January 24, 2018 at 10:10 pm #153474
I am looking at acquiring a franchise and interested in financing it through a ROBS. I have been informed though by our CPA that the C-Corp can not invest in separate LLCs for each of the stores. The purpose of this structure would be to limit liability from the lease to the operating company and from one store to the other. From a Tax point of view it would be all rolled back into the C-Corp.
Is this possible? If we can not confine liability, we are afraid a ROBS would not be suitable for us.
RodJanuary 24, 2018 at 10:19 pm #153543
ROBS can be a tricky transaction that not a lot of CPAs or Legal experts have experience with. That’s why we recommend working with a ROBS provider and take advantage of their free consultations to ask questions like this of experienced professionals.
Now, a C-Corp can own multiple LLCs but you must set it up correctly and abide by the rules so that it doesn’t cost you a lot of money in the long run. These businesses will need to be separate and you may not be able to roll all of the tax obligation back into the C-Corp. You should discuss this with experienced professionals who can adequately help you prepare for your unique situation. Good luck!