Regus reveals franchise plan as shares surge on debut

REGUS, THE serviced office space provider, that made a successful stock market debut yesterday, is to branch out into franchising. The company said that, in future, up to half the office space carrying the Regus brand could be run under franchise.

REGUS, THE serviced office space provider, that made a successful stock market debut yesterday, is to branch out into franchising. The company said that, in future, up to half the office space carrying the Regus brand could be run under franchise.

The news marks a radical departure from the company's existing business model. It currently has no franchise presence and has built its name on running its own high quality service. Mark Dixon, the company's founder and chief executive, said: "We will have different growth in future, with franchising playing an increasing part in small towns and developing countries. We can't be everywhere." Mr Dixon said that the company is in negotiations with its first franchisees and has taken a couple of deposits, although no deals have yet been closed. He said that in five years' time, as much as half of Regus' offices could be run on franchise.

"We will go [along] the franchising route for offices in places like Dorset and Cornwall. That will help us provide wider coverage for our clients. For the franchisees, they will make more money with us than on their own," he said.

Regus will claim a royalty fee under the scheme. As well as allowing the franchise holders to use the Regus brand, it will provide access to the company's reservations system and entire back-office operations.

The company's shares were priced yesterday at 260p, near the top of its flotation price range of 200-270p, valuing it at £1.5bn. The listing raised £235m after expenses, of which £100m will be used to repay debt, to leave Regus ungeared.

The shares ended the first day of trading up 17p at 277p.