remanded L-1A Case: Retail Sales

U.S. Department of Homeland Security 
20 Mass. Ave., N.W., Rm. A3042 
Washington, DC 20529 
U. S. Citizenship 
and Immigration 
FILE: SRC 02 233 52 1 12 
IN RE: Petitioner: 
Beneficiary: 
PETITION: Petition for a .,. r, # - ---- 
Immigration and Nationality Act, 8 U.S.C. 5 1 lOl(aXIS)(L) 
ON BEHALF OF PETITIONER: 
This is the decision of the Administrative Appeals Office in your case. All documents have been 
returned to the office that originally decided your case. Any further inquiry must be made to that 
ofice. 
+- 
/Robert P. Wiernann, Director 
" Administrative Appeals Ofice 
SRC 02 233 521 12 
Page 2 
DISCUSSION: The nonimmigrant visa petition was denied by the Director, Texas Service 
Center, and is now before the Administrative Appeals Office (AAO) on appeal. The decision of 
the director will be withdrawn and the petition will be remanded for finther consideration and 
entry of a new decision. 
The petitioner endeavors to classifjl the beneficiary as a manager or executive pursuant to section 
101 (a)(lS)(L) of the Immigration and Nationality Act (the Act), 8 U.S.C. 6 1 1 Ol(aHIS)(L). The 
petitioner claims to be a subsidiary of located in 
Pakistan. It is engaged in the discount retail sale of household items, gifts, and novelties. The 
initial petition was approved to allow beneficiary to open a new ofice in the United States. The 
petitioner now seeks to extend the petition's validity and the beneficiary's stay for three years as 
the U.S. entity's president and general manager. The petitioner was incorporated in the State of 
Texas on November 30,2000 and claims to have four employees. 
On January 7, 2003, the director denied the petition because the petitioner failed to establish that 
it has a qualifying relationship with the foreign entity. Specifically, the director noted that the 
petitioner's operation as a franchise prohibited a finding of a qualifying relationship. 
On appeal, the petitioner's counsel asserts that the director's conclusion was erroneous and claims 
that the petitioner is a subsidiary of the foreign entity. Counsel states that the petitioner's 
franchise agreement does not affect the foreign company's management and control of the U.S. 
company. Counsel submits a brief and additional evidence in support of the appeal. 
To establish L-1 eligibility under section 101(a)(15)(L) of the Act, the petitioner must meet 
certain criteria. Specifically, within three years preceding the beneficiary's application for 
admission into the United States, a qualifying organization must have employed the beneficiary in 
a qualifying managerial or executive capacity, or in a specialized knowledge capacity, for one 
continuous year. Furthermore, the beneficiary must seek to enter the United States temporarily to 
continue rendering his or her services to the same employer or a subsidiary or affiliate thereof in a 
managerial, executive, or specialized knowledge capacity. 
In relevant part, the regulations at 8 C.F.R. 9 214.2(1)(14)(3) state that an individual petition filed 
on Form 1-129 shall be accompanied by: 
(i) Evidence that the petitioner and the organization which employed or will 
employ the alien are qualifying organizations as defined in paragraph (l)(l)(ii)(G) 
of this section; 
(ii) Evidence that the alien will be empIoyed in an executive, managerial, or 
specialized knowledge capacity, including a detailed description of the services 
to be performed. 
Pursuant to 8 C.F.R. § 214.2(1)(14)(ii) also provides that a visa petition, which involved the 
opening of a new office, may be extended by filing a new Form 1-129, accompanied by the 
following: 
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(A) Evidence that the United States and foreign entities are still qualifying 
organizations as defined in paragraph (l)(l)(ii)(G) of this section; 
(B) Evidence that the United States entity has been doing business as defined 
in paragraph (I)(l)(ii)(H) of this section for the previous year; 
(C) A statement of the duties performed by the beneficiary for the previous 
year and the duties the beneficiary will perform under the extended petition; 
(D) A statement describing the staffing of the new operation, including the 
number of employees and types of positions held accompanied by evidence of 
wages paid to employees when the beneficiary will be employed in a managerial 
or executive capacity; and 
(E) Evidence of the financial status of the United States operation. 
The issue in this proceeding is whether a qualifying relationship exists between the petitioner and 
foreign entity. The regulation at 8 C.F.R. 21 4.2(1)(1Xii) provides: 
(G) Qualifjmg organization means a United States or foreign firm, corporation, or 
other legal entity which: 
(I) Meets exactly one of the qualifjmg relationships specified in the 
definitions of a parent, branch, affiliate or subsidiary specified in paragraph 
(lXI)(ii) of this section; 
(2) Is or will be doing business (engaging in international trade is not 
required) as an employer in the United States and in at least one other 
country directly or through a parent, branch, affiliate, or subsidiary for the 
duration of the alien's stay in the United States as an intracompany 
transferee; and 
(3) Otherwise meets the requirements of section 10 l(a)(lS)(L) of the 
Act. 
(I) Parent means a firm, corporation, or other legal entity which has 
subsidiaries. 
(J) Branch means an operation division or office of the same organization 
housed in a different location. 
6) Subsidiary means a fm, corporation, or other legal entity of which a parent 
owns, directly or indirectly, more than half of the entity and controls the entity; 
or owns, directly or indirectly, half of the entity and controls the entity; or owns, 
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directly or indirectly, 50 percent of a 50-50 joint venture and has equal control 
and veto power over the entity; or owns, directly or indirectly, less than half of 
the entity, but in fact controls the entity. 
(L) Aflliate means 
fl) One of two subsidiaries both of which are owned and controlled 
by the same parent or individual, or 
(2) One of two legal entities owned and controlled by the same 
group of individuals, each individual owning and controlling 
approximately the same share or proportion of each entity. 
On July 26, 2002, the petitioner submitted the Form 1-129. On the Form 1-129, the petitioner 
claimed that "[The petitioner], a Texas corporation, is a wholly owned subsidiary of [the foreign 
entity], a company organized under the laws of Pakistan." The petitioner submitted its articles of 
incorporation, certificate of incorporation, a lease agreement, and a certificate of operation 
showing that the petitioner will be operating under the assumed name of Dollar Discount. The 
petitioner's articles of incorporation indicate that the foreign entity is the initial shareholder of the 
U.S. company. 
On September 20, 2002, the director issued a request for additional evidence. Specifically, the 
director requested that the petition4 clarify whether or not the Dollar Discount store is a 
franchise and provide a copy of the fianchise agreement, if applicable. 
In response to the request for additional evidence dated November 14,2002, the petitioner stated, 
"Dollar Discount is a franchise." The petitioner submittec 
January 17, 2001 between the fi-anchiser, 
franchisee, the beneficiary and the petitioner. 
On January 7, 2003, the director denied the petition because the petitioner failed to establish that 
the "petitioner is a qualifying parent, branch, affiliate or subsidiary company." The director noted 
that fianchise and license relationships do not qualify under any definition of qualifjrlng 
relationship and that since the petitioning company was operating as a fianchise, the petition was 
not approvable. 
On appeal, the petitioner's counsel states that the petitioner is a subsidiary of the foreign entity 
and claims that the petitioner's franchise agreement does not affect the company's ownership and 
control. 
On review, the director incorrectly focused on the petitioner's operation of a franchise rather than 
on the necessary qualifying relationship between the beneficiary's foreign employer and the U.S. 
petitioner. See 8 C.F.R. 5 214.2(1)(3)(i) (requiring that the petitioner and the organization which 
employed the beneficiary are qualifiing organizations). Evidence of the petitioner's stock 
ownership is critical to determining whether a qualifying relationship exists. In this case, the 
director focused solely on petitioner's operation of a franchise business. However, the decision 
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does not indicate that the director considered the claimed parent-subsidiary relationship between 
the foreign entity and the petitioner. Accordingly, the director's decision will be withdrawn and 
the petition will be remanded to the director for entry of a new decision. 
The regulations and case law confirm that the key factors for establishing a qualifylng 
relationship between the U.S. and foreign entities are "ownership" and "control." Matter of 
Siemens Medical Systems, Inc. 19 I&N Dec. 362 (BIA 1986); Matter of Hughes, 18 I&N Dec. 
289 (Comrn. 1982); see also Matter of Church Scientology International, 19 I&N Dec. 593 (BIA 
1988) (in immigrant visa proceedings). In the context of this visa petition, ownership refers to the 
direct and indirect legal right of possession of the assets of an entity with full power and authority 
to control; control means the direct or indirect legal right and authority to direct the 
establishment, management, and operations of an entity. Matter of Church Scientology 
International, 19 I&N Dec. at 595. 
As general evidence of a petitioner's claimed qualifylng relationship, stock certificates alone are 
not sufficient evidence to determine whether a stockholder maintains ownership and control of a 
corporate entity. The corporate stock certificate ledger, stock certificate registry, corporate 
bylaws, and the minutes of relevant annual shareholder meetings must also be examined to 
determine the total number of shares issued, the exact number issued to the shareholder, and the 
subsequent percentage ownership and its effect on corporate control. Additionally, a petitioning 
company must disclose all agreements relating to the voting of shares, the distribution of profit, 
the management and direction of the subsidiary, and any other factor affecting actual control of 
the entity. See Matter of Siemens Medical Systems, Inc., 19 I&N Dec. at 364-365. Without full 
disclosure of all relevant documents, CIS is unable to determine the elements of ownership and 
control. 
In general, a "franchise" is a cooperative business operation based on a contractual agreement in 
which the franchisee undertakes to conduct a business or to sell a product or service in 
accordance with methods and procedures prescribed by the franchiser, and, in return, the 
franchiser undertakes to assist the franchisee through advertising, promotion, and other advisory 
services. A franchise agreement, like a license, typically requires that the franchisee comply with 
the franchiser's restrictions, without actual ownership and control of the franchised operation. See 
Matter ofSchick, 13 I&N Dec. 647 (Reg. Comrn. 1970) (finding that no qualifylng relationship 
exists where the association between two companies was based on a license and royalty 
agreement that was subject to termination since the relationship was "purely contractual"). An 
association between a foreign and U.S. entity based on a contractual franchise agreement is 
usually insufficient to establish a qualifylng relationship. Id. See also, 9 FAM 41.54 N7.1-5; 0.1. 
214.2(1)(4)(iii)(D) (noting that associations between companies based on factors such as 
ownership of a small amount of stock in another company, or licensing or franchising 
agreements, do not create affiliate relationships between the entities for L-1 purposes). 
By itself, the fact that a petition involves a fi-anchise will not automatically disqualify the 
petitioner under section 101(a)(15)(L) of the Act. When reviewing a petition that involves a 
franchise, the director must carefully examine the record to determine how the franchise 
agreement affects the claimed qualifying relationship. As discussed, if a foreign company enters 
into a franchise, license, or contractual relationship with a U.S. company, that contractual 
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relationship can be terminated and will not establish a qualifying relationship between the two 
entities. See Matter of Schick, 13 I&N Dec. at 649. However, if a foreign company claims to be 
related to a U.S. company through common ownership and control, and that U.S. company is 
doing business as a franchisee, the director must examine whether the U.S. and foreign entities 
possess a qualifying relationship through common ownership and management under section 
10 1(a)(15)(L) of the Act. 
qualifying relationship exists, the AAO must examine the number of shares of stock issued by the 
petitioner, the ownership of that stock, and the resulting percentage ownershp of the U.S. 
petitioner. 
Upon review, there is insufficient evidence for the AAO to conclude that the foreign entity and 
U.S. entity had a qualifying relationship at the time the petition was filed. However, the record 
contains no clear evidence of ineligibility, and it appears the noted deficiencies could be cured if 
the petitioner is allotted an opportunity to submit additional evidence. The petitioner has 
submitted its articles of incorporation dated November 30, 2000. The articles state that the 
petitioner is authorized to issue 100,000 shares of common stock with no par value, that it would 
commence business after receiving $1,000 in consideration for issuance of shares, and that the 
initial shareholder would be the foreign entity. The petitioner also submitted its Form 1120, U.S. 
Corporate Income Tax Return for 200 1, which indicates on Schedule K that the foreign entity was 
the sole shareholder. However, the petitioner has submitted no other evidence, such as stock 
certificates, its stock transfer ledger, minutes of board of directors meetings addressing the 
issuance of stock, or other corporate documents which would reflect the total number of shares 
issued and the number of shareholders at the time this petition was filed in July 2002. 
In order to resolve these omissions and to clearly establish the claimed relationship between the 
two entities, the petition will be remanded to the director to request, at a minimum, copies of all 
stock certificates issued by the U.S. company, and its stock transfer ledger. Additional supporting 
evidence could include stock purchase agreements, minutes of any other relevant shareholder 
meetings, or other legal documents governing the acquisition of the ownership interest. 
Beyond the decision of the director, the record as presently constituted does not establish that the 
beneficiary will be employed in a managerial or executive capacity pursuant to sections 
101(a)(44)(A) or (B) of the Act. The job description provided does not adequately describe the 
managerial or executive duties the beneficiary performs on a day-to-day basis. For example, the 
petitioner stated in a November 14, 2002 letter that that the beneficiary is responsible for 
"negotiating and supervising the drafting of purchase agreements" and "developing trade and 
consumer market strategies," but the petitioner does not describe any subordinate employees who 
perform routine purchasing or marketing tasks. Therefore, it is not clear that these duties, which 
comprise 30 percent of the beneficiary's time, are managerial in nature. Some of the other 
described duties, such as "developing and implementing plans" to ensure profitability, are too 
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broad to convey any meaningful understanding of what the beneficiary does on a day-to-day 
basis. Specifics are clearly an important indication of whether a beneficiary's duties are primarily 
executive or managerial in nature, otherwise meeting the definitions would simply be a matter of 
reiterating the regulations. Fedin Bros. Co., Ltd. v. Suva, 724 F. Supp. 1103 (E.D.N.Y. 1989), 
afd, 905 F.2d 41 (2d. Cir. 1990). The actual duties themselves reveal the true nature of the 
employment. id. 
In addition, the regulations provide strict evidentiary requirements for the extension of a "new 
office" petition and require CIS to examine the organizational structure and staffing levels of the 
petitioner. See 8 C.F.R. 5 214.2(1)(14)(ii)(D). The regulation at 8 C.F.R. 5 214.2(1)(3Xv)(C) 
allows the "new office" operation one year within the date of approval of the petition to support 
an executive or managerial position. There is no provision in CIS regulations that allows for an 
extension of this one-year period. If the business does not have sufficient staffing after one year 
to relieve the beneficiary from primarily performing operational and administrative tasks, the 
petitioner is ineligible by regulation for an extension. The petitioner claimed that it employed a 
store manager and two cashiers at the time of filing, and notes that it contracted the services of 
stock clerks when their services were needed. The petitioner provided no evidence of payments 
to the claimed independent contractors, and, based on the petitioner's wage records, it is not clear 
that its claimed employees were employed on a full-time basis or that the petitioner employed all 
three claimed subordinates at the time of filing. The petitioner claims that the store manager was 
hired in 200 1, and that both cashiers were hired in March 2002. However, for the second quarter 
of 2002, the petitioner's Texas Employer's Quarterly Report shows that during this twelve-week 
period, the store manager worked for six weeks, and the cashiers worked three and five weeks, 
respectively. Only three employees were reported for the month of June 2002, the month 
preceding the filing of this petition. 
Based on the record of proceeding as presently constituted, the petitioner has not established that 
the beneficiary's duties are primarily managerial or executive, or that the company employs a 
staff sufficient to relieve the beneficiary from primarily performing nonqualifjmg duties 
associated with the operation of the petitioner's retail store. 
In visa petition proceedings, the burden of proving eligibility for the benefit sought remains 
entirely with the petitioner. Section 291 of the Act, 8 U.S.C. $ 1361. In this matter, the petitioner 
has overcome the specific objection of the director. However, an additional ground of ineligibility 
exists, and additional evidence is required in order to establish eligibility for the benefit sought. 
The director is instructed to issue an additional request for evidence addressing the issues 
discussed above, and any other evidence she may deem necessary. 
ORDER: The decision of the director dated January 7, 2003 is withdrawn. The matter is 
remanded for further action and consideration consistent with the above discussion and entry of a 
new decision which shall be certified to the AAO for review.