USCIS’s New Adjustment of Status Policy May Change How International Buyers Approach Business Transactions

Prepared by Jessica Weiss, Esq., Partner, Weiss & Moy, P.C. Why the deal structure matters A buyer can be ready to purchase a business and the seller can be ready to sign, but an E-2 visa problem can still be hiding in the deal terms. Some issues that I see often that could create problems for an E-2 business deal are over whether a deposit is refundable or not, the financing if tied to the business, the seller if wanting to keep some ownership and control over the deal, and/or the buyer not being able to take over the E-2 business till the visa is issued. E-2 strategy should be part of the deal conversation from the start. The purchase agreement terms, deposit details, financing, seller obligations, assets, and operating plan should all be consistent with E-2 visa requirements. Brokers play a key role in this process because they help people spot issues for E-2 visa purposes and bring it to the attention of a qualified Immigration lawyer. First Step is Start with What Exactly is the Deal? What exactly is the buyer buying? The purchase agreement should clearly identify the business, assets or equity included, purchase price, required deposit, and when the investment becomes committed. If the agreement is vague, the immigration filing may also struggle to connect the buyer’s investment to one specific business and one specific transaction. The funding plan to buy the business should be negotiated alongside the purchase details, not after it. Will the buyer use savings, a gift, a loan, proceeds from another asset, or money moving through related companies? Were taxes paid on funds being used to buy the business? As all funds must come from legal sources for E-2 investment purposes. A funding path assembled at the last minute can delay the transaction and create questions about whether the money was actually committed to the business timely. If the buyer is using a loan, the parties should review the collateral and repayment terms carefully. Financing secured by the buyer’s personal assets may be treated differently from financing secured by the business being purchased. The later is not so desirable for E-2 investor visa purposes. The loan documents, purchase agreement, escrow instructions, and business plan should all describe the same transaction and the same use of the funds. Consistency is key. The buyer should also confirm whether any other person or entity has rights in the investment and whether the documents reflect who is actually making the purchase. These details can affect the purchase agreement, the ownership structure, the flow of funds, and the buyer’s ability to operate the business after the transaction. Make every dollar match the deal Funds may pass through more than one account, company, or country before reaching the U.S. business. That does not automatically make the transaction unworkable, but each step should have a clear business and documentary explanation. The file should show who controlled the funds before they were used to buy the US business, why they moved, and how they were applied to the purchase or required business expenses. At our firm we help clients present a clear picture of all fund transfers to qualify for the E-2 investor visa. This is especially important when the buyer uses related companies or an existing business to make the investment. Ownership records, transfer documents, bank statements, corporate resolutions, and accounting records should support the structure described in the purchase agreement. A simple ownership and money-flow chart can help the broker, buyer, seller, accountants, and immigration counsel understand the same deal quickly. The more entities and transfers involved, the more important it is to make the transaction easy to follow. At our firm we had a case that had several company transfers of funds abroad then several to companies in the US and we were able to show through a detailed organization chart and proper documentation that the funds were always in the position What happens if the visa takes longer? Visa processing may not follow the same timeline as the commercial transaction. Before signing, the parties should discuss whether the agreement will depend on visa issuance, how long the buyer has to complete the purchase, whether the seller will extend the deadline, and what happens to the deposit or escrowed funds if processing takes longer than expected. A visa-contingent purchase may still support an E-2 case when the buyer has made a real commitment, such as placing funds in escrow for release when the condition is satisfied. But escrow is not a substitute for careful drafting. The release conditions, deposit terms, funding, purchase agreement, and immigration filing must all fit together. If the price changes, the assets being purchased change, the seller remains involved, or the parties amend the transaction terms, the immigration team should receive the updated documents. A material change can affect how the investment, the business, and the buyer’s role are presented. Keeping the transaction documents coordinated protects everyone from relying on an outdated version of the deal. Make sure the buyer can actually run the business The transaction should explain what the buyer will do after acquiring the business. The buyer’s ownership interest, authority to make decisions, day-to-day role, and ability to develop and direct the enterprise should match the documents. If a partner, family member, seller, or management company will retain a role, that arrangement should be clearly reflected rather than left ambiguous. It can also hurt the success of the E-2 investor application if the investor isn’t playing a regular role in running fo the US business he just purchased. The buyer should also understand whether the deal is an asset purchase or an equity purchase and what obligations come with it. The structure can affect contracts, licenses, employees, permits, liabilities, and the buyer’s ability to operate immediately. Transaction and tax counsel should address those issues while immigration counsel reviews whether the final structure supports the intended E-2 investment and operating role. Staffing issues need to be addressed as well before a deal closes. If the buyer is relying on existing employees, management, or contractors to keep the business operating, the parties should confirm what will continue after the purchase. Payroll records, employment agreements, work authorization records, and contractor arrangements should be reviewed so that the buyer does not discover a problem only after taking over the business. Questions that should be answered before signing A broker can help protect the transaction by asking: What exactly is being purchased? How will the investment be funded and transferred? What will the deposit and escrow terms require? What happens if visa processing takes longer than expected? Will the seller remain involved? Who will own and control the business after the purchase? What documents must be updated before funds move or the buyer takes over? Brokers will connect the buyer with qualified immigration counsel while these terms can still be negotiated not after a purchase agreement is signed and executed. A strong E-2 deal is a transaction in which the purchase terms, funding, documents, timing, and operating plan all work together. Attorney Jessica Weiss has 27 years of experience handling U.S. immigration matters especially E-2 visa applications throughout her entire professional career. She continues to help identify issues early in E-2 visa matters, while the deal can still be improved and helps buyers obtain successful E-2 visa applications.

For foreign entrepreneurs considering an E-2 Treaty Investor Visa, selecting and structuring the U.S. business is a central part of the case. A franchise can be an attractive option because it may provide an established operating model, defined startup expenses, training, branding, and ongoing support. Why Franchises May Work Well for E-2 Cases An Established Business Model A franchise may give the investor access to an existing brand, operating procedures, technology, vendor relationships, marketing systems, and performance standards. These materials can help explain how the proposed U.S. enterprise will operate, but the investor must still show that the particular business is real, active, and capable of providing a service or product from its inception. Defined Investment and Startup Costs The Franchise Disclosure Document and franchise materials commonly identify the franchise fee and estimated expenses for equipment, premises, training, marketing, inventory, and working capital. This can help document the total cost of the enterprise and how the investor’s funds will be used. For E-2 purposes, the investment must still be substantial in proportion to the cost of purchasing or establishing the business, and the funds must be committed and at risk. Training and Operational Support Many franchisors offer initial training, manuals, technology, marketing assistance, and launch support. These resources may strengthen the practical business plan, particularly for an investor entering the U.S. market for the first time. They do not replace the requirement that the E-2 investor develop and direct the enterprise. A Structured Approval and Launch Process A franchise process may include lead qualification, a discovery call, territory review, review of the Franchise Disclosure Document, financial qualification, discussions with leadership and existing franchisees, final approval, execution of the franchise agreement, training, and launch. The resulting documents may support an E-2 filing by showing the proposed territory, investment, training plan, operating requirements, and anticipated opening timeline. The Franchise Disclosure Document Under the Federal Trade Commission’s Franchise Rule, a franchisor generally must provide its current Franchise Disclosure Document at least 14 calendar days before the prospective franchisee signs a binding agreement with, or makes a payment to, the franchisor or an affiliate in connection with the proposed franchise sale. The FDD contains 23 categories of information, but it is not a government approval of the franchise or a guarantee of success. Core E-2 Requirements Still Apply The investor must be a national of a qualifying treaty country. The investor must have invested, or be actively in the process of investing, a substantial amount of capital. The funds must be lawfully obtained, committed to the enterprise, and placed at commercial risk. The enterprise must be real and active, not merely a passive or speculative investment. The investor must enter the United States to develop and direct the enterprise. The enterprise may not be marginal; it must have the present or future capacity to generate more than a minimal living for the investor and family or otherwise make a significant economic contribution. All license to operate the business must be in place at time E-2 is approved. Licensing Requirements Must Be Addressed Early Some franchises operate in regulated industries, including real estate, construction, healthcare, and financial services. Before committing to the transaction, the parties should determine whether the business entity, the individual owner, a designated broker, or another qualified professional must hold the applicable license. They should also confirm which activities may occur before licensure, whether a licensed manager or broker may supervise operations, and whether the franchisor will permit the investor to proceed prior to immigration and licensing conditions being met for the franchise owner. An investor may be able to acquire or conditionally commit funds to a franchise before receiving E-2 status. Department of State guidance recognizes that funds may be placed in escrow and made irrevocably committed subject only to visa issuance. Nevertheless, the E-2 application must present a credible path to lawful operation. A plan that depends on a future professional license should include the applicable state requirements, the expected timeline, any licensed personnel who will cover regulated functions, and protections if the visa or license is denied. Planning the Franchise and Immigration Process Together A successful franchise-based E-2 strategy requires coordination among the franchise transaction, business formation, funding, lease, licensing, staffing, and immigration filing. Investors should complete legal, financial, and franchise due diligence before committing substantial funds and should avoid performing unauthorized work or regulated activities before receiving the required immigration status and professional license. At Weiss & Moy, P.C., we assist international entrepreneurs with E-2 visa planning and refer out the franchise legal matters to a qualified professional. Please note any information in this article related to franchise matters must be checked with your local franchise lawyer before pursuing a franchise.

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