Get All Access for $5/mo

The Future Of Dotcom Franchises In the wake of the shakedown, how are dotcom franchises staying afloat?

By Devlin Smith

Opinions expressed by Entrepreneur contributors are their own.

Last year we were all riding high on the endless promises of the new dotcom culture. Web-only entities were starting up in people's basements, launching record-breaking IPOs and making it possible for their twentysomething creators to retire millionaires and legends.

All industries got on the bandwagon. Companies had to make their Web presence known, by either launching their own e-commerce ventures or making offers on established names like and Yahoo!.

Franchisors also got into the act. In the most recent Franchise 500®, Entrepreneur recognized the growth of Internet businesses by awarding them their own category in the listing.

Now the honeymoon's over. Thousands of dotcom companies have gone under, and countless more that so eagerly made their way onto the Internet are now rethinking their strategies-losing employees and millions of dollars in the process.

But some franchises have managed to learn from the mistakes of others and hope to create stronger organizations that will lead the next wave of Internet companies.

"[The dotcom shakeout] has actually been very, very good for us," says Jack Reynolds, president of Internet service provider Quik Internet. "[Our franchise] is stronger than ever, because the Internet companies that sell below their cost are or have gone out of business. We are now competing on a level playing field with Internet companies that have to show a profit."

How has Quik Internet survived when so many nonfranchised dotcoms didn't? "The shakeout is centered around dotcoms that don't have an earnings-based business model," Reynolds says. "Our pricing and cost structure has been designed from the beginning to make money."

George Kimble, president of local advertising site, also credits a seemingly unconventional business plan with keeping his company afloat. "It's my money so we're spending it frugally to begin with," he says.

Kimble also believes his company's use of the Web has made all the difference. "We're an advertising/marketing vehicle. We're not doing e-commerce or selling merchandise on the Internet," he says. "We're a source of information, and that's where the Internet's strength is." currently operates two Web site franchises in Rochester, New York, and Orlando, Florida, providing consumers with information on the best merchants, events, organizations and activities in their town. The company has also signed on franchisees for Syracuse, New York; San Diego, California; and Tampa Bay, Florida.

That's not to say that Kimble and his franchisees haven't been directly affected by the recent dotcom troubles-the effect is clear when they're trying to sell potential customers on the virtues of their company. "We have to take more time with advertisers to explain the strengths of the Internet and remind them that Internet usage keeps growing," Kimble says. "People spend more time on the Internet than they do with newspapers and magazines. That's an incredible statistic."

It's not just customers who need convincing; many prospective franchisees also have cold feet about buying a dotcom-related franchise. "People are more skeptical," Reynolds says. "There have been many get-rich-quick scams on the Internet in recent years, [so] people spend more time investigating us to make sure we're the real article."

Kimble says his existing franchisees remain confident in the concept. "Since we're new, we have a lot of time to devote to each franchisee," he explains. "And with the Internet you can change things quickly and experiment-keep things that work, change those that don't."

One thing that seems to be working for both companies is franchising. "The franchise model inherently provides better service to the customer," Reynolds says.

Still not sure about the viability of Internet franchises? Is this really a good time to buy a dotcom franchise?

"Yes, if it's done right," Kimble says. "I would not buy or start a dotcom company that actually tries to sell merchandise on the Net. But if the franchise utilizes the proven strength on the Internet, then now is the time."

Reynolds suggests paying close attention to a company's financial structure. "You need to be sure the [franchise's] cost-revenue relationship is conducive to earnings," he says.

And what about the future of the dotcom franchise category? Will it be around in future Franchise 500® listings? "It's not going to grow as a category until more people have broadband or fast access," Kimble says. "That will take a few more years, but the established dotcom franchises that have a solid, workable idea will grow even during the slow times."

Contact Source

Quik Internet, (949) 548-2171,

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Starting a Business

I Left the Corporate World to Start a Chicken Coop Business — Here Are 3 Valuable Lessons I Learned Along the Way

Board meetings were traded for barnyards as a thriving new venture hatched.

Business News

'Passing By Wide Margins': Elon Musk Celebrates His 'Guaranteed Win' of the Highest Pay Package in U.S. Corporate History

Musk's Tesla pay package is almost 140 times higher than the annual pay of other high-performing CEOs.

Business News

Joey Chestnut Is Going From Nathan's to Netflix for a Competition 15 Years in the Making

Chestnut was banned from this year's Nathan's Hot Dog Eating Contest due to a "rival" contract. Now, he'll compete in a Netflix special instead.


Are Your Business's Local Listings Accurate and Up-to-Date? Here Are the Consequences You Could Face If Not.

Why accurate local listings are crucial for business success — and how to avoid the pitfalls of outdated information.

Money & Finance

Day Traders Often Ignore This One Topic At Their Peril

Boring things — like taxes — can sometimes be highly profitable.

Growing a Business

He Immigrated to the U.S. and Got a Job at McDonald's — Then His Aversion to Being 'Too Comfortable' Led to a Fast-Growing Company That's Hard to Miss

Voyo Popovic launched his moving and storage company in 2018 — and he's been innovating in the industry ever since.