Kung Fu TeaFranchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A Kung Fu Tea franchise requires a total initial investment of $169K – $378K, including a $37K franchise fee and an ongoing 4.0% royalty[2]. The 2025 FDD does not disclose unit-level revenue (no Item 19). SBA 7(a) loans show a 0.0% charge-off rate across 24 loans[1]. Verdict grade: A. Run a live ROI scan →
Data last verified June 18, 2026 · figures per the 2025 FDD issuance
Overview
- Investment
- $169K – $378K
- 23rd pct Service Resta…
- Avg gross sales
- N/A
- 59th pct Service Resta…
- Royalty
- 4.0%
- 3rd pct Service Resta…
- Units
- 388
- 86th pct Service Resta…
- SBA default
- 0.0%
- system-wide median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = >15% above Quick-Service Restaurants avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Only 0.0% of 24 SBA loans charged off, well below the 16% franchise average.
Franchised units fell from 386 to 338 over 3 years. Investigate why operators are leaving.
Bottom line
- Total investment $169K – $378K including a $37K franchise fee, 4.0% ongoing royalty.
- No Item 19 financial performance data disclosed. The franchisor chose not to publish revenue figures.
- Verdict A (Top Quintile) with a risk score of 38/100. SBA loan charge-off rate of 0.0% across 24 loans (well below the franchise average, based on all SBA 7(a) franchise lending, 2010–2024).
- No Item 19 financial performance representation. Without franchisor-disclosed revenue data, you'll need to gather unit economics directly from existing franchisees.
Item 1 · who you're contracting with
The Franchisor
- Legal entity
- KF Tea Franchising LLC
- Parent company
- none
- Predecessor
- KF Tea USA Inc
- Prior franchisor entity
- CEO title
- Manager and Chief Financial Officer
- Hung-Jen (Allen) Wang
- Founder active
- Yes
- Original founder still leading the business
- Incorporated in
- DE
- HQ
- 589 8th Ave., 17th Floor, New York, NY 10018
- Auditor
- PKF O’Connor Davies LLP
- Audited financials
- Franchisor revenue
- $9.1M
- vs $8.4M 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
Kung Fu Tea franchisees operate quick-service boba tea shops, preparing and serving customized tea beverages with tapioca pearls, fruit additions, and milk options. Day-to-day operations include managing point-of-sale systems, training staff on drink preparation, inventory management for tea leaves and toppings, and customer service in a high-traffic retail environment.
- CEO
- Hung-Jen (Allen) Wang
- Headquarters
- NY
- Founded
- 2010
- FDD year
- 2025
- States available
- 42
FDD Item 7 · 2025 filing · 28 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 | |
| Initial franchise fee (Nontraditional Unit)not refundable | $25K | $25K | |
| Training fee (Nontraditional Unit)not refundable | $13K | $13K | |
| Equipment from our affiliate (Nontraditional Unit)not refundable | $7K | $8K | |
| Other equipment, furniture, fixtures and signage (Nontraditional Unit) | $30K | $40K | |
| Computers, printer, fax, other hardware and business software (Nontraditional Unit) | $3K | $5K | |
| Prepaid rent and security deposit (Nontraditional Unit) | $5K | $40K | |
| Total initial investment | $353K | $648K |
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
- Better than avg vs category
- Liquid capital req'd
- $10K – $20K
- Better than avg vs category
- Franchise fee
- $25K – $37K
- Near category avg vs category
- Royalty
- 4.0%
- Gross Sales · 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 | $350 |
| Training fee | $13K |
| Transfer fee | $5K |
| Renewal fee | $10K |
| Inventory (initial) | $15K – $25K |
| Total fee load | 6.0% of rev |
Financial Performance
This franchisor did not disclose financial performance representations in Item 19, or our extractor could not parse them.
vs Quick-Service Restaurants averages
How Kung Fu Tea Compares
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 388
- Opened
- 37
- Last reporting year
- Closed
- 28
- Turnover rate
- 7.2%
- Company-owned
- 2
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Net growth (yr3)
- +2.4%
- Net unit change last year
- 3-yr CAGR
- +14.2%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 25
- 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.
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
- 0.0%
- 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)
- 100.0%
- 5-yr charge-off
- 0.0%
- Loans approved 2021+
- Active lenders
- 16
- Defaults
- 0
Explore lender portfolios on Bank Reports or regional data on State Reports.
Premium insight
SBA Lending Report
Deep-dive into Kung Fu Tea's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 10 lenders with concentration factor
- Per-state charge-off rates across 12 states
- Startup risk premium and job creation velocity
- 7-year lending trend
Instant access. No subscription.
With a 0.0% charge-off rate across 24 loans, banks have historically viewed this brand favorably for lending.
Risk analysis
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
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)
KF Tea USA Inc. and KF Tea Franchising LLC filed trademark infringement litigation on December 27, 2023, in U.S. District Court for the Northern District of Texas (Civil Action No. 3:23-cv-02860-X), later transferred to Wichita Division (Civil Action No. 7:24-cv-00001-O) against Tea N' Boba Enterprises LLC, Toan Van Nguyen, and Vy Nguyen for trademark infringement, unfair competition, false designation of origin, and breach of contract. Court granted Stipulated Order for Permanent Injunction on January 19, 2024. Case settled favorably and dismissed in its entirety on March 4, 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)
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 38 / 100 rating
- 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
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 2 |
| Territory type | Radius |
| Protected territory | Yes |
| Territory radius | 0.5 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 |
| Right of first refusalℹ | Yes |
| Termination notice | 90 days |
| Mandatory arbitration | No |
| Jury trial waiver | Yes |
| Governing law | New York |
| Litigation count | 1 |
View Item 3 litigation summary
KF Tea USA Inc. and KF Tea Franchising LLC filed trademark infringement litigation on December 27, 2023, in U.S. District Court for the Northern District of Texas (Civil Action No. 3:23-cv-02860-X), later transferred to Wichita Division (Civil Action No. 7:24-cv-00001-O) against Tea N' Boba Enterprises LLC, Toan Van Nguyen, and Vy Nguyen for trademark infringement, unfair competition, false designation of origin, and breach of contract. Court granted Stipulated Order for Permanent Injunction on January 19, 2024. Case settled favorably and dismissed in its entirety on March 4, 2024.
Items 10, 11
Training & Operations
- Classroom training
- 0 hrs
- On-the-job training
- 80 hrs
- Training location
- New York
- Ongoing training
- Required
- Field support
- 80 hrs/yr
- On-site visits per year
- POS system
- Revel
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Revel
Item 20 · call current owners
Franchisee Contacts
330 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
Kung Fu Tea · FDD (2025) PDF
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 $37K. 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 does not disclose average franchise owner earnings in their FDD Item 19. Not all franchisors are required to make financial performance representations. We recommend asking existing franchisees directly about their financial experience.
What is Kung Fu Tea's franchise failure rate?
Based on SBA 7(a) loan data, Kung Fu Tea has a charge-off rate of 0.0% across 24 loans, meaning 0.0% 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 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 A-grade franchise with a risk score of 38 out of 100, based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. 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
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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.