Risk Score
Pending analysis
Investment Range
$720,500 - $1,562,500
Franchise Fee
$20,000
Min Cash Required
$50,000
Total US Locations
796
Business Summary
Regus Office businesses provide flexible and virtual offices, co-working facilities, meeting and training facilities, and commercial office alternatives. Regus Office locations typically range from 10,000 to 20,000 square feet and offer a variety of private memberships to individuals and businesses. These offices contain multiple workstations, including private, designated, and shared spaces, conference rooms, and boardrooms, all with access to telecommunications, data transmission, lounges, reception areas, and administrative support.
Corporate History
RGN-USF, LLC, operating as Regus, was formed as a Delaware limited liability company on April 21, 2016. It began offering Regus franchises on April 4, 2018. While RGN-USF, LLC itself does not operate the type of business it franchises, its group parent, IWG PLC (formed September 27, 2016), has offered office spaces similar to Regus internationally since its founding in Brussels, Belgium in 1989. IWG, through its international affiliates or subsidiaries, began offering Regus franchises internationally in 2002. An affiliate, Regus Corporation (formed May 25, 2004), has operated company-owned Regus Offices in the United States since 1998.
Financial Overview
Investment Range
$720,500 - $1,562,500
Franchise Fee (Low)
$20,000
Franchise Fee (High)
$20,000
Minimum Cash Required
$50,000
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$150,000
Equipment Costs (High)
$225,000
Working Capital
$62,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Item 4 of the FDD highlights a Special Risk regarding the franchisor's financial condition, stating that "The Franchisor's financial condition, as reflected in its Financial Statements (see Item 21), calls into question the Franchisor's financial ability to provide services and support to you." This suggests potential concerns about Regus Office's financial stability and its capacity to offer adequate support. The audited financial statements in Item 21 show RGN-USF, LLC had net income of $229,000 in 2023 and $13,000 in 2022. Cash at the end of 2023 was $0, compared to $105,000 at the end of 2022. The company also has a significant "Due from affiliates" balance of $15,660,000 in 2023. These factors, particularly the cash balance and the auditor's specific note, indicate financial constraints that potential franchisees should carefully consider.
Financing Details
Regus Office does not offer any direct or indirect financing to its franchisees. Additionally, Regus Office does not guarantee any franchisee's notes, leases, or other obligations. Franchisees are responsible for securing all necessary financing independently.
Performance Metrics
Total US Locations
796
Franchised Units
4
Corporate Units
792
Avg Square Footage
18,238
Franchising Since
2018
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
Yes
Litigation Summary
Regus Office has no litigation required to be disclosed in Item 3 of the FDD. Item 3 states "No litigation is required to be disclosed in this Item." Therefore, Regus Office does not have any current or past litigation to report in this section.
Bankruptcy History
In or around May 2020, 150 of Regus Office's affiliated entities that own or operate Regus Offices filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code (or equivalent restructuring proceedings in Canada). This action was taken in response to economic dislocation from the pandemic to facilitate negotiation of lease obligations to landlords and lenders. The Order Confirming the Plan of Reorganization for all affiliated entities was entered for the U.S. proceedings on September 22, 2021, and the Order Terminating the Canadian proceedings was entered on September 23, 2021. The franchisor, RGN-USF, LLC, itself did not file for reorganization.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew the Regus Office franchise, franchisees must provide written notice between nine and six months before the current term ends. Franchisees must not have been in Persistent Breach of the agreement, nor have had more than one Substantial Breach (even if remedied). They must also comply with refurbishment requirements for their Regus Office, as outlined in the agreement. Before renewal, franchisees and their guarantors must waive all claims against Regus Office and its affiliates, directors, shareholders, management, employees, and agents. If these conditions are met, franchisees may be granted up to two additional five-year terms, but they will be required to sign Regus Office's then-current franchise agreement, which may have materially different terms and fees.
Training & Support Program
Franchisor Assistance
Before opening, Regus Office provides franchisees with an Integration Plan, the right to use its Marks, access to the System Standards Manual (electronically or in print), mandatory specifications and layouts for a Regus Office, and incorporation into the customer booking portal. Regus Office also provides access to its proprietary Regus Technology and offers initial training for the Designated Operator, Sales Manager, Community Manager, and Community Assistant through an online portal and at a designated Regus premises. Training on the finance system (Titan) is also provided for the key finance employee, along with access to the fit-out supply chain. During operation, Regus Office provides ongoing information on standards, IT and telecoms specifications, space planning briefs, initial and remote IT helpdesk support, quarterly performance advice calls, access to its NCO project management methodology, remote regional property development advice, and support in management, finance, and promotion. Regus Office assists with customer contracts, collects and disburses customer deposits, generates customer invoices, and provides further ongoing training and franchised services.
Initial Training Hours
560
Training Location
Your Office and Company-owned Office
Ongoing Support
Regus Office provides franchisees with ongoing guidance in operating their Regus Office, which includes telephone assistance during normal business hours. This guidance can be provided electronically or in other appropriate manners. While on-site assistance may be provided, Regus Office can charge a reasonable fee of $250 per person per day for such requested assistance. If a Regus Office's performance warrants it, Regus Office can require a designated person (at the franchisee's expense for travel, wages, lodging, and meals) to supervise day-to-day operations until the office meets Regus Office's standards. Franchisees, or their owners, may also be required to attend periodic refresher training courses at designated times and locations, for which fees may be charged. Regus Office also offers additional guidance and assistance upon request, with per diem fees and charges applying.
Franchise Requirements
Ideal Candidate Profile
The ideal candidate for a Regus® Office franchise is a business-minded individual or entity that is willing to strictly adhere to the Regus® System's standards, specifications, and operating procedures. Regus seeks franchisees who can ensure their office maintains a high degree of cleanliness, orderliness, and sanitation, and is in line with the brand's distinctive design and decor. Ideal candidates should possess sufficient financial resources, including working capital, to meet their obligations and successfully operate the Regus® Office. They must be prepared to personally or through a qualified Sales Manager, Community Manager, and Community Assistant, manage the office full-time, ensuring that staff are honest, reliable, competent, and courteous. A strong commitment to ethical conduct and compliance with all laws and regulations is essential. Previous experience in operating offices similar to Regus® Offices is required for the management team.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Supervisory
Territory Type
Protected
Staff Count
4
Territory Size Requirements
Regus Office grants a protected territory that typically consists only of the building where the Regus Office is located (or a specific tower/part of that building if it has multiple sections). Regus Office may redefine a franchisee's territory if certain occupancy requirements, which can be established and modified, are not met. As long as the franchisee complies with the agreement, Regus Office will not establish or license another Regus Office within this territory after the location is chosen. However, the territory is not exclusive in terms of marketing or customer location, meaning Regus Office franchisees may face competition from other franchisees, company-owned outlets, or other distribution channels controlled by Regus Office. For multi-site agreements, the Development Area size depends on factors like population (density, growth), competition, and the number of offices the franchisee agrees to open, with specific demographic software used for determinations.
Staffing Notes
Regus Office requires franchisees to hire, train, and supervise honest, reliable, competent, and courteous personnel for their Regus Office. All personnel are employees of the franchisee, not Regus Office. Franchisees must ensure sufficient trained employees are available to meet operational standards at all times, perform duties in compliance with the System Standards Manual, wear specified uniforms, maintain a neat appearance, and be courteous to customers. Franchisees must keep Regus Office advised in writing of all personnel involved in operations. The Regus Office must be personally managed on a full-time basis by the franchisee (if a sole proprietor) or an owner and a Sales Manager, Community Manager, and Community Assistant, all approved by Regus Office and having successfully completed Initial Training and met specified standards (including minimum experience in operating similar offices). A Sales Manager may be responsible for no more than two Regus Offices. If any of these key managers are replaced, the new individual must attend Initial Training at the franchisee's expense within 30 days of their hire. If a suitable replacement cannot be found, Regus Office may offer assistance with recruitment, but the decision to employ remains solely with the franchisee. All Sales Managers, Community Managers, and Community Assistants must sign Confidentiality/Non-Competition Agreements.