EB5 Investors Magazine Volume 1 Issue 1 | Page 33

General definition of a franchise :
This can be better understood by comparing franchise to independent business . A franchise is a right granted to an individual or group to market a company ’ s goods or services within a certain territory or location . Some examples of today ’ s most popular franchises are The UPS Store , Domino ’ s Pizza , and McDonalds . Additional examples include automotive , cleaning and maintenance , health and fitness , financial services and pet-related franchises . Independent businesses do not have any mandatory guidelines , fees or regulations that are set by other businesses or locations . Franchises are funded through another entity but are also limited in what they may advertise or sell . Independent businesses , however , can freely operate and can adapt to the market or local environment .
The legal definition of a franchise may seem broad , but once a business is considered a franchise it must operate within many state and federal regulations , as well as restrictions that the head of the franchise enforces . A business might also be a business chain rather than a franchise . Therefore , a careful analysis of the business ’ operation is imperative to determining if it meets the California Business and Professions definition of a franchise .
“ For immigrant investors who are new to this country , they face a daunting task of growing a business in an entirely unfamiliar country , not to mention all the language and cultural barriers that are the roadblocks for their success .”
3 . Franchise v . Start-up Business : from the Perspective of an Immigrant Investor
Immigrant investors face a daunting task of growing a business in an entirely unfamiliar country and are challenged by the language and cultural barriers that are the roadblocks for their success . No matter how successful they were in their own business in their own home country , very few of them can duplicate their success in their adopted home country . When the investor ’ s immigration visa is on the line , securing the success of the business investment , and thus obtaining the permanent residency based on the investment , becomes an overarching objective . Buying into a franchise business leaves much of the uncertainty behind , although it in no way eradicates it , all because of the cornerstone principle of a franchise : the ability to duplicate a proven successful business .
The following are just a few examples of why a franchise can be successful :
Corporate reputation – Well-recognized reputation , image and brand name of the franchise business has already been established . Consumers are always more comfortable purchasing items from a familiar name or company they trust .
Professional training – Extensive training and support are commonly furnished by the franchisor to the franchisee .
Focus on business operation – With the established business model to rely on and follow , the franchisee may save a significant amount of time and focus on the business operation .
Better chance of survival – By associating with proven products and methods .
Fixed business model – Support from the franchisor in training , such as consulting , accounting services , technology , equipment , logistics and advertisement .
Stable and predictable business growth and fair rate of return – Low inventory risk and recognized job creation level .
Of course , start-up business is not without its own merits . They include the following :
1 ) No franchise fee or ongoing royalty ( investing fund can be completely contributed to the business with better flexibility ).
2 ) Investors have maximum control over the operation of the business .
3 ) Greater potential on investment return .
4 . Buying Franchise as Regular EB-5 Investment
In terms of immigration , investing in a franchise is not an investment of a Regional Center Project . It is categorized as “ Regular Investment Program ,” which requires a one million dollar investment or a half million dollar investment in a Targeted Employment Area . Furthermore , the franchise business must “ directly ” create 10 or more full-time jobs within two years . It should also be noted that the investor must invest sufficient funds for the initial business start-up ( in addition to the franchise fee and royalty paid to the franchisor ).
There is no secret for the success of franchising . It is an ideal option for entrepreneurs who want to own and operate their own business . If you are interested in investing in a franchise business , please consult with attorneys whose practice is focus on business law , commercial law and immigration law .
Steve Qi is an EB-5 immigration attorney and the founder of the Law Office of Steve Qi & Associates in Alhambra , Calif . A Chinese native , Steve Qi completed his undergraduate degree in World Economy at Fudan University and worked as a journalist in the international news department of Xinhau News Agency . Steve Qi ’ s practice provides legal counsel for Chinese entrepreneurs seeking to invest and immigrate to the United States . His knowledge of both Chinese and U . S . law is helpful in guiding his clients through the EB-5 process and he has regularly appeared in Chinese Television stations to offer commentary on current immigration issues and legal matters .
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