Gong Cha Franchise Costs $164K – $576K (+ 2024 Profits)

Gong Cha is a renowned international beverage franchise, celebrated for its freshly prepared premium teas, bubble teas, and coffee. Founded in 2006 in Kaohsiung, Taiwan, the brand’s name, “Gong Cha,” translates to “tribute tea for the emperor,” reflecting the company’s commitment to quality and excellence in its offerings.

The idea for Gong Cha was conceived in 1996 by two friends, Huang and Wu, who aimed to provide personalized service with premium teas in a variety of innovative and delicious recipes. By 2006, the brand had established itself significantly, opening its first Gong Cha brand store in Kaohsiung City, Taiwan. This marked the beginning of its journey to becoming one of the most recognized providers of quality teas worldwide.

Gong Cha is particularly known for its signature Milk Foam, a creamy, sweet, and savory topping that complements its freshly brewed teas. This hand-crafted foam, made from the freshest milk and highest quality ingredients, has become a hallmark of the Gong Cha experience.

Type of Expenditure	Amount
Initial Franchise Fee	$34,500
Rent, Security Deposits and Utility Deposits	$5,000 – $31,500
Architect / Engineering Fees	$5,000 – $12,600
Leasehold Improvements	$50,000 – $262,500
Exterior Signage	$2,000 – $5,250
Fixtures, Furnishings and Equipment	$25,000 – $52,500
Technology Systems	$2,000 – $7,350
Training Expenses	$1,500 – $5,250
Insurance	$1,000 – $7,350
Business Licenses and Permits	$200 – $21,000
Professional Fees	$1,000 – $5,250
Initial Inventory of Food, Beverages, Paper Supplies and Small Wares	$25,000 – $42,000
Grand Opening Advertising	$1,500 – $5,250
Additional Funds (for the initial 3 months of operations)	$10,000 – $84,000
Total Estimated Initial Investment	$164,000 – $576,000

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Fees:

For each Gong Cha Store developed within the Authorized Territory, a Store Licensing Fee of $15,000 is required. This fee is also non-refundable and must be paid within 30 days after the Master Franchisee and the Subfranchisee sign the Subfranchise Agreement for the first Gong Cha Store within the Authorized Territory. The initial franchise fee charged to the Affiliate Subfranchisee is assumed to be $34,500, which is 2.3 times the amount of the Store Licensing Fee.

Ongoing Fees:

• Running Royalty Fees: 3% of Gross Revenue for all Gong Cha Stores located within the Authorized Territory.
• Brand Marketing Fee: 1% of Gross Revenue for all Gong Cha Stores located within the Authorized Territory. This may increase to up to 2% of Gross Revenue starting from the 4th anniversary of the Effective Date of the Master Franchise Agreement.

Other Fees:

• Store Licensing Fee for Each Additional Subfranchised Gong Cha Store: $15,000 per store.
• Health and Safety Audit Fee: Currently, $800 to $1,000 per store, per year.
• Transfer Fee: $200,000, plus any other administrative fees deemed reasonably necessary.
• Renewal Fee: 1/2 of the License Fee paid under the Master Franchise Agreement.

Franchise Pros and cons

The Pros:

• Specialized training: franchisees must complete 14 days of extensive training as part of the Franchise Agreement. This helps them stay on par with the latest in restaurant management, customer service, and recipe. Franchisees undergo intense, hands-on training from a global network of Gong Cha bubble tea experts. 
• Raw material supply: Gong Cha boasts a devoted logistics department that streamlines the raw material supply to its franchisees. 
• Centralized and localized marketing support: comprehensive marketing and promotional resources improve brand recognition. This includes co-op advertising, social media, ad templates, and regional advertising. 
• Fast-growing industry: bubble tea is a unique QSR concept that has taken the American food and beverage industry by storm. Franchisees can benefit from strong market growth
• Diverse demographics: the franchisor’s business concept has a strong global appeal. The innovative menu attracts families, adults, students, children, and anyone craving delicious bubble tea. 

The Cons:

• No financing: the franchisor doesn’t offer direct or indirect financing to restaurant owners. It neither liaises with third-party financing sources nor provides direct funding to business owners. 
• No absentee ownership: franchisees must be involved in the business operations as part of the Franchise Agreement. 
• No part-time ownership: franchisees can’t run the business part-time or as a side hustle. The franchisor expects restaurant owners to have complete control of every business operation and work within the stipulated operating hours every day of the week. 
• Competing brands: Gong Cha is rivaled by its top competitors, such as Kung Fu Tea or Green Mountain Coffee to name a few.

How to open a gong cha franchise

Opening a Gong Cha franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Gong Cha franchise.

1. Research Gong Cha and the Bubble Tea Industry

• Understand the brand, its products, and its position in the market.
• Familiarize yourself with the bubble tea industry, trends, and customer preferences.
• Evaluate the competition and market demand in your desired location.

2. Assess Your Financial Capability

• Review Gong Cha’s franchising fees, royalty fees, and other associated costs.
• Assess your financial resources to ensure you can cover the initial investment and operating costs.
• Consider potential financial sources, such as personal savings, loans, or investors.

3. Submit Your Franchise Application

• Complete the Gong Cha franchise application form, available on their official website or through contacting their franchising department.
• Provide detailed information about your business background, financial status, and business plan.

4. Attend a Franchise Interview

• Once your application is reviewed, you may be invited for an interview to discuss your application in detail.
• Prepare to talk about your business acumen, understanding of the Gong Cha brand, and how you plan to manage your franchise.

5. Site Selection and Approval

• Work with Gong Cha to identify and select an appropriate location for your franchise.
• Gong Cha may have specific criteria for site selection, including location visibility, foot traffic, and proximity to target markets.
• The chosen site must be approved by Gong Cha’s franchising team.

6. Sign the Franchise Agreement

• Upon approval, you will be presented with a franchise agreement.
• Review the agreement carefully, ideally with the assistance of a legal advisor familiar with franchise contracts.
• Sign the franchise agreement and pay the necessary franchising fees.

7. Undergo Training

• Participate in Gong Cha’s training program for franchisees, which typically covers product knowledge, operational procedures, customer service, and business management.
• The training may take place at a designated training center or an existing Gong Cha location.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.