When most VCs look at a business, they consider it an investment and not a partnership. There is a very important difference between the two. Investments are number games. A VC will invest in 10 companies knowing that 80% of them will fail. This doesn’t mean that they don’t care if a company succeeds or not, but it usually comes down to fragmented demands for their attention. Many VCs will simply not have the time to dedicate or help any of the businesses outside of the top 20%. They might give a franchisor contact information or arrange a meeting with someone who has franchised before, but all of the hard work in finding the right people to plan and execute the franchising legal compliance, systems, training, marketing and sales is still up to the franchisor.
Franchise Foundry looks at our portfolio companies as partners. Although we do acquire equity in the company, we use our investment capital and team expertise to plan and execute the franchising of the business. Instead of just buying our equity, we earn it. We handle the legal, systems, technology, marketing and sales of the franchise. In fact, according to our analysis, by the end of the first year of being our partner, a franchise concept has the same maturity as one 3-4 years older.