, commented, “It was exciting to participate at TeamLogic IT’s TechConnect event and share with some of our industry’s best thought leaders and successful MSPs the key trends, opportunities, and challenges that are taking our industry to the next level.”

Company History

14.  TeamLogic IT was founded in 2006 by Don Lowe, CEO of Franchise Services Inc. (FSI), which includes brands such as Signal Graphics, Sir Speedy, PIP, Multicopy, and Eastnet Print. Lowe recognized that there was an opportunity to serve business customers by creating a national IT franchise. He used FSI resources to develop the TeamLogic IT brand, investing several million dollars to create a world-class organization capable of supporting hundreds of franchise owners nationwide.

15.  Lowe brought in Chuck Lennon to make his TeamLogic IT dream a reality. Lennon had worked for FSI as an executive for Sir Speedy before leaving to provide leadership for New Horizons Computer Learning Centers, which provides IT training and certification. Franchising of the TeamLogic IT concept began not long after the new brand was founded.

16.  While TeamLogic IT operates independently from FSI’s printing brands, it is able to tap into the experience, infrastructure, and resources of FSI. This has aided in TeamLogic IT’s strong growth and there are now locations around the United States.

Entrepreneur’s Franchise 500

17.  TeamLogic IT ranked No. 192 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of TeamLogic IT franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on TeamLogic IT’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  88
• Outlets at the End of the Year:  111
• Net Change:  +23

2017

• Outlets at the Start of the Year:  111
• Outlets at the End of the Year:  136
• Net Change:  +25

2018

• Outlets at the Start of the Year:  136
• Outlets at the End of the Year:  167
• Net Change:  +31

Company-Owned

2016

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• On December 31, 2018, there were 166 TeamLogic IT Businesses open and in operation in the United States. These are all franchised units. To date and since its inception, there has neither been a company-owned outlet, nor a company-managed outlet.

• To qualify for this financial performance representation (“FPR”), a Business must have been open for a minimum of 24 months on December 31, 2018 and provided the Company with a sufficient financial statement or have been opened by an existing owner prior to October 1, 2018 (“multiple”).

• In 2018, 40 new Businesses opened in the United States; these are not eligible for this FPR except for the 7 locations opened by existing franchisees (“multiple”).

• In 2017, 38 new Businesses opened in the United States; these are not eligible for this FPR except for the 7 eligible locations opened by existing franchisees (“multiple”).

• Of the 102 eligible Businesses that were open in the United States prior to 2016, 53 franchisees representing 81 locations reported sufficient 2018 financial statements to be included in this FPR.

• The 81 Businesses in this FPR represent 79% of the 102 eligible Businesses for this FPR.

• The 13 owners owning multiple Businesses provided a single financial statement (41 total Businesses).

• For purposes of this FPR, the values in these financial statements have been divided by the number of eligible locations of each owner. For example, if an owner has 2 Businesses and reported a combined $100 for Hourly Services sales, this FPR will include 2 Businesses, each with Hourly Services sales of $50. The same calculation was performed for each line item in this FPR.

Part 1 – Historic Results for Owners with Single Locations Open 2 or More Years

• On December 31, 2018, there were 40 franchise owners that owned a single location and that qualified for this FPR. These values are the combined total of the 40 individual 2018 financial statements divided by 40.

• All dollar figures are in thousands.

Number of Businesses:  40

Sales