Kolache Factory Franchise Cost, Revenue & Review 2026
- Investment
- $642K – $937K
- Disclosed sales
- $960K
- gross sales, not profit
- SBA charge-off
- 13.0%
- on 31 loans
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Kolache Factory is a quick-service bakery-cafe franchise specializing in Czech-style kolaches with sweet and savory fillings. Franchisees run the shops, managing in-house baking, coffee service, and counter operations.
FranchiseVerdict summary · 2026
A Kolache Factory franchise requires a total initial investment of $642K – $937K, including a $45K franchise fee and an ongoing 6.0% royalty[2]. Per the 2025 FDD, average unit revenue was $960K[2]. SBA 7(a) loans show a 13.0% charge-off rate across 31 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: 2025 filing · Data extracted: · Last cited check: · Staleness risk: medium - a newer filing may exist
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored6 of 7 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
- Investment
- $642K – $937K
- 84th pct Service Resta…
- Avg gross sales
- $960K
- 18th pct Service Resta…
- Royalty
- 6.0%
- 48th pct Service Resta…
- Units
- 60
- 69th pct Service Resta…
- SBA charge-off
- 13.0%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Quick-Service Restaurants median · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $642K – $937K including a $45K franchise fee, 6.0% ongoing royalty.
- RETURNSAverage unit revenue of $960K/year, with an estimated 9% cash-on-cash return (based on ESTIMATED Average/Median Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)).
- RISKVerdict A (Strongest tier), verdict score 75/100 (higher is better). SBA loan charge-off rate of 13.0% across 31 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHNegative: net -2 franchised outlets in the latest year (0 opened, 2 closed); 3 signed but not yet open (Item 20).
- DECLINESystem contracting at -12.5% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- KF Franchising, Ltd.
- Parent company
- Kolache Factory Management, L.L.C. (general partner)
- FDD Item 1, page 6 of the 2025 FDD
- Ultimate parent
- Kolache Factory, Inc.
- FDD Item 1, page 6 of the 2025 FDD
- Predecessor
- Kolache Factory, Inc.
- Prior franchisor entity
- CEO title
- Managing Partner
- John H. Banks
- CEO experience
- 2000 yrs
- Years in role or industry
- Founder active
- Yes
- Original founder still leading the business
- Incorporated in
- TX
- HQ
- 23240 Westheimer Parkway, Suite A, Katy, Texas 77494
- Auditor
- Lawrence, Blackburn, Meek, Maxey & Co., P.C.
- Audited financials
- Franchisor revenue
- $5.1M
- vs $5.2M prior year
- Management churn noted
- Frequent turnover
- Item 2 disclosed frequent executive changes
Overview
About
- CEO
- John H. Banks
- Headquarters
- TX
- Founded
- 1982
- FDD year
- 2025
- States available
- 6
Can you afford it, and what does the money buy?
Entry cost runs 63% above the typical quick-service restaurants franchise.
Source: FDD 2025 · Items 5–7
Full Item 7 breakdown14 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Initial Franchise Fee | $45K | $45K | |
| Real Estate Acquisition and/or Lease Costs | $45K | $120K | |
| Rent, Security and Utility Deposits | $7K | $20K | |
| Architectural, Engineering, Permitting and Legal Fees | $18K | $23K | |
| Leasehold Improvements, Construction | $270K | $360K | |
| Cabinetry & Millwork | $28K | $35K | |
| Equipment, Furniture, & POS System | $175K | $198K | |
| Initial Marketing Expenses | $3K | $5K | |
| Grand Opening Expense | $3K | $10K | |
| Signage | $5K | $15K | |
| Manager and Personnel Training | $3K | $22K | |
| Initial Inventory (Food & Paper Goods) | $10K | $20K | |
| Office Supplies, Uniforms, Freight, Miscellaneous Expenses & Gift Cards | $5K | $15K | |
| Additional Funds/Working Capital - 3 months | $25K | $50K | |
| Total initial investment | $642K | $937K |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. Total is the sum of line-item lows / highs — actual costs may fall outside this range depending on market and build-out scope.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $642K – $937K
- Bottom third — review vs category
- Liquid capital req'd
- $25K – $50K
- Middle of category vs category
- Franchise fee
- $45K – $45K
- Bottom third — review vs category
- Royalty
- 6.0%
- typical 6–8%
- Ad fund
- 3.0%
- typical 3–5%
- Total fee load
- 9.0%
- vs 9–13% typical
- Payback period
- 11.3 yrs
- From FDD / Item 19
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 6.0% of gross sales |
| Marketing / ad fund | 3.0% of gross sales |
| Technology fee | $640 |
| Training fee | $3K |
| Transfer fee | $6K |
| Inventory (initial) | $10K – $20K |
| Total fee load | 9.0% of rev |
What do units actually make?
Average unit sales land near the quick-service restaurants norm.
Source: FDD 2025 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for Kolache Factory until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$827K
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
FDD-reported earnings
The FDD reports $127K as ESTIMATED Average/Median Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA). This is a disclosed figure, not our estimate — we publish no modelled profit for Kolache Factory.
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own lease quote, labor market and build-out budget.
Returns model · single-unit ROIC
What would one Kolache Factory unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
- Avg gross sales
- $960K
- Per unit/yr · from the Item 19 franchised-cohort breakdown (no single system-wide average disclosed)
- Avg estimated average/median earnings before interest, taxes, depreciation and amortization (ebitda)
- $127K
- Reported as ESTIMATED Average/Median Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) in FDD Item 19
- Cash-on-cash
- 8.9%
- Based on ESTIMATED Average/Median Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) / investment midpoint
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- gross sales tiered
- Sample size
- 28 outlets
- vs category median 19
- Range (low → high)
- $524K→$1.9MCited, not corroborated — printed on page 38 of the 2025 FDD. Nothing else in our record independently restates or re-derives it.
- Cohort dispersion (min → max)
- Quartile band
- $691K→$1.2M
- Bottom 25% → top 25%
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 7 / 10
- vs category median 4 / 10 · above
Compared against 781 Quick-Service Restaurants brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $960K/year in gross sales. Revenue-to-investment ratio: 1.2x.
Fee burden
Total ongoing fee load of 9.0% — above the Quick-Service Restaurants median of 7.5%.
Disclosure
Transparency score 7/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System contracting at -12.5% CAGR over 3 years. Investigate whether closures are franchisor-driven consolidation or franchisee exits.
Multi-unit rate
Only 18% of franchisees own multiple units. Could indicate challenging economics or a young system where operators haven't had time to expand.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Quick-Service Restaurants medians
How Kolache Factory Compares
Category median of published Quick-Service Restaurants brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 60
- Opened
- 0
- Last reporting year
- Closed
- 2
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 3.3%
- Company-owned
- 32
- Corporate units in the system
- % franchised
- 47%
- vs corporate-owned
- Multi-unit owners
- 17.6%
- Net growth (3-yr)
- +3.3%
- Net unit change over 3 years
- 3-yr CAGR
- -12.5%
- Compounded over last 3 years
Last fiscal year · Item 20 exits and transfers
- Terminated
- 0
- Not renewed
- 0
- Reacquired
- 2
- Franchisor bought back
- Signed, not yet open
- 3
- 0.05 per open outlet · Item 20 Table 5
- Projected new
- 2
- Franchisor's next-year forecast
- Continuity rate
- 93.3%
- Units that stayed open
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 7 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 contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
Where the owners are · Item 20 owner list
30 current owners across 8 states.
- TX 22
- SC 2
- CA 1
- FM 1
- IN 1
- MO 1
- NE 1
- VA 1
Counts only, from the list the franchisor prints in Item 20. Names and phone numbers are for your own due diligence and are not shown here.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 31
- Loan volume
- $10.2M
- Median loan
- $315K
- 50th percentile
- Charge-off rate
- 13.0%
- on 31 loans · rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 87.0%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 17
- Defaults
- 3
- Typical loan rate
- 6.2%
- avg rate to borrowers
- Franchised industry avg
- 10.8%
- brand above franchise avg ↑
- Jobs supported
- 224
- 2.2 per loan
- Lender concentration
- 19%
- top lender's share
Borrower mix: 75% went to startups / new businesses, 25% to established operators
Franchise vs independent — in limited-service restaurants, franchised businesses charge off at 10.8% vs 10.0% for independents — franchising is associated with 8% higher SBA default risk in this category.
Vintage analysis
Kolache Factory charge-off rate by loan vintage
Top lenders financing Kolache Factory franchisees
Showing 3 of 17 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for Kolache Factory from SBA 7(a) FOIA data.
- Principal loss rate
- 4.4%
- Avg SBA guarantee
- 76%
- Avg interest rate
- 6.16%
- Avg chargeoff amount
- $148K
- Lender concentration
- 19.4%
- Job velocity
- 2.2 per $100K
- NAICS benchmark
- 8.7%
- NAICS 722513
- Jobs supported
- 224
Top SBA lendersTop lender holds 19% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | Simmons Bank | 6 | $2.6M | 0.0% |
| 2 | Wells Fargo Bank National Association | 5 | $1.1M | 20.0% |
| 3 | Fifth Third Bank | 3 | $358K | 0.0% |
| 4 | Bank of Hope | 3 | $824K | 0.0% |
| 5 | Comerica Bank | 2 | $433K | 50.0% |
| 6 | FCNB Bank | 1 | $144K | 0.0% |
| 7 | Bank OZK | 1 | $141K | 100.0% |
| 8 | PNC Bank, National Association | 1 | $184K | 0.0% |
| 9 | CDC Small Business Finance Corp. | 1 | $250K | 0.0% |
| 10 | Stellar Bank | 1 | $520K | N/A |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| TXTexas | 19 | 2 | 16.7% |
| INIndiana | 4 | 0 | 0.0% |
| CACalifornia | 2 | 0 | 0.0% |
| COColorado | 1 | 0 | 0.0% |
| GAGeorgia | 1 | 1 | 100.0% |
| KYKentucky | 1 | 0 | 0.0% |
| MNMinnesota | 1 | 0 | 0.0% |
| MOMissouri | 1 | 0 | 0.0% |
| SCSouth Carolina | 1 | 0 | 0.0% |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
What could kill this investment?
SBA loans charge off at 13.0% — 19% below the 16.0% national norm, i.e. lower lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Contracting franchise system with high capital requirements, undisclosed financial performance standards, and modest profit margins relative to investment creates meaningful risk despite clean litigation history.
Litigation (Item 3)
Subject: officers or affiliates. The franchisor is not a named party in these cases.
No litigation required to be disclosed in Item 3.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Lawrence, Blackburn, Meek, Maxey & Co., P.C.
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Item 19 reports franchised Store Sales (all revenues incl. catering, excl. sales tax/coupons/employee discounts). Most recent FY2024: 28 franchised stores, tiered High/Medium/Low groups of ~10/10/8 stores. avg/median shown here are the mid 'Medium' tier; top/bottom quartile = High-tier and Low-tier averages. Highest single store $1,919,284, lowest $524,001. Franchisor's own audited financials (KF Franchising, Ltd., Texas LP) are in Exhibit A but the statement figures are not present in this text extract.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 75 / 100 verdict
- 01MINORUnit count declining 6.7% YoY indicates system contraction and potential franchisee dissatisfaction
- 02MINORHigh initial investment ($641k–$937k) relative to modest average net income ($127k) yields 5-7 year payback with no guarantee of achieving averages
- 03MINOR6% royalty on $908k average revenue equals ~$54.5k annual fee, consuming 43% of average net income
- 04MINORDeclining unit base suggests difficulty recruiting and retaining franchisees; may indicate operational or market challenges not yet public
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 9.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 5 years |
| Allowed renewalsℹ | 2 |
| Territory type | No territory protection |
| Protected territory | No |
| Exclusive territoryℹ | No |
| Territory radius | 1 mi |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Right of first refusalℹ | Yes |
| RoFR response window | 30 days |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | No |
| Jury trial waiver | No |
| Governing law | TX |
| Litigation count | 0 |
View Item 3 litigation summary
No litigation required to be disclosed in Item 3.
Items 10, 11
Training & Operations
- Classroom training
- 7 hrs
- On-the-job training
- 220 hrs
- Training location
- Houston, Texas area / Katy, Texas corporate office
- Ongoing training
- Required
- Field support
- 220 hrs/yr
- On-site visits per year
- Time to open
- 9 mo
- From signing to launch
- Site selection
- franchisee with franchisor approval
- Franchisor financing
- Not offered
- Item 10
- POS system
- PAR POS (Partech Systems)
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: PAR POS (Partech Systems)
Item 20 · call current owners
Franchisee Contacts
30 owners to call
Name · phone · city · state. Extracted from FDD Item 20
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Kolache Factory franchise?
The total investment to open a Kolache Factory franchise ranges from $642K – $937K, with an initial franchise fee of $45K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Kolache Factory franchise owners earn?
According to Item 19 of the Kolache Factory FDD, the average gross sales per unit is $960K. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
Who owns Kolache Factory?
Kolache Factory is franchised by KF Franchising, Ltd.. Its parent company is Kolache Factory Management, L.L.C. (general partner). The ultimate parent named in the FDD is Kolache Factory, Inc.. Source: FDD Item 1, 2025 filing.
What is Item 19 in the Kolache Factory FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Kolache Factory FDD and qualifies whose outlets they describe.
What is Kolache Factory's franchise failure rate?
Based on SBA 7(a) loan data, Kolache Factory has a charge-off rate of 13.0% across 31 loans, meaning 13.0% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Kolache Factory franchise locations are there?
As of their most recent FDD filing, Kolache Factory has 60 total units in the United States, including 28 franchised units and 32 company-owned units.
Is Kolache Factory a good franchise to buy?
FranchiseVerdict rates Kolache Factory as a A-grade franchise with a verdict score of 75 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
Are you the franchisor?
If you represent Kolache Factory, you can request corrections or provide updated information.
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.