Forever Yogurt Uses Twist On Crowd Funding: Crowd Franchising Lets Investors Buy Part Of Franchise

Tuesday, February 04, 2014

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 Palara, 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.

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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.

Palara 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, Palara 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.

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