QSR Direct Investment
Breaking down the elements of a typical QSR against the EB-5
program requirements, it becomes clear why QSRs and the EB-5
direct investment program are a perfect match for each other:
•
Investment in a new, restructured, or expanded
business: a QSR can range from $350,000 to upwards
of $2 million, depending on the franchise brand.
The investment covers the franchise fee, leasehold,
construction or tenant improvements, furniture,
fixtures, and fittings, as well as insurance, marketing,
payroll, operational reserves, and most importantly,
food. An investment in a QSR in a targeted
employment area that meets the $500,000 threshold
can meet both the new business and minimum
investment requirements of the EB-5 program.
•
Creation of 10 new full-time U.S. jobs: With the
common complaint being that QSRs are always
understaffed, QSRs actually employee a large number
of people. QSRs are often open 7 days a week for
12 hours a day. The duration that the QSR is open
for business results in three work shifts and 18 to 24
full-time jobs per location. A single investor opening
a QSR could expect to far exceed the minimum
ten full-time U.S. workers requirement of the EB-5
program. This large job number could also potentially
support two or more investors per location. This affords
the opportunity for investors with limited funds to
attract and engage the more expensive QSR brands.
•
Management of the new business: The EB-5 Program
requires the immigrant investor to be engaged in
the management of the new commercial enterprise,
either through the exercise of day-to-day managerial
responsibility or through policy formulation. In
regional center sponsored projects this is accomplished
by providing investors with minimum or paired
down rights, whereby the investors have the right to
vote on policy formulation, but no right to exercise
day-to-day control. In direct contrast with regional
center sponsored projects, an investor owning and
operating a QSR can/will bear the responsibility of
policy formulation and day-to-day management.
The last point, managing the new business, is really where
there is a sharp contrast between the QSR direct investment
and regional center sponsored programs. When performing an
evaluation of regional center projects, the common criticism is
that investors are putting their money and faith in a regional
center or developer that they have never met or have had
limited contact with. Without the ability to exercise day-to-day
control, investors can be uncomfortable with a project’s ability
to create the required jobs and to use the funds as detailed in
the project business plan. While fully conceding that this lack
of responsibility and control is attractive to the largest number
of EB-5 investors, for an investor that wishes to be directly
involved in the management of the business and partake in the
potential profits and losses, the QSR direct franchise model
provides that avenue. However, with long delays in processing
and ever changing adjudication standards, we are beginning to
see investors moving away from QSR direct investment and to
regional center sponsored QSR projects.
As detailed further below, delays are unfortunately an issue
yet to have been addressed by USCIS. Continuing delays in
I-526 processing times cause a shift in an investors job creation
window. Investors owning and operating a QSR must be able to
prove job creation by the time or shortly after the I-829 petition
is to be filed. This means that an investor may need to operate
the business and maintain the required job creation for upwards
of 6 years to receive lawful permanent resident status, whereas
a regional center sponsored project using indirect and induced
job creation for hard construction costs could meet the job
creation requirements in year one.
Delays in Processing Times
Current USCIS I-526 processing time is listed as 14 months1,
a period that is difficult to corroborate if you don’t work inside
the USCIS field offices. As practitioners, we see I-526 approval
times ranging from 10 to 24 months. These long processing
times create uncertainty, and are a direct reason for the move
from QSR direct investment to regional center sponsorship.
The filing of the Form I-526 petition does not provide for
an interim visa to the United States, meaning a foreign investor
investing into a new QSR does not have the ability to enter the
United States and manage his/her investment at any point prior
to I-526 approval and adjustment of status to the green card,
either in the United States or at a consulate abroad. The investor
may be able to apply for a B-1 business visa for intermittent business travel, but having a pending green card application muddies
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