What Is An EB-5 Franchise?

What Is An EB-5 Franchise

What Is An EB-5 Franchise

Each year the United States government gives out 10,000 visas to immigrants who meet a certain set of investment criteria.  One of the investment options is EB-5 Franchise, meaning an immigrant investor can use the funds to invest “Direct” or directly into a business entity such as a franchise as opposed to going through a “Regional Center”.  The primary criteria for a direct EB-5 franchise investment are as follows:

  1. Invest $800,000 or $1,050,000 into the franchise
  2. Own at least 25% of the franchised business
  3. Hire an average of 10 employees over a 2 year period

Regardless of whether the business is profitable or provides a positive return on investment, the immigrant investor will receive a US green card that never expires.


Why Choose An EB-5 Franchise Investment Instead Of Using a Regional Center?

The most common type of EB-5 investment is for the immigrant to invest via a Regional Center.  The most common types of investments are infrastructure, hotels,  assisted living facilities, large residential housing facilities, vacation rental properties, and other types of real estate investments.

If you go to an EB-5 conference or event, for the most part you will be hearing pitches from Regional Centers that have around a 100% success rate in immigrants receiving a green card as well as investors in general getting between 30-100% of their investment back.  But, for every successful Regional Center that you meet, there are tons of other Regional Centers that failed and are now out of the picture.

Case in point.  One of the EB-5 investors that we are building a restaurant franchise with spent $800,000 on a Regional Center and he not only lost 100% of his money but he didn’t even get a green card because the investment flopped and didn’t hire enough employees to meet the minimum federal mandate.

So, on his second attempt, he decided to go with us and just build a restaurant franchise with plenty of additional capital reserves so that even if the restaurant doesn’t succeed (which it should), he will at least get his green card.  And, best case scenario, he will not only get his money back but make many times the amount of money that he would over the next 5-10 years from profits generated from the restaurant.

I’ve had many agents tell me that they specifically target investment opportunities that are as small as possible.  Some agents won’t even work with Regional Centers on projects that are over $50,000,000 because the likelihood of failure is so high.  In general, the smaller the overall investment amount, the more likely it is to actually launch and succeed within a shorter time frame.  The bigger the deal, the more likely it is that somewhere something breaks and then you’re left as one of the last people who gets their money back, oftentimes without a green card.


What If I Don’t Have $800,000 To Invest In EB-5?

The next best option to EB-5 is going to be E-2.  Typically with an E-2 investment in a franchise, you’re going to spend between $100,000 – $400,000 (although you can spend more than that if you like).  The big difference is that an E-2 visa is different than the one that EB-5 investors receive because it has to renew about every 2 years or so.  And, the business you invest in has to survive.  So, if 10 years down the road the business fails, then within around 2 years, your visa will expire and you’ll need to figure out another way to stay in the United States (such as launching another E-2 funded business).

There are some benefits however in an E-2 investment over an EB-5 investment, namely:

  1. You can invest as little as $100,000 instead of a minimum of $800,000
  2. You must own at least 50% of the franchised business
  3. No requirement for number of employees that must be hired

So, if you choose the right franchise to invest in and the right American partners (such as us), you can save yourself somewhere between $400,000 – $900,000.  And, you can potentially make much more money than you would from a typical EB-5 investment via a Regional Center.  For instance, many of the franchises that we’ve invested in get our initial investment back in as little as 12-18 months.  And, for years they continue to produce great returns without needing to be an owner-operator.


Interested In Working With Us?

While we are newer to the EB-5 and E2 franchising space, we are veterans within franchising in general.  Our ad agency Lead PPC has worked with hundreds of franchise brands, has helped sell close to 2,000 franchises, and we also own quite a few franchises ourselves.  We like EB-5 and E2 migrant investors because it allows us to scale more quickly, and it provides a long-term win win for the migrant investor with much lower risk and potentially a much higher ROI than what you can get from large projects via Regional Centers.

If you’re interested in learning more, please fill out the form on our website EB5Franchising.com.