Here at Franchise.city we help foreign nationals obtain their E-2 Visas by investing in well known, US based franchises.
A question we often receive is whether it is better to invest in an existing and operational resale franchise, or to start a new franchise.
Obviously if you have the financial means to purchase a successful, already operating resale franchise that is usually your best choice. I stress the word successful because most E-2 applicants overlook this critical attribute and set themselves up for disaster. Lets explore why.
Here at Franchise City we currently work with almost 600 franchises in virtually every sector imaginable. We know how much it costs to start a new retail franchise and the investments range from the low end of $200,000 to over $1,000,000. Keep in mind we are looking at retail brick and mortar franchises not service based franchises which cost a lot less.
So it is typically over 200K to open a retail franchise – however when a prospective E-2 investor visits sites advertising busineses for sale they see hundreds of popular franchises selling for a fraction of that price!! Famous Yogurt franchises for only $50,000! Auto repair shops for only $60,000 there are dozens available and the propsective E-2 applicants eyes light up and they start to contact the sellers with visions of easy E-2 residency on their mind.
Now ask yourself this. Why are these seller who paid a minimum of $250,000 for this franchise selling it for less than they paid? Obviously it is in a distressed financial situation. Its losing money. If the franchise is profitable it will easily for much more than what they paid which is why we suggest only individuals with larger budgets consider investing in a resale franchise. And here is the danger and what can actually happen if you make a poor buyiong decision on a limited budget.
So our E-2 investor sees all these inexpensive franchisesand starts to contact sellers. Will the sellers know about E-2? Of course not, nor will they likely care they just want to sell their business. Now if our applicant has a competent E-2 Visa lawyer it is likely they will caution them on the dangers of this move, but not all people use a lawyer, and not all lawyers are equally competent.
So the E-2 applicant buys the business, completes the paperwork, and eventually sits down for their all important E-2 visa interview. And the very first question the immigration official is likely to ask? “How do you as a new resident to this country expect to turn around this distressed business where a US citizen could not”
Wow. This E-2 visa applicant has spent close to $100,000, and days and weeks preparing only to be shut down right here. If you are buying a financially distressed business you need to show a comprehensive business plan demonstrating how you will turn that business around. How you will employ US workers and become a long term economic benefit to the USA. The US does not want someone to come here only to close the doors to a business. And you have to convince the immigration official that you have the background, the finances and ability to turn this busines around.
And this is the reason why we strongly caution anyone with a lower budget against brick and mortar retail franchises when all you can afford is a financially distressed resale. Generally in these circumstances we suggest exploring new retail franchises or even a service based franchise operated from a small office that has lower costs than those with a storefront retail location.
Here at franchise.city we work with E2 investors helping match them with successful American franchises. we work with hundreds of well known brands that can provide an advantage when applying for the E-2 visa. To learn more about our service click the link on or around this video.