It was at first a joke. "Well, why not we buy McDonald's ( )? - Get McDonald's Corporation Report to guarantee a job for us in the event we fail our crypto trading," said one participant. It was a collective laugh.
"It began from the sort of, well, 90% meme," said Bill "Swo", a Launch Code Capital partner and crypto veteran. Lee is an advisor to friesDao.
The joke became a reality a month later.
FriesDao is a group of crypto enthusiasts and fans who decided to create a new form for governance in the web3 and metaverse worlds. They have raised nearly $4.7 million in just a few days to buy fast-food outlets, and then govern them directly or indirectly.
"The key point is: Can we, as a community, manage and expand a fast food operation in the real world?" Lee agrees.
FriesDao has set the maximum amount it will raise from the community to be less than $10 million. According to its founders, FriesDao had 4,600 members as of February 2, 2012.
Lee comments, "So 10 million actually has some kind of objective planning where, you know? if we average every restaurant we need to purchase might cost anywhere between 500,000 and a million."
"This gives us two stores we can actually ramp into while also reducing our administrative costs. We did some math and decided that this would be enough to attract a lot of interest, while also showing the proof of concept that this proof of concept is possible in real-world operations or assets.
A decentralized autonomous organisation, or DAO, was formed by Kory Spiroff (an ex-executive at Domino's Pizza). Although preliminary discussions are ongoing with several brands, there are good chances that FriesDao's first fast-food restaurant will be a Subway.
Who and what is FriesDao?
FriesDao is an association of crypto and blockchain technology enthusiasts.
According to the members, there are no borders in the business world. Everyone has a voice as long as they take part.
DAOs are a form of transparent, decentralized governance that does not have a trusted third party.
DAO allows members to obtain quick cash without having to do any fundraising.
In short, a DAO is an investment fund in the crypto/web3/metaverse universe.
The governance tokens that a DAO issues are called governance tokens. The number of tokens that they hold gives the tokenholders decision-making power in proportion to their ownership.
Every person who purchases a token will increase their treasury as well as participate in the direction that the community takes. FriesDao distributes Fries tokens to its members.
Lee explains that people who contribute to the treasury would get a kind of symbolic token recognition in form of a fries token.
"But that token also gives them some say in the decision making process about how the stores are purchased and how they expand the future shops, possibly even evolving into very specific store-modification improvement improvements, subject to what a brands might allow."
He says, "A governance proposal could say, hey, we have $2 million in our budget that we want next door. We can put one in Atlanta or one in New York City. But we also want one in Los Angeles. You can also influence it as a token holder.
FriesDao wants fast-food restaurants - Why?
It all began with a joke in cryptosphere for the founders. The group quickly realized that decentralized governance could be possible in both the real world and the metaverse/web.
"I believe, as long as we can pull it off, we'd probably be the first cryptocurrency community to tie together a real-world venture. Lee states that this would be an incredible feat and that we are capable of it.
"And if this is done successfully, it would be an open framework we share with others in the DAO community so that anyone that has some experience could copy the exact same game plan, and then call a proposal for using their treasury expansion to another store."
DAO-governed fast food restaurants are able to retain the spirit of franchising. DAO governance is a great target because the fast-food industry has been an attractive model for many first-time entrepreneurs.
Main Street is familiar with fast food and visits it often. FriesDao may not have stated it, but there is no doubt that fast food industry wants to promote widespread adoption of crypto in order to show the public that it can manage restaurants as well as traditional central entities.
It is not necessary to insist on explaining mathematical concepts or protocols that aren't understood by most people. Adopting a well-known brand doesn't require any demonstrations because fast food is part and parcel of popular imagery.
Subway and McDonald's: What would this look like?
FriesDao plans to purchase a fast-food restaurant within the next three to six months. Preliminary talks are ongoing with franchise owners. However, the scales favor Subway franchises.
It is still to be determined where it will be located. The community wants to open a restaurant in every major U.S. metro area. The main factors that matter are the cost and speed of the steps.
According to friesDao, Subway is the best deal due to the price. Subway would be a good deal due to the cost.
Franchisehelp.com estimates that a McDonald's franchise will cost at least $1,3million. However, the total cost to open a Burger King (QSR - Get Restaurant Brands International Inc Report) franchise ranges from $333,000 up to $3.4 million.
Lee states, "We don’t want to make a mistake and spend 20% of the Treasury on our second attempt." Subway is a good candidate for us because they are less expensive than other franchise brands. That is why we chose to make our first call with Subway.
The community plans to publish annual reports as part of its research on its performance, findings, and experiences in franchising efforts as a DAO. The group believes this can promote the legitimacy of cryptospace.
Are FriesDao members shareholders?
As with all of crypto, legislation regarding DAOs remains unclear and hazy. FriesDao, a token called Fries, is available to members who help fund this effort.
These tokens are symbolic. They do not give equity in the restaurants friesDAO will buy. They will not share in the dividends or profits.
Lee stated that this was due to the limitations of [Securities and Exchange Commission]. "We spent a lot time and effort to see how we could make this a reality without violating any regulatory issues. This is why we need to make this a symbol of our appreciation for your contributions.
FriesDAO believes that the value lies in the dividends and profit-sharing, but not in the profits. According to the group, the social-currency component is what gives the most value.
A token alignment has the advantage of incentivizing everyone to work towards a common goal. Lee says, "For example, we could issue some sort of membership passes in the form NFT where these token holders also have NFT rights."
"We can negotiate with certain stores where we purchase, where there are, you know promotion rebates that were given and a kind of, let's just say, free food for an NFT holder.
"And that's all it is. The value [is]n't in the free food, but in the fact that a community now has the ability to interact with the real-world asset with a real-world use case. It's that which makes it so amazing.
He says, "So there's an perceived network value from those. We can't prove that there is monetary value because regulations prevent us from being able to. You know that people perceive network value differently. This is what we want to do, which is to experiment and see how it works in a true social currency setting.
What if it doesn't work?
FriesDao learned from its mistakes, as many other decentralized autonomous organisations.
If it does not purchase restaurants from major fast-food chains, the group will return the money to its members.
FriesDao kept the money in a multisignature "gnosis safe" wallet to avoid hacks that could lead to the theft of funds. This smart contract is based on the Ethereum blockchain and requires that a transaction be completed by a minimum of signatories.
If you have five people involved in a trade the wallet can be programmed so that they all need to give their approval before the transaction can be activated. This avoids the possibility that one person may lose the funds.
Like other DAOs friesDao still has to deal with the fact that those who have the most tokens have more influence on the direction and running of the community. The community's wealthiest members will have the most power. The most qualified might have the least power.
"If someone puts in $1, then they're going away, versus someone who puts in $100, you have to consider the fact that someone is taking on more risk than another person," said Brett Beller (co-founder of Drizly, an online liquor store, and adviser to FriesDao.