Saturday, December 16, 2017
Business

Twist on crowd funding: Crowd franchising lets investors buy part of franchise

Ever walked into a small business and liked it so much that you thought, "I could make a bundle if I owned one of these!''

A Chicago-based yogurt shop owner says that shouldn't be a pipe dream.

Mandy Calara, co-founder and CEO of Forever Yogurt, has started an online business that allows ordinary people to buy ownership in a franchise for as little as $1,000.

Calara launched CrowdFranchise.com in December with the hopes of expanding his chain of 24 self-serve yogurt shops and, eventually, connecting investors with other franchise concepts. He's promoting nine new group-owned franchises, including one in Tampa and another in Miami Beach, where the chain already has a store on Ocean Drive.

CrowdFranchise.com works like crowd funding sites such as Kickstarter and Indiegogo, except instead of backers donating money to make a new product, campaign or organization come to life, investors buy part of a franchise.

The investors vote on decisions concerning the franchise and get a cut of any profits based on what percent of the franchise they own. The corporate office scouts the sites and provides the management. If the business flops, investors lose their initial investment but aren't financially responsible.

Calara got the idea for crowd franchising when he started franchising Forever Yogurt, a Chicago-centric chain founded in 2010. Despite plenty of interest from investors, not everyone had the $350,000 to $400,000 to start a franchise.

"We were looking for new ways for interested franchisees who did not qualify individually to open a store,'' he said. "We wanted something that the average income investor could participate in.''

So far, Forever Yogurt has received commitments from 19 investors totalling $402,000 to create a location in Chicago's Wicker Park near its flagship store. To open, it needs $650,000 — enough to cover a larger than usual reserve fund.

For anyone thinking about buying a franchise, Calara says group ownership is a good way to gain experience without all the work. Investors are privy to documents and various aspects of the business but don't have to wash the dishes or lock the doors at night.

Finally, some validation for us book nerds. New data from Chase Freedom card services shows that holiday spending on books — including e-books — was up 31 percent over last year, the most of any category.

Interestingly, the survey also found sales of electronics were down 15 percent and toys were down 4 percent. A victory for books? Maybe, in a roundabout way. Chase's analysts credited the boost to so many people already owning tablets, e-readers and laptops, but needing more titles to download.

Denver might be mourning the Super Bowl loss but, at least, has this to cheer: Walmart is offering shoppers there online grocery ordering and store pickup — the first test of "Walmart to Go'' nationwide.

Walmart started online delivery service in Colorado last year and, based on the results, decided to expand to store pickup. Delivery charges run $5 to $7 per trip, but store pickup is free.

Publix tried a similar curbside service several years ago but dropped it in 2012 because of low customer support. It also charged $7.99 per order, which could have been a deterrent.

There's no saying when or if Walmart will expand its online/pickup service, but I'm sure all its competitors will be watching. To promote the new service, Walmart gave Denver area shoppers who ordered groceries online during Super Bowl week a free "Game Time Snack Pack'' with two sodas, two bags of chips and a jar of salsa.

After that blowout of a game, they probably could use it.

Susan Thurston can be reached at [email protected] or (813) 225-3110. Follow her on Twitter @susan_thurston.

Correction: This story has been modified to reflect the misspelling of a name.

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