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How can we invest in an EB-5 restaurant franchise project with diners at different locations?

We plan to participate in EB-5 by investing in a restaurant franchise project which includes several small diners at different locations. Is it a prerequisite for EB-5 that specific locations be secured first through a signed lease or property purchasing contract? If some diners are located in TEAs but some are not, what is the minimum amount of investment?

Answers

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    Barbara Suri

    Immigration Attorney
    Answered on

    One million U.S. dollars at this time.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    It is possible if properly structured and all locations are identified in the EB-5 business plan and secured, or at least a letter of intent is in place. The less accurate information you present in your direct EB-5 case, the riskier it is.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    You can structure it so that the diners are owned/held by a single entity, which would be the entity that the money would be invested in. The location should be secured and in TEAs in order to qualify for the minimum requisite capital investment of $500,000, and at least 10 jobs created.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    If the jobs are not within a TEA, the current minimum investment amount is $1 million. Also in the restaurant industry many are undocumented, so make sure to use E-verify and, if possible, hire only U.S. workers who count, which are citizens or permanent residents.

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    Marko Issever

    EB-5 Broker Dealer
    Answered on

    Unfortunately, if all of the restaurants are not in TEA-designated locations, then I am afraid you will not be able to take advantage of the $500,000 reduced amount. You will then need to invest a minimum of $1 million. Other than that, if you follow all the rules and regulations of a direct EB-5 investment you should be fine. You need to create a newly created enterprise (NCE) that you fund as equity from your personal funds. This NCE could make loans to the separate subsidiaries that own the diners at each location. You need to structure the transaction such that at least 10 full-time positions combined are credited to you. Please work with an experienced EB-5 immigration attorney so that you follow all the necessary steps and not make a mistake along the way.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    Your business plan needs far more detailed information, but it is feasible. In circumstances of this nature, serious consideration should be given to setting up a holding company that all the multiple businesses under one parent company.

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    Charles Foster

    Immigration Attorney
    Answered on

    One could make a direct EB-5 investment in a franchise that owns several locations, provided that you invest in one legal entity that owns the multiple locations. Furthermore, if all the locations are not located in a targeted employment area (TEA), you might have to qualify by making the minimum $1 million investment. As part of the EB-5 petition, you would have to describe the location of the enterprise, including the location of the several franchises.

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    Michael A Harris, Esq

    Immigration Attorney
    Answered on

    Great question. For the direct EB-5 restaurants I have been involved with, a letter of intent or proposed lease may be possible. USCIS would have concerns if the diner is located in a geographic area that is not described in the business plan and initial filing. If some locations are within a TEA but others are not, and the capital will be flowing to operations that are not principally occurring in a TEA, then a full non-reduced minimum investment would appear to be needed.

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    Phuong Le

    Immigration Attorney
    Answered on

    For any portfolio investment, at a minimum all locations must be leased and identified. TEA is all or nothing unless stores are specifically carved out of the fund if non-TEA.

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    Belma Chinchoy

    Immigration Attorney
    Answered on

    In order to qualify for a reduced investment amount, all locations must be in a qualifying TEA. Hard to do an EB-5 biz plan without a location secured, but it's probably worth a discussion.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    There may be a way to make this work. But it is complicated.

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    Robin J Gray

    Immigration Attorney
    Answered on

    One solution would be to put the businesses under one new commercial enterprise (NCE). You would need to make sure the businesses are wholly owned subsidiaries of the NCE. To qualify for TEA, the NCE would have to be in a TEA designated area and show that you are investing at least $500,000. Furthermore, in a direct investment into these separate businesses you are describing, you would invest your personal funds into a holding company (NCE) which 100 percent owns several subsidiary companies. Each separate subsidiary company operating different types of businesses and starting at the same time can receive your personal investment funds in different quantities at different times, and the combined subsidiaries can create 10 full-time jobs within two and half years after the investor's I-526 petition is approved.

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    Hassan Elkhalil

    Immigration Attorney
    Answered on

    Depends on your business structure, the amount of investment, the ownership, etc. Yes, the investment must be at-risk before you file your application, thus the lease or purchase of the property contract must be included along with other supporting documents.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    This is a complex, but achievable structure that really requires more than an Internet Q&A to sort out. But with the right planning it should work out.

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