Chicago startup FranShares wants to give anyone the chance to invest in franchises like restaurant chains and barber shops, opening up an entirely new asset class to retail investors.
FranShares, founded last year by Kenny Rose, is a new investing platform that brings fractional franchise ownership to any investor, not just those who are accredited. The startup allows anyone to invest in franchises for as little as $500, giving average Joe investors the chance to add franchises to their portfolio for the first time ever, Rose said.
On Wednesday, the startup raised $1.4 million in a round led by Chicago Ventures, along with angel investors like Chartboost CTO Sean Fannan and MuteSix COO Daniel Rutberg.
FranShares announced an SEC filing for its initial fund on Wednesday, which will look to crowdfund $20 million from investors. Rose said he expects within the next two to three months the platform will begin accepting investments. The startup currently has 1,500 investors on its waitlist.
Rose said investors can expect dividends through income generated by the franchises, along with owning equity in the business.
FranShares is starting with two franchises: restaurant chain Teriyaki Madness and waste management company Smash my Trash. The startup will set up and run operations for the businesses, with plans to open 25 locations of each across the country. Eventually, the startup says it will allow investors to back fitness centers, hair care, automotive companies, home services and other types of franchises.
"I wanted to be able to show people you can make good returns across different industries," said Rose, a former financial advisor at Merrill Lynch and the founder and CEO of Semfia Franchise Brokerage.
"We love investing in founders who deeply understand the industry in which they're building," Chicago Ventures founding partner Stuart Larkins told me. "Kenny has a history as a sought-out franchising expert. FranShares is a natural extension of Kenny's expertise as he democratizes an asset class that has been overlooked and inaccessible to the masses."
Rose said FranShares brings yet another alternative asset class to investors who are looking to diversify their portfolio, and gives people a chance to invest in businesses directly in their community.
"I think people are going to be excited to literally see their investments, and create more of that localized effect of where their money is going," he said.
