FREQUENTLY ASKED QUESTIONS

A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. Technically, the contract binding the two parties is the “franchise,” but that term more commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is most often referred to as franchising. There are two different types of franchising relationships. Business Format Franchising is the type most identifiable. In a business format franchise, the franchisor provides to the franchisee not just its trade name, products and services, but an entire system for operating the business. The franchisee generally receives site selection and development support, operating manuals, training, brand standards, quality control, a marketing strategy and business advisory support from the franchisor. While less identified with franchising, traditional or product distribution franchising is larger in total sales than business format franchising. Examples of traditional or product distribution franchising can be found in the bottling, gasoline, automotive and other manufacturing industries. While from the public’s vantage point, franchises look like any other chain of branded businesses, they are very different. In a franchise system, the owner of the brand does not manage and operate the locations that serve consumers their products and services on a day-to-day basis. Serving the consumer is the role and responsibility of the franchisee. Franchising is a contractual relationship between a licensor (franchisor) and a licensee (franchisee) that allows the business owner to use the licensor’s brand and method of doing business to distribute products or services to consumers. While every franchise is a license, not every license is a franchise under the law. Sometimes that can be very confusing. In the United States, a franchise is a specific type of licensing arrangement defined by the Federal Trade Commission and also by several states. In the United States a franchise generally exists when: The franchisor licenses a franchisee the right to use its trade or service mark; To identify the franchisee’s business in marketing a product or service using the franchisor’s operating methods; The franchisor provides the franchisee with support and exercises certain controls; and, The franchisee pays the franchisor a fee.

Franchises operate in virtually every sector you can imagine. In addition to a large presence in the restaurant and hotel sectors, the most commonly franchised industry categories include service-related fields such as: Home repair and remodeling Carpet cleaning Household furnishings Property management Maintenance and cleaning services As well, franchises are commonly seen in business support services such as: Accounting Mail processing Advertising services Package shipping Personnel services Printing services. Other commonly franchised industries include: Automotive repairs and services Environmental services Hair salons Health aids and services Computer and phone repair Clothing stores Children’s services

Investment requirements for purchasing a franchise differ tremendously based on the industry and the type of business the franchise operates. Total start-up costs can range from $20,000 or less to more than $1 million, depending on the franchise selected and whether it is necessary to own or lease real estate to operate the business. For a franchise to work with a VISA E-2 the minimum investment should be $100,000 USD.

Definitely! A lot of big companies are formed as a franchise. some of the very well know such as Mcdonalds, and other smaller ones that you wouldn't expect it to be a franchise.

It depends for most businesses. Most franchisors will offer a defined business territory for you to work in, but there are some key things you’ll need to consider before you sign on the dotted line. The location, configuration, size, and composition of your territory, as well as the terms imposed by the franchisor, will be the success or downfall of your business. When trying to find the best territories for your franchise, here are some things to consider: The Size of Your Franchising Territory Greater profitability or sales potential aren’t necessarily guaranteed from bigger territories. You’ll often find that the more lucrative of territories are smaller, because it’s easier to create a loyal base of customers through focused marketing efforts. Smaller areas are also easier to manage logistically, so there aren’t areas left unserved. The right size business territory is one that provides you with enough prospects to meet your sales targets, but without being so large that it lowers your gross margin or productivity levels. The Configuration of Your Territory The profitability, marketability, and manageability of your business will also rely on the shape of your territory. Consider areas that you can travel from your home to your office or customers with ease. For example, if you’re going to be visiting customers’ homes throughout the day, you’ll need to make sure you can commute easily. And if you’re going to be direct mailing clients, it’s easier to mail these within one territory without having purchase multiple zip codes or lists. The Location of Your Territory If your franchise territory is near to (but not encroaching on) other franchise territories, this could give your business a good starting point. Customers within the area may have already heard of your brand, making it easier to get your business going. If you’re the first franchisee in the area, however, be prepared to put more aside for your initial marketing efforts. The Composition of Your Territory Before you accept a territory, it’s crucial that you’ve evaluated its potential customers. Is there a demand for your services or products in this area? For example, if you’re selling cleaning services to residential properties and the area’s largely filled with businesses, this isn’t going to be a good territory for you. A good franchisor will work with a prospect in finding a promising territory for the most potential success. Territorial Protection The territory of your franchise will be described in your Franchise Disclosure Document (FDD). You need to pay close attention to what territory you’re being given and whether it’s “protected” or “exclusive” and how these are defined by your franchisor. Make sure “encroachment” is clearly defined in the agreement, so you know your territory cannot be entered by another franchisee. You may also want to consider whether you’re allowed to promote your services within an “open territory” (one that has no franchisees in it), and whether you’re allowed to accept referral business from someone outside your territory. Considering all these factors is crucial before you make any firm decisions on your franchising territory.

The requirements change from company to company but they all stay within a few categories: You have the funds or can get fininacing for startup costs. A business plan. Satisfy the regulatory requirements. Understanting of the documentation. Visas and Franchises can help you through all the steps of the process.

A Franchise Disclosure Document, also known as an FDD, is a legal document that a franchisor must disclose to a prospective franchisee before a franchise may be sold. The FDD contains 23 disclosure sections that, under the franchise laws, require a franchisor to disclose information about the franchisor, the franchise opportunity being sold, fees charged by the franchisor, the legal relationship between the franchisor and franchisee, and other information about the franchise offering. Under the federal and state franchise laws an FDD must include 23 sections with each section referred to as an “Item.” Below is a summary of the 23 disclosure items of an FDD: Item 1: The Franchisor and any Parents, Predecessors, and Affiliates – Within Item 1 the franchisor must disclose its corporate information, including information about affiliated and parent companies of the franchisor. Item 2: Business Experience – Within Item 2 the franchisor must disclose information about the franchisor’s management team. Item 3: Litigation – Within Item 3 the franchisor must disclose certain types of litigation that currently involves or previously involved the franchisor, the franchisor’s affiliates, predecessors, and/or individual management team members identified in Item 2. Item 4: Bankruptcy – Within Item 4 the franchisor must disclose whether or not the franchisor, the franchisor’s affiliates, predecessors, and/or individual management team members identified in Item 2 previously filed for bankruptcy. Item 5: Initial Fees – Within Item 5 the franchisor must disclose all upfront fees that a franchisee must pay to the franchisor before the franchisee opens the franchised business. The most common initial fees disclosed in Item 5 include the initial franchise fee and other upfront pre-opening fees that may be paid to the franchisor such as fees for opening-inventory and equipment that must be purchased from the franchisor. Item 6: Other Fees – Within Item 6 the franchisor must disclose all other fees that a franchisee must pay to the franchisor throughout the terms of the franchise agreement. These fees typically include on-going royalties, brand development fund, marketing, technology, training, and other fees specific to the franchisor. Item 7: Estimated Initial Investment – Within Item 7 the franchisor must include a low to high estimate of the estimated cost for a franchisee to establish and open the franchised business. This estimate must include everything from build-out costs to reserve capital for the first three months of operation. The biggest expenses in Item 7 relate to expenses related to building-out and equipping the franchised business. Item 8: Restrictions on Sources of Products and Services – Within Item 8 the franchisor must disclose what products and supplies the franchisee must purchase from the franchisor or the franchisor’s designated suppliers. Within Item 8 the franchisor must also disclose revenue and rebates that the franchisor earned from selling source-restricted supplies and products to franchisees. Item 9: Franchisee’s Obligations – Within Item 9 the franchisor must disclose, in table format, the franchisee’s obligations under the franchise agreement. This table includes a summary of all legal obligations ranging from site selection and opening to default provisions and the franchisee’s obligations upon termination of the franchise agreement. Item 10: Financing – Within Item 10 the franchisor must disclose whether or not the franchisor offers franchisees financing as to initial fees to be paid by the franchisor or in connection with the franchised business. Item 11: Assistance, Advertising, Computer Systems, and Training – Within Item 11 the franchisor must disclose the type of assistance and training that the franchisor will provide to the franchisee, advertising requirements imposed on the franchisee, and the required computer and software systems that the franchisee will be required to purchase and utilize. Item 12: Territory – Within Item 12 the franchisor must disclose if the franchisee will be awarded a protected territory, whether or not the territory is protected, how the territory will be determined, and instances where the franchisor reserves the right to operate within the franchisees territory. Item 13: Trademarks – Within Item 13 the franchisor must disclose information about the trademarks of the franchise system, including, whether or not they are registered with the United States Patent and Trademark Office, their registration status, and whether or not the franchisor has notice of a trademark conflict or dispute. Item 14: Patents, Copyrights, and Proprietary Information – Within Item 14 the franchisor must disclose information about any patents, copyrights and other proprietary information that is related to the franchise system. Item 15: Obligation to Participate in the Actual Operation of the Franchise Business – Within Item 15 the franchisor must disclose what obligations, if any, the the individual franchisees / franchisee owners must have in the day-to-day operations of the franchised business including whether or not they must work in the franchised business on a full time basis. Item 16: Restrictions on What the Franchisee May Sell – Within Item 16 the franchisor must disclose its control over what a franchisee may or may not sell as a part of the franchised business. Item 17: Renewal, Termination, Transfer, and Dispute Resolution – Within Item 17 the franchisor must disclose and summarize the legal rights and obligations related to the renewal, termination, and transfer of the franchised business. This item must also include a summary as to how legal disputes must be resolved between the franchisor and franchisee. Item 18: Public Figures – Within Item 18 the franchisor must disclose if there are any celebrities or other public figures that have been hired to promote the franchise system. Item 19: Financial Performance Representations – Within Item 19 the franchisor must disclose whether or not it is making any Financial Performance Representations and if it does, the franchisor must provide specific detail within Item 19. Item 20: Outlets and Franchisee Information – Within Item 20 the franchisor must disclose, in five separate tables, a summary of the franchised and corporate outlets over the prior three years and a projection as to future opening in the next year. Item 21: Financial Statements – Within Item 21 the franchisor must disclose and include copies of the Franchisor’s Financial Statements. Item 22: Contracts – Within Item 22 the franchisor must list and attach as an exhibit all contracts that a franchisee must sign with the franchisor. These contracts include a sample of the franchisor’s standard franchise agreement and related agreements such as a development agreement, site selection agreement, release agreement, and others. Item 23: Receipts – Within Item 23 the Franchisor must include two copies of the receipt page. The receipt page is the page that a franchisee must sign to confirm and prove the proper disclosure and delivery of the FDD. The FDD is also a business document that discloses to prospective franchisees the business underpinnings of your franchise.

It’s important to assess the potential risk of the various franchise investments you’re considering to determine where they lie on the risk axis. Keep in mind, their perceived risk isn’t limited to a single factor. Rather, it’s the sum of all the risk factors that could cause your investment to go south. With that in mind, let’s look at some of these risk factors so you can measure the risk associated with the franchises you’re considering. Fads If it’s been around for years and has an established market, it will probably be around in the future -- absent other changes in the market. But if it’s new to the market, be careful. Remember, new can often mean “higher risk.” Franchise fads can allow you to make money, of course, especially if you jump in early (and perhaps get out early, too) or se­cure a location that gives you a captive market for a popular product. But be careful about jumping on any bandwagon if it seems faddish. Regionality and seasonality You must also evaluate whether the concept will work well in your chosen market. Let’s say you’re from North Carolina and just love the local barbecue. When you relocate to Texas and see that there aren’t any restaurants serving North Carolina-style barbecue, you may think there’s a real opportunity -- and maybe it is. But perhaps there’s a reason North Carolina barbecue isn’t well-known in Texas. In North Carolina, barbecue means pulled pork on a bun with coleslaw. (The sauce varies depending on which part of the state you’re from.) But in Texas, barbecue means BEEF with a spicy, tangy sauce. So while North Carolina barbecue might work in Texas, it could also be a very high-risk venture. Likewise, consider the seasonality of a business. Some businesses will work better in warm climates and others in cold. Looking to get into a lawn-care business? Perhaps you’ll do better in Miami than you would in Chicago. There may, of course, be great reasons to consider a lawncare business in Chicago. Perhaps you’d like to work like a dog for nine months and spend the next three recovering and enjoying the fruits of your labor. Or perhaps you see an opportunity to add a second seasonal business -- say, a holiday décor business -- to your lawn-care business so you can take advantage of the relationships you build (in which case be sure to read your in-term, noncompete clauses very carefully). But seasonality poses a risk if you’re not prepared for it. Labor losses from one season to the next can be an ongoing problem. And there will be the obvious need to manage cash flow during the fat months so you can survive during the lean ones. Regulations Government regulations pose a potential threat to any business. While it’s tough to prognosticate what the government will do, there are certainly some things on the horizon. One obvious example is franchising in the emerging market for cannabis and related products. At the moment, the pendulum is swinging in favor of more broad-based acceptance of cannabis retailing -- at least at the state level. At the same time, cannabis franchises must still navigate federal laws; banking regulations are one major hurdle right now. And conceivably, regulations could be enacted at the federal level that could end recreational cannabis retailing overnight. Recession Resistance Another question you’ll want to address is how well the business will hold up under different economic circumstances. Some busi­nesses perform better than others in difficult times. The first thing that might come to mind is the degree to which a business concept involves a discretionary purchase. For example, if your customers were to lose their jobs, they might be less likely to have their carpets cleaned, their houses painted, or their cars washed, as these tasks could be put off (or done by the consumers themselves) if they had to tighten their belts. Some businesses are highly recession-resistant, such as funeral parlors, health care, and education -- although in each case, the consumer may reduce their spending on these services. And some businesses will actually thrive during tough times. A consumer may be more likely to repair his car during a recession, whereas in a good economy he might simply buy a new one. Be sure to ask any franchisors you are considering how the business fares under different economic conditions. Capital Risks Capital (or financial) risks are involved when the franchisor doesn’t have the resources to meet its growth plans. You’ll want to closely examine the financial statements in the franchise disclosure document (FDD) to determine just how well-capitalized the franchi­sor is. (If you’re not well-versed in finance, ask your accountant to help.

We provide you with the best assistance in the market to make sure you obtain the best results. From getting your Visa or franchise approved, to provide you with tools to create a profitable franchise. Through our years of experience we have ammased a huge network of professionals, copanies, and property owners, that will not only aide in your process but also will provide you with opportunities that others can't. We are also specialists in analysis of locations and finding which businesses are missing in each area so you can take advantage of this.

A franchise fee is the payment a franchisee makes to the franchisor for the right to use the company's brand, products, and intellectual property. This can be done up front or on an ongoing basis according to the terms of the franchise agreement. Instead of creating a business from scratch, a franchisee benefits from the brand recognition and systems that the franchisor has already built. But these benefits come with a cost. Learn more about the purpose of franchise fees and how they work. What Is a Franchise Fee? While the definition of a franchise may differ at the state level, under the Federal Trade Commission (“the FTC Rule”), which defines franchising throughout the United States, a business relationship qualifies as a franchise if three criteria are met: The franchisor licenses its trademarks, service marks, trade name, logo, or other proprietary marks to the franchisee. The franchisor has “significant operating control” or “significant operating assistance” in the franchisee’s business. The franchisee makes a payment to the franchisor of at least $500 (annually adjusted) either before or within six months of opening the business. As you can see, the third element means that a fee is required for a franchise agreement to be considered official. How Franchise Fees Work Franchise fees typically begin with an initial payment that the franchise makes to the franchisor when they sign their franchise agreement and become a franchise. This fee can be any amount above $500 (per the FTC Rule) and is generally in the range of $20,000 to $50,000. The amount will be disclosed upfront in the franchise disclosure document. While many people equate the payment of the franchise fee with the initial services and support provided by the franchisor, that is usually not the case. The fee is merely a payment for joining the franchise system under the terms of the franchise agreement. Essentially, the franchisee must pay for the rights to all of the franchisor's assets that will help them succeed as a business. These assets hold a lot of value, so upfront fees can be expensive. Because the franchisee will continually benefit from these assets, there will usually be ongoing fees as well. These can be royalty payments or marketing fees, and they can be calculated in many ways. In the majority of systems, it's simply a percentage of either the franchisee’s gross or net revenue. This payment, along with its frequency, is disclosed in the franchise disclosure document. When Franchise Fees Vary For most franchisors the initial franchise fee is not negotiable but, like any contract, the amount of the franchise fee is whatever the two parties agree it to be. Franchising is all about consistent and sustainable replication, and if one franchisee has paid a lower franchise fee than others, it can cause problems.

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A franchise territory is the area within which a franchisee is authorized to establish and operate a franchised business. The scope and size of a franchise territory is determined by the franchise agreement, and the levels of protection afforded to a franchisee within the designated territory will vary from franchisor to franchisor. Franchisors use many different terms when referring to franchise territories, such as “operating territory,” “operating area,” “exclusive territory,” “exclusive area,” “designated area,” and “area of responsibility.” If you are buying a franchise, evaluating your franchise territory and the protections granted to you is a critical task. Although your franchise agreement will designate your franchise territory and the level of protection you are granted within FDD Item 12, your franchisor is required to disclose the scope, size, and level of protection it will afford you within your franchise territory. How to Evaluate Your Franchise Territory? The level of protection that you may or may not be granted within your franchise agreement varies from franchisor to franchisor, and many times depends on the industry and type of business. Some franchise systems offer exclusive territories where other franchisees are not authorized to operate or sell, while other systems offer you the ability to operate and sell within a territory but without protection from other franchisees. In other instances, the territory protections fall in between: some forms of territory exclusivity come with specific exceptions for certain venues or forms of commerce, such as the Internet. Below, we summarize important factors to consider when evaluating and, potentially, negotiating the scope, size, and protections associated with your franchise territory: Fixed location businesses versus mobile businesses – When evaluating your territory rights, the first step is to understand the franchised business and whether or not you will be selling goods or services from a fixed location or on a mobile basis. Examples of fixed location franchises include traditional retail businesses, such as restaurants, gyms, and other retail stores; and service-based businesses, such as spas and tutoring services that operate from a center. Examples of mobile franchise businesses include the many service-based businesses where franchisees go out and provide their services on-site at their customer’s location, or deliver products to the customer. Examples of mobile franchised businesses include home-service businesses and businesses that maintain a physical retail presence but rely on customer deliveries for items such as gift baskets. Protection versus no protection – Franchisors vary dramatically as to whether or not they offer their franchisees exclusive territory protection, and even within franchise systems that offer territory protection, there is great variation as to the type of protection and whether or not the protection is contingent on the franchisee’s performance or sales. If a franchisor does not offer territory protection, for a fixed location business, this means the franchisor can grant and authorize another franchisee to open another retail outlet next door, or more realistically, a few blocks away. For mobile businesses, this means the franchisor could authorize other nearby franchisees to service customers located within your territory. Are there exceptions to territory protection? – Many times, franchisors possess a legitimate interest in “carving-out” exceptions to territory protections that they grant to you as a franchisee. When buying a franchise, you need to review these carve-outs and evaluate how they may impact your business. Examples of common exceptions to territory protections include: Captive Markets such as malls, stadiums, college campuses, government institutions, airports, amusement parks, and other venues that draw large captive audiences within your franchise territory; Web and Alternative Distribution Models such as the Internet, websites, catalogs (to the extent people still use catalogs), and direct-to-consumer channels of distribution where the franchisor may deliver products and, possibly, services directly to consumers even if they are located within your franchise territory; Private Label rights that permit the franchisor to sell a competing product or service under a trademark and name that is different from the trademark and name of the franchised business; National Accounts permitting the franchisor to directly service facilities and locations that are part of a large national corporation, even if the account being serviced is located within your franchise territory; and Performance Contingencies that condition your territory rights on performance criteria, such as minimum sales or gross revenue obligations.

The short answer is No. However, the E2 visa regulations require that the E2 visa applicant establish that the business enterprise has the capacity to generate enough income to provide for more than a minimal living for the investor’s family. One way to establish the minimal income requirement is to show that the E2 applicant has hired one or more employees. This would clearly show that the business income is more than enough to provide for only the investor. But, if the E2 visa applicant is not prepared to hire employees during the application process – there is another option. The entrepreneur can create a business plan that details the steps that will be taken within five years to make a significant economic contribution. In the business plan, the investor can project a personnel growth plan within five years. Using this strategy, the E2 investor applicant can present a case for approval without hiring any employees before filing the application.

While operating a franchise there are 2 main costs associated with the franchise. The Royalty and the marketing royyalty. These are normally a percentage of the monthly revenues of the business. Let’s take a look at some of the most common costs associated with opening a franchise. Franchise Fee When opening a franchise, it’s important to remember that you are essentially “renting” the brand from the franchise. That brand comes with a lot of support and recognition, but you still have to pay for the privilege of being associated with it. Franchise fees can be as little as $20,000 or as much as $50,000 or even more. The amount of the fee usually depends on how much you have to do to get the franchise up and running. Franchises that require you to build a location will be more than a mobile or home-based franchise, for example. Your fee will usually cover the cost of your training and site selection support, hence why the fee is higher for businesses that require a location. Exactly what the fee covers is different for each franchise. Sometimes it will just act as a licensing fee for the rights to use the brand. When you are doing your initial research, be sure to find out exactly what your franchise fee covers. Legal and Accounting Fees These fees are on you, of course, but they are well worth it. Any person who is considering purchasing a franchise should absolutely consult with an attorney who is familiar with franchise law. The attorney you hire can review the franchise disclosure document with you and go through the franchise agreement to make sure it’s fair. Each attorney will charge differently for this and it will largely depend on how much time your attorney has to spend on the documents, but you’ll probably have to budget between $1,500 and $5,000 for this. It’s also a good idea to start working with a qualified accounting firm as soon as you decide to purchase a franchise. An accountant can help you set up your books and records for the company and can also help you determine how much working capital you’ll require to get your business set up and have it run until it becomes profitable. Working Capital Speaking of working capital, this is the amount of cash that is available to a given business on a day-to-day basis. It’s crucial to have enough working capital to cover a given length of time. This could be just a few months, or it could be a few years. It depends on how much time the business will need to start bringing in enough revenue for it to run. Franchisors do generally provide an estimate of how much working capital you’ll require, but you should back this up with your own research and do your own calculations with the help of your accountant. Talk to other franchisees in the system about how much they needed. Build-Out Costs Build-out costs include constructing the building and purchasing all the furniture, fixtures, equipment, signage and anything else related to the building such as architectural drawings, zoning compliance fees, contractor fees, decor, security, deposits, insurance and landscaping. Your franchisor will give you an estimate of build-out costs, which vary widely between franchises. If you choose a home-based franchise, obviously there will not be any buildout costs associated with it, but there may be other expenses like vehicles. Supplies These are all the things you require to run your franchise. Restaurants will need food, of course, but they also need plates, cutlery and napkins. Other franchises will need different things to offer their services. Your franchisor can give you a list or estimate of what you will need to run your franchise. Inventory If you are purchasing a retail franchise or some other kind of franchise that sells products, you will need inventory. This is another cost that will vary widely between franchises, but your franchisor should be able to help you with estimates. You might have to purchase between $20,000 and $150,000 worth of inventory depending on the business. Travel and Living Expenses During Training Franchisors will provide training for franchisees and often the franchisee’s management team. While the training itself is usually covered by the franchise fee, the travelling and living expenses to go to a franchise’s headquarters for that training may not be covered. Often, training runs from a few days to a week or so and is followed up with more training back at the franchisee’s location.

A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. Technically, the contract binding the two parties is the “franchise,” but that term more commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is most often referred to as franchising. There are two different types of franchising relationships. Business Format Franchising is the type most identifiable. In a business format franchise, the franchisor provides to the franchisee not just its trade name, products and services, but an entire system for operating the business. The franchisee generally receives site selection and development support, operating manuals, training, brand standards, quality control, a marketing strategy and business advisory support from the franchisor. While less identified with franchising, traditional or product distribution franchising is larger in total sales than business format franchising. Examples of traditional or product distribution franchising can be found in the bottling, gasoline, automotive and other manufacturing industries. While from the public’s vantage point, franchises look like any other chain of branded businesses, they are very different. In a franchise system, the owner of the brand does not manage and operate the locations that serve consumers their products and services on a day-to-day basis. Serving the consumer is the role and responsibility of the franchisee. Franchising is a contractual relationship between a licensor (franchisor) and a licensee (franchisee) that allows the business owner to use the licensor’s brand and method of doing business to distribute products or services to consumers. While every franchise is a license, not every license is a franchise under the law. Sometimes that can be very confusing. In the United States, a franchise is a specific type of licensing arrangement defined by the Federal Trade Commission and also by several states. In the United States a franchise generally exists when: The franchisor licenses a franchisee the right to use its trade or service mark; To identify the franchisee’s business in marketing a product or service using the franchisor’s operating methods; The franchisor provides the franchisee with support and exercises certain controls; and, The franchisee pays the franchisor a fee.

Franchises operate in virtually every sector you can imagine. In addition to a large presence in the restaurant and hotel sectors, the most commonly franchised industry categories include service-related fields such as: Home repair and remodeling Carpet cleaning Household furnishings Property management Maintenance and cleaning services As well, franchises are commonly seen in business support services such as: Accounting Mail processing Advertising services Package shipping Personnel services Printing services. Other commonly franchised industries include: Automotive repairs and services Environmental services Hair salons Health aids and services Computer and phone repair Clothing stores Children’s services

Investment requirements for purchasing a franchise differ tremendously based on the industry and the type of business the franchise operates. Total start-up costs can range from $20,000 or less to more than $1 million, depending on the franchise selected and whether it is necessary to own or lease real estate to operate the business. For a franchise to work with a VISA E-2 the minimum investment should be $100,000 USD.

Definitely! A lot of big companies are formed as a franchise. some of the very well know such as Mcdonalds, and other smaller ones that you wouldn't expect it to be a franchise.

It depends for most businesses. Most franchisors will offer a defined business territory for you to work in, but there are some key things you’ll need to consider before you sign on the dotted line. The location, configuration, size, and composition of your territory, as well as the terms imposed by the franchisor, will be the success or downfall of your business. When trying to find the best territories for your franchise, here are some things to consider: The Size of Your Franchising Territory Greater profitability or sales potential aren’t necessarily guaranteed from bigger territories. You’ll often find that the more lucrative of territories are smaller, because it’s easier to create a loyal base of customers through focused marketing efforts. Smaller areas are also easier to manage logistically, so there aren’t areas left unserved. The right size business territory is one that provides you with enough prospects to meet your sales targets, but without being so large that it lowers your gross margin or productivity levels. The Configuration of Your Territory The profitability, marketability, and manageability of your business will also rely on the shape of your territory. Consider areas that you can travel from your home to your office or customers with ease. For example, if you’re going to be visiting customers’ homes throughout the day, you’ll need to make sure you can commute easily. And if you’re going to be direct mailing clients, it’s easier to mail these within one territory without having purchase multiple zip codes or lists. The Location of Your Territory If your franchise territory is near to (but not encroaching on) other franchise territories, this could give your business a good starting point. Customers within the area may have already heard of your brand, making it easier to get your business going. If you’re the first franchisee in the area, however, be prepared to put more aside for your initial marketing efforts. The Composition of Your Territory Before you accept a territory, it’s crucial that you’ve evaluated its potential customers. Is there a demand for your services or products in this area? For example, if you’re selling cleaning services to residential properties and the area’s largely filled with businesses, this isn’t going to be a good territory for you. A good franchisor will work with a prospect in finding a promising territory for the most potential success. Territorial Protection The territory of your franchise will be described in your Franchise Disclosure Document (FDD). You need to pay close attention to what territory you’re being given and whether it’s “protected” or “exclusive” and how these are defined by your franchisor. Make sure “encroachment” is clearly defined in the agreement, so you know your territory cannot be entered by another franchisee. You may also want to consider whether you’re allowed to promote your services within an “open territory” (one that has no franchisees in it), and whether you’re allowed to accept referral business from someone outside your territory. Considering all these factors is crucial before you make any firm decisions on your franchising territory.

The requirements change from company to company but they all stay within a few categories: You have the funds or can get fininacing for startup costs. A business plan. Satisfy the regulatory requirements. Understanting of the documentation. Visas and Franchises can help you through all the steps of the process.

A Franchise Disclosure Document, also known as an FDD, is a legal document that a franchisor must disclose to a prospective franchisee before a franchise may be sold. The FDD contains 23 disclosure sections that, under the franchise laws, require a franchisor to disclose information about the franchisor, the franchise opportunity being sold, fees charged by the franchisor, the legal relationship between the franchisor and franchisee, and other information about the franchise offering. Under the federal and state franchise laws an FDD must include 23 sections with each section referred to as an “Item.” Below is a summary of the 23 disclosure items of an FDD: Item 1: The Franchisor and any Parents, Predecessors, and Affiliates – Within Item 1 the franchisor must disclose its corporate information, including information about affiliated and parent companies of the franchisor. Item 2: Business Experience – Within Item 2 the franchisor must disclose information about the franchisor’s management team. Item 3: Litigation – Within Item 3 the franchisor must disclose certain types of litigation that currently involves or previously involved the franchisor, the franchisor’s affiliates, predecessors, and/or individual management team members identified in Item 2. Item 4: Bankruptcy – Within Item 4 the franchisor must disclose whether or not the franchisor, the franchisor’s affiliates, predecessors, and/or individual management team members identified in Item 2 previously filed for bankruptcy. Item 5: Initial Fees – Within Item 5 the franchisor must disclose all upfront fees that a franchisee must pay to the franchisor before the franchisee opens the franchised business. The most common initial fees disclosed in Item 5 include the initial franchise fee and other upfront pre-opening fees that may be paid to the franchisor such as fees for opening-inventory and equipment that must be purchased from the franchisor. Item 6: Other Fees – Within Item 6 the franchisor must disclose all other fees that a franchisee must pay to the franchisor throughout the terms of the franchise agreement. These fees typically include on-going royalties, brand development fund, marketing, technology, training, and other fees specific to the franchisor. Item 7: Estimated Initial Investment – Within Item 7 the franchisor must include a low to high estimate of the estimated cost for a franchisee to establish and open the franchised business. This estimate must include everything from build-out costs to reserve capital for the first three months of operation. The biggest expenses in Item 7 relate to expenses related to building-out and equipping the franchised business. Item 8: Restrictions on Sources of Products and Services – Within Item 8 the franchisor must disclose what products and supplies the franchisee must purchase from the franchisor or the franchisor’s designated suppliers. Within Item 8 the franchisor must also disclose revenue and rebates that the franchisor earned from selling source-restricted supplies and products to franchisees. Item 9: Franchisee’s Obligations – Within Item 9 the franchisor must disclose, in table format, the franchisee’s obligations under the franchise agreement. This table includes a summary of all legal obligations ranging from site selection and opening to default provisions and the franchisee’s obligations upon termination of the franchise agreement. Item 10: Financing – Within Item 10 the franchisor must disclose whether or not the franchisor offers franchisees financing as to initial fees to be paid by the franchisor or in connection with the franchised business. Item 11: Assistance, Advertising, Computer Systems, and Training – Within Item 11 the franchisor must disclose the type of assistance and training that the franchisor will provide to the franchisee, advertising requirements imposed on the franchisee, and the required computer and software systems that the franchisee will be required to purchase and utilize. Item 12: Territory – Within Item 12 the franchisor must disclose if the franchisee will be awarded a protected territory, whether or not the territory is protected, how the territory will be determined, and instances where the franchisor reserves the right to operate within the franchisees territory. Item 13: Trademarks – Within Item 13 the franchisor must disclose information about the trademarks of the franchise system, including, whether or not they are registered with the United States Patent and Trademark Office, their registration status, and whether or not the franchisor has notice of a trademark conflict or dispute. Item 14: Patents, Copyrights, and Proprietary Information – Within Item 14 the franchisor must disclose information about any patents, copyrights and other proprietary information that is related to the franchise system. Item 15: Obligation to Participate in the Actual Operation of the Franchise Business – Within Item 15 the franchisor must disclose what obligations, if any, the the individual franchisees / franchisee owners must have in the day-to-day operations of the franchised business including whether or not they must work in the franchised business on a full time basis. Item 16: Restrictions on What the Franchisee May Sell – Within Item 16 the franchisor must disclose its control over what a franchisee may or may not sell as a part of the franchised business. Item 17: Renewal, Termination, Transfer, and Dispute Resolution – Within Item 17 the franchisor must disclose and summarize the legal rights and obligations related to the renewal, termination, and transfer of the franchised business. This item must also include a summary as to how legal disputes must be resolved between the franchisor and franchisee. Item 18: Public Figures – Within Item 18 the franchisor must disclose if there are any celebrities or other public figures that have been hired to promote the franchise system. Item 19: Financial Performance Representations – Within Item 19 the franchisor must disclose whether or not it is making any Financial Performance Representations and if it does, the franchisor must provide specific detail within Item 19. Item 20: Outlets and Franchisee Information – Within Item 20 the franchisor must disclose, in five separate tables, a summary of the franchised and corporate outlets over the prior three years and a projection as to future opening in the next year. Item 21: Financial Statements – Within Item 21 the franchisor must disclose and include copies of the Franchisor’s Financial Statements. Item 22: Contracts – Within Item 22 the franchisor must list and attach as an exhibit all contracts that a franchisee must sign with the franchisor. These contracts include a sample of the franchisor’s standard franchise agreement and related agreements such as a development agreement, site selection agreement, release agreement, and others. Item 23: Receipts – Within Item 23 the Franchisor must include two copies of the receipt page. The receipt page is the page that a franchisee must sign to confirm and prove the proper disclosure and delivery of the FDD. The FDD is also a business document that discloses to prospective franchisees the business underpinnings of your franchise.

It’s important to assess the potential risk of the various franchise investments you’re considering to determine where they lie on the risk axis. Keep in mind, their perceived risk isn’t limited to a single factor. Rather, it’s the sum of all the risk factors that could cause your investment to go south. With that in mind, let’s look at some of these risk factors so you can measure the risk associated with the franchises you’re considering. Fads If it’s been around for years and has an established market, it will probably be around in the future -- absent other changes in the market. But if it’s new to the market, be careful. Remember, new can often mean “higher risk.” Franchise fads can allow you to make money, of course, especially if you jump in early (and perhaps get out early, too) or se­cure a location that gives you a captive market for a popular product. But be careful about jumping on any bandwagon if it seems faddish. Regionality and seasonality You must also evaluate whether the concept will work well in your chosen market. Let’s say you’re from North Carolina and just love the local barbecue. When you relocate to Texas and see that there aren’t any restaurants serving North Carolina-style barbecue, you may think there’s a real opportunity -- and maybe it is. But perhaps there’s a reason North Carolina barbecue isn’t well-known in Texas. In North Carolina, barbecue means pulled pork on a bun with coleslaw. (The sauce varies depending on which part of the state you’re from.) But in Texas, barbecue means BEEF with a spicy, tangy sauce. So while North Carolina barbecue might work in Texas, it could also be a very high-risk venture. Likewise, consider the seasonality of a business. Some businesses will work better in warm climates and others in cold. Looking to get into a lawn-care business? Perhaps you’ll do better in Miami than you would in Chicago. There may, of course, be great reasons to consider a lawncare business in Chicago. Perhaps you’d like to work like a dog for nine months and spend the next three recovering and enjoying the fruits of your labor. Or perhaps you see an opportunity to add a second seasonal business -- say, a holiday décor business -- to your lawn-care business so you can take advantage of the relationships you build (in which case be sure to read your in-term, noncompete clauses very carefully). But seasonality poses a risk if you’re not prepared for it. Labor losses from one season to the next can be an ongoing problem. And there will be the obvious need to manage cash flow during the fat months so you can survive during the lean ones. Regulations Government regulations pose a potential threat to any business. While it’s tough to prognosticate what the government will do, there are certainly some things on the horizon. One obvious example is franchising in the emerging market for cannabis and related products. At the moment, the pendulum is swinging in favor of more broad-based acceptance of cannabis retailing -- at least at the state level. At the same time, cannabis franchises must still navigate federal laws; banking regulations are one major hurdle right now. And conceivably, regulations could be enacted at the federal level that could end recreational cannabis retailing overnight. Recession Resistance Another question you’ll want to address is how well the business will hold up under different economic circumstances. Some busi­nesses perform better than others in difficult times. The first thing that might come to mind is the degree to which a business concept involves a discretionary purchase. For example, if your customers were to lose their jobs, they might be less likely to have their carpets cleaned, their houses painted, or their cars washed, as these tasks could be put off (or done by the consumers themselves) if they had to tighten their belts. Some businesses are highly recession-resistant, such as funeral parlors, health care, and education -- although in each case, the consumer may reduce their spending on these services. And some businesses will actually thrive during tough times. A consumer may be more likely to repair his car during a recession, whereas in a good economy he might simply buy a new one. Be sure to ask any franchisors you are considering how the business fares under different economic conditions. Capital Risks Capital (or financial) risks are involved when the franchisor doesn’t have the resources to meet its growth plans. You’ll want to closely examine the financial statements in the franchise disclosure document (FDD) to determine just how well-capitalized the franchi­sor is. (If you’re not well-versed in finance, ask your accountant to help.

We provide you with the best assistance in the market to make sure you obtain the best results. From getting your Visa or franchise approved, to provide you with tools to create a profitable franchise. Through our years of experience we have ammased a huge network of professionals, copanies, and property owners, that will not only aide in your process but also will provide you with opportunities that others can't. We are also specialists in analysis of locations and finding which businesses are missing in each area so you can take advantage of this.

A franchise fee is the payment a franchisee makes to the franchisor for the right to use the company's brand, products, and intellectual property. This can be done up front or on an ongoing basis according to the terms of the franchise agreement. Instead of creating a business from scratch, a franchisee benefits from the brand recognition and systems that the franchisor has already built. But these benefits come with a cost. Learn more about the purpose of franchise fees and how they work. What Is a Franchise Fee? While the definition of a franchise may differ at the state level, under the Federal Trade Commission (“the FTC Rule”), which defines franchising throughout the United States, a business relationship qualifies as a franchise if three criteria are met: The franchisor licenses its trademarks, service marks, trade name, logo, or other proprietary marks to the franchisee. The franchisor has “significant operating control” or “significant operating assistance” in the franchisee’s business. The franchisee makes a payment to the franchisor of at least $500 (annually adjusted) either before or within six months of opening the business. As you can see, the third element means that a fee is required for a franchise agreement to be considered official. How Franchise Fees Work Franchise fees typically begin with an initial payment that the franchise makes to the franchisor when they sign their franchise agreement and become a franchise. This fee can be any amount above $500 (per the FTC Rule) and is generally in the range of $20,000 to $50,000. The amount will be disclosed upfront in the franchise disclosure document. While many people equate the payment of the franchise fee with the initial services and support provided by the franchisor, that is usually not the case. The fee is merely a payment for joining the franchise system under the terms of the franchise agreement. Essentially, the franchisee must pay for the rights to all of the franchisor's assets that will help them succeed as a business. These assets hold a lot of value, so upfront fees can be expensive. Because the franchisee will continually benefit from these assets, there will usually be ongoing fees as well. These can be royalty payments or marketing fees, and they can be calculated in many ways. In the majority of systems, it's simply a percentage of either the franchisee’s gross or net revenue. This payment, along with its frequency, is disclosed in the franchise disclosure document. When Franchise Fees Vary For most franchisors the initial franchise fee is not negotiable but, like any contract, the amount of the franchise fee is whatever the two parties agree it to be. Franchising is all about consistent and sustainable replication, and if one franchisee has paid a lower franchise fee than others, it can cause problems.

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A franchise territory is the area within which a franchisee is authorized to establish and operate a franchised business. The scope and size of a franchise territory is determined by the franchise agreement, and the levels of protection afforded to a franchisee within the designated territory will vary from franchisor to franchisor. Franchisors use many different terms when referring to franchise territories, such as “operating territory,” “operating area,” “exclusive territory,” “exclusive area,” “designated area,” and “area of responsibility.” If you are buying a franchise, evaluating your franchise territory and the protections granted to you is a critical task. Although your franchise agreement will designate your franchise territory and the level of protection you are granted within FDD Item 12, your franchisor is required to disclose the scope, size, and level of protection it will afford you within your franchise territory. How to Evaluate Your Franchise Territory? The level of protection that you may or may not be granted within your franchise agreement varies from franchisor to franchisor, and many times depends on the industry and type of business. Some franchise systems offer exclusive territories where other franchisees are not authorized to operate or sell, while other systems offer you the ability to operate and sell within a territory but without protection from other franchisees. In other instances, the territory protections fall in between: some forms of territory exclusivity come with specific exceptions for certain venues or forms of commerce, such as the Internet. Below, we summarize important factors to consider when evaluating and, potentially, negotiating the scope, size, and protections associated with your franchise territory: Fixed location businesses versus mobile businesses – When evaluating your territory rights, the first step is to understand the franchised business and whether or not you will be selling goods or services from a fixed location or on a mobile basis. Examples of fixed location franchises include traditional retail businesses, such as restaurants, gyms, and other retail stores; and service-based businesses, such as spas and tutoring services that operate from a center. Examples of mobile franchise businesses include the many service-based businesses where franchisees go out and provide their services on-site at their customer’s location, or deliver products to the customer. Examples of mobile franchised businesses include home-service businesses and businesses that maintain a physical retail presence but rely on customer deliveries for items such as gift baskets. Protection versus no protection – Franchisors vary dramatically as to whether or not they offer their franchisees exclusive territory protection, and even within franchise systems that offer territory protection, there is great variation as to the type of protection and whether or not the protection is contingent on the franchisee’s performance or sales. If a franchisor does not offer territory protection, for a fixed location business, this means the franchisor can grant and authorize another franchisee to open another retail outlet next door, or more realistically, a few blocks away. For mobile businesses, this means the franchisor could authorize other nearby franchisees to service customers located within your territory. Are there exceptions to territory protection? – Many times, franchisors possess a legitimate interest in “carving-out” exceptions to territory protections that they grant to you as a franchisee. When buying a franchise, you need to review these carve-outs and evaluate how they may impact your business. Examples of common exceptions to territory protections include: Captive Markets such as malls, stadiums, college campuses, government institutions, airports, amusement parks, and other venues that draw large captive audiences within your franchise territory; Web and Alternative Distribution Models such as the Internet, websites, catalogs (to the extent people still use catalogs), and direct-to-consumer channels of distribution where the franchisor may deliver products and, possibly, services directly to consumers even if they are located within your franchise territory; Private Label rights that permit the franchisor to sell a competing product or service under a trademark and name that is different from the trademark and name of the franchised business; National Accounts permitting the franchisor to directly service facilities and locations that are part of a large national corporation, even if the account being serviced is located within your franchise territory; and Performance Contingencies that condition your territory rights on performance criteria, such as minimum sales or gross revenue obligations.

The short answer is No. However, the E2 visa regulations require that the E2 visa applicant establish that the business enterprise has the capacity to generate enough income to provide for more than a minimal living for the investor’s family. One way to establish the minimal income requirement is to show that the E2 applicant has hired one or more employees. This would clearly show that the business income is more than enough to provide for only the investor. But, if the E2 visa applicant is not prepared to hire employees during the application process – there is another option. The entrepreneur can create a business plan that details the steps that will be taken within five years to make a significant economic contribution. In the business plan, the investor can project a personnel growth plan within five years. Using this strategy, the E2 investor applicant can present a case for approval without hiring any employees before filing the application.

While operating a franchise there are 2 main costs associated with the franchise. The Royalty and the marketing royyalty. These are normally a percentage of the monthly revenues of the business. Let’s take a look at some of the most common costs associated with opening a franchise. Franchise Fee When opening a franchise, it’s important to remember that you are essentially “renting” the brand from the franchise. That brand comes with a lot of support and recognition, but you still have to pay for the privilege of being associated with it. Franchise fees can be as little as $20,000 or as much as $50,000 or even more. The amount of the fee usually depends on how much you have to do to get the franchise up and running. Franchises that require you to build a location will be more than a mobile or home-based franchise, for example. Your fee will usually cover the cost of your training and site selection support, hence why the fee is higher for businesses that require a location. Exactly what the fee covers is different for each franchise. Sometimes it will just act as a licensing fee for the rights to use the brand. When you are doing your initial research, be sure to find out exactly what your franchise fee covers. Legal and Accounting Fees These fees are on you, of course, but they are well worth it. Any person who is considering purchasing a franchise should absolutely consult with an attorney who is familiar with franchise law. The attorney you hire can review the franchise disclosure document with you and go through the franchise agreement to make sure it’s fair. Each attorney will charge differently for this and it will largely depend on how much time your attorney has to spend on the documents, but you’ll probably have to budget between $1,500 and $5,000 for this. It’s also a good idea to start working with a qualified accounting firm as soon as you decide to purchase a franchise. An accountant can help you set up your books and records for the company and can also help you determine how much working capital you’ll require to get your business set up and have it run until it becomes profitable. Working Capital Speaking of working capital, this is the amount of cash that is available to a given business on a day-to-day basis. It’s crucial to have enough working capital to cover a given length of time. This could be just a few months, or it could be a few years. It depends on how much time the business will need to start bringing in enough revenue for it to run. Franchisors do generally provide an estimate of how much working capital you’ll require, but you should back this up with your own research and do your own calculations with the help of your accountant. Talk to other franchisees in the system about how much they needed. Build-Out Costs Build-out costs include constructing the building and purchasing all the furniture, fixtures, equipment, signage and anything else related to the building such as architectural drawings, zoning compliance fees, contractor fees, decor, security, deposits, insurance and landscaping. Your franchisor will give you an estimate of build-out costs, which vary widely between franchises. If you choose a home-based franchise, obviously there will not be any buildout costs associated with it, but there may be other expenses like vehicles. Supplies These are all the things you require to run your franchise. Restaurants will need food, of course, but they also need plates, cutlery and napkins. Other franchises will need different things to offer their services. Your franchisor can give you a list or estimate of what you will need to run your franchise. Inventory If you are purchasing a retail franchise or some other kind of franchise that sells products, you will need inventory. This is another cost that will vary widely between franchises, but your franchisor should be able to help you with estimates. You might have to purchase between $20,000 and $150,000 worth of inventory depending on the business. Travel and Living Expenses During Training Franchisors will provide training for franchisees and often the franchisee’s management team. While the training itself is usually covered by the franchise fee, the travelling and living expenses to go to a franchise’s headquarters for that training may not be covered. Often, training runs from a few days to a week or so and is followed up with more training back at the franchisee’s location.