Kung Fu Tea Franchise Cost, Revenue & Review 2026
- Investment
- $169K – $378K
- Disclosed sales
- not disclosed
- SBA charge-off
- Limited · 24 loans
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Kung Fu Tea is a quick-service bubble-tea franchise serving customizable milk and fruit teas with tapioca pearls. Franchisees run compact shops handling drink prep, POS, staffing, and inventory.
FranchiseVerdict summary · 2026
A Kung Fu Tea franchise requires a total initial investment of $169K – $378K, including a $25K – $37K franchise fee and an ongoing 4.0% royalty[2]. This franchisor makes no financial performance representation in Item 19 of its FDD. Item 19 is voluntary under the FTC Franchise Rule, and this filing states that it makes none, so no revenue or earnings figures are disclosed. Declining to publish one is lawful and is not evidence of how the outlets perform. It does mean that less about this brand can be verified from its filing, and the FranchiseVerdict grade - an editorial assessment, not investment advice - reflects that. FranchiseVerdict grade: B (Above average), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: medium - issued 12 to 24 months ago; a newer filing is likely on file
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 scored5 of 5 headline figures on this page cite a page of the filing.
Overview
- Investment
- $169K – $378K
- 15th pct Service Resta…
- Avg gross sales
- N/A
- Royalty
- 4.0%
- 3rd pct Service Resta…
- Units
- 388
- 87th pct Service Resta…
- SBA charge-off
- N/A
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 $169K – $378K including a $25K franchise fee, 4.0% ongoing royalty.
- RETURNSThis franchisor makes no financial performance representation in Item 19 of its FDD. Item 19 is voluntary under the FTC Franchise Rule, and this filing states that it makes none, so no revenue or earnings figures are disclosed. Declining to publish one is lawful and is not evidence of how the outlets perform. It does mean that less about this brand can be verified from its filing, and the FranchiseVerdict grade - an editorial assessment, not investment advice - reflects that.
- RISKVerdict B (Above average), verdict score 55/100 (higher is better).
- GROWTHPositive: net +9 franchised outlets in the latest year (37 opened, 28 closed); 10 signed but not yet open (Item 20).
- DATAThis franchisor makes no financial performance representation in Item 19 of its FDD. Item 19 is voluntary under the FTC Franchise Rule, and this filing states that it makes none, so no revenue or earnings figures are disclosed. Declining to publish one is lawful and is not evidence of how the outlets perform. It does mean that less about this brand can be verified from its filing, and the FranchiseVerdict grade - an editorial assessment, not investment advice - reflects that. Item 20 of the FDD lists current and former franchisees; asking them directly is the standard way to fill this gap.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- KF Tea Franchising LLC
- Predecessor
- KF Tea USA Inc. (began operations May 2010)
- Prior franchisor entity
- CEO title
- Manager and CFO
- Hung-Jen (Allen) Wang
- Founder active
- Yes
- Original founder still leading the business
- Incorporated in
- Delaware
- HQ
- 589 8th Ave., 17th Floor, New York, NY 10018
- Auditor
- PKF O'Connor Davies LLP
- Audited financials
- Franchisor revenue
- $8.4M
- vs $9.1M prior year
- Management churn noted
- Frequent turnover
- Item 2 disclosed frequent executive changes
Independent franchisee associations
- Franchise Advisory Council (FAC)
- Independent Franchisee Association
Franchisee-led councils or alliances disclosed in Item 20. Indicates operator voice.
Affiliated brands
- and predecessor
- TKK Franchising
- Mars Holding Group
- Arms Global
- Yasubee Franchising
- Yasubee QC
Other brands the franchisor or its parent operates (Item 1).
Overview
About
- CEO
- Hung-Jen (Allen) Wang
- Headquarters
- NY
- Founded
- 2013
- FDD year
- 2025
- States available
- 42
Can you afford it, and what does the money buy?
Entry cost runs 44% below 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 (Standard Unit)not refundable | $25K | $37K | |
| Training fee (Standard Unit)not refundable | $13K | $13K | |
| Equipment from our affiliate (Standard Unit)not refundable | $7K | $8K | |
| Other equipment, furniture, fixtures and signage (Standard Unit) | $30K | $40K | |
| Computers, printer, fax, and other hardware and business software (Standard Unit) | $3K | $5K | |
| Prepaid rent and security deposit (Standard Unit) | $5K | $40K | |
| Leasehold improvements and architectural costs (Standard Unit) | $40K | $150K | |
| Interior design (3D rendering of shop) (Standard Unit) | $4K | $5K | |
| Initial inventory of tea, coffee, cups, menu boards, and packaging materials (Standard Unit)not refundable | $15K | $25K | |
| Initial marketing program (Standard Unit) | $5K | $5K | |
| Insurance - liability and workers compensation - initial deposit (Standard Unit) | $5K | $20K | |
| Travel, living expenses and salaries during initial training (Standard Unit) | $4K | $5K | |
| Legal and accounting fees (Standard Unit) | $5K | $6K | |
| Additional funds - first month (Standard Unit) | $10K | $20K | |
| Total initial investment | $169K | $378K |
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
- $169K – $378K
- Top 40% of category vs category
- Liquid capital req'd
- $10K – $20K
- Top 40% of category vs category
- Franchise fee
- $25K – $37K
- Top 40% of category vs category
- Royalty
- 4.0%
- typical 6–8%
- Ad fund
- 2.0%
- typical 3–5%
- Total fee load
- 6.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 4.0% of gross sales |
| Marketing / ad fund | 2.0% of gross sales |
| Technology fee | $108 |
| Training fee | $13K |
| Transfer fee | $5K |
| Renewal fee | $10K |
| Inventory (initial) | $15K – $25K |
| Total fee load | 6.0% of rev |
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
Kung Fu Tea makes no financial performance representation in Item 19 of its FDD - a voluntary item under the FTC Franchise Rule - so no unit revenue figures are disclosed. The return models need a revenue figure to start from, and the operating costs that turn gross sales into a profit are in no FDD. Enter your own and the calculator runs on your assumptions — nothing here is modelled until you do.
Returns model · single-unit ROIC
What would one Kung Fu Tea 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 annual revenue, 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.
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
No financial performance representation
This franchisor makes no financial performance representation in Item 19 of its FDD. Item 19 is voluntary under the FTC Franchise Rule, and this filing states that it makes none, so no revenue or earnings figures are disclosed. Declining to publish one is lawful and is not evidence of how the outlets perform. It does mean that less about this brand can be verified from its filing, and the FranchiseVerdict grade - an editorial assessment, not investment advice - reflects that.
Item 20 of the FDD lists current and former franchisees; asking them directly is the standard way to fill this gap.
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Fee burden
Total ongoing fee load of 6.0% — below the Quick-Service Restaurants median of 7.5%.
Disclosure
This franchisor makes no financial performance representation in Item 19 of its FDD. Item 19 is voluntary under the FTC Franchise Rule, and this filing states that it makes none, so no revenue or earnings figures are disclosed. Declining to publish one is lawful and is not evidence of how the outlets perform. It does mean that less about this brand can be verified from its filing, and the FranchiseVerdict grade - an editorial assessment, not investment advice - reflects that. Item 20 of the FDD lists current and former franchisees; asking them directly is the standard way to fill this gap.
Operator retention
System expanding at 14.2% CAGR over 3 years across 388 units — operators are staying and new ones are joining.
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 Kung Fu Tea 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
- 388
- Opened
- 37
- Last reporting year
- Closed
- 28
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 7.2%
- Company-owned
- 2
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Net growth (3-yr)
- +14.2%
- Net unit change over 3 years
- 3-yr CAGR
- +14.2%
- Compounded over last 3 years
Last fiscal year · Item 20 exits and transfers
- Terminated
- 0
- Not renewed
- 0
- Transferred
- 25
- Reacquired
- 0
- Franchisor bought back
- Signed, not yet open
- 10
- 0.03 per open outlet · Item 20 Table 5
- Projected new
- 30
- Franchisor's next-year forecast
- Transfer rate
- 6.4%
- Owners selling to other franchisees
- Continuity rate
- 93.2%
- Units that stayed open
- Ceased ops
- 7.2%
- Units that stopped operating
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 43 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
330 current owners across 43 states.
- NY 44
- TX 41
- VA 27
- CA 20
- NJ 19
- MD 15
- FL 14
- GA 13
- IL 13
- CO 10
- MA 10
- OH 10
- +31 more states
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
- 24
- Loan volume
- $6.3M
- Median loan
- $250K
- 50th percentile
- Charge-off rate
- Limited · 24 loans
- Limited SBA coverage: 24 loans, rate hidden until 10 have resolved and loans reach 2% of franchised units
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- Limited · 24 loans
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 16
- Defaults
- 0
- Typical loan rate
- 7.1%
- avg rate to borrowers
- Franchised industry avg
- 10.6%
- n=3,755 loans
- Jobs supported
- 340
- 6.3 per loan
- Lender concentration
- 29%
- top lender's share
Borrower mix: 85% went to startups / new businesses, 15% to established operators
Franchise vs independent — in snack and nonalcoholic beverage bars, franchised businesses charge off at 10.6% vs 8.9% for independents — franchising is associated with 19% higher SBA default risk in this category.
Top lenders financing Kung Fu Tea franchisees
Showing 3 of 16 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 Kung Fu Tea from SBA 7(a) FOIA data.
- Principal loss rate
- 0.0%
- Avg SBA guarantee
- 78%
- Avg interest rate
- 7.14%
- Lender concentration
- 28.6%
- Job velocity
- 6.3 per $100K
- NAICS benchmark
- 7.0%
- NAICS 722515
- Jobs supported
- 340
Top SBA lendersTop lender holds 29% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | The Huntington National Bank | 6 | $1.1M | 0.0% |
| 2 | KeyBank National Association | 2 | $601K | N/A |
| 3 | Citizens Bank | 2 | $346K | N/A |
| 4 | Manufacturers and Traders Trust Company | 1 | $160K | 0.0% |
| 5 | Byline Bank | 1 | $600K | N/A |
| 6 | CRF Small Business Loan Company, LLC | 1 | $155K | N/A |
| 7 | Hanmi Bank | 1 | $680K | N/A |
| 8 | Inova Federal Credit Union | 1 | $150K | N/A |
| 9 | Newtek Small Business Finance, Inc. | 1 | $200K | 0.0% |
| 10 | New Millennium Bank | 1 | $250K | N/A |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| ILIllinois | 4 | 0 | 0.0% |
| VAVirginia | 3 | 0 | -- |
| CACalifornia | 2 | 0 | -- |
| MIMichigan | 2 | 0 | -- |
| NJNew Jersey | 2 | 0 | -- |
| OHOhio | 2 | 0 | -- |
| COColorado | 1 | 0 | -- |
| DCWashington DC | 1 | 0 | -- |
| INIndiana | 1 | 0 | -- |
| MDMaryland | 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?
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Kung Fu Tea presents meaningful risk due to absent financial disclosures, stagnant unit growth, recent litigation, and an opaque royalty structure that could erode profitability on unknown revenues.
Litigation (Item 3)
Subject: the franchisor is a named party (plaintiff).
KF Tea USA Inc. and KF Tea Franchising LLC filed trademark infringement suit (Dec 2023) against Tea N' Boba Enterprises LLC and others in N.D. Texas; permanent injunction granted Jan 2024; settled and dismissed March 2024.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · PKF O'Connor Davies LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Includes franchise/training fee income $1,792,879; royalty fee income $4,190,568; marketing fee income $2,322,341; other income $51,540 for FY2024
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- 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 55 / 100 verdict
- 01MEDNo average revenue or net income disclosed in FDD Item 19 — impossible to validate ROI claims or compare to $169k-$378k investment
- 02MINORMinimal unit growth (2.4% YoY) on 388-unit system suggests market saturation or franchisee struggles in the boba tea category
- 03HIGHRecent trademark litigation (Dec 2023–Mar 2024) indicates brand protection concerns and potential IP vulnerabilities competitors may exploit
- 04MEDHigh royalty burden (4% of gross sales) with no disclosed average revenue means franchisees could pay $5k-$15k+ annually with unknown profit margins
- 05MED10-year term locks franchisees into a struggling growth trajectory with limited exit flexibility
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 6.0% 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 | 10 years |
| Allowed renewalsℹ | 2 |
| Territory type | Protected territory |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Territory radius | 1 mi |
| Territory population | 50,000 |
| Online sales rightsℹ | Granted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 5 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 90 days |
| Mandatory arbitration | No |
| Jury trial waiver | Yes |
| Governing law | NY |
| Litigation count | 1 |
View Item 3 litigation summary
KF Tea USA Inc. and KF Tea Franchising LLC filed trademark infringement suit (Dec 2023) against Tea N' Boba Enterprises LLC and others in N.D. Texas; permanent injunction granted Jan 2024; settled and dismissed March 2024.
Items 10, 11
Training & Operations
- Classroom training
- 0 hrs
- On-the-job training
- 80 hrs
- Training location
- New York City (company or affiliate locations)
- Ongoing training
- Required
- Field support
- 80 hrs/yr
- On-site visits per year
- Time to open
- 4 mo
- From signing to launch
- Site selection
- Franchisee selects, franchisor approves
- Franchisor financing
- Not offered
- Item 10
- POS system
- Revel (revelsystems.com)
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Revel (revelsystems.com)
Item 20 · call current owners
Franchisee Contacts
330 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 Kung Fu Tea franchise?
The total investment to open a Kung Fu Tea franchise ranges from $169K – $378K, with an initial franchise fee of $25K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Kung Fu Tea franchise owners earn?
Kung Fu Tea makes no financial performance representation in Item 19 of its FDD - a voluntary item under the FTC Franchise Rule - so no unit revenue figures are disclosed. Declining to publish one is lawful and is not evidence of how the outlets perform. It does mean that less about this brand can be verified from its filing, and the FranchiseVerdict grade - an editorial assessment, not investment advice - reflects that. Item 20 of the FDD lists current and former franchisees; asking them directly is the standard way to fill this gap.
Who owns Kung Fu Tea?
Kung Fu Tea is franchised by KF Tea Franchising LLC. The FDD names no parent company. Source: FDD Item 1, 2025 filing.
What is Item 19 in the Kung Fu Tea 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 Kung Fu Tea FDD and qualifies whose outlets they describe.
What is Kung Fu Tea's franchise failure rate?
SBA 7(a) loan charge-off data is not available for Kung Fu Tea (fewer than 10 loans on file). Charge-off rates are one way to gauge franchise risk, but not all franchise loans go through the SBA program. We recommend reviewing turnover and closure data in the FDD and speaking with current franchisees.
How many Kung Fu Tea franchise locations are there?
As of their most recent FDD filing, Kung Fu Tea has 388 total units in the United States, including 386 franchised units and 2 company-owned units. 37 new units were opened in the latest reporting year.
Is Kung Fu Tea a good franchise to buy?
FranchiseVerdict rates Kung Fu Tea as a B-grade franchise with a verdict score of 55 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?
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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.