Franchise Route Considered by EB5 BRICS Investors

Hey, Patrick Findaro here, co-founder at Visa Franchise. I just wanted to go through a trend that we’ve been seeing for 2022 with our clients. As well as a larger prospect base of people that are inquiring about different franchise opportunities for their investor visas.

And we have noticed that traditional EB-5 BRIC investors, (Brazil, Russia, India, China). Over the years, there’s been a lot bigger percentage going the regional center out, where they’re just investing their capital across another 20, 50, 100-plus investors. Generally, in a real estate project, they’re now considering the direct franchise route in 2022.

Investors from BRIC Considering Direct Franchise EB-5 route?

Unfortunately, the Regional Center Program is in a bit of a flux, where it hasn’t been renewed since June 2021. Hopefully it does get re-authorized in Congress in February 2022, so next month. But, if that doesn’t happen, the direct EB-5 option is still available.

Many investors do like the franchise route, because you can predict the cash flow a lot easier than a standalone startup. Buying a business is a great option in the U.S., and many investors do do that for the E-2 visa. Especially when they have proper time to do a thorough due diligence with their attorney, with their accountant.

However, with an EB-5 visa, it’s gotta be new jobs. So 10 full-time new jobs, so 35 hours a week or more, W-2 employees, they can’t be contractors that are receiving a 1099 tax form.

Disadvantanges of Buying a Troubled Franchise

So, with that franchise route, it’s going to be more predictable cash flow, you have the advisor from the franchisor. You technically can buy an existing business, but it’s got to be a troubled business. So unless you’ve already bought businesses in the United States, I don’t recommend that the first business you buy is a troubled one.

The Key: Access to Franchise Data

With a franchise, you do have all the data that’s collected from the franchise disclosure document so you can see how many locations they’re opening, how many locations they’re closing, that submitted investment range.

Does the franchisor have litigation against them? What’s the background of the executives? Had they ever had a bankruptcy? Do they have any litigation ongoing or closed lawsuits against the executives or the franchise company?

So you can get all that information about a franchise that you might be considering for the EB-5. Most of those franchises are going to require you as an owner-operator.

BRIC Countries

So, if you’re from Brazil, Russia, India, China, it’s probably going to be tough to run that business while you wait for the EB-5. Whether that’s two, three, four years.

However, you could potentially get another citizenship by investment. There’s countries like Turkey and Grenada that you could invest. And then, through that, have an E-2 visa kind of as a bridge, or you just wait it out. And there’s a select few franchisors that can work closely with you. So you can manage a manager from afar and the franchisors providing ongoin.