Franchise Deep Dive: Regus' Franchise Costs, Fees, Profit and Data

Regus overview

Regus is a provider of flexible workspaces with a network of offices, coworking and meeting spaces that companies can use around the world. The franchise is part of the International Workplace Group (IWG).

The Regus network of workspaces allows companies to operate anywhere, with no setup costs or capital investment. Through a range of office formats, as well as a growing mobile, virtual office and workplace recovery businesses, Regus enables people and companies to work where they want, when they want and how they want while providing an established business model with multiple revenue sources.

The brand is now providing the opportunity to franchise in the United States and is actively seeking partners with the right skills, drive and finance to join the business.

Locations and growth

How Many Locations Are There?

Regus has over 3,000 locations across 900 cities and more than 120 countries.

In 2021, when hybrid working skyrocketed, Regus opened an abundance of new flexspace locations around the world, with the goal of making it easier than ever for employees to achieve work-life balance in 2022.

Last year, IWG announced plans to add 1,000 more locations under agreement next year, with the majority coming from landlords, building owners, and institutional developers who want to fill empty spaces and generate revenue and operating income.

Business model

What Is the Business Model?

A typical Regus Office occupies approximately 10,000 to 20,000 square feet of commercial office space, but can be smaller or larger, depending on the site you choose and the regional demographics of the area in which your site is located. The office may occupy a single floor, a number of floors, parts of a building or an entire building. All offices are constructed to Regus’ specifications as to size, layout and décor. Franchisees offer a variety of private memberships to individuals and businesses.

Typically, Regus Offices are leased, and are located in metropolitan areas or surrounding suburbs. Offices contain multiple workstations, including private, designated and shared spaces; conference rooms; and boardrooms. They all have access to telecommunications systems, data transmission services, lounges, reception areas and administrative support from trained client support representatives.

The brand operates by four simple steps to success:

• Find the Right Location: The brand can help you select the right location and open your first center.

• Sell Workspace and Services: Global sales and marketing platforms will help achieve high occupancy.

• Upsell: Increase revenue by selling additional products and services (e.g membership).

• Retain and Grow: Leverage Regus systems and tools to keep customers happy and drive growth.

Revenue and profit

How Much Can Regus Owners Make?

Per the 2022 Franchise Disclosure Document (FDD), the information below provides revenues and expense information for the 391 outlets whose rents were in the middle 80% of all rents (between $21.50 and $47.50 per square foot) and that were open continuously from January 1, 2021 through and including December 31, 2021. They were also between 10,000 and 19,989 square feet in size.

Gross Revenues

• Average: $837,706

• % of Rev: 100%

• Median: $819,967

• Number of Units Exceeding Average: 183

• Percentage of Units Exceeding Average: 46.80%

EBITDA

• Average: $191,213

• % of Rev: 22.3%

• Median: $251,371

• % of Rev: 29.4%

• Number of Units Exceeding Average: 195

• Percentage of Units Exceeding Average: 48.39%

How Much Does It Cost to Open a Regus Franchise?

The total investment necessary to begin operation of a single-unit Regus® Office is from $939,500 to $1,917,500. This includes $20,000 that must be paid to the franchisor. Below is a breakdown of costs:

• Initial Franchise Fee: $20,000

• Signage: $16,000–$35,000

• Office Equipment, Supplies and Misc.: $5,000–$8,000

• Hardware and Software: $45,000–$52,500

• Lease Payments—Three Months: $50,000–$215,000

• Real Estate and Improvements: $416,000–$835,000

• Furniture, Fixtures and Equipment: $325,000–$645,000

• Insurance: $2,000–$6,000

• Utility Deposits—Telephone, Internet, Other Technology: $2,000–$3,000

• Business, Licenses and Permits: $500–$3,000

• Professional Fees: $3,000–$10,000

• Grand Opening Advertising: $5,000–$10,000

• Additional Funds/Working Capital: $50,000–$75,000

• TOTAL: $939,500–$1,917,500

The total investment necessary to enter into a Multi-Site Development Agreement with the

development rights of two to five Regus Offices is from $1,118,000 to $5,270,000. This includes between $40,000 for two locations and $100,000 for five locations that must be paid to the franchisor.

What Is the Franchise Fee for Regus?

The franchise fee for a single-unit Regus Office is $20,000. If you sign a Multi-Site Development

Agreement, you pay a Development Fee equal to the sum of the initial franchise fee for the first Regus Office to be developed, plus 50% of the initial franchise fee for each additional Regus Office you agree to develop.

Who Are the Leaders of Regus?

• Wayne Berger—President and Chief Executive Officer, Americas

• Charlie Steele—CFO

• Norm Petersdorf—Executive Vice President, Operations, North America

• Michael F. Berretta—Vice President Network Development

• Kelly Bieterman—Head of Franchise Performance for the Americas

• Scott Weidholz—Director of Franchise Development

• Remo Gross—Manager and Group Finance Director

• Stanna Palazova—Vice President of Partnership Growth, Midwest

• As the Demand for Flexible Workspaces Has Grown 30%, IWG (Parent of Regus, Spaces, and other Flexible Workspace Brands) Targets 1,000 Additional Locations

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