What if we told you that one of the fastest-growing and most ambitious brands in our industry is neither Regus nor WeWork?
In fact, it’s Office Evolution.
Established in 2003, Office Evolution operates a franchising business model that’s driving impressive expansion across North America.
It’s not the only flexible workspace company operating a franchise – others include coworking brand Serendipity Labs, itself enjoying fast-paced growth – yet Office Evolution has hit upon a remarkably successful formula.
Currently, the company has 21 open franchise business centers with a further 15 expected to open by the end of the year (compared to 6 opened in 2016), which will bring the total up to 36. Plus, Office Evolution owns 7 workspaces itself.
Mark Hemmeter, CEO of Office Evolution, expects that number to keep on rising. He is targeting around 50 new franchise openings next year, equating to approximately 1 per week. After that, Mark’s goal starts hitting new open rates of 400-500 every year.
These are phenomenal statistics. So what’s the secret to their snowballing success?
During an interview with Allwork, Mark, an experienced real estate developer, concedes that “there’s a huge tectonic shift going on” in terms of working styles and awareness of flexible workspace, but that’s only part of the story.
“The reason we’re growing is because our franchisees are almost identical to our clients. They are local, successful businesspeople and they want to own an executive business, something they can be proud of.”
No “back office junk”
The model works by franchisees paying a fee to Office Evolution, which contributes to a centralised support system incorporating call center services, billing and administration, technology and marketing.
“Franchising is a system of support,” Mark explains. “When franchisees join Office Evolution they become part of a huge, growing industry. We have centralised as much as possible at our head office in Colorado to make it easier for them to run their business.
“They essentially become a local business owner supported by Office Evolution, which is a huge differentiator from the standard corporate model. They benefit from recurring income and they don’t have to worry about any back office junk!
“That’s why we’ve been so successful so far.”
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Franchising: a two-way street
With dozens — potentially hundreds — of entrepreneurs owning different business centers, how does Office Evolution uphold brand values and service levels?
“It’s an interesting partnership. We do a lot of teaching, but these are smart local business owners too, and we’ve learned a lot from them. For instance, one helped us adopt a great blogging and social media strategy. Another, who is hospitality-driven, started offering free trial days for interested clients, which worked really well.
“A good franchise is a two-way street.”
As for demand, the majority of their locations are based in suburban locations, which are convenient to clients as well as their franchise owners.
“We have a very specific niche that we go after. Our clients are mainly local, small business owners based primarily in the suburbs. They’re not fancy startups. They are typically service professionals, accountants, consultants, business coaches, and the like.”
Again, this local approach appeals both to clients and to Office Evolution’s franchisees — and it works.
“Our ratio is approximately 10 to 1 in terms of our suburban vs. downtown locations,” said Mark. “We do have a few downtown business centers, but most of the time they act as an amenity for our suburb locations — for instance, they serve clients who need to hold a meeting in the city.
“The rest of the time, the locations are close to home and super easy. They’re accessible and convenient as opposed to hip and urban.”
A “tidal wave” of opportunity
The open rates validate Office Evolution’s impressive pace of expansion, and the company has also just been named No.4 on Entrepreneur’s Top New Franchises List, the first workspace operator to do so. Mark believes this is as much to do with their own success as that of the industry itself: “We’re riding a high tidal wave and we’re in the right place at the right time.”
Now Mark is looking further ahead and laying the foundations for his long-term vision.
“When you have local, invested business owners doing the ‘heavy lifting’, it allows for explosive growth. Right now we’re looking for more great franchisees, and at some point we will look for a great partner in the business.”
By geographical coverage, Office Evolution is one of the fastest growing brands in flexible workspace, but they’re not necessarily the largest by square footage. For that, a step-change is required.
“We want to challenge the big players, like the ‘WeWorks’, so we want to partner up with someone to really accelerate growth,” added Mark. “Because I believe that if you want to go fast, you go alone. But if you want to go a long way, go together.”