WeWork announces franchise agreement with Ampa Group for WeWork Israel

WeWork announced on Monday that it would be signing an agreement with major Israeli real estate company, the Ampa Group, giving the latter the rights to operate WeWork Israel as a franchise. Calcalist revealed WeWork's plans last week.

Ampa has played an intrinsic role in WeWork’s development since the company opened its first location in Israel in 2014. Seven years later, WeWork Israel has expanded to thirteen locations across six different cities, and provides more than 10,000 members across the country with flexible and innovative office space solutions.

WeWork has decided to switch to a franchise model in some of the countries that are not in the company’s business core and Israel is on that list. Secret negotiations began taking place several months ago between WeWork’s corporate office and its local branch which is led by Benjy Singer and between Ampa, which is owned by the Nakash brothers, Shlomi Fogel, and Tuli Ceder.

The model the company employs in Israel is based on a collaboration with Ampa: the latter purchases and renovates the complexes and leases them to WeWork, which pays for the renovation and rents out the offices on a short-term basis. The sides are currently in talks for WeWork to compensate Ampa to the tune of tens of millions of shekels for debts it had accrued and for low occupancy. WeWork will receive a percentage of Ampa’s income in exchange for its use of the WeWork brand.

WeWork first entered the Israeli market in 2014 at the behest of its then CEO, Israel-born Adam Neumann. After WeWork’s attempt at going public failed and Neumann left the company, the management underwent significant changes and is re-examining its business model.

“As the world begins to emerge from the pandemic and the demand for flexible, turn-key space solutions at scale continues to grow, WeWork’s product is more relevant than ever before,” said WeWork CEO Sandeep Mathrani. “WeWork With its proven track record and in-depth understanding of the market, Ampa is the right partner to not only strengthen our business in Israel, but also propel it forward.”

“Being WeWork’s local partner for the past seven years, we are excited to start operating WeWork Israel exclusively,” said Shlomi Fogel, Chairman of the Ampa Group. We have full confidence in the WeWork product as the global leading solution for flexible spaces. We believe that the Ampa team together with the WeWork local team will strengthen and expand the business in the Israeli market, especially considering the challenges post Covid-19.”