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Franchises Look To Foreign Nationals For Hard-To-Find Financing

eb5.jpgImmigrants who have large bank rolls and a burning desire to live in the United States as legal citizens have an unconventional way to make their dream come true. With U.S. franchises finding it increasingly difficult to secure the financing they require in order to move forward with their expansion, more of them are looking to wealthy foreigners to invest. The EB-5 visa program allows foreigners an opportunity to acquire residency by investing a minimum of $500,000 in an American franchise chain such as Elements Therapeutic Massage, Battery Giant, and YoBlendz. The program was implemented in 1990 and has become especially popular over the last few years due to the reduction of more traditional means of franchising. Immigration attorney have had their plates full working with foreign nationals to locate franchise deals in which they can take advantage of the program.
The program has been a boon for these companies that are participating in the program and the numbers of immigrants looking to take advantage of the program are impressive. In 2012 there were 6,040 applications to the EB-5 program and even more – 65,343 applications – in 2013. Considering that there were only 470 applications files in 2006, it is clear that the program has been picking up significant steam over the last several years. There is, however, one prominent stipulation on the part of the applicants in regard to the terms of the agreement upon approval. The investment that is made is required to generate a minimum of 10 new jobs within two years or the investor’s residency is revoked and they are sent back to their home country.

Based on the increasing number of applicants it is clear that the reward is worth the risk for them. And to this point, it seems to be mutually beneficial, both for the investors as well as for the economy as more than 57,000 jobs have been created and well over $8 billion raised since fall 2013. One of the main reasons for the high numbers is the lack of traditional financing since the economic crisis in 2008. Prior to that there wasn’t significant interest in the program but now companies are beginning to see it as a first option for financing rather than a last resort.
One example of the program working according to its design is the case of 25-year-old Zhijun Mao. Mao, an investor from China, borrowed $550,000 from his parents to purchase a YoBlendz franchise in Miami. According to Mao, his stand is expected to create 24 new jobs between the two yogurt stands that he now owns. So far his venture has been a success and the local economy is seeing the benefits as well.

But it isn’t a perfect system by any stretch as there are few franchise outlets that cost enough to meet the half-million dollar investment minimum mandated by the program. Also, the application process, which involves financial analysis and background checks among other things, can take months or even years to complete. Most franchises have strict and very tight deadlines and the process often drags on too long to meet those deadlines. Still many believe it is the fastest way to obtain residency for foreigners and is a preferred way for them to meet their entrepreneurial goals.

If you or anyone you know is interested in participating in the EB-5 program or would like more information about this or any other immigration program, please visit the Austin immigration attorney at the Lyttle Law Firm website or contact them at their offices in Austin, Texas at 512-215-5225.