Oscar Jofre Speaks at Franchising Event in Denver, CO

We are always looking for ways to help our clients and the franchise community grow and succeed. That’s why we’re excited that our CEO, Oscar Jofre, got a chance to speak at the “Living in the Roaring 20s: Looking Ahead to a Wild Decade in Franchising” event in Denver, Colorado this week. The event featured dynamic panels of industry leaders. It was a great opportunity to take advantage of a hands-on learning experience, designed to help franchise businesses reach new heights and share key lessons learned from a global pandemic, tools and strategies for risk mitigation, and explore critical trends and new opportunities on the horizon.


Oscar was there to share his valuable expertise regarding raising capital. He joined two panels to discuss how crowdfunding can be used by franchisees and franchisors and how NFTs and cryptocurrencies are permanently altering the franchise landscape.


In addition to Oscar’s presentation, the event also featured panels on franchise strategy, industry outlook, sustainability, post-COVID best practices, navigating mergers and acquisitions, and much more of interest to anyone in the franchise industry, from those just starting to explore franchising to established professionals looking for ways to take their businesses to the next level. 


KoreConX is proud to have been a sponsor of this event, and we hope to see you at the next one!

What is the Opportunity in RegCF for Franchisees and Franchisors?

Raising capital is a critical part of any business, and it can be especially challenging for franchisees and franchisors. Fortunately, there are several options available, notably Regulation CF crowdfunding. This regulatory framework, which was created as part of the JOBS Act, allows businesses to raise up to $5 million per year from a wide range of investors and introduced significant opportunities within the capital raising journey.

An Opportunity for Franchises

Regulation Crowdfunding, RegCF for short, is a securities regulation that allows companies to offer and sell securities to the general public through a crowdfunding portal. Since being passed into law just over 10 years ago, companies have raised over $1B in capital through this exemption.

Of course, there are also risks associated with investing through RegCF. As with any investment, there is always the potential that it may not gain the traction issuers anticipate and the desired capital may not be raised. However, if done carefully and with due diligence, RegCF can be an excellent way for franchisees or franchisors to raise capital.

Advantages of Reg CF for Franchisors and Franchisees

Several key points should be highlighted when it comes to the advantages of crowdfunding through Regulation CF for both franchisors and franchisees. Reg CF opens up a new way to raise capital for franchisors while retaining full ownership and control of their company. This is thanks to the lower investment minimums required and the ability to raise capital from both accredited and non-accredited investors. On the other hand, franchisees can use Reg CF to improve the reach of their franchise (with the approval of the franchisor) and raise the necessary capital to get their franchise off the ground or expand it.

When it comes to Regulation CF, there are a few key advantages that both franchisors and franchisees can enjoy, including:

  • Lower investment minimums are one of the key selling points of Reg CF for both franchisors and franchisees. This means that issuers can raise capital from their fans, customers, and others who already support the company.
  • The ability to raise capital from both accredited and non-accredited investors is another key advantage of Reg CF, which allows issuers to tap into a larger pool of potential investors.
  • Improved reach is thanks to the fact that Reg CF allows for the use of social media and other online platforms to reach a wider audience of potential investors and increase the likelihood that an offering will receive the exposure needed to be successful.

Getting Involved in Reg CF

For franchisees and franchisors, the opportunities are plentiful with Reg CF. However, the main thing to remember is that to be successful in Reg CF campaigns, you need to have a great product with an even better message.

The first step is to get your product in front of potential investors. This can be done through several channels, including social media, online advertising, and PR. Once you have people interested in your product, it’s crucial to provide them with more information about why your product is worth investing in. This is where having a strong value proposition comes in. Once you have an audience for your product, you can begin the process of getting your offering qualified with the SEC and listing it on a funding portal.

Your value proposition should be clear, concise, and compelling. It should address the needs of your target market and explain how your product can meet those needs. Additionally, your value proposition should be supported by data and customer testimonials. These will help to show potential investors that your product is the real deal.

Finally, it’s important to remember that raising money through Reg CF is a team effort. To be successful, you’ll need to build a strong network of support. This includes family, friends, members of your target market, and a supporting team of key players from lawyers to broker-dealers and marketing professionals to help you reach your goal in the most efficient way possible.

Preparing for the Future with Reg CF

This regulatory crowdfunding framework offers numerous opportunities for early-stage businesses to raise capital from a large pool of investors. Through RegCF, startups and small businesses can offer securities to the general public, allowing investors of all income levels to participate in their growth. Franchising is a great way to expand a business and bring it to new markets. With RegCF, there is now an opportunity for franchisees and franchisors to raise capital from everyday investors through equity crowdfunding.

What Franchisees and Franchisors Should Consider when Crowdfunding

With franchisees and franchisors looking to secure capital, a growing trend is using Regulation CF to raise capital from accredited and nonaccredited investors. Since RegCF’s expansion to $5M in early 2021, the updated limit provides even more potential for franchises to raise the money they need to fund operations and expansions. 


Here are some things franchisees and franchisors should consider:


Anyone Can Invest


Regardless of income, anyone can invest in a RegCF offering. This means that both wealthy accredited investors and everyday investors can also become shareholders. With this in mind, the pool of potential investors increases substantially compared to traditional private investments. 


Fees and Compliance


When conducting a RegCF offering, franchisees and franchisors should be prepared to pay portal fees, potential broker-dealer fees, and legal fees to prepare the offering documents, for example. There will also be a cost to engage with an investor acquisition firm to market the offering to potential investors. 


Building the Franchise 


While one of the most obvious advantages of a crowdfunding campaign is securing funding to grow, there are other benefits. For example, some investors may become franchisees while others are incentivized to become loyal customers. A successful RegCF campaign can also be useful for brand marketing. 


Alternative Financing


For some franchisees, getting a traditional bank loan is not possible. Some banks have requirements for how long a franchise has been open when applying, so this option is not feasible for newer franchises. Instead, crowdfunding can provide the necessary funding to open or expand to new locations. 


More Favorable Terms


Sometimes, offers from private investors like venture capital or private equity firms can be unattractive to franchisors. The investor may request too much control over the company that the owner would not want to give up, making the deal impossible. Instead, crowdfunding allows companies to dictate the deal and retain control over the company.