Kona Ice Franchise in 2024: Costs, Fee & FDD
Kona Ice has made a splash in the frozen dessert market with its vibrant mobile truck concept, serving up delicious shaved ice to communities across the U.S. If you’re considering joining this growing franchise, here’s a detailed breakdown of the costs, potential earnings, and what makes Kona Ice an appealing option.
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Kona Ice is a unique and vibrant mobile shaved ice franchise that has carved out a niche in the frozen dessert industry. Founded in 2007 by Tony Lamb, Kona Ice has grown rapidly, thanks to its innovative approach to serving delicious shaved ice from brightly colored trucks. The brand stands out not only for its refreshing treats but also for its commitment to community involvement and philanthropy, making it a significant player in the franchise world.
The core product of Kona Ice is its customizable shaved ice, where customers can choose from a variety of flavors and combinations using the patented Flavorwave system. This interactive and engaging experience is particularly popular among children and families, making Kona Ice a hit at events, parties, and school fundraisers. In addition to shaved ice, some Kona Ice franchises also offer ice cream and other frozen treats, expanding their appeal. The brand primarily serves communities, schools, sports events, and corporate gatherings, effectively tapping into a diverse customer base that spans all ages.
As of now, Kona Ice has a remarkable presence with over 1,000 franchises across the United States and in a few international markets. Each day, hundreds of thousands of customers enjoy Kona Ice’s offerings, demonstrating the widespread popularity and demand for its products. The franchise’s ability to operate from mobile units allows it to reach a broad audience, bringing its treats directly to where people gather and ensuring a steady stream of business opportunities.
Kona Ice provides robust support to its franchisees, starting with a comprehensive training program that covers everything from operations to marketing strategies. Franchisees benefit from ongoing support, including access to a well-developed network of resources, a strong brand reputation, and marketing materials. Additionally, the franchise is known for its commitment to community involvement, often partnering with local organizations to raise funds and support charitable causes, which further strengthens its brand loyalty and community presence.
Kona Ice Franchise Insights
- The patented Flavorwave system allows customers to create their own unique shaved ice experience with a choice of over 30 flavors, enhancing customer satisfaction and repeat business.
- With a low startup cost and the ability to operate multiple units, Kona Ice offers a scalable business model that can be tailored to different markets and demographics.
- Kona Ice franchises operate from custom-designed trucks, allowing for flexible and mobile operations that can easily adapt to various events and locations.
- The franchise has been ranked #1 in the Mobile Franchise category by Entrepreneur magazine multiple times, underscoring its success and popularity in the industry.
Kona Ice Franchise Key Indicators
Growth YOY (%)
13%
vs industry 0%
3-year Growth (%)
29%
vs industry 3%
Total Investment
$173K-$222K
3-year Failure Rate
3%
vs industry 11%
How much does it cost to open a Kona Ice franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Kona Ice franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Kona Ice franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). you can see a breakdown of the costs to open a Kona Ice below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $15,000 | $15,000 |
| KEV and Installed Equipment | $146,491 | $155,491 |
| Training Expenses | $140 | $950 |
| KEV Delivery | $0 | $10,000 |
| KEV Compliance Fee | $0 | $5,000 |
| KEV Insurance for 3 Months | $500 | $1,500 |
| Tax, Title, and Licensing of KEV | $1,000 | $8,000 |
| Initial Inventory | $9,975 | $9,975 |
| Optional Inventory | $0 | $225 |
| Permits and Licenses | $250 | $1,500 |
| Real Estate or KEV Storage | $0 | $4,000 |
| Computer System and Software | $0 | $1,000 |
| Additional Funds – 3 Months | $0 | $9,500 |
| Total | $173,356 | $222,141 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
The total estimated initial investment to open a Kona Ice franchise ranges from $173,000 to $222,000. This includes expenses such as the franchise fee, equipment, vehicle costs, initial inventory, and other start-up costs.
- Liquid Assets Franchisees are generally expected to have at least $50,000 to $75,000 in liquid assets. This ensures that the franchisee has sufficient cash flow to cover initial expenses and operational needs.
- Net Worth The estimated net worth requirement for a Kona Ice franchisee is approximately $150,000. This reflects the financial stability needed to manage both the franchise investment and ongoing operational costs.
How much does a Kona Ice franchise owner make?
Calculating the salary of a Kona Ice franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Kona Ice franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Kona Ice Revenue & Gross Sales
In recent years, Kona Ice franchises have seen average gross sales of approximately $150,000. This figure reflects the potential for earnings is on the lower end due to its unique mobile model, though individual performance can vary based on several operational factors.
Which key factors impact the average revenue performance of Kona Ice franchisees?
Key factors affecting revenue include the effectiveness of marketing strategies, location of service, seasonal variations, and the efficiency of operations. Rapid expansion and market saturation may also impact individual store performance.
Kona Ice Franchise Operational Costs
Kona Ice has a unique mobile franchise model. Operational costs for a mobile franchise like Kona Ice are the ongoing expenses required to run the day-to-day operations of the business. These costs are essential for maintaining the business’s functionality and ensuring smooth operations. For a Kona Ice mobile franchise, operational costs include:
- Inventory and Supplies Regular expenses for syrups, cups, napkins, and other necessary supplies to keep the business running smoothly.
- Truck Maintenance and Fuel Costs associated with maintaining and fueling the mobile unit, including repairs and regular upkeep to ensure it remains operational.
- Insurance Comprehensive insurance coverage for the truck, liability, and business operations.
- Employee Wages Payroll expenses if you hire staff to assist with operations, including wages, taxes, and potentially benefits.
- Franchise Fees Ongoing royalty fees paid to Kona Ice, typically a percentage of your gross sales, as well as any marketing fees for national or local advertising campaigns.
- Permits and Licenses Costs for obtaining and renewing necessary business permits and licenses to operate legally in various locations.
- Technology and POS Systems Maintenance and updates for point-of-sale systems, software, and other technology used for transactions and business management.
Understanding these costs will help you budget effectively and ensure a sustainable and profitable operation.
Kona Ice Franchise Fees
Owning a Kona Ice franchise is different from owning an independent, non-franchised business. All franchises tend to charge ongoing fees that franchisees are required to pay to operate. Kona Ice requires their franchisees to pay the below fees:
- Royalty Fee 6% of gross sales.
- Advertising and Marketing Fees 2% of gross sales for national marketing, with potential additional local marketing contributions.
- Additional Fees Fees for ongoing training, truck maintenance, and other services.
These ongoing fees are essential to consider when planning the financial aspects of owning and operating a Kona Ice franchise. They cover the costs of brand support, advertising, and ongoing operational assistance provided by Kona Ice.
Kona Ice Franchise Earnings
The earnings of a Kona Ice franchise owner can vary based on several factors including location, sales volume, and operational efficiency. On average, franchise owners can expect to earn an average EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of around $75,000 per year, assuming that they are working in the business themselves. This estimate is based on average sales and operational costs.
Earnings can fluctuate significantly depending on how efficiently the business is run and prevailing market conditions. For instance, factors such as local demand, competition, and effective management practices can greatly influence profitability. Thus, while the average EBITDA provides a general benchmark, individual results may differ.
Note that the earnings would be significantly lower for a Kona Ice owner if they hire someone to run the mobile truck for them.
How to open a Kona Ice franchise
Opening a Kona Ice franchise involves a series of structured steps to ensure that prospective franchisees are well-prepared and aligned with the brand’s operational standards. This process begins with an initial inquiry and includes financial assessments, comprehensive training, and site development. Each step is designed to equip franchisees with the knowledge and resources needed to successfully operate a Kona Ice truck. Here’s a detailed outline of the process to become a Kona Ice franchisee:
1. Initial Inquiry
a. Research: Conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
b. Franchise Application: You or your franchise specialist submits an initial inquiry basic information about your interest and background.
c. Financial Disclosure: Provide detailed financial information to meet investment requirements.
2. Pre-Qualification
a. Initial Screening: Kona Ice reviews your application and financial status.
b. Pre-Qualification Approval: If criteria are met, you advance in the process.
3. Franchise Disclosure Document (FDD)
a. Receive FDD: Obtain the FDD from Kona Ice, detailing terms, fees, and obligations.
b. Review Period: Take time to review the FDD with legal and financial advisors.
4. Discovery Day
a. Invitation: Attend Discovery Day to meet the team and learn more about the business.
b. Meeting the Team: Engage with Kona Ice’s team to understand operations and culture.
5. Franchise Agreement
a. Agreement Signing: Sign the franchise agreement if both parties agree to proceed.
b. Initial Fee Payment: Pay the initial franchise fee as specified.
6. Site Selection and Approval
a. Location Search: Identify and secure a location for the truck.
b. Approval: Get approval for the truck’s location from Kona Ice.
7. Training Program
a. Comprehensive Training: Participate in training covering operational and customer service aspects.
b. On-Site Training: Get hands-on training at an existing Kona Ice location.
8. Store Construction and Setup
a. Design and Build: Work with Kona Ice on truck design and setup.
b. Equipment Installation: Install the necessary equipment in the truck.
9. Pre-Opening Preparation
a. Hiring: Recruit and train staff.
b. Inventory: Order initial inventory and supplies.
c. Marketing Plan: Implement pre-opening marketing strategies.
10. Grand Opening
a. Soft Launch: Conduct a soft opening to test operations.
b. Grand Opening Event: Officially launch with a grand opening event to attract customers.
11. Ongoing Operations
a. Operational Support: Receive ongoing support from Kona Ice in marketing and operations.
b. Continuous Improvement: Regularly refine business practices for continued success.
Pros & Cons
Pros
Unique Mobile Concept: Kona Ice’s truck-based service model offers flexibility and lower overhead compared to traditional brick-and-mortar locations.
High Demand: The fun, interactive service and variety of flavors drive strong customer interest and repeat business.
Community Engagement: The mobile model allows for active community involvement and participation in local events.
Low Overhead: Reduced need for a fixed location and associated costs.
Strong Brand: Growing recognition and positive brand image contribute to franchisee success.
Cons
Seasonal Variability: Sales may fluctuate with seasonal changes, affecting revenue consistency.
Market Saturation: Rapid expansion might lead to increased competition and market saturation in some areas.
Operational Costs: Ongoing costs for truck maintenance and supplies can impact profitability.
Limited Scope: Mobile service limits the ability to offer a wider range of products and services compared to fixed locations.
Initial Investment: The initial investment can be high, especially when including truck and equipment costs.
