Building a Strong E-2 Case with No Business Operations

Citizenship: United Kingdom
Total Investment: $139,000 (approx.)
Total Cash Reserve: $53,000 (approx.)

E-2 companies are generally expected to be operational at the time of application submission to strengthen the E-2 case. This means the business should ideally be open and running, with American workers involved in its management and operations, even before the E-2 visa is granted. If the business is not in operations, the E-2 application may not be as strong.

But, what if a business cannot begin operations until after receiving the E-2 visa? How can you still build a strong, compelling application?

The Challenge

One of our clients faced this scenario after signing an agreement with a franchisor.

In the franchise agreement, a special clause, known as the E-2 Contingency Clause was added. This allows E-2 investors to receive a refund on franchise fees if their E-2 visa is denied.

For more about the escrow E-2 Contingency Clause, click here.

However, under this clause, the franchisor may chose to prevent the client from beginning operating the business until the E-2 visa is approved.

This clause is designed to protect both parties:

• For the client: It mitigates the financial risk by ensuring refund of the franchise fee in case of visa denial.
• For the franchisor: It safeguards intellectual property, such as proprietary procedures, operations, training, and access to franchise manuals, by restricting operations until the visa is granted.

While this clause reduces the client’s financial exposure, it is a double-edged sword. The restriction on starting business operations until visa approval can delay the client's ability to show business operations.

As a result, this left critical elements such as payroll records, employee contracts, active client engagements, etc. unavailable for submission as evidence

**Before signing a franchise agreement, consult with our firm about the E-2 contingency clause. This clause isn’t always recommended and could negatively impact your application depending on your specific situation.

Our Strategy

First, it’s crucial to understand that simply promising to start a business after E-2 visa approval is insufficient and likely to result in denial.

U.S. immigration authorities want concrete and physically tangible evidence. They do not want verbal promises at the interview and speculative promises in a business plan (this is all insufficient).

In a situation like our client, a stronger and more convincing E-2 application needs to complete real, actionable steps to bring the business as close to operations as possible. Many E-2 investors, without guidance from an experienced E-2 attorney, fail at this critical step.

Therefore, to create a compelling case that would convince the U.S. immigration authorities, we focused on demonstrating the business's readiness to operate immediately after visa approval. We highlighted the client’s irrevocable financial commitments, such as the payment of the franchise fee into an escrow account, underscoring the financial dedication to the venture. Additionally, we provided evidence of operational preparations, including photos of the leased office space and proof of job recruitment efforts on platforms like Indeed.com. Every aspect of the application was supported with comprehensive documentation, from the franchise agreement to vendor relationships, to substantiate the business's capability to seamlessly begin operations upon approval.

The Results

The client’s E-2 visa was approved without any additional requests for documentation, allowing him to finalize the franchise acquisition and start operations as planned. This success highlighted the importance of aligning detailed evidence of operational readiness with the application’s overall narrative, ensuring compliance with E-2 law requirements as well as franchise agreement regulations.

**Applying without established business operations may not be advisable, depending on your business model, investment amount, and place of application submission. Contact us for strategies and feedback for your specific situation.

What if our client had receive a Request for Additional Evidence (RFE)?

Our firm provides Guaranteed Support for Request for Evidence (RFE) responses, no matter how complex or lengthy the RFE issued by USCIS. There are no additional attorney’s fees for our E-2 clients who receive RFEs. Click here for details.

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To protect our clients' privacy, names of individuals and businesses have been omitted. In some cases, we may also alter or generalize certain details to further safeguard their confidentiality.