ApplePie Capital: Crowdfunding Investments into Top Franchises

I don’t know about you, but owning or investing in a franchise business has always captivated me. There is definitely something about owning a local business, a national brand, and starting a business in a box. I'm not alone -- the franchise sector is a huge and growing source of employment for the American economy.

But when you start to look into investing/buying your own franchise, things start to get a little complicated.

Minimum investments are typically high -- high enough to keep most people out. And frankly, even though I work extremely hard, who really wants to run a small restaurant or bagel place and be wedded to your business 24/7?

Crowdfunding investments in Franchises

So, instead of dropping a few hundred thousand dollars into a single business, why not spread some of your money around into different types of businesses?

Well, crowdfunding is making that happen.

ApplePie Capital enables individual investors to build diversified portfolios by investing in franchise debt. Co-founder and CEO, Denise Thomas joined me on my Tradestreaming Podcast to talk about this interesting “asset class” and how to invest in a portfolio of top franchises using ApplePie Capital’s crowdfunding platform.

Listen to my interview with ApplePIe Capital's Denise Thomas here.

Why It Makes Sense to Look at Investing in Franchises

First of all, ApplePie's investments are essentially loans to franchises -- instead of going to a bank or other lending institution, a franchise owner turns to ApplePie and its investors to fund a new build-out or refurbishing an existing location.

(real more about marketplace lending)

Here's why ApplePie explains the investment case to prospective members:

We enable qualified investors to earn attractive fixed income returns by lending to entrepreneurs of high-quality franchise brands.

This exciting asset class features investment opportunities in local businesses supported by proven brands with measurable track records of success. Our franchise loan marketplace unlocks this diverse asset class and enables you to support entrepreneurship and fuel economic growth and jobs in local communities.

All good stuff -- what's interesting about this investment model is that typically, franchises have a lot of data on their store performance. Investors get access to a lot of historical information on which to base their investment decisions. 

Also, ApplePie targets an 8-12% gross return before fees. Not too shabby.

How it works

Check out a past investment opportunity -- this one was for an Einstein Bagels in San Diego, CA. The franchise owner was looking to borrow close to $500,000 and pay 8.5% per year for 7 years. ApplePie supplies the following information to its members so they can size up the opportunity:

  • An ApplePie Rating -- a score of the relative quality of an investment compared to other investments on the platform. Looks at Brand History, Loan Purpose, Operator Experience, Down Payment, and Business History (whether this is a new location or an existing one).
  • Business Highlights -- short bullet points on the health of the business
  • Bankruptcy History -- whether the business or franchisee has declared bankruptcy in the past 7 years
  • Job Creation -- how many jobs with this local business create
  • And more...

Who's the Team Behind Apple Pie Capital

ApplePie is run by Denise Thomas, who has great experience on the forefront of finance.

She's run a variety of businesses that introduced new models for efficient capital flows. She's surrounded by a talented team of professionals from the lending, franchise, and finance world that's put together an impressive platform.

Recent News about ApplePIe

ApplePie Capital is in a pretty hot space, combining online lending with the always-in-demand franchise business. So, it's similar to LendingClub  -- in that investors can come online and loan money to small businesses (that's why Google is interested in the marketplace lending space, anyway.)

The company announced it raised $6 million in Series A funds for its service and received $28 million as a pool of debt capital to use for issuing loans. In a field of a lot of me-too crowdfunding platforms, ApplePie has chosen a differentiated approach, giving investors access to an investment they've traditionally been shut out of.