Reference no: EM133415025

Damien Mellick and Hemi Nikora share a small apartment over a commercial shopfront in Albany, New Zealand, only a short walk from the post office. Hemi works part-time as an IT consultant for a local college in Albany. Damien has a good sales position with an international medical software design company that he got after finishing his commerce degree in neighboring Auckland last year, but he is keen to start his own business.

While studying, his entrepreneurship and 3D design double major had him working his computer pretty hard, so it was always in need of repair/upgrades, which he performed himself, becoming a bit of a 'Mr fixit'. He believes that there are many similar unaccredited self-taught yet technically competent people who just need to be coordinated to build a PC repair franchise network to service all areas of Auckland.

Basically, Damien and Hemi plan to outsource the mobile labor component of the business using a franchise model, effectively creating a network of PC repairs on an exclusive area basis with strong marketing and operational support. Damien and Hemi will differentiate their service by offering to diagnose the problem via telephone before sending out the repair, so that the right parts and a good estimate of the time available to solve the problem are supplied to the franchisee accepting the callout. This two-step strategy will allow the repair to focus on fixing the PC effectively with an expert telephone diagnosis providing a correct fault description to the mobile repairer at least 75 percent of the time.

The service offer will thus have two main facets: A telephone assistance service will be operated by the franchisors (Damien and Hemi to begin with) where they will attempt to diagnose and correct software-related problems over the phone in a maximum of 15 minutes for a flat fee. If after 15 minutes the computer problem cannot be resolved remotely, the fee is retained as a callout fee and a local repair is advised of the probable diagnosis and machine specifications to give them the best chance of repairing the PC onsite. A callout is then arranged by a local franchisee network partner who has an agreed service response time, processes and standards befitting their relationship to the franchise.

Questions;

How do you evaluate this model?

What are the key operational risks in this model?