Franchising Today - Summer 2016 - 8

Column by Joel Buckberg

Crowdfunding enables businesses without
access to traditional capital financing to
raise money via the Internet.

BENEFITS OF CROWDFUNDING
THIS CAPITAL-RAISING METHOD IS WELL-SUITED FOR FRANCHISING.

IN In2012,
PRESIDENT
OBAMA
2012, President
Obama
the Internet
and social media, typisigned into law the Jumpstart Our
Business Startups Act (JOBS Act). The
Securities and Exchange Commission
(SEC) announced in October 2015 the
final rules under Title III of the JOBS
Act for crowdfunding, the sale of unregistered securities to the public.
Franchising is uniquely suited for the
JOBS Act's crowdfunding process.
Crowdfunding enables businesses
without access to traditional methods
of capital financing to raise capital via
8

franchising-today.com

SUMMER 2016

cally from small-dollar investors. The
rules mandate disclosure of certain
information and affirmative fraud
prevention measures. The crowdfunding rules are not yet formally
published, so they will not be effective
and ready for use until they are.
What utility is crowdfunding for
franchises? Unlike other potential
issuers, franchisors are already subject to rigorous disclosure requirements under the Franchise Rule of

the Federal Trade Commission and
certain state franchise laws. Much of
the disclosure mandated by Title III
is already encompassed in a franchise
disclosure document (FDD), so many
franchisors have already prepared
much of the disclosure required to be
filed with the SEC. From the franchisee side, the information in the FDD
provides some of the disclosure necessary to meet the SEC standards, or
at least provides the basis for developing the necessary information.


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Table of Contents for the Digital Edition of Franchising Today - Summer 2016

Contents
Franchising Today - Summer 2016 - Cover1
Franchising Today - Summer 2016 - Cover2
Franchising Today - Summer 2016 - 1
Franchising Today - Summer 2016 - Contents
Franchising Today - Summer 2016 - 3
Franchising Today - Summer 2016 - 4
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Franchising Today - Summer 2016 - Cover3
Franchising Today - Summer 2016 - Cover4
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http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017winter
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017fall
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017summer
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2017spring
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2016winter
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2016fall
http://www.nxtbook.com/nxtbooks/knighthouse/ft_2016summer
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