Bottom line
- Total investment $185K – $627K including a $35K franchise fee, 6.0% ongoing royalty.
- Average unit revenue of $440K/year (median $401K).
- Rated MODERATE with a risk score of 64/100. SBA loan default rate of 0.0% across 29 loans (below the industry average).
- Emerging franchise — only 3 years of franchising with 6 units. Early-stage systems carry higher risk but may offer better territory availability.
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Gong cha unit return on the cash you put in?
Unlevered ROIC · per unit
11%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Gong cha units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$352K
on $1.8M purchase
Total debt
$1.4M
SBA $0.9M + senior + seller note
Overview
About
Gong Cha franchisees operate bubble tea retail locations, preparing and serving specialty tea-based beverages with tapioca pearls and customizable toppings. Daily operations include inventory management, customer service, point-of-sale transactions, and beverage preparation using branded recipes and equipment. Franchisees are responsible for local marketing, staffing, and maintaining brand standards within their protected territory.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 35 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Gong Cha presents HIGH RISK due to a severely underdeveloped franchise system (6 units), active multi-state regulatory violations, master franchise disputes, and undisclosed profitability metrics.
Score breakdown · what drove the 64 / 100 rating
- 01MINOROnly 6 operating units indicates a micro-franchise system with minimal scale and unclear growth trajectory
- 02MINORMultiple regulatory violations across three states (CA, MD, VA) suggest systemic compliance and disclosure issues
- 03HIGHMaster franchise renewal dispute with court litigation and arbitration indicates franchisor-franchisee relationship deterioration and territorial instability
- 04MEDNet income not disclosed despite $439,522 average revenue, making true profitability assessment impossible
- 05MEDHigh initial investment ($184,500–$627,060) relative to system size creates significant capital risk with limited track record
- 06HIGHGoing Concern status is FALSE, indicating potential financial viability concerns at corporate level
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
98 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Gong cha · FDD (2025) PDF