Franshares is an online investment platform that is targeting the franchising industry. The company is not regulated as either a funding portal or a broker-dealer; rather, it chooses to work with a regulated entity to create a market for private securities. The niche investment platform says it is offering securities under Reg D as well as Reg A and Reg CF. Franshares is partnering with digital asset enabler Securitize to facilitate transactions. Securitize is probably best known as a full-stack digital security platform.
So why should you invest in Franchises? Passive return and growth – according to Franshares. Currently, three securities offerings are listed on the platform (each under Reg D). A targeted net yield for the offerings ranges from 4.7% to up to 16%. The targeted net IRR ranges from 19.2% up to 36.4%, with a hold period ranging from 3 to 10 years.
The platform says it is developing a Secondary Marketplace for shares purchased on the platform. The partnership with Securitize, a licensed Alternative Trading System (Securitize Markets ATS) and Broker-Dealer, could power the trading of shares.
Franshares states that it only invests in franchises with net profits and avoids ones that have “high build-out costs, employee headcounts, and inventory.”
Franshares helps franchise operators access private capital online, creating an alternative to banks or private equity. The company curates the offerings, aiming to “select the best opportunities.”
The global franchising industry’s estimated market size was USD 121.36 billion in 2023, and it is expected to continue growing at a steady pace.
The world of alternative investments continues to expand. The digitization of securities will help to fuel the growth of novel assets, providing investors with more options and diversification. Franshares is the first of its kind in the US (as far as we know)—another interesting entry into the sector of online capital formation.