Could McDonald’s franchise model help IWG beat WeWork?

Regus and Spaces' parent company IWG is planning to ramp up expansion through a franchise agreements
April 16, 2019 05:08PM

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IWG, the world’s largest flexible-office provider, is now turning to McDonald’s for inspiration on how to ward off competition from WeWork.

The Swiss firm, which has about 555,000 workstations globally, is planning to roll out the franchise model pioneered by McDonald’s back in the 1950s in a bid to accelerate its growth, according to The Wall Street Journal. Through its brands Regus and Spaces, the company builds out spaces in commercial office buildings, and subleases the spaces to companies on flexible terms.

Under the new structure, the company plans to outsource this process to franchisees, a move it hopes will widen the gap between itself and WeWork, which has 466,000 workstations globally, and is rapidly closing the margin. During a March earnings call, IWG Chief Executive Mark Dixon said the company wants more than 60 percent of IWG’s locations to be set up as partnership agreements, which includes franchises.

This week, the company reportedly sold all of its 130 spaces in Japan to meeting-room company TKP Corp. $419.1 million.

IWG was founded 30 years ago, and is often considered among the first companies to have pioneered the co-working model.

In recent years, WeWork has reshaped the industry with chic spaces and a community-minded marketing campaign. After its most recent fundraising in January, the firm was valued at $47 billion, and rebranded as the We Company. It now has more than 400 locations.

[WSJ]David Jeans