Gong Cha Franchise FDD, Profits, Costs & Fees (2024)
Gong Cha, an international beverage franchise, is famous for its premium teas, bubble teas, and coffee. Founded in 2006 in Kaohsiung, Taiwan, its name, “Gong Cha,” means “tribute tea for the emperor,” symbolizing the brand’s dedication to quality.
The idea for Gong Cha began in 1996 with founders Huang and Wu, who wanted to offer personalized tea service with innovative flavors. By 2006, the first Gong Cha store opened in Kaohsiung, marking the brand’s rise to global recognition.
Gong Cha is best known for its signature Milk Foam, a creamy, sweet, and savory topping that enhances its freshly brewed teas. This hand-crafted foam, made from the finest ingredients, is a defining element of the Gong Cha experience.
Gong Cha Franchise Stats
Gong Cha
Number of units: 157 franchises
Initial investment: $175,000 - $620,000
Average revenue (AUV): $429,000
Gong Cha Franchise Initial Investment
It costs on average between $175,000 – $620,000 to start a Gong Cha franchised restaurant.
This includes costs for construction, equipment, inventory, and initial operating expenses. The exact amount depends on various factors, including the type of restaurant you choose, the location, and whether the franchisee chooses to lease or purchase the property.
| Type of Expenditure | Low Amount | High Amount |
|---|---|---|
| Initial Franchise Fee | $34,500 | $34,500 |
| Training Expenses | $3,600 | $7,200 |
| Architect and Engineering Fees | $5,150 | $13,000 |
| Leasehold Improvements | $51,500 | $270,500 |
| Furniture, Fixtures, and Equipment | $18,500 | $49,000 |
| Technology Systems | $9,300 | $12,350 |
| Exterior Signage | $2,050 | $5,400 |
| Security and Utility Deposits and Rent | $5,150 | $32,500 |
| Professional Fees and Business Permits | $1,250 | $29,000 |
| Initial Supplies and Inventory | $25,750 | $61,800 |
| Grand Opening Advertising | $2,050 | $5,400 |
| Insurance | $5,400 | $12,350 |
| Additional Funds – 3 Months | $10,300 | $86,500 |
| Total | $174,500 | $619,500 |
Gong Cha Franchise Average Revenue (AUV)
A Gong Cha franchised restaurant makes on average $429,000 in revenue (AUV) per year.
Here is the extract from the Franchise Disclosure Document:
This compares to $557,000 yearly revenue for similar restaurant coffee and tea franchises. Below are 10 Gong Cha competitors as a comparison:
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Gong Cha Franchise Disclosure Document
Frequently Asked Questions
How many Gong Cha locations are there?
As of the latest data, Gong Cha operates over 2,000 locations globally. The vast majority of these locations are franchise-owned, with only a few being company-owned.
The company has ambitious growth plans, aiming to expand its U.S. presence to 500 locations by 2025. Currently, the U.S. market is a key focus for Gong Cha, with rapid expansion underway.
What is the total investment required to open a Gong Cha franchise?
The total investment required to open a Gong Cha franchise ranges from $175,000 – $620,000.
What are the ongoing fees for a Gong Cha franchise?
For a Gong Cha franchise, the ongoing fees include a 6% royalty fee on weekly net sales, which is due on the third business day of each week. Additionally, there is a brand marketing fee of 1% of weekly net sales, although this fee may be increased up to 2% with 90 days’ prior written notice.
These fees are standard for maintaining franchise operations and contributing to the brand’s national and local marketing efforts.
What are the financial requirements to become a Gong Cha franchisee?
To become a Gong Cha franchisee, the financial requirements typically include a minimum net worth ranging between $300,000 and $500,000 and liquid assets of at least $100,000 to $200,000. These financial thresholds ensure that prospective franchisees have the necessary resources to cover initial costs, operational expenses, and ongoing franchise fees.
How much can a Gong Cha franchise owner expect to earn?
The average gross sales for a Gong Cha franchise are approximately $0.43 million per location. Assuming a 15% operating profit margin, $0.43 million yearly revenue can result in $64,350 EBITDA annually.
Who owns Gong Cha?
Gong Cha is owned by TA Associates, a private equity firm that acquired a majority stake in the company in 2019. This acquisition has helped Gong Cha expand its global footprint and continue growing in markets across the world.
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