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Consider the franchises you are most familiar with—perhaps your local salon, your neighborhood restaurant, or a home service business. They likely have easily recognizable names and a brand you can conjure up without much effort. It’s no wonder that 70 of the top 100 franchises are based in the USA.
As a business model, franchising is often synonymous with “local” and “regional” brands due to its huge 80% franchises that fall into this category. That doesn’t mean, nevertheless, that franchising doesn’t attract aspiring entrepreneurs from throughout the world. In fact, there are two visa programs that supply paths to franchise (and other small business) ownership and legal status in the United States: the E-2 visa and the EB-5 visa.
As a franchise consultant, I have worked with many foreign nationals who wanted to open a business in the U.S. while also obtaining legal status, so I have immersed myself in learning about these visa options. I do not provide any legal advice to applicants, and those interested in the legal requirements for E-2 and EB-5 visas should seek the advice of with an attorney.
Let’s take a closer look at each visa options to understand what they mean, the initial requirements for each, and why they are relatively difficult to obtain.
Classification E-2
According to the United States Citizenship and Immigration Services, Investor of the E-2 Treaty is a “nonimmigrant classification” that “allows a citizen of a treaty country to enter the United States if he or she invests a substantial amount of capital in U.S. business.”
General qualifications for E-2 visas, as mentioned, you should be a citizen of a country that has a everlasting treaty with the United States. In addition, the person must invest (or be in the technique of investing) “a substantial amount of capital in a bona fide business in the United States,” which incorporates the full cost of an “established business” — equivalent to a franchise — or the full cost of starting a latest business. Finally, the person must show that he or she intends to enter the U.S. solely for the purpose of developing that business. E-2 visa holders may not engage in any work outside of approved E-2 interests.
It is necessary to understand that this feature is not a path to a Green Card or U.S. citizenship and requires an investment of time and money to qualify. This variety of visa is considered employer-sponsored, and individuals cannot apply for this visa while outside the United States. Additionally, the E-2 is approved in two-year increments (although applicants may reapply every two years indefinitely), and a classified individual may live and work in the United States only so long as his or her business stays in operation.
Note: AND A treaty country is “a country with which the United States maintains a treaty of commerce and navigation, or with which the United States maintains a qualifying international agreement, or that has been recognized as a qualifying country by law.” For a complete list of treaty countries and a history of the dates of each treaty, see this website of the US Department of State.
EB-5 classification
In the early Nineteen Nineties, the United States created the Immigrant Investor Program, which created opportunities for foreigners to invest in American firms to stimulate the economy. This initiative created the EB-5 visa to allow foreigners who could meet the requirements to change into business owners in the United States.
Unlike the E-2, which is a “nonimmigrant classification” and subsequently not a path to U.S. citizenship, the EB-5 Immigrant Investor Program is. For this reason, the EB-5 visa is not employer-sponsored, is much tougher to obtain, and has several stringent requirements that few people qualify for.
As EB-5 Section The U.S. Citizenship and Immigration Services website states that individuals “may apply for lawful permanent residence (obtain a Green Card) if” they first “make a necessary investment in a commercial enterprise in the United States,” which was updated in 2022 to be at least (*2*)$1.05 million; and second, if they “plan to create or retain 10 permanent positions for skilled U.S. workers.” In essence, these two minimum qualifications involve a large financial investment in addition to job creation inside the enterprise.
Although there is no set limit on the variety of EB-5 categories granted, the average annual variety of visa holders is roughly 10,000.
As you can imagine, these two visas are not particularly easy for the average foreign investor to obtain. However, for those that can afford the capital investment, there are several options for owning a business. One of them is a franchise.
Why is owning a franchise a viable option? As a business model, a franchise not only has a framework and a plan for running a profitable business, but also the support of a registered parent company. Therefore, much of the groundwork and preparation for launching the business has already been accomplished, not to mention the support system of other franchisees under the same brand.
Franchising can even be a way to start a business that is culturally relevant to demand trends for a foreigner who has not spent a significant period of time in the country. It can even be a recognizable brand and business model for officials who approve the business for visa purposes.
While franchising is not the only option for E-2 and EB-5 visa holders, it is an avenue price considering for foreigners looking for ways to invest in a U.S. business and gain legal status.