3 Case Studies Of Failed E-2 Visa Businesses

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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

Jaime 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.

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.

2) Real Estate E-2 Visa Investment – Failed To Grow And Develop

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.

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.

 

Click here mor info and Visas

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.

The New York Times wrote an article a few years back on a British couple whose E-2 visa was not renewed.  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.

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