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Businesses tend to overspend on technology, then turn around and don’t even use it enough.

That is the premise around which The Utility Co., a startup in Ottawa, Canada, plans to build its franchise business. Formed last summer, the company has embarked on a recruiting spree that founder and CEO Mark Scott expects will yield more than 60 franchises by the end of this year.

Scott, the former CEO of managed services platform vendor N-able Technologies, said Utility has picked up 10 franchises since the fall and is on a plan to recruit five a month through 2007.

The company’s model aims to take the managed services to another level, he said, by getting its franchises to meet all of their customers’ IT needs through a hosted approach. Customers lease whatever hardware they need, and the franchises handle all business and communications applications for them.

Most managed services providers, Scott said, are using managed services, through which they remotely monitor and manage clients’ IT environments, to ultimately sell more product. But Utility wants to show customers how to best use the technology they already have, he said.

“It’s definitely a new approach to the market,” he said. “We don’t have to innovate anymore from a technology perspective; we have to help people understand what they’re spending.”

To achieve this, the company in February launched its Utility Meter Reading, a Web-based assessment tool designed to help small and midsize businesses make better use of their technology investments.

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Scott said the average SMB (small to midsize business) spends about $360 per user each month on technology but only uses about 15 percent of that investment.

The meter, accessible at the company’s Web site, assesses a business in the categories of spending, operations, communications and management. Results are compiled in a report that analyzes a company’s IT spending versus its effectiveness in meeting business goals.

Scott said Utility has found much success recruiting franchises from the copying/printing services market. Other types of solution providers will follow because Utility is creating an opportunity for them to get into managed services, he said.

In addition to the franchise model, Utility also plans to launch a “franchise affiliate” program through which entrepreneurs can co-brand their business with the Utility brand. That way they retain their existing brand while adding the Utility approach to their offerings, Scott said.