WeWork Franchise Cost, Fee, Requirements and Profit

 

 

You would be gravely mistaken to believe that WeWork is just another trendy co-working facility whose business model would collapse when the market contracts. Compared to more established providers of temporary executive office spaces, like Regus, it has a considerably wider goal, presence, and brand identification. When you become a WeWork franchise owner, you will be able to create a business that provides remote workers with the flexibility they need to work from anywhere, on their own schedule. 

 

 

 

About WeWork

 

With its headquarters in New York City, WeWork Inc. offers coworking spaces, including real and virtual shared spaces. The company had 590,000 members with a weighted average commitment time of 20 months. It operated 44.8 million square feet of space including 19.8 million square feet in the United States and Canada, at 756 locations in 38 countries. 

 

The business’s unsuccessful initial public offering (IPO) of company stock attracted the attention of the general public. One corporate entity owns each WeWork facility. The brand’s premise, which offers access to consistently furnished workspaces in locations around the world, makes it ideal for a franchise model in some aspects. 

 

 

 

WeWork Expansion Plan

 

Since WeWork does not provide a franchising option, it owns and manages each unit independently. The business rents out commercial premises transforms them into cutting-edge offices and common areas and then makes them available to employees based on a monthly membership fee.

 

It is thought to be the world’s fastest-growing coworking space provider. WeWork franchises may be available in the future, but for the time being there is no need because the company already attracts sufficient funding to grow globally. WeWork is putting its name on new buildings and spaces, but they still have some degree of operational control.

 

 

 

 

 

 

Reason for WeWork Being a Successful Franchise

 

WeWork franchise has two scenarios currently about cash flows to help them make it successful. 

 

1. Cash outflow means what is WeWork spending its money on. Let’s see how cash outflow works as the majority of this expense comes from its long-term leases with landlords for sizable spaces. These payments are payable to numerous landlords each month. This is advantageous since it is predictable, on the one hand. When your cash demands are predictable, budgeting is simple. On the other hand, because these leases are pricey, this is negative. 

 

2. Cash Inflow means how is WeWork receiving the cash from? Most of this is made up of monthly rent payments from subtenants. WeWork’s cash inflow is more unstable than its cash outflow since its tenants frequently break their lease early, either because they relocate to new, non-WeWork workplaces or because they cease to exist. Less can be predicted about inflows than outflows. 

 

 

 

Drawbacks In WeWork Franchise

 

1. WeWork’s business strategy has a major issue because they didn’t want to be a real estate company. Therefore, they would sign long-term leases, redesign the interior of the buildings, and then sublet to other parties. It goes without saying that this is a viable business strategy, but the margins will be much thinner than if they had simply purchased the structure.
2. WeWork has never had the ability or interest in sustainable expansion. Instead, they were losing $2 billion annually while incurring expenses of $100 million every week. Which they were able to pay for as CEO Adam Neumann’s only talent was dividing money from suckers.
3.  Actually, the way the business operated was that Neumann would purchase properties himself. He would then lease the structures to WeWork, which would make the necessary upgrades and sublease them. As a result, Neumann personally owned the asset and was entitled to payment regardless of what happened with WeWork.
4. WeWork was a not especially sneaky way for Neumann to defraud investors of money before giving it to him privately. In all of WeWork’s bizarre, cult-like training and papers, they consistently highlight the “We” Whereas the business was always about the CEO himself throughout. 

 

 

 

 

 

 

Discrepancies between WeWork and Regus Franchise

 

Just like the two restaurants will feed you, the two office space suppliers will rent you space. The atmosphere, customer care, and experiences, however, will be very different. Skim through the following table to know how are each of the co-working spaces different from the others.

 

 

 

WeWork Franchise	Regus Franchise
WeWork was a dream of an entrepreneur who spent his time building a business model, and not a brand.	Regus is a company that has been created over many years to make money.
WeWork was a private startup that received excessive funding at first, then received tremendous amounts of funding and was valued above all previous standards.	Regus is a public and profit-generating company
WeWork claimed to be a tech firm even though it made money through subleasing property.	Regus does not deny that it is a real estate corporation.
WeWork made the concept of coworking spaces popular. It advertised it to business owners, independent consultants, and corporate clients who had remote employees or were rapidly expanding and required office space in numerous major cities.	Targeted at independent accountants, lawyers, and other professionals who need an office, possibly two or three, but are likely to keep that office for years, Regus is much more about renting an office.

 

 

 

What makes WeWork Unique?

 

• Their distinct brand identity
• It is a space for a group of shared interests
• WeWork Plans for long-term capital raising and expansion
• They provide free internet access, events, beer, coffee, food, ping pong, and more perks
• It is known as NYC’s fastest-growing business in terms of footprint (and other cities)
• They offer cheap rental accommodations in pricey places
• Their Modern design and anti-corporate environment aimed at young professionals
• community-building mobile application
• Their focus is on hiring young and active staff members who can offer suggestions
• They also organize their Annual Summer Camp

 

 

 

Franchise Deck Review and Analysis

 

Instead of running the facility, I would foresee seeing WeWork serve as the building owner’s agent. This would imply that the risk to WeWork is limited to the upfit and utilities rather than a fixed monthly rental cost or a percentage of the monthly earnings. 

 

We would expect them to turn a profit within six to twelve months. The early locations required a larger expenditure than subsequent ones. The development of the brand and concept, as well as the financial infrastructure needed to run the business, are shared among many consumers and locations.

 

Competition Analysis of WeWork Franchise
Franchise Brand	Cost to Franchise	Franchise Fees	Royalty + Ad fees	Expected Profit	Recoup of Capital	FD Rating
Regus Franchise	$549,000 – $998,000	$50,000	Royalty fee 6%+Ad fee 2%	51% less than the franchise fee	N/A	2.5/5.0
WeWork Franchise	N/A	N/A	N/A	The company posted revenue of $815 million	N/A	4.0/5.0
Office Evolution Franchise	$400k-$1.3M	$39,500 – $49,500	Royalty fee 7.5%+ Ad Fee is 3%	Not disclosed in FDD	Not disclosed in FDD	3.3/5
Venture X Franchise	$1.1 million-$3.4 million	$79,500	Royalty fee 6%+ Ad fee 2%	Not disclosed in FDD	Not disclosed in FDD	3.0/5.0

 

 

 

Conclusion

 

If WeWork chooses to own its own real estate property and start managing the offices of any large companies out there in the world, it will help it reduce its volatility differential and manage its cash flows. Eventually, WeWork will help them go cash flow-free very smoothly which will help them to grow and expand their franchise. 

 

You can explore other coworking or real estate franchise opportunities,

 

1. Red Barn Franchise 
2. Regus Franchise
3. WeWork Franchise
4. Office Evolution Franchise
5. Venture X Franchise
6. Success Space Franchise
7. Best Coworking Space Franchise