How can I meet the criteria to make an EB-5 investment through a franchise? - EB5Investors.com

How can I meet the criteria to make an EB-5 investment through a franchise?

I”m looking to invest $900,000 into a franchised business. Either I will do so independently or co-invest with another American investor where the combined business will meet the employment requirement.
How many years of working capital (rent, salaries etc.) can be counted against the initial capital requirement?
Can I set up 2 or more franchises to meet the capital requirement?
At what stage of my application process do I need to pay the commitment fee to a franchisor? Let’s assume I have setup an escrow account with the requirement capital.

Answers

Ying Lu

Ying Lu

Immigration Attorneys
Answered on

Only if your franchised stores are in a TEA area, your investment amount can be $900,000. Otherwise, your minimum investment will be 1.8 million. All the funds that will be used for job creation can be counted as your investment.

Fredrick W Voigtmann

Fredrick W Voigtmann

Immigration Attorneys
Answered on

Franchises can be excellent EB-5 vehicles under the right circumstances. You can invest independently, but if you are not already in the United States in a valid non-immigrant status, such as E-2, which would allow to run your business, you probably will want to consider partnering with a U.S. citizen, who can help you run the business, or run it for you, until you qualify for your conditional lawful permanent residence. Your business plan will need to be credible, feasible, and based upon verifiable detail, which can come from the franchiser''s history and records of other similar-sized franchise businesses. Uncommitted capital in a bank account, such as a large amount of operating reserves, might not count for EB-5 at risk purposes. You can set up two different franchises, but since you are a direct EB-5, you can have only one "new commercial enterprise" or "NCE", which is defined an one legal entity (corp., LP, or LLC) and its wholly-owned subsidiaries. Also, you want to make sure both locations are located in a Targeted Employment Area. You need to make your investment and pay any franchise fee before you submit your I-526 petition to the USCIS. The use of an escrow account with an automatic release upon I-526 is allowed, but you might want to consider not using an escrow since I-526 processing times are so long.

Bernard P Wolfsdorf

Bernard P Wolfsdorf

Immigration Attorneys
Answered on

If you are going to invest in a franchise, make sure the franchiser is familiar with EB-5 and that you will have the requisite number of jobs allocated. An amount of $900,000 is the reduced amount if you are in a TREA, otherwise the amount is $1.8 million. Have you checked the business is located in a TEA? Also, if two businesses, make sure the structure is acceptable or you may not be able to count both.

A Olusanjo Omoniyi

A Olusanjo Omoniyi

Immigration Attorneys
Answered on

It is difficult to predict a feasible plan with these set of questions. Advisably, consider hiring professionals who can examine the details of a franchise you are interested in. In addition, feel free to consult a few comparative franchise entities rather than just one. Franchises have been used for EB-5, but detailed planning is necessary to create a successful one. If you will need more than one franchise location to meet the investment requirements, you should seriously consider creating a holding company which can help tie the operations together.

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