Flexible workspace is the new franchise frontier
The demand for flexible workspace across the world has seen record growth in the last few years, with flexible working spaces set to grow up to 30 per cent annually for the next five years, according to global real estate giant Jones Lang Lasalle (JLL). In Australia, it is no different. In the past 10 years, 87 per cent of Australian businesses have introduced a flexible workspace policy and 84 per cent of Aussie workers state they would now turn down a job that didn’t offer flexible working, according to IWG’s 2019 Global Workplace Survey. These impressive statistics are why franchising is becoming the natural next chapter of the flexible workspace story and why it will be one of the key accelerators that will aid this growth.
Traditionally, franchises have been considered the preserve of the consumer lifestyle industries – retailers, restaurants and hotel chains are common options for property decision-makers looking to invest, because of the brand recognition that a lot of businesses in these sectors hold. But with the soaring popularity and growing necessity of flexible working in major hubs across the world and the global mobile workforce set to hit 1.87 billion people by 2022, would-be franchisees would do well to consider the other options available to them, in order to benefit from this huge growth potential.
Flexible workspaces are now becoming woven into the fabric of our societies, offering flexibility to businesses and their staff whenever and crucially, wherever they need it. A new trend is emerging that is seeing an increasing number of co-working spaces housed within vibrant retail shopping centres offering opportunities for those who want to work in bustling hubs with many amenities on tap. With 74 per cent of Aussies now believing that flexible working is the ‘new normal’ and 50 per cent of all workers expected to be working remotely most of the time by 2020, it won’t be long before we see high streets becoming destinations for both serviced offices and retailers – in fact, it is already happening, the example being Spaces The Wentworth in Perth.
Along with new franchising opportunities, comes a new audience. The Millennial generation is fast being seen as the future of the franchising market for a variety of reasons, chief among them, their desire to work flexibly, as well as their affinity with new technologies. Collaboration and teamwork are two of the biggest benefits of a franchising model and millennials are tuned into this way of working.
The sharp increase in under-30s starting their own business is thanks to the franchise model bridging the gap between experience and ambition – franchising provides the confidence of an established successful business model so entrepreneurs do not need to start from nothing, but nor do they need to be an employee. They’ll have the opportunity to pour their own enthusiasm and hard work into a concept with the confidence of a wider business behind them.
With the franchise sector in Australia worth an estimated $182 billion, employing over 590,000 people, the opportunity is now while the sector is operating at record heights.
In Canada, franchise systems with low investment costs and high returns are rising in popularity, as prospective franchisees look towards opportunities in growing industries, according to the Canadian Franchise Association.
Hong Kong has also seen steady and reliable growth in a variety of popular franchising sectors including hotels, retail, education and wellness and healthcare. In the services sector, there is a growing trend for multi-brand franchising, whereby the franchisor group acquires complementary service brands. The South China Morning Post reported in 2017 that co-working in Hong Kong is increasingly becoming an indicator of where forward-thinking businesses take up roots, with corporate real estate and portfolio strategies increasingly looking at ways in which they can activate and maximise space, as companies implement new working strategies, including flexible working.
Entrepreneur.com’s annual Franchise 500 is the definitive ranking of the strongest franchise brands and in its latest report, it finds that we are long past the days of associating franchising with fast-food restaurants and as a US phenomenon. In fact, the franchising industry is constantly being rejuvenated with new players as it moves towards becoming truly international, with 36 per cent of those businesses listed, franchised outside the US.
Flexible, serviced offices have undoubtedly begun to emerge as investable asset classes for institutions, with unique service offerings and income potential available to make the most of. The operating model is proven, demonstrably successful and opportunities for growth are significant on local, regional and national scales, especially with brands that are globally renowned and therefore benefit from good brand equity. We could soon see flexible workspace taking its place alongside hotels and student accommodation as a separate asset class and a core part of institutional portfolios. It is an even more thrilling prospect that the under-30s are leading the charge for those franchisees looking to get involved.
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Comments attributed to Mark Bhardwaj, Head of Partnership Growth in Australia for IWG