Foreign nationals investing in US franchises must navigate the intersection of US franchise law, immigration law, and entity formation. The process is more involved than domestic franchise investment, but it is entirely achievable with the right legal team. At Lopes Law LLC, we work with international investors from Brazil, Portugal, Spain, and other countries who are entering the US franchise market, and we understand both the legal framework and the practical realities these investors face.

The good news is that US franchise law gives foreign nationals the same FDD disclosure rights as any domestic buyer. The federal FTC Franchise Rule (16 CFR Parts 436-437) does not distinguish based on nationality. Every investor, regardless of country of origin, is entitled to receive the Franchise Disclosure Document at least 14 calendar days before signing any agreement or paying any consideration. What differs for international investors is everything that surrounds the franchise transaction: visa strategy, entity formation, US banking, and cross-border tax obligations.

What Do Foreign Nationals Need to Know Before Buying a US Franchise?

There are five foundational issues every international franchise investor must understand before signing anything. Getting these right from the start prevents costly problems later.

US Franchise Law Applies Equally to Foreign Buyers

You have the same legal rights as any US citizen when purchasing a franchise. The FDD must be delivered at least 14 calendar days before you sign or pay. You are entitled to review all 23 items including the franchisor’s litigation history (Item 3), list of franchisees (Item 20), and financial performance representations (Item 19, if any are made). The franchisor cannot pressure you to sign before that window expires.

The FDD is written in English and contains legal concepts that may be unfamiliar to investors from civil law countries like Brazil or Portugal. Terms like “indemnification,” “liquidated damages,” and “right of first refusal” function differently than their rough equivalents in Brazilian or Portuguese law. An attorney who understands both the US legal framework and the investor’s home country legal background is essential, not just helpful.

Entity Formation: A US Legal Entity Is Required

Most franchisors require you to form a US legal entity to sign the franchise agreement. You cannot sign as a foreign individual in most cases. The most common structures are a single-member LLC (owned directly by the foreign national) or a multi-member LLC (if there are multiple investors). Some investors use a US LLC owned by a foreign holding company, which can create efficiencies for investors who are building a multi-unit portfolio or who have existing foreign corporate structures.

The LLC formation must happen before or at the same time as the franchise agreement signing. Formation in a state like Delaware or the state where the franchise will operate is a common choice. Delaware LLCs are widely accepted by franchisors and offer flexibility, but operating in a state different from formation requires foreign qualification in the operating state.

US Business Banking

You will need a US business bank account for operations, royalty payments, and tax purposes. Some US banks require in-person verification to open a business account, which means planning a US visit specifically for this purpose. Others accept notarized documentation and remote verification for foreign-owned entities. This should be researched early because account opening timelines can affect franchise launch schedules.

Tax Implications for Foreign Nationals

Once you begin operating a US business, you have US federal and state tax filing obligations. Foreign nationals who own US business entities are subject to US taxation on US-source income. If you are not a US tax resident, different withholding and reporting rules apply. You should engage a US CPA with international tax experience alongside your franchise attorney. The intersection of FIRPTA (Foreign Investment in Real Property Tax Act), FBAR (Foreign Bank Account Report), and state franchise taxes creates a compliance picture that requires specialized expertise.

What Visa Options Are Available for Franchise Investors?

Visa strategy is one of the most important decisions an international franchise investor will make, and it must be addressed before or alongside the franchise legal process. At Lopes Law LLC, we coordinate with immigration attorneys for international franchise clients to ensure the franchise structure and the visa structure are consistent with each other.

E-2 Treaty Investor Visa

The E-2 Treaty Investor Visa is available to nationals of countries that have qualifying commercial treaties with the United States. This includes Portugal, Spain, Italy, Germany, the United Kingdom, Mexico, and over 80 other countries. Notably, Brazil does not have an E-2 treaty with the United States as of 2026, so Brazilian nationals cannot use this visa category.

The E-2 visa requires a “substantial” investment in a qualifying US business. There is no fixed dollar minimum, but franchise investments in the $150,000 to $500,000 range generally satisfy the substantiality test. The investor must be coming to the US to actively manage and develop the enterprise. The E-2 is a nonimmigrant visa (not a green card path by itself) but is renewable indefinitely as long as the investment remains qualifying.

EB-5 Immigrant Investor Program

The EB-5 program is available to nationals of all countries, including Brazil. It requires a minimum investment of $800,000 in a Targeted Employment Area (TEA, meaning a rural area or high-unemployment area) or $1,050,000 in a non-TEA location. The investment must create at least 10 full-time jobs for qualifying US workers. The EB-5 leads directly to US permanent residency (a green card), making it the preferred path for investors who want to immigrate, not just invest. Multi-unit franchise ownership is often the most reliable way to satisfy the job creation requirement through a direct franchise investment.

L-1 Intracompany Transferee Visa

If you have an existing foreign company and are opening a US affiliate, subsidiary, or branch, the L-1 visa may allow you to transfer yourself as an executive or manager to the US entity. This can be an option for investors who already operate a business in their home country that has a qualifying corporate relationship with the new US franchise entity.

Important Note on Immigration Counsel

Visa requirements must be addressed by a licensed US immigration attorney. The role of franchise counsel and immigration counsel are complementary but distinct. At Lopes Law LLC, we handle the franchise legal work: FDD review, franchise agreement negotiation, entity formation, and related matters. We coordinate with immigration attorneys but do not practice immigration law.

How Should International Investors Evaluate US Franchise Opportunities?

The FDD evaluation process for international investors involves the same 23-item review as for domestic buyers, but with additional focus on certain disclosures that are particularly important for investors who cannot easily visit franchisee locations or attend discovery days.

Item 20 lists all current franchisees, their contact information, and franchisees who have left the system in the past three years. Contact current franchisees directly. Ask them: what does the actual weekly revenue look like? How responsive is the franchisor’s support team? What do they wish they had known before signing? These conversations are irreplaceable, and franchisors cannot prevent you from contacting their franchisees once you have the FDD.

Item 19 Financial Performance Representations deserve special scrutiny for international investors. If the franchisor makes any Item 19 disclosure (and many do not), review it carefully for what it includes and what it excludes. A median unit revenue figure that excludes the bottom quartile of performers tells a very different story than an unfiltered median. At Lopes Law LLC, we explain exactly what the Item 19 data does and does not show so that investment decisions are based on accurate information.

Also consider whether the franchise concept has cultural fit with your target market. A food concept with strong US regional identity may face different challenges in a market where your customer base includes a large international or immigrant population. Understanding the local competitive landscape before committing to a territory is important.

What Entity Structure Do International Franchise Investors Need?

The entity structure for an international franchise investor serves multiple purposes simultaneously: it satisfies the franchisor’s requirement for a US legal entity, it provides liability protection, and it must be compatible with any visa structure being used.

The most common structure is a single-member LLC owned directly by the foreign national investor. This is simple to form and manage, and is widely accepted by franchisors. If multiple investors are involved, a multi-member LLC with a clear operating agreement governing management and profit distribution is appropriate.

Some international investors, particularly those building multi-unit portfolios, use a US holding company structure. A US parent LLC or corporation holds ownership interests in individual operating LLCs for each franchise unit. This structure can provide tax efficiency and liability compartmentalization across units, but it adds complexity and ongoing compliance obligations.

As of January 1, 2024, most new US LLCs and corporations are required to file Beneficial Ownership Information (BOI) reports with FinCEN under the Corporate Transparency Act. This report identifies the individuals who own or control the entity. Failure to file is a federal violation. For foreign-owned entities, the BOI filing requires providing identifying information for each beneficial owner, which for an LLC owned by a foreign national means providing passport information and other identifying details. At Lopes Law LLC, we ensure international clients are aware of this filing requirement and assist with the process.

FIRPTA (Foreign Investment in Real Property Tax Act) is relevant if the franchise involves owned real estate. If you purchase real property in the United States as part of or alongside the franchise investment, FIRPTA imposes withholding requirements on any future sale. This is a tax compliance issue to address with your CPA, but it affects structuring decisions made at the outset.

A Real Scenario: Coordinating the Franchise and Visa Timelines

Consider the experience of a Brazilian investor who was interested in a food service franchise with approximately 50 US locations. He came to us having already identified the brand and attended the franchisor’s discovery day. His timeline was compressed: the franchisor had a territory he wanted, and another candidate was reportedly interested in the same territory.

At Lopes Law LLC, we reviewed the FDD and identified several issues in the franchise agreement that required negotiation, including an onerous personal guarantee provision and a radius restriction that conflicted with a second territory the client hoped to acquire within 18 months. We also explained the financial performance disclosures and helped him understand what the Item 19 data actually showed about revenue ranges across units of different sizes.

Simultaneously, because Brazil does not have an E-2 treaty, his visa options were the EB-5 program (requiring the $800,000 TEA investment threshold and job creation) or an L-1 visa based on his existing Brazilian food service company opening a US affiliate. The immigration attorney he engaged determined the L-1 was the faster path given his existing business. The franchise entity was structured as a US LLC owned by his Brazilian company, consistent with the L-1 corporate relationship requirement.

The coordination between franchise counsel and immigration counsel from day one prevented a situation where the entity structure would have worked for the franchise agreement but been incompatible with the visa application. That kind of misalignment can set an international investment back by months.

How Much Does Legal Help for International Franchise Investment Cost?

At Lopes Law LLC, international franchise investors have clear, flat-fee pricing so there are no billing surprises during an already complex process.

• FDD Validation Review (standard domestic): $3,000 flat fee. Covers all 23 FDD items, franchise agreement review, and written report.
• International FDD Validation Review: $6,000 flat fee. Covers everything in the standard review plus cross-border considerations, including explanation of US legal concepts for investors from civil law jurisdictions and coordination notes for immigration counsel.
• Entity formation assistance: Quoted separately based on complexity of structure.
• International contract review (NDAs, distribution agreements): $1,500 to $2,000 for standard agreements.

For context, the legal fees represent a small fraction of the total franchise investment, which for most franchise systems ranges from $150,000 to $1,000,000 or more. Getting the legal work right at the outset protects an investment of that magnitude. This information is for general guidance; specific legal fees depend on the scope of work.

For more detail on the E-2 visa and franchise ownership specifically, see our guide on E-2 Visa and Franchise Ownership: What Investors Need to Know. For Brazilian investors interested in the EB-5 path, see EB-5 Visa and Franchise Investment: Legal Requirements and Strategies. For a full overview of what an FDD review includes, see What Does an FDD Review Include?

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