The franchisee

Expetec, a South Dakota-based company that provides information technology services for small and medium-sized businesses, has opened a Milwaukee-area franchise and plans to add over two dozen more in the metro area.
Russell Koerner is the owner/manager of the first Expetec franchise in the Milwaukee area, which he opened in the basement of his Muskego home in early April. In addition to Koerner, the Muskego franchise has three part-time employees: two technicians and an office manager, Koerner’s wife, Karen.
"We don’t have the customer base yet to make the employees full-time," Koerner said. "Hopefully in a few months, that will happen."
Koerner also is looking for space to lease for his business. Eventually, he wants to find a location in the Muskego/New Berlin/Brookfield area.
Expetec, formed in 1992 by Lonnie Helgerson, has about 200 franchises across the United States. Of those, 54 were added in the first five months of this year. The company has an ambitious plan to grow to 5,000 franchise locations in 10 years, Helgerson said.
"It sounds like a lofty number, but it doesn’t take a lot to get a location open," he said.
Start-up costs for a new Expetec franchise range from $62,000 to $83,000, which includes equipment costs and a $25,000 franchise fee.
For franchisees with fewer financial resources, Expetec offers a financing program that allows franchisees to open the business with a $5,000 down payment, if they meet credit requirements. Expetec then loans the franchisee money for the rest of the start-up costs.
About 30 people ask for information each day about starting an Expetec franchise, Helgerson said. Many of them are IT technicians who have had difficulty finding a job since the dot.com bust of the economy in the late 1990s and the increasing number of companies outsourcing IT jobs to India.
"The vast majority of them have been out of work for a year to a year and a half," Helgerson said. "They’re tired of it. They get some entrepreneurial jolt, and they want to do it on their own."
Koerner worked as a computer technician for 15 years with other companies before he decided to become an Expetec franchisee. At his last job, his work schedule had been reduced to three days a week.
"I didn’t want to wait until I got laid off," Koerner said.
Being a part of a growing national chain has several advantages, Koerner said. For example, the company helps him with marketing.
"That’s the one thing I’m probably the worst at," he said. "From a technology standpoint, I’m pretty good. I guess I’m just not the salesperson I would need to be starting a business without anybody."
Expetec also has national accounts, which provide a customer base for new franchisees.
"I’ve been serving a few of the Office Maxes in town," Koerner said.
The company’s franchise owners also share information to help each other out with handling the latest computer glitch or on-line pest. The franchisees post comments on the company’s Web page for each other to review.
"By being part of a national company, you have these other owners that run into issues that might affect you in Milwaukee," Koerner said. "Because there is so much information out there, it’s hard to keep track of it without information from other people. I could spend all day sitting at my computer and learning about the latest and greatest things in the industry, but I have to go out and get revenue."
Small local IT service providers are at a disadvantage without that shared knowledge pool, Koerner said.
"These companies become reactive to problems instead of proactive to problems," he said. "With Expetec, you can ask 100 or so other franchise owners, ‘What’s going on? I’m getting complaints that all of these computers are running slow. What can I do?’ It has really been beneficial to me."
Nationally, the company’s profits are growing. Expetec had $6 million in system-wide sales in 2002, resulting in $1.4 million in corporate revenue. In 2003, corporate revenue was about $3.8 million. System-wide sales information for 2003 is unavailable but was "significantly higher" than in 2002, Helgerson said.
Corporate revenue is expected to reach about $5 million this year, he said.
"We’ve invested some serious money into the company," Helgerson said. "Our franchisees, they’re out there making money. They’re doing well and they’re talking about it."
June 25, 2004, Small Business Times, Milwaukee, WI