New Platform Deep-Dive Review: FranShares Business Franchise Investing

Franchises can offer steady income, portfolio diversification, and inflation hedging and with exponentially less risks than startups. But they've also been traditionally very hard to access, with enormous time commitments and massive investments sizes (in the $ millions). FranShares offers completely passive access at just $10k minimum. They target recession-resistant franchises that provide profitability metric transparency and avoid high buildout and inventory costs. On the downside, they appear to have transparency issues regarding waterfalls, skin-in-the-game, etc.

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A Changing of the Guard for CrowdFunding sites?

The recent downturn has caused a trend of brand new companies to pop up like daisies after a spring rain. And many of them are taking a different take on things and/or doing things differently than than the old guard.

So this is the fourth article in a new series about these new platforms. And this one is about Franshares, which specializes in the niche asset-class of franchise business.

The Franchise Business

Franchise investments can produce many desirable things like steady income distributions, portfolio diversification and inflation hedging.  And compared to startups/venture-capital, many franchises tend to have a much lower failure rate due to using a proven business model, and coming with extensive training and support (from the franchisor). Directly owned franchises also tend to avoid the daily fluctuations and volatility associated with public market business investments.

This asset class has traditionally been difficult to access and limited to high net worth individuals (who might put in $ millions to fund the entire businesses on their own and also supply the considerable time and talent required to run them) and/or private equity firms. 

FranShares allows an investor to  access the asset class with a much smaller/ fractional investment ($10,000) and a much less onerous, passive investment.

So when I saw it, I was immediately intrigued.

FranShares Features

FranShares currently has three open deals which is fairly impressive for a newish site. They say the focus on recession-resistant franchises that provide profitability metrics and are avoid ones with high buildout costs, large employee headcounts and substantial inventory. And they target widely diversified opportunities across a number of industries, geographies and business strategies. Business categories include: B2B, fitness, kids, hair care, pets, automotive, food, home services, waste management and more. On the down-side, the pitch decks do not appear to provide basic information required to understand the terms/risk ( and which are typically provided). Also, sponsors may not put in significant skin in the game/co-investment in all deals. Additionally, accredited investors will not like the use of Regulation A+ and CF on some deals (which tend to have much higher expenses than accredited-only offerings).

This new review has more info on how FranShares works, its pros and cons and also a due-diligence deep-dive on a current Share SFR deal. Click here to see the full Franshares review.