WHY do they want you to work on premise? Wanting your presence is just a means to an end. There could be many reasons, like:
* They think it's easier to control how much somebody works if it's on premise
* it might be easier to manage
* it might be inertia
* they think it's more efficient
* somebody is trying to exert control, or demonstrate to a higher-up that they can do so
... and so on. You should first try to understand where they are coming from, and then you can try to argue your case, framing it in a way that they can get most of their underlying motivation.
Also, it helps to know in advance what you are willing to give up and what not (are you willing to walk away if you don't reach an agreement? what compromises would be acceptable to you?)