Discover the latest franchise-friendly industries
When we think of a franchise, we tend to think of household names that achieved world domination – McDonald’s, Starbucks, Marriott International.
Franchising has traditionally been the territory of restaurants and hotels. However, it is a business model that lends itself well to accelerating growth in a wide range of sectors, providing an opportunity for investors looking to become franchisees, and individuals looking for a turnkey solution to become business owners.
In this article, we take a dive into three global industries with untapped potential to help investors meet their growth goals: flexible workspace, property and wellness.
Flexible workspace growth
The need for flexible, distributed office solutions is on an upward trajectory worldwide. According to the Instant Group’s 2019 Global Flex Market report, global demand for flexible workspace shot up by 19 per cent last year alone.
The experts believe that the upward climb is only set to continue. In “Disruption or Distraction,” global brokerage JLL predicts that no less than 20 million square feet of real estate will become flexible over the next five years, accounting for over 8.5 per cent of total office space in Europe. Both mature and emerging markets paint a similar picture: in the UK, an early adopter of flexible offices, it is thought that 12.5 per cent of the national office market will consist of flexible workspace by 2023; over in Australia, 12.4 per cent of the real estate market is expected to be flexible by 2030, with 50 per cent of all workers predicted to be working remotely ‘most of the time’ by the end of this year.
This offers investors the unique opportunity to diversify away from traditional franchise industries, with a positive cash flow and significant returns on investment.
It’s something we’ve observed at IWG with brands such as Regus and Spaces, which has 3,400 locations across more than 120 countries, and currently offers partners a highly attractive return on investment. The IWG offering includes office space, coworking options, meeting rooms and virtual offices as well as a range of their own services to support clients in areas including sales, marketing and HR.
This emerging franchise sector is becoming increasingly appealing for investors looking for their next big challenge.
As flexible workspaces develop alongside the changing nature of office work, so too does the property market continue to develop.
One of these areas, explains IWG’s Head of Partnership Growth Mark Bhardwaj, is an increase in the strata franchise market in Australia.
For example, Australia Strata Management is a new player, with 40 of its 51 highly successful territories already managed by experienced Strata Management franchisees
Quest Apartments, Australasia’s largest hotel operator, which has similar levels of investment to IWG, also continues to attract large numbers of franchisees in both the major cities across Australia and in the smaller suburbs. “Areas in which we are also seeing significant growth in office space, both traditional and coworking and flexible office offerings,” says Bhardwaj.
In Europe, franchising is becoming a strong, often preferred means of expansion in hotel industry. The consolidation and acquisition of hotel chains has led to a sharp rise in the proportion of franchised properties in the portfolio of the top chains, and as they are now larger than ever, they will need to continue to rely on franchises to achieve their desired growth plans and remain ahead of their competition.
The wellness industry has experienced rapid growth through franchising in recent years.
Europe’s global wellness market is one of the fastest-growing, according to the Global Wellness Institute, valued in at $4.2 trillion. Asia’s fitness industry amounts to $8,742m in 2020, out of which most revenue is generated in China ($5,344m recorded in 2020) while over in Canada, the health and fitness category is a $32 billion industry with an expected 35% growth in franchise listings over the next five years.
In the US, boutique fitness is the fastest growing brick-and-mortar exercise category — between 2013 and 2019 membership at boutique studios grew by a whopping 121%. Orangetheory Fitness, operated out of Boca Raton, Florida has more than half a million members worldwide, and the franchise currently has over 500 locations across the United States as well as several units overseas.
There are ample new opportunities to diversify in this exciting sector, from nutrition, supplements and mental wellness offerings. One example is Mass Nutrition, Australia’s leading health and supplements brand, which announced its new franchise structure in 2017 to take on further investors and directors allowing the company to expand.
Whether starting up an estate agency, jumping on the wellness bandwagon, or delving into flexible workspaces, franchisees are looking at less traditional industries. Expect to see this trend throughout 2020 - and for the foreseeable future.
To find out about flexible workspace franchising opportunities with IWG, please visit franchise.iwgplc.com