FranShares has a new approach to passive income, letting people invest in franchises for as little as $500

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High angle view of a piggy bank and colorful pie chart on pink background; cash flow analysis

Image Credits: the_burtons (opens in a new window) / Getty Images

Historically, passive income has been associated with investing in real estate such as rental properties.

FranShares is a Chicago-based startup that wants to offer investors another form of passive income: the chance to invest in franchises for as little as $500. 

For the unacquainted, a franchisor is a party that owns and licenses a franchise business model such as McDonald’s. A franchisee is a party, often a local businessperson, who buys a license and operates one or more franchise locations. While many people dream of becoming a franchisee, the ability to cough up or borrow enough cash is a massive barrier to entry. Upfront costs for “quality” franchises typically cost a minimum of $100,000 and can run into the millions.

The idea behind FranShares’ marketplace is to match franchise operators with investors wanting a piece of a business without having to deal with the headaches and expense involved with owning one. The advantage for franchise operators is the ability to access investment and fund expansion “without the drawbacks of bank loans or private equity,” according to CEO and founder Kenny Rose. Investors gain fractional ownership in franchise locations and the potential to receive excess profits as distributions. 

To date, FranShares has built a “community” of about 43,000 investors — nearly half of which are either millennials or Gen Z. The investors overall are a diverse bunch, ranging from retail investors and accredited investors to family offices and private equity looking to diversify their portfolios. These investors have put money in locations for franchises spanning three different industries so far, including food, kids’ fitness and waste management. Specific brands include Teriyaki Madness, Smash My Trash and Hawaiian Bros.

FranShares wants to make sure people are protected, so franchisors must disclose financials, executive backgrounds and even litigation, and are regulated by the Federal Trade Commission (FTC). The startup’s offerings are also subject to SEC regulations. 

FranShares has raised $4.2 million in seed funding led by Chicago Ventures to grow its business. The Pitch Fund, Litquidity Ventures (Lit Ventures) and Furnished Finder founders Aaron Hashim and Brian Payne also participated in the round. FranShares previously raised $1.57 million in a 2021 pre-seed round. 

The opportunity is there. Franchises made about $859 billion in revenue in the U.S. alone in 2023.

“I see a future where you’re going to be able to go stand in Jimmy John’s and get served by the owner operator, and then on your way out, you see a QR code you can scan and go invest in their expansion,” Rose said.

Opening up access

Rose started FranShares in 2020 after having worked with over 600 franchise brands in more than 100 industries. He was a franchise consultant for three years before starting Semfia, a franchise brokerage.

“I’m passionate about removing barriers of ownership for minority businesspeople who often spend their entire careers in franchises without having the opportunity to become owners,” he told TechCrunch.

Investors on the FranShares platform had the ability to invest only in franchise locations and franchisees until late June when the marketplace offered the first opportunity to invest in the franchisor itself. That franchisor was Kidokinetics, a sports enrichment and physical education program for kids. It’s offering people to invest in its latest capital raise (with a goal of $600,000) as it prepares to roll out dozens of locations throughout North America. 

The most recent investment opportunities (Kidokinetics, BraveHart/Hawaiian Bros.) are for accredited investors, but FranShares says it has offered investments for non-accredited investors in the past and expects to do so in the future.

The startup makes money by charging franchisees and franchisors raising capital a monthly subscription fee for investor relations management. Investors pay a flat annual platform fee and a “small” one-time acquisition fee each time they participate in an offering.

“Although franchising is typically synonymous with fast food, franchising covers hundreds of different industries that most people don’t think of, like haircare and automotive service,” Rose said. “We want to make them all as accessible as possible. We also plan to eventually add real estate so investors can ‘vertically integrate’ their investments.”

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FranShares has a new approach to passive income, letting people invest in franchises for as little as $500

by with No Comment Tech

High angle view of a piggy bank and colorful pie chart on pink background; cash flow analysis

Image Credits: the_burtons (opens in a new window) / Getty Images

Historically, passive income has been associated with investing in real estate such as rental properties.

FranShares is a Chicago-based startup that wants to offer investors another form of passive income: the chance to invest in franchises for as little as $500. 

For the unacquainted, a franchisor is a party that owns and licenses a franchise business model such as McDonald’s. A franchisee is a party, often a local businessperson, who buys a license and operates one or more franchise locations. While many people dream of becoming a franchisee, the ability to cough up or borrow enough cash is a massive barrier to entry. Upfront costs for “quality” franchises typically cost a minimum of $100,000 and can run into the millions.

The idea behind FranShares’ marketplace is to match franchise operators with investors wanting a piece of a business without having to deal with the headaches and expense involved with owning one. The advantage for franchise operators is the ability to access investment and fund expansion “without the drawbacks of bank loans or private equity,” according to CEO and founder Kenny Rose. Investors gain fractional ownership in franchise locations and the potential to receive excess profits as distributions. 

To date, FranShares has built a “community” of about 43,000 investors — nearly half of which are either millennials or Gen Z. The investors overall are a diverse bunch, ranging from retail investors and accredited investors to family offices and private equity looking to diversify their portfolios. These investors have put money in locations for franchises spanning three different industries so far, including food, kids’ fitness and waste management. Specific brands include Teriyaki Madness, Smash My Trash and Hawaiian Bros.

FranShares wants to make sure people are protected, so franchisors must disclose financials, executive backgrounds and even litigation, and are regulated by the Federal Trade Commission (FTC). The startup’s offerings are also subject to SEC regulations. 

FranShares has raised $4.2 million in seed funding led by Chicago Ventures to grow its business. The Pitch Fund, Litquidity Ventures (Lit Ventures) and Furnished Finder founders Aaron Hashim and Brian Payne also participated in the round. FranShares previously raised $1.57 million in a 2021 pre-seed round. 

The opportunity is there. Franchises made about $859 billion in revenue in the U.S. alone in 2023.

“I see a future where you’re going to be able to go stand in Jimmy John’s and get served by the owner operator, and then on your way out, you see a QR code you can scan and go invest in their expansion,” Rose said.

Opening up access

Rose started FranShares in 2020 after having worked with over 600 franchise brands in more than 100 industries. He was a franchise consultant for three years before starting Semfia, a franchise brokerage.

“I’m passionate about removing barriers of ownership for minority businesspeople who often spend their entire careers in franchises without having the opportunity to become owners,” he told TechCrunch.

Investors on the FranShares platform had the ability to invest only in franchise locations and franchisees until late June when the marketplace offered the first opportunity to invest in the franchisor itself. That franchisor was Kidokinetics, a sports enrichment and physical education program for kids. It’s offering people to invest in its latest capital raise (with a goal of $600,000) as it prepares to roll out dozens of locations throughout North America. 

The most recent investment opportunities (Kidokinetics, BraveHart/Hawaiian Bros.) are for accredited investors, but FranShares says it has offered investments for non-accredited investors in the past and expects to do so in the future.

The startup makes money by charging franchisees and franchisors raising capital a monthly subscription fee for investor relations management. Investors pay a flat annual platform fee and a “small” one-time acquisition fee each time they participate in an offering.

“Although franchising is typically synonymous with fast food, franchising covers hundreds of different industries that most people don’t think of, like haircare and automotive service,” Rose said. “We want to make them all as accessible as possible. We also plan to eventually add real estate so investors can ‘vertically integrate’ their investments.”

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Twin Labs founders

Twin Labs automates repetitive tasks by letting AI take over your mouse cursor

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Twin Labs founders

Image Credits: Twin Labs

Meet Twin Labs, a Paris-based startup that wants to build an automation product for repetitive tasks, such as onboarding new employees to all your internal services, reordering items when you’re running out of stock, downloading financial reports across several SaaS products, reaching out to potential prospects and more.

“Twin’s starting point is a science-fiction idea. We saw the development of the technical capabilities of LLMs — foundation models. And the question we asked ourselves was whether we’d be able to duplicate ourselves by training an AI agent on the way we perform our tasks,” Twin Labs co-founder and CEO Hugo Mercier told me.

In Twin Labs’ case, the most interesting thing isn’t what they’re doing — improving internal processes — but how they’re doing it. The company relies on multimodal models with vision capabilities, such as GPT-4 with Vision (GPT-4V), to replicate what humans usually do.

Before landing on multimodal models, Twin Labs first tried to develop autonomous agents using traditional LLMs. “We’ve tested lots of things, we’ve implemented research papers, we’ve tested open source GitHub repositories. Overall, the conclusion is that LLMs are completely unreliable. This means that LLMs are making the wrong decisions,” Mercier said. “In the end, the task isn’t done.”

According to him, GPT-4V has been trained on a lot of different software interfaces and the underlying code bases, which unlocked new possibilities. “When you show an interface, it understands the feature behind the button,” Mercier said.

Unlike Zapier and other automation products, Twin Labs doesn’t rely on APIs and designing complicated multi-step processes. Instead, Twin Labs is more like a web browser. The tool can automatically load web pages, click on buttons and enter text.

For instance, if you’re hiring someone, you might need to add this person’s information in your payroll system, send an invitation to Slack, create a Google Workspace account and invite your new employee to create an account with the healthcare insurance provider.

Companies usually keep a long list of tasks and just go through the list every time there’s a new team member. These tasks aren’t complicated but it’s extremely important to do them well, in the right order and with some specific checkboxes ticked. That’s why it’s going to be important to be able to train Twin Labs’ AI assistant using screen recording and natural language descriptions.

But the startup isn’t there yet — it is working toward this vision. Hugo Mercier and Joao Justi, the two co-founders, spent the last six months building a prototype of this product. They also raised $3 million in pre-seed funding from Betaworks, Motier Ventures, Factorial (Matthew Hartman & Clem Delangue) and many angel investors, such as Florian Douetteau (Dataiku), Thomas Wolf (Hugging Face), Charles Gorintin (Alan), Mehdi Ghissassi (DeepMind), Romain Huet (OpenAI), Irwan Bello (OpenAI), Romuald Elie (DeepMind), Yan-David Erlich (Weights & Biases), Olivier Pomel (Datadog), Rodolphe Saadé (CMA CGM), Thibaud Elziere (Hexa), Quentin Nickmans (Hexa), Philippe Corrot (Mirakl) and Rand Hindi (Snips, Zama).

There are still many challenges ahead for Twin Labs’ autonomous agent system. For example, completing a task costs quite a bit of money — but API and infrastructure costs are rapidly going down in the AI space. Twin Labs will first ship a product with a library of pre-trained tasks to make sure that they work well. After that, the startup expects that it will open up its platform so that clients can create their own tasks.

While many people associate AI products with a chatbot interface, Twin Labs’ approach is interesting as it’s an innovative way to interact with AI models. “We really wanted to get down to the nitty-gritty of what people do on a day-to-day basis, and how we can take over some of the things that are actually a bit of a hassle for them,” Mercier said.

Bluesky opens up federation, letting anyone run their own server

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Blue sky with clouds illustration, representing Bluesky social

Image Credits: Bryce Durbin / TechCrunch

Social network Bluesky, a competitor to X, Threads, Mastodon and others, is opening up its doors with today’s news that the network is now opening up federation, following its public launch earlier this month. The move will allow anyone to run their own server that connects to Bluesky’s network, so they can host their own data, their own account and make their own rules. This decentralized model of social networking is similar to the one that Mastodon already uses, but is underpinned on Bluesky by a different protocol, keeping the two networks separate for now.

The growing interest in federation stems from consumer demand to have more control over their personal data — something that gained more attention after billionaire Elon Musk bought Twitter, rebranded it to X and changed its focus to become an “everything app” with a focus on payments, creators, video shows, AI…and more lax moderation. That sent some former Twitter users in search of alternatives that were more sustainable, like Mastodon and Bluesky.

Bluesky, in particular, drew interest as it began its life as a project funded by Twitter under Jack Dorsey. It has since spun out as its own company, raising funding like a typical startup.

After a somewhat lengthy time in private beta, the company launched to the public earlier this month and now has over 5 million registered users, according to an official tracker. With federation, the network could continue to grow as those interested in self-hosting could set up their own server, or instance, to cater to their own needs or those of a particular community. An instance can send and receive posts from other instances, like the one Bluesky itself operates, but can also block others, if they choose, and set their own moderation guidelines.

This could be helpful for those who were hoping to make Bluesky a safer place to interact, unlike Twitter/X, but found themselves frustrated with Bluesky’s moderation decisions, which have been controversial at times.

While this model is similar to Mastodon, Bluesky uses a newer social networking protocol, the AT Protocol, while Mastodon and many other networks today use ActivityPub. Because the latter is a W3C-endorsed standard, it’s the one being adopted by Instagram for its X rival Threads.

There are some differences between Bluesky and Mastodon, as the company points out today in an announcement.

It notes that Bluesky users will be able to participate in the global conversation, instead of the one dictated by the community they join, as aspects of how your experience differs from others is in your control thanks to other features, like custom feeds and composable moderation. The latter means moderation is not tied to your server. While server operators can set rules around the content they host, communities can use blocklists and soon, independent moderation services, to introduce additional layers of moderation. That means there’s not as much pressure on server operaters to block other servers (defederate) because of the content they host, since users will have their own tools to manage their moderation preferences.

Plus, Bluesky aims to make account portability easier than on Mastodon, allowing users to change servers without changing their username or losing followers or posts.

People interested in hosting their own service will need a bit of technical know-how. To get started, you can view resources across Bluesky’s developer blog, its PDS repo on its GitHub and the PDS Administrators’ Discord. Initially, federation will be open to those interested in running smaller servers.

“There are some guardrails in place to ensure we can keep the network running smoothly for everyone in the ecosystem,” Bluesky’s blog post notes. “After this initial phase, we’ll open up federation to people looking to run larger servers with many users,” it says.

Once alternatives are established, Bluesky will recommend its service as the default to new users, but they’ll be able to change to another at any point, without losing their data.

Bluesky is now open for anyone to join

As Bluesky opens to the public, CEO Jay Graber faces her biggest challenge yet