IWG is fighting off major rival WeWork by using a model that is tied to one of the most well-known clowns in the world.
The office provider is using McDonalds’ franchisor model in order to expand its coworking brands Regus, No. 18, and Spaces. Now, the company will have others do the leasing and building under a franchise model in order to expand more rapidly, without dealing with the huge capital.
Mark Dixon, IWG Chief Executive, said that eventually, he hopes two-thirds of the company will run through partnership agreements, included its franchises.
Just this week, the company announced that it is selling 130 of its Japanese locations to TKP Corporation for $419 million under an “exclusive master franchise agreement for the country.”
Although IWG denies that this arrangement has nothing to do with WeWork, it is still taken aback that it is treated as an afterthought in discussions about the future of the office market.
WeWork still has a ways to go before it can truly catch up to IWG, but WeWork’s valuation of $47 billion has left some baffled. IWG, who has been through a recession and remained profitable, has a market capitalization of $3.24 billion.
The idea of franchising within the flexible office industry is not new. In 2004, Regus acquired HQ Global Holdings, a company who grew through franchise deals.
“Franchising within our industry has come and gone, and it’s resurging again,” said Frank Cottle, chairman and CEO of the Alliance Business Centers Group.