Regus: $1.07M Average Sales vs. $939K-$1.91M Franchise Cost

In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Regus franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Regus franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Regus outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Regus franchise opportunity

Section V – Presentation and analysis of Regus’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 average total revenues, disclosed expenses, EBITDA, and occupancy percentage for the 477 company-owned Regus outlets that were open continuously from January 1, 2022 through and including December 31, 2022 and were between 10,000 and 19,989 square feet in size

• 2022 average, median, highest, and lowest gross revenue for the 2 franchised Regus outlets in fiscal year 2022

• 2021 average total revenues, disclosed expenses, EBITDA, and occupancy percentage for the 489 company-owned Regus outlets that were open continuously from January 1, 2021 through and including December 31, 2021 and were between 10,000 and 19,989 square feet in size

• 2021 gross revenue for the 1 franchised Regus outlet in fiscal year 2021

Section VI – Key ratios, comparables, computations, and analyses for the Regus franchise opportunity (exclusive content for Platinum subscribers)

Section I – Regus Franchise Costs

• Regus franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $20,000
• Signage:  $16,000 to $35,000
• Office Equipment, Supplies, and Miscellaneous:  $5,000 to $8,000
• Hardware and Software:  $45,000 to $52,500
• Lease Payments – 3 Months:  $50,000 to $215,000
• Real Estate and Improvements:  $416,000 to $835,000
• Furniture, Fixtures, and Equipment:  $325,000 to $645,000
• Insurance:  $2,000 to $6,000
• Utility Deposits – Telephone, Internet, Other Technology:  $2,000 to $3,000
• Business Licenses and Permits:  $500 to $3,000
• Professional Fees:  $3,000 to $10,000
• Grand Opening Advertising:  $5,000 to $10,000
• Additional Funds/Working Capital:  $50,000 to $75,000
• Total Estimated Franchise Costs for Single Regus Office Franchise Agreement (excluding real estate leasing or acquisition costs):  $939,500 to $1,917,500

Section II – Regus’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Regus’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $20,000

• Royalty Fee:  6% of monthly Gross Revenue

• Infrastructure Support Payment:  6% of monthly Gross Revenue

• Marketing Fund Fee:  2% of monthly Gross Revenue

• Local Marketing:  0% to 2% of monthly Gross Revenue

• Cooperative Advertising Programs:  the greater of: (i) the amount that the franchisor is currently requiring you to spend on local marketing; and (ii) such amounts as are determined from time to time by the Co-op, not to exceed 2% of monthly Gross Revenue

Section III – Number of Franchised and Company-Owned Regus Outlets

Franchised

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  1
• Net Change:  +1

2021

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  2
• Net Change:  +1

2022

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

Company-Owned

2020

• Outlets at the Start of the Year:  830
• Outlets at the End of the Year:  800
• Net Change:  -30

2021

• Outlets at the Start of the Year:  800
• Outlets at the End of the Year:  781
• Net Change:  -19

2022

• Outlets at the Start of the Year:  781
• Outlets at the End of the Year:  762
• Net Change:  -19

Section IV – News Updates on the Regus Franchise

• Flexible Offices Giant IWG Posts Highest Revenue in 35-Year History

• WeWork Rival IWG’s Half-Year Profit Surges on High Demand, Improved Pricing

• Regus Ranked No. 331 on Entrepreneur’s 2024 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Regus Franchise (Item 19, 2023 FDD)

• First, as of December 31, 2022, the franchisor’s affiliate, Regus Corporation, operated 762 outlets in the United States.

• The following tables show historical Gross Revenues and expense information for calendar years 2022 and 2021 for company-owned outlets in the United States that were open continuously from January 1 through and including December 31 of that year and were between 10,000 and 19,989 square feet in size, which the franchisor considers to be the optimum target size range for a franchised outlet (however, in limited circumstances depending upon unique market conditions, other sizes will be considered for franchised outlets).

• The following tables exclude outlets in the most expensive locations in New York, San Francisco, Boston, Chicago, and Washington, D.C. where the franchisor does not anticipate having franchised locations.

• Based on these standards, for Part 1, the franchisor has excluded 285 company-owned outlets (37% of the total of 762), and for Part 2, the franchisor has excluded 292 company-owned outlets (37% of the total of 781), in each case that either closed permanently, were less than 10,000 square feet or greater than 19,989 square feet, or were in New York, San Francisco, Boston, Chicago, or Washington, D.C. No outlets were excluded for temporary closures.

• Second, as of December 31, 2022, the franchisor had three operational franchised outlets in the United States and Puerto Rico. Of these three franchised outlets, the franchisor excluded data from one outlet (33% of the total of 3) which was not open for the full year 2022.

• As of December 31, 2021, the franchisor only had one operational franchised outlet in the United States, the data for which is disclosed in Part 2.

• While data for company-owned outlets includes Gross Revenues, certain costs, and EBITDA, data for franchised outlets only includes Gross Revenues, which is the only data that was reported by the franchisees.

Part 1 – 2022

• Part 1 provides revenues and expense information for the 477 company-owned outlets (approximately 63% of the 762 company-owned outlets operating in the United States as of December 31, 2022) that were open continuously from January 1, 2022 through and including December 31, 2022 and were between 10,000 and 19,989 square feet in size.

Average

Total Revenues:  $973,368 (100.0%)

Disclosed Expenses

• Product Costs:  $43,946 (4.5%)
• Employee Related Costs:  $126,505 (13.0%)
• Rent Charge:  $320,786 (33.0%)
• Facility Cost:  $83,538 (8.6%)
• Operational Costs:  $4,109 (0.4%)
• Bad Debt:  $551 (0.1%)
• Agents Commission:  $3,273 (0.3%)
• Other Center Costs:  $17,996 (1.8%)
• Estimated Fees (Royalties, Marketing, Infrastructure Support):  $136,271 (14.0%)

EBITDA:  $236,392 (24.3%)

Occupancy %:  79.9%

• High Gross Revenue was $2,490,475 and the low Gross Revenue was $366,657.

• Gross Revenue for the two franchised outlets in fiscal year 2022 was:

• Average Gross Revenue:  $1,071,632.52
• High Gross Revenue:  $1,540,776.52
• Median Gross Revenue:  $1,071,632.52
• Low Gross Revenue:  $602,488.52
• Number and Percent of Units Exceeding Average:  1 (50%)

Part 2 – 2021

• Part 2 provides revenues and expense information for the 489 company-owned outlets (approximately 63% of the 781 company-owned outlets operating in the United States as of December 31, 2021) that were open continuously from January 1, 2021 through and including December 31, 2021 and were between 10,000 and 19,989 square feet in size.

Average

Total Revenues:  $845,189 (100.0%)

Disclosed Expenses

• Product Costs:  $33,129 (3.9%)
• Employee Related Costs:  $115,777 (13.7%)
• Rent Charge:  $331,087 (39.2%)
• Facility Cost:  $77,829 (9.2%)
• Operational Costs:  $2,704 (0.3%)
• Bad Debt:  $8,370 (1.0%)
• Agents Commission:  $3,964 (0.5%)
• Other Center Costs:  $14,926 (1.8%)
• Estimated Fees (Royalties, Marketing, Infrastructure Support):  $118,326 (14.0%)

EBITDA:  $139,076 (16.5%)

Occupancy %:  78.4%

• High Gross Revenue was $2,338,074 and the low Gross Revenue was $297,472.

• Gross Revenue for the one franchised outlet in fiscal year 2021 was $1,471,264.

• The franchisor compiled and calculated the figures in the preceding tables using information supplied by these outlets. The franchisor does not directly operate any of these outlets; all company-owned outlets are operated by the franchisor’s affiliates, which are all owned and controlled by the franchisor’s affiliate, Regus Corporation.

• The material financial and operational characteristics of future operational franchise outlets are not reasonably anticipated to differ materially from the company-owned outlets.

• “Estimated Fees” includes imputed royalties, advertising contributions, and other fees not paid by company-owned outlets.

• “Gross Revenues” means all received and accrued revenue, including cash, cash equivalents, and credit derived directly or indirectly from all business conducted with the use of the Marks or upon, from, or with, the company-owned outlets, whether evidenced by check, cash, credit, charge, exchange, or otherwise (including proceeds of any business interruption insurance policies).

• Gross Revenues includes the fair market value of any goods or services received, directly or indirectly if consideration other than cash was received. Gross Revenues excludes (a) sales and similar taxes that, by law, are chargeable to customers and (b) any refunds given to customers.

• “EBITDA” means earnings before interest, taxes, depreciation, and amortization.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Section VI – Regus Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️