Your E-2 visa business is struggling and your immigration visa is about to expire. What now?
By: Patrick Findaro, Commercial Director at Visa Franchise
At Visa Franchise, we frequently encounter E-2 visa holders whose business is underperforming and are on the last few months of their status. This can be a very stressful time for an E-2 visa investor especially if the individual has a family and is worried about moving back to his home country for a period of time while the visa is resolved. Many of these cases come well referred by experienced attorneys that have an immigration action plan and others come directly to Visa Franchise, often with poor advice from legal counsel (and even no legal counsel). Visa Franchise works side by side with the client and his immigration attorney to find an appropriate franchise investment that meets the qualifications for an E-2 visa in order for the investor to reapply for the E-2 visa in a timely manner.
Five Case Studies of Failed E-2 Visa Businesses
Businesses fail for a variety of reasons. If the business fails or is too marginal to be renewed for the E-2 visa, then the E-2 investor visa needs to invest in a qualifying substitute investment to replace the business. The E-2 visa investor must demonstrate that the business has an economic benefit beyond the petitioner’s family and must create American jobs. Many foreigners will attempt to bring over their concept from abroad (read more here) and others try to buy an existing business that in reality is quite different financially than what the the original business listing claims. We will explore five case studies including a couple cases where they readjusted the plan and subsequently received their E-2 visa approval. The names and nationalities are changed in most cases to protect the identity of our clients.
1) Existing E-2 Visa Business – Not the Same Business as Advertised
Our client, Jaime from Argentina, engaged our services over a year ago. He was on a tight budget for a food services franchise (where the investment was no more than $150,000), and we had provided a few franchise concepts in South Florida that fit his profile. He was very critical of the franchises and emphasized how he wanted a bigger name and a nicer store build out. We took him to a juice franchise concept that was about $400,000 to show what a larger investment could provide. Without our support, Jaime sought out existing businesses for sale with a realtor that matched his budget. Not surprisingly, many of the businesses for sale were performing poorly and for others it was quite evident the owner had fraudulently manipulated the numbers. Jaime finally invested in a café that sold crepes and other snacks.
Within two months of operating the business, he and his wife were working 50+ hours a week to pass breakeven (barely profitable). The financial numbers that the seller provided were grossly overstated and he failed to properly report the hours he actually worked in the business. Jaime eventually reached out to a gelato franchise we previously introduced him to provide a gelato showcase for his café. The gelato was one of the most profitable items but would have been even more profitable if he were a franchisee and not just a purchaser of large quantities of gelato. The gelato franchisor regularly visited the café and kept us informed on how the store was struggling, mismanaged, and had no clear identity, selling any type of snack or dessert. As the business continues to struggle, Jaime will have to invest in another business (ideally a franchise) if he wants to keep his E-2 visa status.
2) Real Estate E-2 Visa Investment – Failed to Grow and Develop
Our current client, Cem from Turkey, was a prominent real estate investor and developer back in Turkey. He moved with his wife and kids to Orlando for quality of life and business opportunities. He planned for a small townhouse development as well as flipping homes throughout the region. The development never got off the ground and he ended up selling the property. His immigration attorney advised him that buying, restoring, then selling homes (otherwise known as flipping) would not be approved in itself for an E-2 visa. Without a proper business and not adhering to his E-2 visa business plan, Cem needed to come up with an alternative to keep his family in Orlando.
He engaged Visa Franchise, and we expedited his business search and analysis to seven days. We presented five unique opportunities, including real estate options. Cem is now deciding between being a distributor of high-end module homes or investing in a real estate property management franchise. For the real estate property management franchise, for franchisees over one year median gross sales are over $500,000 and they on average manage 200+ properties. This sort of real estate endeavor meets the E-2 visa requirements as opposed to some investor who buys 4-6 homes to manage and expects to receive a visa in return.
3) Small E-2 Visa Restaurant – Too Marginal
We have heard of numerous cases of foreigners who sell everything they have in their home country to start a business from scratch in the U.S. Often times, they do not work with a business advisor nor immigration attorney. This leaves them greatly exposed from a financial perspective as well as their immigration status. Many of them become an employee to their business and do not have enough margin to hire a few American employees.
British E-2 Visa Denied in Maine
The New York Times wrote an article a few years back on a British couple whose E-2 visa was not renewed. The British couple owned and operated a restaurant in Wells, Maine for over 10 years. It was called Laura’s Kitchen. However, a few years ago, United States Citizenship and Immigration Services (USCIS) refused to extend their E-2 investor status as the business was not profitable enough. They declared that the business was marginal, defined as not having the present or future capacity to generate more than enough income to provide a minimal living for the E-2 visa holder and his family.
4) Small E-2 Visa Restaurant – Immigration Processing Issue
British E-2 Visa Denied in Utah
In 2015, Suzanne and Bill Whitelock opened a British style restaurant in Plain City, Utah. They had hopes of bringing British style food to rural Utah and growing their business. Suzanne told a Fox News reporter, “We were told we had to have a significant investment, so we sold our house, all our possessions, and invested everything into this building.” It appears their business was going okay, making a profit in the second year, but they had a mishap on the immigration process. It is important to have a top immigration attorney support your E-2 visa renewal. The renewal process is of course always easier when the business is a great success and grows beyond a mom and pop restaurant.
5) Joint Venture with the Wrong Partner – Outright Fraud
Earlier this year, a prominent immigration attorney referred an Italian-Brazilian client, Gustavo, to us. His client had invested a year ago in an Orange County, California healthcare clinic which he supposedly owned 50%. The attorney expressed his concerns during the initial application but the client was impetuous to continue with the investment and E-2 visa application. His E-2 visa was approved in the São Paulo consulate for 2 years—less than the 5-year maximum, probably as the government official had a fair level of skepticism of his case. The operating partner is also a Brazilian national having resided in the U.S. for over 15 years and was able to persuade his fellow national into making the investment. The business turned out to be fraudulent and his supposed operating partner would not share any of the financial information nor pay his quarterly dividend as agreed upon. He has finally accepted the $200,000 investment as a sunk cost and will pursue legal action against his untrustworthy partner. Unfortunately, this is quite common with many foreigners who feel at ease with their fellow nationals in the U.S.
Now we are working with Gustavo to open up a healthy food franchise in Orange County. He spoke to six different franchisors and 10+ franchisees of this healthy food franchise before making a decision. The franchisor is registered with the Federal Trade Commission (FTC) and is further regulated in the state of California by their laws governing franchising. Unfortunately, it is those who tried first to analyze investments themselves, without our advisory, that most value our process.
Depending on how the initial investment was structured, Visa Franchise can work with the investor and immigration attorney to find an appropriate franchise investment to reapply for another E-2 visa or include the new franchise as part of the original business case. Much of this depends on the entities and original business plan used for the E-2 visa petition. Make sure the attorney has ample experience with the E-2 visa and do not be afraid to ask for client referrals when deciding on engaging their services. Sometimes the attorney who is heavily marketing all over the internet does not have the legal acumen to support the immigration case.
Marketing consultant, Roy H. Williams said, “A smart man makes a mistake, learns from it, and never makes that mistake again. A wise man finds a smart man and learns from him how to avoid that mistake altogether.” Unfortunately for some of our clients, they did not have a franchise consultant nor even a competent immigration attorney to act as their advisor during the investor immigration process. It is one thing is to make a mistake once, albeit a VERY costly mistake, but to make that mistake again is unnecessary. Visa Franchise is here to help find and analyze the best E-2 visa businesses for our clients and their families no matter what their unique situation is.
Who Is Visa Franchise?
Visa Franchise guides investors in identifying and analyzing the best investment opportunities tailored to their specific objectives. The focus of the firm is on franchises that qualify for the E-2 (1) and EB-5 visas (2). Visa Franchise is the trusted advisor of clients from all over the world when it comes to helping them find the business opportunity that best meets their investment and immigration goals. Visa Franchise takes into consideration their capability, experience, and size of investment to ensure that they choose the best possible option for their unique, individual situation. Visa Franchise is based in Miami, Florida with offices throughout the U.S. and world.
If you are interested in owning a franchise please reach out to firstname.lastname@example.org or call us at +1-888-550-7556