Financing or Franchising?

Whether it’s due to a desire to leave corporate America or a passion for entrepreneurship, the small business community in America is growing. As a result, the concept of shared office space has taken off within the past two decades, giving budding business owners a chance to collaborate and get off the ground without having to worry about finding their own space.

While the majority of co-working concepts have primarily focused their growth on major cities where the start-up scene is flourishing, the development costs are expensive, causing these companies to require investments from private equity firms in order to keep up with the cost of real estate.

Suburban office space

Denver-based co-working concept Office Evolution has taken a different approach. Rather than targeting major urban areas, the company looks at expanding in nearby suburbs. The reasoning behind this was twofold. The first was that it reduced the build out cost, which was vital for the brand when it began franchising in 2012.

“We turned to the franchise model because it reinforced our mission at Office Evolution, to help small business owners succeed,” said Mark Hemmeter, CEO and founder of Office Evolution. “The co-working industry is growing, and we wanted to give small business owners a chance to get in on the ground floor. By keeping our overhead costs low, we’re encouraging more small business owners to join our system because we’re not requiring them to make as large of a financial investment. Choosing to focus on developing in the suburbs was the best choice for our franchisees and for our brand.”

The second reason was that the suburbs catered more to the brand’s target tenants. Office Evolution looks for small business owners over the age of 40 to rent space because they’re often more loyal and thus, more likely to return than the younger generation. What they found is that this demographic typically lives in the suburbs rather than the inner city, making Office Evolution a more convenient choice than the majority of the other co-working concepts.

“We’re not looking for the next big tech start-up to rent out our space,” said Hemmeter. “We don’t want our clients to outgrow our space, we want them to lease from us long-term. Our average tenants stay with us for two to three years, with some staying as many as 14 years, because we’re located within a short drive of where they live, where their kids go to school and where they need to pick them up after soccer practice. They’re family and community-oriented, so they want to stay close to home rather than have to make the commute in traffic downtown. We make that possible.”

Growth and expansion

By utilizing this model, Office Evolution has become the fifth largest co-working space company in the nation, with a chance of becoming the fourth largest before year’s end at its current growth rate. The brand has awarded 129 locations, 51 of which are currently open. Over the next five years, Office Evolution has plans to open 50 locations per year with international expansion soon to follow - giving even more franchisees the opportunity to get "a piece of the pie" in what is clearly a lucrative industry.

“We’re not only the largest franchisor of co-working space in the country but we’re also the fastest growing,” said Hemmeter. “While other co-working giants are getting financial support from investors, we’re relying on a great management team, working around the clock to help drive the success of thousands of franchisees and small business owners across the country. Because we’re all in this together, we’ll remain a competitive force in the space.”