New Zealand's biggest co-working business with a master franchise is up for sale
Monday, 17 June 2019
The world's leading provider of flexible and co-working office space, International Workplace Group (IWG), is on the hunt for a local buyer to purchase its New Zealand business with master franchise rights.
This follows on from similar launches of sales and franchising programmes in other countries like the United Kingdom and Japan.
It was reported internationally that IWG had shifted its strategy and that much of the business would be up for sale over time.
IWG has 17 office locations covering about 24,000 square metres in New Zealand, almost half the co-working and serviced office space here.
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IWG New Zealand country manager Pierre Ferrandon said it was launching its franchise programme in New Zealand this week and it had been talking to parties interested in the master franchise and its existing co-working business.
IWG was the holding company for about 16 brands globally in the serviced office and co-working industry.
In New Zealand IWG had two brands operating - Bizdojo and Regus - and was launching a third, its Spaces brand, in November at 501 Karangahape Road, in Auckland, next to Tesla's new service centre.
Currently IWG was franchising in 11 countries.
Nine months ago IWG launched a franchise programme in the UK, with 'tremendous success', where five franchise partners had signed on.
The group had wanted to find a master franchise partner there who would then sub-franchise, but that did not happen, so IWG had sold 'cluster franchises' with the purchasers setting up in five locations for a five-year term.
In Japan, IWG sold its existing business and master franchise rights in April for 320 million British pounds (NZ$619m) to TKP, a Tokyo provider of rented conference rooms and banquet halls.
The Financial Times reported that TKP would operate the 130 flexible working centres in Japan using IWG's brands, and that IWG's chief executive Mark Dixon said the group was in discussion with a number of franchise partners around the world. He 'would expect over time pretty much all' of the company to be up for sale. IWG would become more valuable without its assets than with them, Dixon said.
'We want to accelerate our growth faster than we have been doing,' Ferrandon said. The industry globally was growing about 25 per cent a year and very fast in New Zealand.
IWG wanted to establish 100 to 120 locations through franchising in New Zealand from the 17 now which were in Auckland, Christchurch, Dunedin and Wellington. IWG envisaged 50 to 60 of those to be located in Auckland.
In the Netherlands where there were about 8 million people, IWG had established 130 locations in 10 years, one of its most mature markets, so IWG considered 100 in New Zealand with nearly 5 million people was doable.
IWG regarded corporates with offices in the regions in New Zealand as strong candidates for co-working space. They typically rented office space for a few people which was inefficient and expensive, Ferrandon said.
'That's where the opportunity is, these corporates to come and work from a flexible work space or co-working where they can actually get the right space for the amount of staff they have.'
'Also it removes liabilities on balance sheets, fit-out costs, depreciation and helps with the financial efficiency.'
IWG operated in close to 4000 locations with about 5 million square metres of office space around the world and was 10 to 20 times bigger than its closest competitor WeWork. Its customers ranged from freelancers to one-man bands to corporates and about 90 per cent of the Fortunes 500 companies, Ferrandon said.