Pretty simple, you operate the franchise out of a Qualified Opportunity Zone (QOZ) entity and concentrate operations in a QOZ location. If you're running a bona fide business, the rest of the compliance should be straightforward.
Ask A Question
How can I buy a franchise and make that into a Qualified Opportunity Zone Business?
Answers
In general, an entity that seeks to be a qualified opportunity zone business (QOZB) needs to operate a business in an opportunity zone (OZ) and use sufficient tangible property that counts as qualified opportunity zone business property (QOZBP) (70% of the entity's total tangible assets). In the case of a franchise, an additional consideration is that at least 40% of a QOZB's intangible assets must be used in a business in an OZ. This means that if the franchise rights are used for stores/restaurants located outside an OZ, and such use exceeds 60%, the franchise rights might need to be held in a separate entity and not in the QOZB (and the QOZB should hold locations in the OZ). On the other hand, if the rights will be used only for locations in an OZ, then qualification as a QOZB should not be that different from any other business.
DISCLAIMER:the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.