KUNG FU TEA

Item 7 lays out the financial entry: $37,000 franchise fee within a total investment of $169,000-$378,000, covering buildout for shops slinging proprietary teas, bubble drinks, and smoothies. Ongoing costs hit with 4% royalty, 2% brand fund, plus $140-$350 monthly tech fees—aligning with beverage norms but stacking up against peers like Gong Cha's similar structure. No Item 19 earnings disclosure leaves AUVs opaque, forcing reliance on broader category medians around $400K-$600K for tea shops; without it, validating ROI demands extra diligence on local traffic and Asian-American market density.

System metrics paint contraction: 378 locations in 2023 shrank to 361 in 2024 (-4%), bucking industry growth, though 385 total units and 30 projected opens suggest rebound ambitions via multi-unit pacts. High transfers (25) indicate resale activity, potentially easing exits but hinting at owner churn. SBA records show 24 loans averaging $261,425, low volume versus giants like Dunkin' but typical for emerging F&B; defaults undisclosed here warrant checking. Litigation over trademarks and breach versus Tea N’ Boba signals aggressive IP protection, a plus for brand integrity yet a reminder of ex-franchisee disputes common in beverages.