I am the business developer for a national property management franchise in Indianapolis.

Franchise success in the restaurant industry proves that right?  

.- Regarding Texas, you may want to verify this as I'm not a Texas resident but even though Texas has no income tax it does have a franchise tax.  

I also stepped in the franchise restaurant world around that time.  

And assuming you will be a managing member of the LLC (which it sounds like you will be), then you'd meet the criteria for "doing business in California" and would be subject to the $800 California Franchise tax.

Actually thought about buying a franchise opportunity at one point.

Here is a short list of IRS approved investments:Rental property, flipping real estate, pre-foreclosures, forecloisures, REO's, mortagages, loans, businesses, limited partnerships, franchises, notes, raw land (must be all cash, no debt financing is allowed on raw land), residential real estate, commercial real estate, lease options, LLC's, international real estate, multifamily units, tax liens and deeds, vacation properties (as long as you dont use them), private and public stock, mutual funds, hedge funds, and the list goes on . . . .

I save on franchise taxes since the entities are out of CA, and the S Corp is only subject to self employment/FICA tax.

The good thing is you are located in Illinois,I am guessing you dont have to pay a Franchise tax which is not dependent on Income, but a priveledge for been allowed to do businessin the State....California is an example even if you have Loss, an LLC MUST PAY $800 to the Franchise Tax board every year,for that priviledge, however the income correctly will be pass through via a K-1 to your 1040 return

Plus, most 9 states have no franchise or corp tax for general partnerships unless you make an S election.