Franchising for the 99%: How FranShares & its investors are democratizing the asset class

Over the last decade, the push to democratize investing has transformed the financial landscape, making new options available to a broader audience. From fractional stock platforms like Robinhood and Acorns to micro-investing in art, wine, and racehorses, these options have nudged the door to wealth-building wider than ever before. 

Franchising for the 99 percent

The scale of real estate and franchising makes these asset classes particularly hard to democratize. With traditional real estate and franchise investments, for instance, investors must front (at minimum) tens of thousands in licensing fees and hundreds of thousands more in start-up costs. Depending on the industry and brand network, those numbers can climb into the millions. With such a high bar for up-front capital, most investors outside the 1 percent get shut out of these lucrative opportunities. 

FranShares founder Kenny Rose, informed through nearly a decade of experience running and brokering franchise businesses, could see the challenges as well as the opportunities. He took a novel approach, combining the success of fractionalized assets with the portfolio investment structure of private equity and venture capital funds. Kenny launched FranShares in 2020 with the goal of bringing franchise investing and diversification to as many retail investors as possible.

FranShares makes investing in franchises as easy as other high-yield investment vehicles, such as stocks and mutual funds. With FranShares, individual and institutional investors can access streams of passive income with low minimums and annual fees.

The benefits of franchising for investors of all stripes

Traditional franchising offers enterprising investors a blend of entrepreneurship and investment. Franchise investors gain a pathway to business ownership without the need to start from scratch, leveraging established brands and proven business models. The franchise model lowers the risks that are typically associated with starting a new venture, so investors can focus on operating, staffing, and scaling their businesses. 

As an investment strategy, franchising offers many attractive features, such as …

Recession resistance: Franchise businesses often provide resilience in economic downturns thanks to their established brand recognition and loyal customer base. These aspects lead to steady cash flows, even when consumer spending is low. Most often, franchise businesses operate in in-demand industries such as food, home care, child education and enrichment, automotive services, and health care. 

Franchises also follow proven business models that have survived different market conditions, offering stability and efficiency that can adjust to changing economic environments. This adaptability makes franchising a recession-resistant investment.

Multifaceted diversification: Investing in franchising allows for strategic diversification – not only across different industries but also geographically, which spreads risk and opens opportunities for multiple revenue streams. Investing in complementary networks may also help investors balance seasonality and other challenges as well as enable cross-promotion between well-aligned brands. It enables investors to tap into various markets with differing consumer behaviors and preferences, thus bolstering portfolio resistance against market volatility and economic shifts. 

FranShares takes the power of diversification even further by allowing investors to participate in a portfolio of well-vetted, diversified franchise companies that span regions, industries, and demographics. This venture capital-inspired structure creates a foundation for stable and well-balanced returns.

Inflation hedging: An attractive quality of franchising, hedging makes franchises especially appealing to investors who are looking to protect their capital against the eroding effects of inflation. Franchises often operate in sectors that deal with essential goods and services, meaning those that remain in demand regardless of economic fluctuations. Such staple franchise brands can adjust prices accordingly and quickly add corrections to your portfolio.  

Franchises also benefit from economies of scale and established supply chain agreements, insulating the business against uncontrolled rising costs. By investing in franchise businesses through platforms like FranShares, investors can leverage these inflation-resistant characteristics to safeguard and grow their investments even during periods of high inflation.

Investors share the excitement of “franchising for all” 

Institutional investors and high-net-worth individuals have long enjoyed the recession-resistance and lower volatility of franchising. Celebrities and professional investors use the $787B franchise market to diversify their portfolios with real assets that stand the test of time. FranShares CEO Kenny Rose explains:

There’s a reason franchise investing is so popular with one-percenters and celebrities like Shaquille O’Neil and Patrick Mahomes. Few other asset classes, if any, have the potential to deliver attractive returns and equity appreciation. After the roller-coaster ride of the past few years, there’s a huge pent-up demand for investments that can provide real income from real businesses. Franchises have always been a great way to build wealth. It’s time to bring these opportunities to a wider audience.

With FranShares, retail investors have gained access to franchising for the first time, without the need for high up-front investments or accredited investor status. That, in turn, has attracted the attention of start-up investors who are eager to see franchises take their place alongside other democratized assets. 

Since its launch, FranShares has attracted nearly $6M in venture investment. Most recently, the company completed a $4.1M seed round led by Chicago Ventures, which helps FranShares structure investment portfolios for its growing base of accredited investors. “FranShares is on to something big, and they have the talent and the game plan to execute,” says Stuart Larkins, Chicago Ventures Founding Partner. “They’re unlocking an entire asset class for investors hungry for alternatives to traditional bonds and equities.”

Invest with FranShares and easily diversify into franchises 

The numerous benefits of franchising have made franchises a perennial favorite of wealthy investors – and now, this wealth-building power is also available to retail investors. If you’re ready to enjoy the benefits of a well-diversified, stable, recession-resistant investment channel for your portfolio, be sure to check out available investments here.