As a nation, America has a long history of encouraging entrepreneurship, innovation, and investment. There’s even a visa that can support you in coming to the U.S. and setting up a franchise. This makes franchising a great way into the country, and the U.S. a great target market for potential franchisees.
So how does it work?
The U.S. Franchise Investor Visa Made Easy
More than 50,000 investor visas are issued to people coming into the U.S. every year. There are two types of visas for this: EB-5 and E-2.
To qualify for an EB-5 visa, you have to make a minimum investment of $900,000 and create at least ten American jobs. This is beyond the reach of many potential franchisees.
The E-2 visa has lower requirements. It requires a “substantial investment,” generally $100,000, and has no set minimum for the number of jobs created.
An estimated 70% of America’s franchises meet the eligibility criteria for the E-2 visa. With over 2,000 franchises out there, that 70% provides a lot of options, which is why most entrepreneurs choose the E-2 investor visa.
Who Can Apply for an E-2 Investor Visa?
Over 70 countries have treaties with the U.S. that give their citizens access to the E-2 visa. To apply for an E-2 visa, you need to be a citizen of one of these countries.
These treaties aren’t identical, and the details of the visa vary depending upon where you come from. How long the visa is valid for, and how often you can enter the country in that time, depends upon your country’s treaty.
Once in the U.S., an E-2 visa investor can stay for two years, after which they must apply for an extension or reenter with a valid visa. Combined with the validity period, this can let some franchise owners stay in the U.S. on an E-2 visa for over five years.
How Hard Is It to Get an E-2 Visa?
If you meet the criteria, then the E-2 visa is one of the easiest ways into the U.S., with an approval rate of 88%. U.S. consulates and embassies provide clear standards for what will make a successful application, though their officers maintain discretion over your approval.
If your E-2 visa is denied, you will be told what visa requirement you didn’t meet. This lets you modify your application to gain approval the second time around.
What Are the Standards for an E-2 Visa?
To make you eligible for an E-2 visa, the business you’re going to run in the U.S. has to meet certain standards:
- You must have controlling ownership.
- It must be a real operating business.
- You must direct and develop the business.
- It must have significant income or economic impact.
But what does this mean in practice?
Controlling Ownership
You must own 50% or more of the business. Two business partners or family members can each own half of a single franchise, letting both apply for E-2 visas.
Real Operating Business
Stock market investments and passive investments in real estate won’t qualify you for an E-2 visa. It has to be an actively operating business that you work on.
Directing and Developing the Business
You don’t have to work day-to-day at the location of your business, which would be impractical for a franchisee running multiple outlets. But you do have to be actively involved in the business, directing and developing it. This shouldn’t be a difficult standard for franchisees to meet. If you care enough to run a business then you’ll already be looking to direct and develop it, to make it as profitable as possible.
Significant Income or Economic Impact
For this part, your business has to meet either one of two criteria.
For the first option, the business has to provide significant income to you and your family. This means earning a minimum amount between $40,000 and $70,000, depending on where in the U.S. the business is. You don’t have to earn this much straight away, but must be able to reach it within the term of your visa.
If you can’t meet the income requirement, then you can instead show how your business contributes to the local and national economy. To meet this standard, the business should have at least $500,000 in sales and five or more employees, although this is not a hard and fast rule. American employees are essential for renewing your E-2 visa when it runs out, and if the net income from the business isn’t high, then the more employees you have the better.
Remember, you don’t need to meet both of these standards. Either significant income or a significant contribution to the economy will do.
Gaining an E-2 Visa Through a Franchise
Although 55% of billion-dollar startups have an immigrant founder, all of these immigrants were already based in the U.S. They had first-hand experience of how business works in the country and of how to deal with American customers. Without that, it’s difficult to succeed in the highly competitive U.S. market.
While you can in theory obtain an E-2 visa for a startup or to buy a business, franchising is often the best option. According to the Harvard Business Review, it takes one to two years to buy a business, with a recommended 12 hours each day committed to the search process. Working with a specialist company like Visa Franchise, the process of finding and analyzing a franchise can be brought down to only three months. Such a company’s accumulated data and franchise industry relationships will provide a smoother process.
Even if you eventually plan to create a non-franchised business, franchising may be the place to start. It’s easier to create a startup or buy a business if you’re already based in the U.S. A franchise gives you a way into the country and the opportunity to experience its business culture.
Of course, there are pros and cons to using a franchise for your E-2 visa, and you need to consider how they balance for you:
Pros:
- Initial and ongoing support from franchisor will help you get your business set up;
- Established business model built to ramp up, meaning that you can start quickly and grow your profits;
- Franchisor provides critical business functions, such as: negotiating with suppliers, research and development, market research, real estate negotiations.
Cons:
- Costs associated with gaining franchise rights;
- Time it takes to open the business and break even;
- Restrictions imposed by franchisor;
- Some franchises do not accept E-2 visa candidates. This includes some high-profile brands like Subway, McDonald’s, and Chick-fil-A.
What Are Popular E-2 Visa Franchise Industries?
With roughly 70% of franchises eligible for the E-2 visa, there are 1,400+ options to explore. The COVID-19 pandemic has changed the franchising landscape, making some industries more or less profitable than they once were.
At present, the main industries to consider are:
- Fast food
- Pet care
- Real estate
- Business services
- Education
- Health
- Cleaning
E-2 Visa Case Studies
So what does this look like in practice?
Case 1: Property Management in Southern California
This case involved a real estate property management franchise with over 200 units across the U.S. The franchisor helped the E-2 visa investor start up their business from zero and provided ongoing marketing and systems support. The franchisee now manages over 300 properties across LA county and plans to grow further.
Business Summary
- Investment Amount: $110,000
- Percent Ownership: 100%
- Investment Horizon: 5+ years
- Time Commitment: 1st year – 60 hours per week; 2nd year – 50 hours per week; 3rd year – 45 hours per week
- New or Existing Unit: new
- Job Count: three W-2 employees
- Estimated Annual Return on Investment: 100%+
Case 2: Services Business in South Florida
The franchisor partially owns a minority non-controlling stake in the E-2 visa business and supports the day-to-day operations. The E-2 visa investor is more focused on the strategy and finances of the service routes. The investor did not have an E-2 visa eligible passport, so he acquired a Grenada passport by investing $220,000 in a government approved real estate project in Grenada.
Business Summary
- Investment Amount: $220,000
- Percent Ownership: 51%
- Investment Horizon: 5+ years
- Time Commitment: semi-absentee
- New or Existing Unit: purchased existing service contracts
- Job Count: two W-2 employees; five 1099 contractors
- Estimated Annual Return on Investment: 8-12%
Going From an E-2 Visa to a Green Card
If you’re going to set up a business in the U.S. then you’ll probably want to stay for the long term. To do that, you’ll need a green card, which allows permanent residence.
Before investing in a business for your E-2 visa, you should look at different paths to that green card. You’ll need the expert advice of a licensed U.S. immigration attorney to get your strategy right, but these options can give you an idea of how you might progress:
EB-1A Green Card
Do you have a specialist skill? Have you been published in industry journals? That expertise could earn you an EB-1A green card, which covers people of extraordinary ability.
If you’re considering an EB-1A green card, then you need to build up evidence for years in advance. Throughout your initial E-2 visa term, prepare your case by taking opportunities to develop and demonstrate your specialist skills, and ensure that they’re validated by others in your industry.
EB-1C Green Card
Do you own a foreign company with at least ten employees and over $1,000,000 in sales? Then you might be eligible to apply for an EB-1C green card, which is for multinational managers and executives.
This is a good route for entrepreneurs with existing business interests outside the U.S. To qualify, you’ll normally need to build up your U.S. organization to have fifteen or more employees working at three or more levels.
EB-1C visas are processed in less than a year for 98% of nationalities, making this a fast route to settlement for anyone who’s eligible.
EB-5 Visa Green Card
Do you have a spare $900,000 to invest? Are you willing to wait two or more years to get your green card? Then EB-5, a green card route designed to draw investment into the U.S., could be for you.
To become eligible, you’ll need to invest a minimum of $900,000 in a qualifying area of the country and create at least ten Americans jobs. If you used a franchise business in the right area for your E-2 visa, if you invest over $900,000 in that area through the business, and if it employs ten or more Americans, then your E-2 business could also see you through the green card process.
This is why it’s important to consider your green card strategy during the E-2 application: the way you enter the country can affect your eligibility to stay for the long term.
Using a Specialized Franchise Consultant
As you’ll have realized by now, this is a complicated and sometimes confusing process. Once you combine the steps involved in setting up a franchise with those involved in a visa application, and then try to get the parts to support each other, you’ll have a lot of work on your hands.
One way to ensure that things go smoothly is to hire a specialist franchise consultant like Visa Franchise. They’ll guide you through the franchise evaluation process, including research, vetting, assessing options, and developing a shortlist. They’ll introduce you to franchisors and franchisees, as well as provide referrals to immigration and business attorneys, to get the legal advice you need on both sides of the process.
Using that sort of expertise from people with insider knowledge of the U.S. system can make all the difference between success and failure. If you’re looking in bewilderment at the thousands of franchise opportunities or how to meet the standards for an E-2 visa, then help is available.
How to Get Started on an E-2 Visa
There are many free resources to support your research and even franchise brokers who will help you negotiate a deal. There are also specialized consultancies like Visa Franchise, who understand the particular issues around the E-2 investor visa and which franchises that visa is compatible with, giving you unique insights that other brokers may be unaware of. You can download Visa Franchise’s exclusive E-2 visa guide here, or apply directly to be a Visa Franchise client, like nearly 400 other E-2 investors.
Whatever route you take, whether it’s through a consultant, a broker, or your own hard work, an E-2 visa can give you a route to a new life and a new career, running a franchise in the U.S.
Patrick Findaro is the Managing Director of Visa Franchise, the leading advisor for identifying and analyzing U.S. businesses eligible for the E-2 investor visa. Visa Franchise has helped 375+ entrepreneurs from over 60 countries achieve their dream of owning a U.S. business. Their small businesses have created over 2,200+ jobs.