Buying a Franchise in the US
Many well known businesses are run by individuals and families as franchises. This is a great opportunity for the foreign investor who is looking to invest their money in the United States in a new business to gain an E-2 investor visa.
One of the disadvantages of buying into a franchise for the average American citizen is the total cost of doing it. Many franchises involve more than $150,000 – that figure would be at the lower end of a franchise purchase. A McDonalds franchise, for instance, needs around $500,000 invested to get it off the ground. Many people who want to be involved in a franchise are those who want to get away from the certainties of working for an employer and want to strike out on their own, yet they may have to resort to getting a loan or mortgaging their home to find sufficient money to buy the franchise.
On the other hand, the money needed for the cheaper franchises are the amounts which a typical E-2 investor might have available. For a successful visa application, any franchise purchase would have to be completed before the application is submitted, so you would need to have the money to pay the fee and any equipment required for the business as well as signing the franchise agreement.
Franchises have a number of attractions for the first time business investor in the United States. Many investors looking to start up a business from scratch here face formidable problems. The main problem is that the full amount of money needed to purchase the business has to be committed before seeking to apply for the visa. Also, the applicant has to demonstrate convincingly that the business will be profitable enough to be viable, support the visa holder and his or her family and provide jobs for American citizens as well – that is one of the goals of the visa program. It is easier in many ways to purchase an existing business than try and start up a new business unless the investor has already had a lot of experience running a similar type of business in their home country and can prove they have this experience.
This is where the purchase of a franchise becomes attractive. The investor chooses to buy into an existing brand with proven business potential. The franchise parent company (e.g McDonalds, Burger King, ACE Hardware, UPS etc.) can provide a considerable amount of back up to help the franchisee in the early stages of the business. The franchise parent can also negotiate considerably lower costs for goods and services needed than a non franchise business.
Purchasing a franchise means that the investor is still exposed to risk and must run the business with a combination of hard work and business acumen, but the risk is softened to a certain extent because of the association with the franchise main operation. Risk is important as far as a visa application is concerned because the success of the E-2 investor’s application does depend on demonstrating that not only has all the necessary paperwork and money been spent before the application is submitted, but that the business is fully exposed to normal risks of profitability as would any other business.