Beware of “E2 Visa Eligible” Businesses & Franchises
We're digging through 5,500 franchises with our sister company Vetted Biz. And out of hundreds of franchises that are eligible for the E2 visa where they accept E2 visa applicants most are not good businesses.
Written by
Tech VC
Published on
28 Jul 2022
Table of Contents:
This article is based on a video originally recorded on Visa Franchise Youtube Channel.
If you’re looking to get an E2 visa and you’re maybe looking at existing businesses for sale or franchises, this is a warning for you:Â Just because a business says it’s eligible for the E2 visa, (whether that’s a business for sale or a franchise) does not mean it’s going to be able to get you renewed.
Contents
Franchise For Sale Rate vs Failure Rate
A lot of franchises mark themselves as eligible for the E2 visa.
We’re digging through 5,500 franchises with our sister company Vetted Biz. And out of hundreds of franchises that are eligible for the E2 visa where they accept E2 visa applicants most are not good businesses.
One example that we recently reviewed is 9Round. It had a franchise for sale rate and a failure rate of nearly 80% (combining those two statistics).
You can’t just look at net unit growth because 9Round, for example, hasn’t totally imploded, they’re down to 400 locations. I think the peak was closer to 600.
There still are a good amount of locations, but there’s been a lot of churn and there’s been a lot of openings while at the same time more closures. You can read the 9round review on Vetted Biz.
You have to see all the statistics when you're looking to buy a franchise for your E2 visa.
Why is this important?
Mind the failure rate as well as what’s the franchise for sale rate because you want to know: Are a lot of people getting out of this system?
The typical three-year franchise for sale rate or franchise failure rates around 10%, 11%. It went up slightly given the COVID pandemic. It used to be more in the single digits for the franchise for sale rate over a three-year period.
However, that is one of the most important figures for you to look at and really catch a red flag before you invest in any franchise for your E2 visa.
In case of buying an existing business
Now, if you’re buying an existing business for your E2 visa, any seller or any broker can say that this business is eligible for the E2 visa. The investment amount, generally over $100K, a couple of employees, some profitability, it should be eligible for the E2 visa. Does that mean the business is going to survive?
Usually, when you take over an existing business from an individual (not from a corporation) that might help a little more with the transition. Revenue drops 10%, 20%, and profits are probably going to drop closer to 30%. You have to keep that in mind and understand that a lot of these small businesses are not professionally run and the owners are not disclosing what their true profits are.
Definitely sign an NDA, ask for that tax return, ask for their QuickBooks, and hire a professional to do a proper due diligence of the E2 visa business for sale.
Be informed about the Industry
In the franchise side, we have a lot of great data at our sister company, Vetted Biz, on thousands of franchises that are available in the United States.
But before you invest in any franchise, you’ve got to have a franchise attorney review that hundred-plus page franchise agreement to really understand and communicate to you what you’re getting into when you’re signing for that franchise resell or for that startup franchise, as well as they can help negotiate some of the terms.
And potentially, there’s some turns to allow you to open up the business in a lengthier timeframe because it might take some time, for example, to get the E2 visa.
Conclusion
So, buyer beware. Just because it says it’s E2 visa eligible, does not mean it’s a good business and does not guarantee that you’re going to get the E2 visa when you go in for that consulate interview or when you change your status here in the United States to the E2 status.
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