The minimum amount you can invest in FranShares’ offerings is $500.
The primary way to fund your investment is via an ACH transaction or wire transfer from a linked bank account. You can link your bank account either by 1) directly entering your routing and account numbers or 2) by using your online banking credentials.
Each offering has a hard cap, so once it fills up you cannot directly add to your investment. We will regularly be opening new offerings that investors can participate in. Additionally, investors may be able to invest in existing offerings through our secondary trading platform when available.
FranShares’ first offering, “TNT Franchise Fund Inc.” will require investors to be accredited. However, we will be quickly releasing offerings that do not require accreditation.
Note that this is not legal advice, however, generally a person is an “Accredited Investor” if s/he meets any of the following four criteria:
A trust is accredited if it meets any of the following criteria:
An entity is accredited if it meets any of the following criteria:
For individuals, the documents depend on whether you are being verified under the net worth test, one of the two income tests, or the knowledgeable investor test. For net worth verification, you’ll need to submit any combination of bank statements, brokerage statements, other statements of securities holdings, and appraisal reports to assess the value of your assets. For income-based verification, evidence can be supported by tax returns, W-2, K-1, 1099, or other government documents. For the knowledgeable investor test, a copy of an unexpired Series 7, Series 65, or Series 82 securities license will suffice.
For business entities and trusts, the $5 million minimum assets can be shown by furnishing a bank statement, brokerage statement, and/or appraisal reports of real estate or other tangible assets held by the entity. If a business entity does not meet the minimum assets requirement, each owner of the business entity must be individually verified as an accredited investor, in which case the above-mentioned documentation requirements for individuals apply.
Similarly, if a trust does not meet the minimum assets threshold, the trust documents should be submitted to determine if the trust qualifies based on the type of trustee, or if the trust is revocable. If the trust wishes to achieve accreditation under the condition that the trust is revocable, then all trust grantor(s) must be accredited individually, in which case the above-mentioned documentation requirements for individuals apply.
Unfortunately, FranShares can only accept investments from those located in the United States and Puerto Rico for the time being.
FranShares is not charging any management fees for our initial offering “TNT Franchise Inc.”. FranShares will be co-investing with our investors in every fund and will be receiving distributions along with our proportionate share of any franchise sale in the future. We will also earn a brokerage commission from the franchisor, not out of our investor’s returns
Each FranShares offering is exempt from registration with the SEC via Regulation A+ or Regulation D. These exemptions allow for participation by accredited and/or non-accredited investors depending on the offering.
Our first offering, TNT Franchise Fund Inc. will be raising capital from accredited investors.
Every offering’s returns will vary based on what franchises are included. Please review each offering for detailed information about expected returns.
We will likely start distributions of excess cash flow 12 to 18 months after each offering is closed. We expect to have quarterly distributions.
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(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.