The South African franchise industry generated an estimated turnover of R587 billion in 2017 –
a stark increase from 2014’s R465 billion. Research by the Franchise Association of South Africa (FASA) and Statista predicts the country’s GDP will increase by 3.7% by 2050. Franchising accounts for 13.3% of SA’s GDP, with over 35 000 franchise outlets across the country.
“The franchise industry in South Africa has shown itself to be very resilient, particularly given the economic downturn of the last ten years,” says Anna Dawson, former editor at Franchise Direct. “Two in three South African franchisors have been in business for more than a decade and this longevity demonstrates that franchising is a successful and viable business model.”
Why consider IWG as a franchise business opportunity?
There’s no better time to buy a franchise, and what better franchise investment to make than in the serviced office market? Regarded as one of the most exciting growth markets in the world, coworking spaces have been dubbed the next franchise frontier. Here’s why:
- In 2022, 1.87 billion people will make up the global mobile workforce. These remote workers from almost every city in the world will need flexible workspaces.
- By 2030, an estimated 30% of corporate real estate could be flexible workspace, according to global real estate giant JLL.
“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,” says Joanne Bushell, International Workplace Group (IWG) Managing Director for Africa.
“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”.
Read on to find out how and why you can get started investing in an IWG franchise business opportunity.
What is the IWG franchise business opportunity?
The IWG franchising model gives investors and partners the opportunity to buy into the workplace revolution by developing Regus or Spaces locations across South Africa. Franchisees will closely work with IWG to select the best locations to develop.
Franchising with IWG offers franchisees:
- Access to South Africa’s largest provider of flexible workspace
- A proven business model and track record of performance in South Africa
- An existing customer base, spanning large multinationals to small businesses, using our locations every day
- Established back office systems with global client support
- Favourable pricing through the IWG supply chain network
- Central sales support to provide sales leads and new client introductions.
Why should local and international investors consider the IWG franchise opportunity?
The tough economic climate SA is currently facing may make it seem like an unfavourable time to start a business. But, owning a franchise presents a lower risk of failure or loss of investments than if you were to start your own business from scratch.
Franchising gives aspiring entrepreneurs an opportunity to launch their own business under the guidance and support of a successful business enterprise. An added bonus of partnering with a recognised brand is access to its clients and the confidence of joining a proven business system.
The franchise market in South Africa is robust and growing. IWG is one of the many lucrative business opportunities in South Africa for those interested in both local and international franchising. The franchising business opportunity offers investors:
- Training from successful business operators, with access to a franchise support network.
- Being part of a brand where all franchisees share a similar design and layout, the same product, the same service and product quality.
- Operational support from the franchisor in areas such as financing, accounting, employee training and human capital management.
- Easier access to financing than an independent start-up – good franchise support reduces risk for banks and investors.
- Access to financial guidance and support from commercial banks – most are specialised in and familiar with the franchise mechanism.
Return on investment
- Although franchising is not new to South Africa it is still a relatively young franchise market, which allows for growth opportunity with returns above the global average.
- The value of the rand makes investment in South African franchises attractive for international investors, requiring lower capex compared to investing overseas.
- South Africa is among the top ten countries worldwide that is projected to have the greatest average annual GDP growth from 2016 to 2050.
- Government has committed to support small businesses and entrepreneurship, a move which could have a highly positive impact on growth and innovation within franchising.
What is IWG’s franchising model?
A franchise investment in the flexible workspace and coworking sector offers franchisees an opportunity to diversify away from traditional franchise markets, while cashing in on good returns and an attractive return on investment.
The IWG franchise model is a partnership that offers franchisees an investment opportunity to access the network, support and guidance of the leading global workspace provider with an unparalleled network of office, coworking and meeting spaces for companies to use in every city in the world.
The model is suitable for franchisees that have the capability to operate multiple business centres in an area with the traditional revenue-based franchise royalty and marketing fee. The franchisee is expected to manage the front-end of the business with trained staff while IWG offers full back-end support.
How does IWG operate?
IWG’s operating model is based on achieving high occupancy in our centres and attaining maximum efficiency with our support structures, ensuring the best returns from each centre.
IWG will help you drive your location’s occupancy to generate revenue quickly and to reduce the time to mature occupancy. We aim for all our locations to reach maturity within eighteenth months.
Our model is simple, cost effective and efficient:
- Purchase the rights for a cluster of IWG locations
- The cluster will be developed over an agreed period
- Expect locations opened to be typically 800+ square metres either in stand-alone or multi-let buildings
- Over 120 workstations
- Locations in town centres, business parks and roadside settings
What are the benefits of investing in an IWG franchise?
South Africa is leading the serviced office sector in Africa, with the largest and most mature market. The demand for workplace flexibility is becoming increasingly urgent, driven by employees and employers, by customers and by cost-conscious accountants.
“It can provide partners with a highly attractive, double-digit return on investment,” suggests Alan van der Westhuizen, Head of Partnership Growth – South Africa at IWG.
“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.”
In addition, IWG is the industry leader in the global serviced office sector and South Africa’s largest provider of flexible workspace. Our business model is proven and we have a track record of performance in South Africa, along with an established customer base. By investing in an IWG franchise business opportunity, you get:
1. Excellent returns
Franchising with IWG will help you optimise your property to meet market demand – lowering your capex and opex costs and generating double-digit cash returns at maturity.
2. Proven operating model
IWG will help you develop and operate your workspace using the same successful model that drives our 3 400 locations worldwide.
We have a refined business model and a successful growth story that has seen us significantly develop our network in South Africa over the past 23 years whilst consistently delivering strong returns. IWG has a well-established and mature presence in the major cities, with the potential to grow into regional and provincial markets.
3. Established systems
You’ll benefit from established IWG systems for sales, marketing, CRM, invoicing, inventory management, bookings, training and much more. The Infrastructure Support Cost is a P&L item made up of costs incurred by IWG to operate its shared service support centres.
Leveraging the global scale network these costs are significantly reduced for franchisees in comparison to costs required for a standalone business. Hence centres can be operated with a lean team dedicated to customer satisfaction.
4. Support infrastructure
IWG has leading platforms designed to drive costs savings and revenue. These include an online training school, a global CRM system, a billing system and a marketing material generator.
How can you become an IWG franchise investor?
- Get in touch with us on franchise.sa@IWGplc.com.
- We’ll send you more detailed information on the franchise opportunity, a basic application to give us an understanding of who you are, what your experience is, what your investment capability is and what regions or areas you are considering.
- Send us the completed application form so that we can assess the information and schedule a meeting to present a complete franchise solution.
- Details regarding locations and site evaluation as well as development plans and timelines, training and the steps to the opening of your IWG franchise business will be discussed in this meeting.
If you have the drive, resources and commitment to lead the workspace revolution as an IWG franchise partner, get in touch with our Franchise Team.