Chicago based FranShares raises a $4.1 million seed round to let people invest in franchises #FranShares, a Chicago-based startup, has introduced an innovative way to invest in franchises with as little as $500. Founded by Kenny Rose, CFE in 2020, FranShares aims to democratize access to franchise ownership, making it easier for individuals to invest in successful franchise businesses without the significant upfront costs typically required. Historically, passive income opportunities have been dominated by real estate investments. However, FranShares offers a new avenue by allowing investors to gain fractional ownership in franchise locations. This model not only benefits investors but also helps franchise operators access the capital needed for expansion without resorting to bank loans or private equity. FranShares has built a community of around 43,000 investors, nearly half of whom are millennials or Gen Z. These investors include a diverse mix of retail investors, accredited investors, family offices, and private equity firms. Investments have already been made in franchises across three industries: food, kids' fitness, and waste management, featuring brands like Teriyaki Madness, Smash My Trash, and Hawaiian Bros. To ensure investor protection, FranShares requires franchisors to disclose financials, executive backgrounds, and litigation histories, adhering to Federal Trade Commission (FTC) regulations. Additionally, FranShares’ offerings are subject to SEC regulations. The company recently raised $4.2 million in seed funding led by Chicago Ventures, with participation from The Pitch Fund, Litquidity Ventures, and Furnished Finder founders Aaron H. and Brian Payne. This follows a $1.57 million pre-seed round in 2021. FranShares' unique approach has significant implications for the market. The franchise industry generated approximately $859 billion in revenue in the U.S. in 2023. Rose envisions a future where investing in franchises becomes as simple as scanning a QR code at your favorite franchise location. By lowering the barriers to franchise ownership, FranShares is opening up new opportunities for minority businesspeople and other aspiring entrepreneurs. The platform not only offers investment opportunities in franchise locations but recently expanded to include investments in franchisors, starting with Kidokinetics, a sports enrichment program for kids. The article on TechCrunch in the first comment. Want to stay up to date with the market? Here my newsletter: - Linkedin: https://lnkd.in/d4h8zqKA - Substack: https://lnkd.in/dzfGJzmW
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1moThe article on #techcrunch: https://techcrunch.com/2024/07/30/franshares-has-a-new-approach-to-passive-income-letting-people-invest-in-franchises-for-as-little-as-500/