Kung Fu Tea Franchise Cost, Revenue & Review 2026
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]. 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]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $169K – $378K
- 16th pct Service Resta…
- Avg gross sales
- N/A
- Royalty
- 4.0%
- 3rd pct Service Resta…
- Units
- 388
- 87th pct Service Resta…
- SBA charge-off
- 0.0%
- % 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 avg · 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.
- RETURNSIncludes 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
- RISKVerdict A (Strongest tier), verdict score 65/100 (higher is better). SBA loan charge-off rate of 0.0% across 24 loans (well below the franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- DATANo 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
Corporate structure & franchisor financials
- Legal entity
- KF Tea Franchising LLC
- Parent company
- None
- 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 58% below the typical quick-service restaurants franchise.
Source: FDD 2025 · Items 5–7
Full Item 7 breakdown28 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
- 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%
- percentage · 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 did not disclose financial performance in FDD Item 19. The ROIC and return models require Item 19 revenue. Without it all inputs are estimates. You can still run the calculator with your own assumptions by entering an expected revenue figure.
Returns model · single-unit ROIC
What would one Kung Fu Tea unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
42%
Within the 30–60% "attractive franchise" band
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
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
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 average of 7.9%.
Disclosure
Franchisor chose not to disclose financial performance representations. You will need to gather unit economics directly from existing franchisees.
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 averages
How Kung Fu Tea Compares
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
- 14.8%
- 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
3-year detail · Item 20
- Opened (3yr)
- 159
- Closed (3yr)
- 53
- Terminated (3yr)
- 4
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 50
- Reacquired (3yr)
- 0
- Franchisor bought back
- 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
- Typical loan rate
- 7.1%
- avg rate to borrowers
- Franchised industry avg
- 10.6%
- brand beats franchise avg ↓
- 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.
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.
What could kill this investment?
SBA loans charge off at 0.0% — 100% 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
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 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)
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 65 / 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 |
| 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
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 $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 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 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?
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 verdict score of 65 out of 100 (higher is better), 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
Are you the franchisor?
If you represent Kung Fu Tea, 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.