FranShares is the world’s first SEC qualified platform allowing investors the opportunity to passively invest in franchises
Yes, FranShares is subject to SEC regulations and the franchise industry, including FranShares, is subject to FTC regulation.
FranShares will launch in February, 20022
Upon completion of our SEC approval process, we’ll be releasing detailed information on our initial fund. In the meantime, you can read our offering circular here.
FranShares will be launching its second fund a few months after we finalize fundraising for our initial fund. FranShares will offer funds more frequently toward the end of 2022.
FranShars minimum investment is $400
Upon launch, investors can directly link their bank account to fund their investment
Investors can always invest in future funds when available.
You do not need to be an accredited investor to invest in FranShares
Yes, FranShares accepts international investors.
FranShares does not charge any fees. We make money by partnering with our investors in every offering.
Distributions will start 12 to 18 months after the fund is launched and occur at least quarterly, but we will do our best to make them monthly. Our first priority is to ensure proper cash flow for the business to pay out the highest long-term distributions.
Investors can earn returns on their investment through monthly distributions of earnings, and the appreciation of the business upon sale.
Based on years of franchise investing expertise, we use a variety of criteria to select which franchises to invest in.
Each FranShares fund is registered with the SEC for a Regulation A+ raise. This registration allows for investor transparency, participation by accredited and non-accredited investors, and the ability to advertise the fund.
Our first fund, TNT Franchise Fund Inc. (the “Fund”), will be raising capital from passive retail investors (“Fund Investors”) to indirectly invest in franchises.
The Fund will form a subsidiary holding company (holdco) for each franchise brand (and each such holdco will have subsidiaries under it for each of the locations for a particular brand). These subsidiaries will be 100% owned, either directly or indirectly, by the Fund.
The Fund and its subsidiaries will be operated, managed, and controlled by FranShares, Inc.
This structure is analogous to a typical PE fund structure, wherein the PE fund owns multiple franchises that are operated by the PE fund. And, similar to a PE fund, the Fund Investors will not provide guarantees because they are too numerous, have no control, are completely passive, etc.
Franchise ownership is a long-term investment. While we will have a trading platform to help facilitate liquidity, we strongly suggest holding FranShares for five years or longer. We suggest this both for the purpose of growth in the franchise holdings and also for tax purposes. For your equity position in the fund, the Qualified Small Business Stock (QSBS) tax exemption may allow you to avoid 100 percent of the capital gains taxes incurred when you sell a stake in a startup or small business as long as you hold the stock for five years.
Each portfolio has different circumstances depending on the type of investment. For an income fund, we would hold the portfolios indefinitely. For a growth fund, we would hold for a minimum lifespan of five years and expect to sell them in the five- to ten-year span with the permission of the franchisor. When this happens, we pay each investor a portion of the buyout price based on their share of ownership in the fund. We then encourage investors to diversify their holdings by reinvesting into several other FranShares funds.
Each offering is fully registered with the SEC, and all offering materials will be available prior to any investment being made. To view materials, join the FranShares waitlist and create a profile once the offering is live.
At FranShares, we’ll be taking a page from the private equity book of franchise management to ensure our franchises maximize ROI.
Depending on the fund, we’ll either work with a reputable and experienced outsourced management company like
Restaurant Sherpas, or leverage our internal expertise to hire a in-house management team. There is no shortage of franchise management talent in our team’s network.
Due to regulations, FranShares must perform Know Your Customer and Anti-Money Laundering checks, which require your social security number.
FranShares is qualified under REG A+ of the JOBS Act. Our offering documents can be viewed here.
Distributions taken on a monthly or quarterly basis will be subject to a 23.8 percent federal income tax. For your equity position in the fund, the Qualified Small Business Stock (QSBS) tax exemption may allow you to avoid 100 percent of the capital gains taxes incurred when you sell a stake in a startup or small business as long as you hold the stock for five years.
Please email any questions to email@example.com and we will be happy to help.
Had two things I think we should add to the FAQs. “Where’s McDonalds?” -then we can talk about how they’re sold out everywhere, why fast food isn’t a great investment, investing in service franchises for ROI, and getting prime territories.
Other one is “Are we investing in existing franchisees or new locations?”
405 W Superior Street, #93Chicago, IL60654
(1) Portfolio IRR projections are calculated using all cash flows, including the initial investment of $25,000,000 of offering proceeds, annual earnings before interest, depreciation and amortization (“EBITDA”), less estimated corporate taxes, and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.
(2) Cash Yield projections are calculated as the arithmetic mean (average) of five years of annual cash flows (including EBITDA, less estimated corporate taxes) divided by the initial investment of $25,000,000 of offering proceeds.
(3) Equity IRR projections are calculated using the initial investment of $25,000,000 of offering proceeds and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.