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Concerto Tunes Up IT Franchising Plan

Having spent some 15 years in the information technology industry, Raymond Hivoral knew firsthand the lack of quality service provided by armies of independent computer technicians.

Faced with yet another case of inadequate service to the small sales firm he worked for, Hivoral figured there had to be a better way to obtain quality information technology services.

His solution was a franchised Raymond IT services business that would ensure a standardized level of quality service to customers, along with the kind of support and training computer technicians need in the field.

Concerto Networks officially incorporated in 2002; the business really got rolling this year and now has 21 franchisees, including six in San Diego.

"We're simplifying technology for the small to medium-sized business," Hivoral said.

Steve Smith, a franchisee who began operating his business in August, said the concept has worked well for him.

Since he purchased his franchise, Smith has worked for about 25 customers, primarily small businesses, ranging from two to 30 employees.

"I'm not profitable yet, but it's going pretty well," he said. "Concerto Networks has allowed me to concentrate on revenuegenerating issues and the customer service part of the business, while they take care of all the paperwork."

As part of the arrangement, franchisees receive backup support services, including handling the billing and collection for services; training; advertising and promotion; and partnerships with other top branded services.

Smith said the latter element was especially positive.

"They have a good partnership program which allows me to provide additional technology services from the likes of Hewlett-Packard, Spring, Office Depot and Symantec to my customers," he said. "And for anything that I sell, I earn residuals."

While franchisees collect a percentage on the sale of technology services, the franchise agreement requires paying Concerto Networks 14 percent of their billable hours.

The franchise buy-in fee is $25,000.

Like most of the early Concerto franchisees, Smith's business is a one-person operation, but he sees it growing to a point in six to eight months to hire another person. He's also been designated an area developer, giving him rights to set up additional franchises in his geographic area.

Hivoral said the firm's growth has been swift. He expects to have 30 franchises by the end of the year. Franchised units are in California, Oregon, Washington, New Jersey, New York, Pennsylvania and Florida. More franchises are planned for New York, New Jersey and Florida, while new ones will be added in Indiana, Virginia and Illinois.

"Last week we signed a letter of intent for a franchise in New Zealand, so that will be our first one internationally," he said.

A similar franchised IT service called Geeks On Call, based in Hampton Roads, Va., has about 205 franchises in 14 states and the District of Columbia.

A major driving force in the rapid growth of such a service is the importance of having a dependable computer network for smaller firms, Hivoral said.

Virtually every small to medium-sized business relies on its computer system, and such systems need regular maintenance that is usually provided by independent contractors.

The big problem with this is not knowing how qualified the providers are, and whether they'll be around when you need them, he said.

Concerto Networks aims to take the guesswork out of the equation by building a national brand that ensures a dependable quality of service each time it's provided, Hivoral said.

A graduate of Bonita High School and San Diego State University, Hivoral, 41, has a bachelor's degree in business administration and marketing, and a degree from ITT Technical Institute in San Diego.

He got the business going with about $1 million in capital, raised with the help of a small group of investors.

John Hawkins, the chief executive officer of Cloud 9 Shuttle and chairman of the San Diego Regional Chamber of Commerce, is on the firm's advisory board.

"It's a smart concept, and the franchise model allows the oldfashioned kind of American entrepreneurial spirit to come out on a larger scale," he said. "I think these guys are focused, smart and directed, and given the right time, they'll do fine."

Hivoral says he's not concerned about a national downturn in IT spending. The fact is, current IT spending in the United States is about $300 billion, and the trend by many larger companies is outsourcing for this service.

Even more important, the fastest-growing types of businesses are small, which won't have internal IT units, but will definitely need the service, he said.