Our unwavering commitment to our data-driven investment and franchise management philosophy ensures that we only provide our investors with world-class franchise investment opportunities.
At FranShares, we will never charge fees. We invest alongside our investors in every fund, generally 20%. This means we only make money when you make money, so we take franchise selection seriously.
Source the bestfranchise opportunities
We review hundreds offranchise opportunities, but less than 1% meet our investment criteria. We look for franchise opportunities in recession resistant industries with a strong track record of success.
Lock-in thebest deals
At FranShares, we buy our franchises in bulk. This buying power ensures that we’re also getting the best franchise valuations while enjoying franchise fee savings of 32% on average.
Conduct rigorousdue diligence
When we find a deal worthpursuing, we dive into the details and look at everything from industry growth, competitive activity, macroeconomic trends, franchise leadership, risks, and potential return on investment.
All franchises are subject to FTC regulation which requires franchises to disclose their itemized startup costs. Additionally, many franchises disclose a Financial Performance Representation (FPR) of their locations. FranShares only works with franchises that show net profits in their FPR so our investors can have a better understanding of potential returns. We avoid franchises that have high buildout costs, employee headcounts, and inventory to maximize ROI.
FranShares looks at each franchise’s growth per location, store sales and number of franchisees to ensure the brand is growing quickly, efficiently, and sustainably.
While most people think of major fast-food franchise brands when thinking about franchising, the availability for new locations is limited-to-nonexistent in good markets. FranShares looks for growing franchise brands that have availability for multiple locations in good markets.
As part of FTC regulation, each franchisor’s leadership must be disclosed. We look for experienced teams based on their involvement in their franchise’s industry and in franchising as a whole.
While they may not always invest in the “sexiest” businesses, FranShares looks for those that are more essential services that have great long-term outlooks. We avoid quick fads and stick with staples like haircare, automotive, fitness, etc.
Franchising does not make new industries but instead consolidates existing ones. We look at who the other competitors in their respective industries are, whether they are growing, and what our franchises’ competitive advantages are to capture market share in the space.
Many franchises require a full-time owner and operator. We focus on semi-absentee franchise models that can be manager-run, which typically have lower employee headcounts and simpler operations. We also add an extra layer of management, which is typically not found in these franchise models to have top-of-the-line efficiency in operations.
No one has a crystal ball that can reveal what’s going to happen in the future and what to invest in. Instead, we make educated investment decisions to prepare as much as possible. We look at essential and need-based industries that tend to perform well in all economic conditions and have a history of performing well in the previous recession or COVID lockdowns.
For decades, Private Equity firms have been acquiring profitable franchises and turning them into cash cows by leveraging outsourced franchise management companies, or building in-house franchise management teams.
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 likeRestaurant 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.
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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.