investment. The entity is an established business model
and usually has a proven track record. Most, if not all
franchisors, are well capitalized and have the ability to
scale in key markets and offer training and support.
The franchise brand usually provides an established
product or service which may already enjoy widespread
brand-name recognition. This, in turn, allows the franchisee
the benefits of a customer base which would ordinarily
takes years to establish.
A franchisee also benefits by receiving the systems and
processes that have taken a franchisor many years to
create and perfect. The franchisee can offer their customer
a certain level of quality, consistency, and expectations.
Franchises also offer important pre-opening support such
as site selection, design, construction, financing, training,
and a grand-opening program in order to have a successful
launch of the new business.
specific business model in a specific industry. For most
investors, immigrating is a daunting task and owning a
business only adds to the stress of
acclimating to a new country.
In order for long term success and to not jeopardize an
applicant’s EB-5 status, the franchisor also offers ongoing
suppor t: training, national and regional adver tising,
operating procedures, operational assistance, ongoing
supervision and management support, as well as potential
discounted prices and bulk purchase discounts with
authorized vendors for the franchisee. In certain cases,
the franchisor may also provide a management service to
operate the locations.
"Owning a franchise
allows you to go into
business for yourself,
but not by yourself."
Franchising takes care of that issue
by offering, among other things,
training, support, operational know-
how, and processes to successfully
start and continue to operate the
business. Owning a franchise allows
you to go into business for yourself,
but not by yourself. That statement
truly resonates with a foreign investor, because, as stated
previously, the investor has enough to do in order to settle
into a new life.
A FRANCHISE AS A DIRECT EB-5
INVESTMENT
A franchise would most likely qualify as a direct EB-5
Investment. It is not unusual for a franchise to offer double
digit returns on an investment as opposed to the single
digit return on a pooled investment offering. Even though
the USCIS has adjusted the investment level from $500,000
to $900,000, a franchise is still a valuable option as an
investor has the ability to buy multiple locations, depending
on the franchise, and thereby spreading the risk across
locations, or perhaps, with certain franchise offerings, give
them the ability to purchase an entire region, such as a zip
code, city, or county.
Franchises, by the very nature of the business model, is
set-up to meet key factors necessary for a direct EB-5
USING FRANCHISING AS
AN EB-5 TOOL
The EB-5 visa program, with proper
planning, is the perfect vehicle for
a foreign student attending college
in the U.S. to remain in the U.S. after
his or her studies are completed.
Foreign investors’ goals of providing
a better life for their children can be
realized by not only educating the
children in the U.S., but also by having the children own,
operate, and manage a franchised business here.
The versatilit y of the EB -5 visa also ex tends to the
availability of purchasing an existing franchise operation
and/or purchasing an existing network of existing locations
owned by either an existing franchisee or the franchisor. It is
not unusual for a franchisor to own and operate “corporate
owned” locations to either break into a new marketplace or
enter into the market. Many times, the franchisor will need
to exit from being an operator of the business and focus
on franchisor duties and responsibilities. Again, in this
scenario EB-5 becomes the perfect vehicle.
Many franchisors do require an owner/operator with a
high level of English fluency and understanding of rules,
regulations and laws.
Robert Cresanti, president and CEO of IFA stated that
“Investor visa capital is one of many good alternative
financing options for franchisees and franchisors, driving
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