Franchise
& EB-5
Steve Qi
32
by Steve Qi
1. Introduction
The phenomenal increase in the past five years of EB-5 applications, in particular those through Regional Centers, has
eclipsed the number of applications for almost two decades
since EB-5’s inception in 1990. Much of that increase can
be attributed to the rapid economic growth and the resulting
wealth in China and unprecedented rise in Regional Centers.
As investors become more wary of the inherent ailments of the
Regional Center Program (in particular of the fraudulent claims
by some Regional Centers as manifested by the recent lawsuit
by SEC against a Chicago project), the regular EB-5 Program
has once again become the focal point for some savvy investors
and would-be immigrants. An interesting, as well as inevitable
trend, in the regular EB-5 Program is that franchise has become
an increasingly popular vehicle among investors/immigrants.
This article tries to address this trend.
“An interesting, as well as inevitable trend,
in the regular EB-5 Program is that franchise
has become an increasingly popular vehicle
among investors and immigrants.”
2. What is “Franchise”?
Legal definition of a franchise:
According to California Business and Professions Code, section 20001, a “franchise” means a contract or agreement, either
expressed or implied, whether oral or written, between two or
more persons by which:
(a) A franchisee is granted the right to engage in the
business of offering, selling or distributing goods
or services under a marketing plan or system
prescribed in substantial part by a franchisor.
(b) The operation of the franchisee’s business pursuant
to that plan or system is substantially associated
with the franchisor’s trademark, service mark, trade
name, logotype, advertising, or other commercial
symbol, designating the franchisor or its affiliate.
(c) The franchisee is required to pay, directly
or indirectly, a franchise fee.
E B 5 I n v e s to r s M ag a z i n e