Promoting economic expansion in the United States through E2 and EB 5 makes it easier for immigrants to achieve success in America. Breakthrough legislation created this immigrant investor program in 1990 to create jobs and to stimulate the American economy.
What are E2 and EB 5 visas?
Both visas aim at the same objective: to stimulate growth. But there are crucial differences of which foreign business owners should be aware. First, like many franchises that require active involvement by the owner, the E2 visa requires the immigrant business owner to be personally involved in the day-to-day operations of the business. The EB-5, however, accommodates passive investments into new or existing businesses that can create at least 10 jobs for American workers.
Investment Requirements
The EB 5 visa program requires a minimum investment of at least $500,00 to $1 million per family. This requirement is lowered if the enterprise creates jobs in a targeted employment area (TEA) that is experiencing unemployment that is one and a half times greater than the national average.
The requirements for an E2 visa, however, pose a much lower hurdle with no stated minimum. The law simply requires that the immigrant investor parlay a “substantial amount of capital,” defined by the law as an amount being material and relationship to the cost of purchasing the existing enterprise or establishing a new one, or substantial enough to provide the necessary working capital for the successful management of the business. A good way to validate a “substantial amount of capital” is through a financial feasibility study.
Investment Opportunities
E2 and EB 5 visas create the perfect opportunity for franchises as many of them, like McDonald’s, require active owner participation, which aligns perfectly with the E2 visa. Immigrant investors can invest their hard-earned capital in a troubled business that they can then turn around, or they can buy an existing business and take over completely without any support from the previous owners. But both of these options, while providing the optimal profit potential, also pose the highest degree of risk, unless a restaurant management company is engaged to facilitate and oversee the operations. At TRG restaurant consulting we provide the services necessary for investors to startup and operate their business successfully.
With a franchise, the immigrant capitalist enjoys many advantages. The lifeblood of any business is its customer base, and buying a franchise comes packaged with a well-established customer base. There is brand equity already established, the name is well-known, and this leads to customers who are already loyal and comfortable with purchasing items from a firm with a solid foundation. And unlike buying an existing business, the franchisor provides continued support and training to the employees and managers of the franchise to support the entrepreneurial pursuit of the immigrant business owner. Unfortunately, much of the support provided by franchisors is based on “boilerplate” or generic templates and the contract agreements are also less than favorable to the investor.
The franchising option also offers a moderate to low capital risk for the franchisor and franchisee. Failure rates for franchisees are in some cases lower than they are for other types of new business investments and can be pre-examined by conducting a proper, independent feasibility study. Established franchises which are backed by solid brand awareness, may obtain banks loans with some ease due to the perceived lower risk. From a marketing standpoint, the franchisor has in place advertisements at the local and national level, providing maximum coverage and coverage to boost the revenues of all franchisees without being encumbered by the additional cost of marketing and advertising.
Investing in your own business can be even more rewarding, if the investor is willing to take all of the necessary steps to be successful. This option can also offer a moderate to low capital risk for investors. Starting a new business is not easy, but there are plenty of resources available to assist an owner. For example, at TRG restaurant consulting we offer EB5 business plans, feasibility studies, site selection, lease negotiations, concept development, startup assistance, training, branding, project management, foodservice design and everything needed to get your business open and operating at a high level. Another advantage of opening your own business is the freedom to; develop a concept you believe in and enjoy, to expand and grow, to control your revenue and income, to make adjustments when necessary and of course the flexibility of an open schedule and timeline. This is usually the preferred option for an entrepreneur with future growth in mind. In most cases these type of business savvy investors plan on creating scalable concepts that will be offered as franchise opportunities to others in the future.
If you have questions regarding business opportunities or E2 / EB5 investor information, call TRG Restaurant Consulting at 877-777-6175 or email us at info@trgrestaurantconsulting.com
