Should I Buy an Existing E2 Business or Start a Franchise?

There were 43,286 E2 visas issued by the US immigration authorities in 2019. This represents only a sliver of the total of over 8.7 million visas issued to nationals of countries around the world.

There are several reasons for this. The E2 visa is an excellent way to immigrate to the United States quickly, but it is expensive and difficult to prove eligibility. The complex nature of business startups, in general, is certainly a major factor in these challenges.

One option, start a franchise, deserves serious consideration. There are many advantages to going the franchise route. In this post, we hope to demystify the E2 visa and give you the information to make your business in America a success story.

Buying an existing E2 business might seem to be an easy answer, but good businesses are often hard to find. You have to ask yourself, why are they selling it, to begin with? Keep reading as we explore in-depth if investing in a US franchise might be a better option.

Overview of E2 Visa Requirements

Before considering if the franchise model is a good fit for you, it is important to know if you are able to meet the requirements for an E2 visa. In order to qualify for an E2 visa you must meet the following conditions:

1. National of a Country the US Has a Treaty With

The E2 Investor Trader Visa is strictly limited to citizens of countries in which The United States has a current treaty of commerce,  navigation, and/or trade in place. There are many countries from Europe, South America, and Asia on the list of treaty countries.

2. Currently Invested or In Process of Investing in a US Enterprise

This can be a tricky one. The visa can not be approved until investment requirements are met. But at the same time, meeting those requirements is difficult to determine before a decision on visa eligibility is made by the US immigration authorities.

3. Have the Skills to Develop and Direct the Business

E2 visas are issued to only those uniquely qualified to develop and run the sponsoring business. The owner of the company has the most obvious need to direct the business from within the United States. But others may qualify as having important supporting roles within the business.

4. The Investment Needs to Be Substantial

In some cases, an investment of $25,000 may satisfy the government as long as you prove additional “working capital”. More realistically the investment will need to be closer to $100,000 in order to be considered substantial.

Regardless of the type of business, your startup costs will need consideration as well. These startup costs that have already been invested offer further proof the investment in the enterprise is substantial.

5. The Business Can Not Be Marginal

The government’s reasoning behind E2 visas is to create opportunities for Americans in the form of jobs. In order to satisfy this requirement, the applicant must prove the business has the current and future capacity to have a significant impact on the US economy.

A business plan the demonstrates strategy for growth and the hiring of additional employees in the states helps to satisfy this condition. A business is deemed “not marginal” by showing profits significantly higher than the living costs of the visa holder and their family.

6. Intend to Leave the US Upon Expiration of Visa

This is a no-brainer. Since the E2 visa is not an immigration visa, the US requires the applicant to promise to leave the US before the visa expires. E2 visas can be renewed indefinitely and can be done without leaving the US.

Family and Employees Eligible

The immediate family of an E2 visa holder are also permitted to live in the US. The spouse and children (unmarried and under 21) of the E2 visa holder are eligible to accompany them to the US. The spouses of E2 visa holders are permitted to work, but children are not.

In some cases, the employees of the sponsoring business may qualify as well. The employee(s) must be deemed essential to the operation of the business enterprise. High-level executives, specialized professionals, and management often apply and are approved under the E2 visa guidelines.

What Is the Difference Between E1 and E2 Visas?

The E1 and E2 visas are similar as they are both nonimmigrant business visas. They both allow citizens of treaty countries the means to oversee investment in a US business and live in the US in order to do so. However, there are a couple of important distinctions between the two.

The E1 visa, also known as the E1 International Investor Visa, is specific to international trade and associated business. In order to qualify for an E1 visa, the applicant must be engaged in substantial trade between their home country and the United States.

The E2 visa has no such requirements as the business can be 100% local and still qualify. Yet, with the E2 visa, the applicant must prove substantial investment in said enterprise. E2 visa holders are expected to create more wealth than needed to support themselves and their family, not a requirement of E1 visas.

Advantages of a Franchise for E2 Visa Approval

Many consider the E2 visa the best and closest thing to a green card. E2 visa holders are given an opportunity to participate in the greatest economy in the world, bring their families, and stay in the United States as they work their business.

Since there are no limits to the number of extensions (2 years at a time) an E2 visa holder may apply for. As long as the business continues to meet the E2 visa requirements, E2 visa holders are able to stay in the United States indefinitely.

Many franchise opportunities in the US are in the 50k – 150k initial investment range which are likely to satisfy the “substantial investment” requirements of the government. The government’s requirement that the business be real, operating, and non-marginal is much easier to prove as franchises are usually traditional brick-in-mortar type businesses (nonspeculative).

The main advantage of investing in a franchise to obtain an E2 visa is the fact the business is already a proven business model with data to back up expected profits. Proving to the government the business is not marginal becomes much easier as a result.

Possible Disadvantages

There are two sides to every coin. Complications may arise, depending on which franchise you invest in. Some franchises require extensive training before final ownership of the franchise is completed. The E2 visa can not be approved until the business is officially in operation with the owner. 

For a foreign national, this can be problematic as they will likely need to acquire another type of visa to come to the US to set up the business and complete the franchise training requirements. Setting up an escrow payment (contingent of E2 visa approval) may also become more difficult as franchise agreements are intensive and strict concerning financial commitment.

Franchise vs Buy a Business

The biggest problem with buying an existing business that E2 visa hopefuls run into – lack of documentation and speculation of future profits. Yet, buying an existing business with a proven track record of consistent profits is possible.

In many cases these businesses are fully operational and staffed already. If the business meets the requirements of an E2 visa, as the owner you will only need to maintain its operation to continue to qualify.

Managing Investment Risk

This can be easier said than done. Successful businesses are not often up for sale and it is much more likely the business is failing or the profits are not sustaining. It’s possible to get incredible deals when buying a failing business, but for E2 visa purposes, the uncertainty that comes with such high-risk investments might disqualify your application.

On the other hand, if the business you purchase has operated and was profitable for more than 2 years, you only need to submit the tax returns to prove the business is not marginal and likely to continue to be so. Real-world returns (proven income) always look better on an E2 visa application than a planned enterprise (business plan).

Protecting Your Investment

More than 25% of the estimated 30.7 million small businesses in the US were started by immigrants. Many of these businesses are successful profitable ventures, but the majority of them will fail within two years. Securing an E2 visa is no guarantee that your business will succeed. 

Franchises are a wise investment due to the support system already in place to help you succeed. Owning a franchise is owning a piece of a much larger business. The corporate headquarters of a franchise has the connections, market influence, and advertising budget to streamline your business growth. 

They say there is no such thing as a sure thing in business and they are right. Yet, joining a proven franchise minimizes risk and provides a beaten path to profits and a turn-key business plan from day one.

How to Find E2 Visa Franchises

Learning about franchising opportunities starts with understanding how franchises work. In order to better your odds of success in the US business world, becoming knowledgeable about the type of business is a must. Advanced Franchising™ offers a free online course to purchasing a franchise.

Researching Franchises

Perhaps the best part about starting a franchise is the sheer depth and understanding of the business you can get before you start. As you will be the owner of the business but not alone in the business, you will have a support network of the parent company, their brand awareness, and good reputation in the market. 

With that end goal in mind, set out to find a franchise, that matches your skills, ambitions, and E2 visa requirements. The more reputable and well-known the franchise is, the more likely you will get the e2 visa approval. So, you may want to start your research with the most successful and proven franchises.

When researching franchises, you may find it helpful to narrow your search to your budget and type of business. Franchises in the service industry, fast food sector, and many others are common businesses that successfully secure E2 visas.

Getting Funded

Generally speaking, most E2 visa applicants fund their investment out of pocket. However, there are funding opportunities available to these businesses that you may qualify for. Check with the franchise you are interested in to find out what funding options their franchisees normally pursue.

Any business, including a good E2 business, needs startup and operational capital to launch. Showing your ability to meet the business’s financial needs is a deciding factor in getting approved for the visa.

Because franchises are in the business of partnering with business owners, they are very clear on what finances the business will need to be successful. This translates nicely to less risk for your investment and more confidence in your E2 visa enterprise.

Start a Franchise and Get an E2 Visa

Your journey to America may be riddled with obstacles, but your resolve will surely see you through these difficulties. Starting a franchise is not the “for everybody solution” and these decisions should not be made blindly. Research various franchise business opportunities before you make a decision.

Starting a franchise in The United States can simplify and increase your chances of being issued an E2 visa. Consult with an immigration attorney to learn more about the process. When you’re ready to start a franchise, hire a franchise broker to help you make the right business decisions for success in the US.