“The estimated turnover generated by franchising in South Africa in 2018, was R721 billion and the number of franchisors has increased by almost 30 percent since 2013. I will let that sink in for a bit,” says Mo Nanabhay, Franchise Director, Africa for IWG plc. Nanabhay spoke about opportunities in the franchise market in South Africa, at the recent Property Broker Round Table held at Spaces Atrium on 5th in Sandton.
IWG plc., parent company of Regus and Spaces in South Africa, recently became the first to enter a proven national serviced office proposition into the South African franchise market. “The flexible workspace market is cleaner, simpler and less volatile than other, traditional franchise opportunities,” says Mo.
The franchise industry in South Africa is robust, with the largest franchise sector being fast-foods, closely followed by retail and education. Support received at a presidential level is also encouraging for the industry. The IWG franchising model gives investors and partners the opportunity to buy into the workplace revolution by developing any of the current Regus or Spaces locations across South Africa, or even open their own suitable location.
The numbers show that the commercial real estate franchise market has huge potential for investment and growth as the “flexible work revolution” gains momentum. In a recent survey, 53% of professionals globally now work remotely for at least half their working week. According to an Adecco Power of Work Study, 82% of 18 to 26-year-olds aspire to be flexible workers.
The industry is estimated to be growing by 24% each year . By 2020, 50% of all workers will be remote most of the time . In 2022, the global mobile workforce will be 1.87 billion people . This is why global real estate giant JLL estimates that up to 30% of corporate real estate could be flexible workspace by 2030.
The way in which businesses, and employees think about working and how they structure their real estate portfolio is changing dramatically. Customers are no longer willing (or able) to invest in capital intensive bricks and mortar or bleed their resources on empty desks.
Mo says: “Three in ten buildings on every street around the world could offer a new franchise opportunity in the coming years. The serviced office market is one of the most exciting growth markets in the world, and the next frontier for franchise operators. We are excited to partner with new franchise operators to bring the many benefits of flexible working to more people and businesses across South Africa”.
Nanabhay adds, “Traditionally, franchises are more resilient during economic downturns and the proven, demonstrably successful IWG operating model is a further safeguard for franchisees and investors. IWG plc. (previously Regus) has been running successful workspaces for almost thirty years, ever since it founded the industry in 1989. It has developed its business model through many economic cycles. Part of IWG, the global operator of leading workspace providers, Regus is present in almost 3,500 locations, 120 countries and 1,100 towns and cities. It now wants to accelerate its global growth with franchise partners worldwide”.
Though a flexible office space franchise model will require more investment outlay than your local chip shop franchise, Nanabhay suggests, “It can provide partners with a highly attractive, double-digit return on investment. It’s an opportunity to diversify away from traditional franchise industries, and benefit from strong cash returns and significant double-digit returns on investment with the backing of a comprehensive infrastructure to support franchisees throughout the lifecycle of their investment.”
The workplace revolution is not coming, it is already here and already disrupting the commercial property industry. This, together with the fact that growth in the franchise industry in South Africa is not slowing down, sees professionals jumping at the opportunities.
Source: Forbes 2017 quoting Emergent Research.
Source: Flexjobs.com, 2017 annual survey.
Source: Strategy Analytics.