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How Much Does It Cost to Open Kung Fu Tea Franchise?

If you are looking towards opening a Kung Fu Tea Franchise, it will be nice for you to have a preview of what the company represents before going ahead to make enquiries about the total cost of opening the franchise in your location. KF Tea Franchising LLC is a Delaware limited liability company formed April 17, 2013.

Their principal business address is 589 8th Ave., 17th Floor, New York, NY 10018. As of the 2022 Franchise Disclosure Document, there are 213 franchised Kung Fu Tea locations in the USA. Based on 2022 FDD data, Kung Fu Tea has franchise locations in 33 states plus DC. The largest region is the South with 95 franchise locations.

The franchisor offers franchises for the operation of retail shops selling a variety of oriental style brew tea, bubble tea, coffee, juices, smoothies and other hot and cold drinks. They also offer a multi-unit franchise under which you agree to open and operate a specified number of Kung Fu Tea shops over an agreed period of time within an agreed geographic area.

With over 200+ locations across the U.S., Kung Fu Tea has become America’s largest made-to-order bubble tea brand. You can join them in elevating the world of made-to-order beverages and challenging the face of the beverage industry through fresh, innovative, and fearless efforts. Here are areas where you are expected to spend money and the cost associated with it;

Financial Investment Required to Open a Kung Fu Tea Franchise

  1. Initial Investment Range – $124,050 to $428,050

The total investment necessary to begin operation of a Kung Fu Tea shop franchise is $124,050 to $428,050 for a standard Kung Fu Tea shop and $124,050 to $281,050 for a non-traditional unit. This includes $50,050 to $72,050 that you must pay to the franchisor or their affiliate. Please note that the franchisor relied on its experience from opening a location in the past and its experience in the tea industry industry and related business.

  1. Franchise Fee: $30,000

  2. Royalty Fee: 4 percent of Gross Sales

Due Date for this fee is Paid by electronic funds transfer every Friday for the preceding Reporting Period. The amount of the Royalty Fee for any renewal term will be that provided in the Franchise Agreement executed for such renewal term.

Please note that “Gross Revenues” include all revenues generated from the provision of any and all services and/or the sale of any and all products and, whether by the franchisee or a third – party provider, that relate to or arise from the Franchised Business. It does not include taxes collected from customers.

  1. Local Advertising Spend, Local Marketing Fund, or Cooperative Advertising Contribution: At least 1 percent per calendar year and the Due Date: for this is Monthly.

Please note that each local advertising Cooperative may elect to increase the monthly contribution if approved by a two – thirds majority of the members, and the minimum contribution is subject to adjustment by an amount not to exceed the increase in the CPI.

Centers owned by Kung Fu Tea franchise and its affiliates are also members of their respective local Cooperative and each company – owned Center has the same voting rights as the franchised locations within the Cooperative. If the company – owned Centers comprise the majority of a given Cooperative, the maximum and minimum fees for that Cooperative will be consistent with the range stated in this Item 6.

  1. Liquidated Damages Under Area Development Agreement: This fee varies but the Due Date is Payable within 30 days of the termination of the Development Agreement.
  2. Audit Costs: All costs and expenses associated with the audit, reasonable accounting and legal costs.
  3. Indemnity: This fee will vary under the circumstances and the Due Date is As incurred.

Please note that you must reimburse Kung Fu Tea franchise if it is held liable for claims arising out of your franchise operations.

  1. Insurance: Reimbursement of costs the franchisor’s out – of – pocket costs.
  2. Equipment, Supply, or Supplier Testing or Inspecting: Fee not to exceed the actual costs of inspecting and testing. (Due Date:  Due on receipt of invoice.)

Please note that This fee covers the cost of testing or inspecting equipment, supplies, or suppliers you propose.

  1. POS Hardware and Software: Depends upon vendor and products purchased. (Due Date:  Depends upon vendor and products purchased.)
  2. Attorneys’ Fees and Costs: Will vary under circumstances. (Due Date:  As incurred.)

Payable to Kung Fu Tea franchise if it is forced to retain independent counsel and seek damages or injunctive relief to enforce the Franchise Agreement (whether or not suit is filed) or if Pods is required to defend your unsuccessful claim against it.

  1. Veteran Incentives: This is open for negotiation with the company.
  2. Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If requirements are met, franchisees can renew for one additional term of 10 years.
  3. Financial Assistance: Kung Fu Tea franchise has relationships with third – party sources which offer financing to cover the following: franchise fee, startup costs, equipment, inventory, accounts receivable, and payroll et al.

In Summary,

  • Initial Franchise Fee: $37,000
  • Total Investment: $124,050 to $428,050
  • Working Capital: $5,000 to $25,000
  • Royalty Fee: 4.0%
  • Ad Fees: 2.0% .

10 – STEP Guide to Business Opportunities with Kung Fu Tea

  1. Fill out the inquiry form
  2. A sales representative will contact you via email or phone
  3. Schedule an interview to go over all the details
  4. Receive franchise disclosure document (FDD)
  5. Look for the best possible store location (the Kung Fu Tea Team will provide professional recommendations for location screening and final approval)
  6. Sign franchise agreement and lease for approved store location
  7. Store Renovation (the Kung Fu Tea Team will provide a standard store layout and interior design)
  8. Training Program (provided for up to two people and usually finishes in three weeks)
  9. Grand Opening (the Kung Fu Tea Team will have a senior staff member present to assist you during the grand opening period for up to two weeks to ensure smooth store operation)
  10. High fives and continued support from the Kung Fu Tea Team