How to Finance a Gong cha Franchise: Kiosks, Cafes and Costs
By Anthony Cornella
A Gong cha franchise loan funds one of the lighter build-outs in the beverage business. Gong cha serves bubble tea and fresh-brewed tea drinks, and because its stores need no grease traps or cooking exhaust systems, the money goes mainly into interior finishes, beverage equipment, refrigeration and opening working capital rather than a full commercial kitchen.
Below we cover the investment figures Gong cha publishes for U.S. franchisees, its financial requirements, how its SBA Franchise Directory listing and note work, and which loan structures fit a kiosk, a traditional cafe, a resale or a multi-unit plan.
US Professional Funding is not affiliated with, sponsored by or endorsed by Gong cha; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice. Review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Gong cha Franchise Loan at a Glance
- Brand: a tea brand launched in 2006 in Kaohsiung, Taiwan, that now reports more than 2,100 stores worldwide and entered the U.S. in 2016.
- Estimated initial investment: $207,450 to $648,460 per single unit, according to Gong cha’s U.S. franchise page.
- Financial requirements: the U.S. franchise page lists “$150,000 and $500,000 net worth”; confirm with the franchisor how each threshold applies.
- Formats: in-store kiosks inside established locations and traditional shops, in spaces as compact as 800 square feet.
- Timeline: approval averages about 30 days, and signing to opening takes about 4 to 8 months, according to the franchisor.
- Training: about 14 days in New York for the franchisee and a designated store manager.
- Franchisor financing: none; Gong cha says it does not provide financing.
- SBA Franchise Directory: listed, with a note about lien position on 504 loans.
What Is Gong cha?
Gong cha’s roots go back to 1996, when founder Super Wu opened his first tea shop in Taiwan. The Gong cha brand launched in 2006 in Kaohsiung, and it has since grown into a global chain that reports more than 2,100 stores. The brand arrived in the United States in 2016, and its U.S. training and support are centrally managed from a hub in Chicago, Illinois.
The concept. Gong cha sells milk teas, fruit teas, brewed teas and specialty drinks with customizable toppings such as tapioca pearls, and the brand cites more than 600 possible combinations. Stores sit in malls, on or near college campuses and in other high-traffic settings, and many sales are quick, made-to-order drinks.
Formats. Gong cha offers in-store kiosks inside established locations and traditional shops surrounded by complementary businesses. The brand describes its stores as highly adaptable and notes that they need no grease traps or cooking exhaust systems.
Why lenders view it the way they do. Lenders see a recognized global brand with a compact, equipment-light format and a simple menu built around beverages. The flip side is that a bubble tea shop depends heavily on foot traffic and a strong site, so lenders weigh location and lease terms as heavily as the brand itself.
Gong cha Franchise Costs
Total investment. Gong cha’s U.S. franchise page states an estimated initial investment of $207,450 to $648,460 per single unit. The FAQ on the same page gives a lower estimate for a new store, so buyers should rely on the Item 7 table in the current FDD as the controlling figure and ask the franchisor to explain any difference.
Initial franchise fee. The franchise fee and any reduced fee for additional units under a development agreement are disclosed in Item 5 of the FDD. Gong cha’s franchise page does not list the fee separately.
Real estate and build-out. Most Gong cha stores operate in leased space. Build-out covers the counter, plumbing and electrical work for beverage equipment, flooring, lighting, seating and branded decor. Because there is no cooking line, there is no need for grease traps or exhaust hoods, which helps keep construction simpler than a typical quick-service restaurant.
Equipment. Beverage equipment typically includes tea brewers, sealing machines, blenders, ice machines, reach-in and under-counter refrigeration, freezers, water filtration, a point-of-sale system and digital menu boards.
Opening costs and working capital. Opening inventory of tea, dairy, syrups, toppings, cups and packaging, plus training travel, grand opening marketing, deposits, insurance and additional funds for the first months of operation, round out the budget.
When you read the Item 7 table, expect to see line items for:
- Initial franchise fee
- Leasehold improvements and construction
- Beverage equipment, refrigeration and smallwares
- Furniture, fixtures, signage and decor
- Point-of-sale and technology
- Opening inventory and supplies
- Training expenses, including travel to New York
- Grand opening marketing
- Rent, security deposits, permits and insurance
- Additional funds for the initial operating period
Ask the franchisor where a kiosk and a full traditional shop with seating each fall within the range. Get contractor bids and equipment quotes for your specific site before setting the loan amount.
Ongoing Fees and How They Affect Your Loan
Gong cha describes its royalty and marketing fees as competitive, but its U.S. franchise page does not publish the rates. Item 6 of the FDD lists the royalty, marketing or brand fund contribution, technology fees and transfer and renewal fees.
How lenders factor fees in. Percentage fees reduce cash flow before rent, labor and debt service, so lenders build them into projections and stress-test the store at lower sales levels.
Cost of goods. Tea, dairy, toppings and packaging are recurring purchases, and cup and lid costs add up quickly at high volumes. Projections should show cost of goods as a percentage of sales and how it moves with menu mix.
Labor and hours. Made-to-order drinks need staff at peak periods, so labor planning is a major line in any lender’s review.
Franchisor Requirements for New Owners
- Financial requirements: Gong cha’s U.S. franchise page lists “$150,000 and $500,000 net worth” and calls for adequate liquid resources and net worth to fund development of new stores and meet operational needs. Ask the franchisor to confirm in writing how the liquidity and net worth thresholds apply to your plan.
- Experience: food and beverage experience is preferred but not required, and the brand looks for passion, experience, financial resources and an entrepreneurial mindset.
- Training: the franchisee and a designated store manager complete about 14 days of training in New York before opening, supported by online training videos and manuals.
- Territories: the franchisor lists New York, New Jersey, Pennsylvania, Connecticut, Massachusetts, Rhode Island, New Hampshire, Oklahoma, Texas, Georgia, North Carolina, South Carolina and Florida as open for development.
The approval process. Gong cha outlines seven steps: pre-approval with a credit check, business plan review, location review, an executed franchise agreement, training, construction and grand opening. The franchisor says approval takes about 30 days on average, and signing to opening takes about 4 to 8 months. Because the business plan and location are reviewed before signing, a Gong cha franchise loan conversation should start early so the lender’s view of the site and projections lines up with the franchisor’s.
Ways to Own a Gong cha
A new store. Most new owners open a new kiosk or traditional shop. Lenders underwrite on projections, the site and the owner’s liquidity and experience. Our page on franchise start-up financing covers how these loans are structured.
Buying an existing store. Gong cha’s FAQ says the cost of buying an existing store varies case by case. A resale gives a lender actual sales and cost history. Our page on financing a franchise restaurant acquisition explains the process.
Multi-unit development. Gong cha offers both single-store and multi-unit development agreements. A multi-unit plan can mix kiosks and traditional shops, but each opening adds its own build-out, equipment and working capital needs.
Financing Options for a Gong cha Franchise
SBA 7(a) loans. Gong cha says it is approved by the SBA and listed on the SBA Franchise Directory. An SBA 7(a) loan can cover the franchise fee, build-out, equipment, opening inventory and working capital in one package, which suits a project of this size. The SBA 7(a) program maximum is currently $5 million, though program rules can change.
SBA 504 loans. When an owner buys a building or finances substantial long-lived fixed assets, an SBA 504 loan may fit. Most Gong cha stores lease their space, so 504 financing applies mainly to owners who purchase property.
Conventional term loans. Experienced operators with strong financials may use conventional business loans, especially for additional units once the first store shows steady results.
Equipment financing. Tea brewers, sealing machines, blenders, ice machines, refrigeration and point-of-sale systems can often be financed or leased separately, which preserves cash for build-out and opening costs. See our restaurant equipment financing and leasing options.
Working capital and lines of credit. Beverage sales can swing with weather, school calendars and mall traffic. A line of credit can help cover payroll and inventory during slower stretches and fund seasonal menu launches. Learn more about restaurant working capital.
Seller financing on resales. A selling franchisee may agree to carry part of the price. Any seller note would need to be acceptable to the senior lender and is typically subordinate to it, and SBA rules may limit how it can be used.
SBA Loans for Gong cha Franchisees
SBA lenders generally require a franchise brand to appear on the SBA Franchise Directory before making an SBA-guaranteed loan to one of its franchisees. A listing means the brand’s franchise documents have been reviewed for SBA eligibility; it does not approve any borrower. For a broader look at SBA lending in this industry, read our article on SBA loans for restaurants.
Gong cha’s listing. Gong cha appears on the directory under code S8232, with one note: the lender or certified development company must make sure it secures the correct lien position on all collateral, as required by the SBA’s lending rules.
What that means in plain English. The note matters most for SBA 504 loans, where a bank loan and a loan through a certified development company share the same collateral in a set order of priority. It reminds the lenders to perfect their liens in the right order. For most borrowers it does not change eligibility, but it can affect how equipment, leasehold improvements or real estate are pledged.
SBA application tips. Prepare a business plan with sales assumptions tied to your site, a build-out budget, equipment quotes, the lease or letter of intent, the FDD and franchise agreement, a personal financial statement and tax returns. Our SBA loan calculator can help with early payment estimates; any estimate is for planning only and is not an offer or approval.
How Lenders Evaluate a Gong cha Deal
Personal credit and financial history. Lenders review personal credit, tax returns and a personal financial statement, and owners typically sign personal guarantees.
Net worth and liquidity. Lenders compare your liquid funds with the equity injection, the franchisor’s requirements and a reserve for the opening months.
Industry and management experience. Food and beverage experience is preferred by the franchisor and valued by lenders. Owners without it can strengthen a request by hiring an experienced store manager who attends training.
Business plan and projections. Projections should reflect the site’s foot traffic, peak hours, average ticket, cost of goods, labor, royalty and marketing fees and the ramp-up after opening. Lenders favor conservative assumptions they can tie to the location.
The FDD and franchise agreement. Lenders read Items 5, 6, 7, 10, 17, 19 and 20. Review Item 19 to see whether the current FDD includes financial performance representations and use any data as a reference, not a forecast.
Site and lease. For a kiosk, lenders look at the host location’s traffic and the terms of the license or sublease. For a traditional shop, they want a lease term that covers the loan and reasonable renewal options.
Historical financials for resales. Expect to provide several years of profit and loss statements, tax returns and sales reports.
Equipment and Store Formats
Kiosks. A kiosk inside an established location needs a compact equipment package and minimal seating. Lenders look closely at the host’s traffic and the length and security of the arrangement.
Traditional shops. A full store adds seating, decor and more refrigeration, and sometimes more brewing capacity for higher volumes.
No cooking line. Because Gong cha stores need no grease traps or cooking exhaust, they can fit spaces that would not work for many restaurants, which widens the site options and can help with lease negotiations.
Multi-Unit Growth and Development Agreements
Financing a second or third store. After the first store shows steady sales, lenders can underwrite the next one using its track record. Each store needs its own budget for build-out, equipment and working capital, and a development agreement will set opening deadlines. Our article on financing an area development agreement explains how to stage capital against a schedule.
Build-out across markets. If you develop in more than one of the open states, local permitting and construction costs will differ, so budget each site separately. Our guide to restaurant build-out financing covers how construction draws work.
Real-World Scenarios
A first-time owner opening a mall kiosk. A buyer with retail management experience opens a kiosk in a busy shopping center. She uses an SBA 7(a) loan for the franchise fee, build-out and working capital, and leases the beverage equipment.
A college-area traditional shop. An owner opens a full shop near a university. The lender builds projections around the academic calendar and adds a line of credit for slower summer months.
An existing owner adding units. An operator with one successful store signs a multi-unit development agreement. The lender reviews the first store’s results and finances each new opening separately.
Common Mistakes to Avoid
- Relying on a website investment range instead of the current FDD’s Item 7 table
- Underestimating cup, packaging and topping costs in projections
- Signing a kiosk arrangement without reviewing its term and renewal rights with your lender
- Ignoring seasonality tied to weather, school calendars or mall traffic
- Committing to a multi-unit schedule without a capital plan for each opening
- Leaving too little working capital for the ramp-up after opening
For more pitfalls in this industry, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Gong cha Franchise
Step 1: Confirm the requirements. Ask Gong cha for its current FDD and written financial requirements.
Step 2: Review the FDD with advisors. Study Items 5, 6, 7, 10, 17, 19 and 20 and the franchise agreement with a franchise attorney and accountant.
Step 3: Talk to a financing specialist. Discuss SBA 7(a), equipment financing and working capital options before you commit to a site.
Step 4: Build your business plan. Model sales, cost of goods, labor and fees for your format and location.
Step 5: Secure the site. Negotiate the lease or kiosk arrangement with input from your lender and attorney.
Step 6: Apply and close. Submit your projections, budget, FDD, franchise agreement, lease and personal financial documents.
Step 7: Plan the opening. Coordinate training in New York, construction, equipment installation and grand opening marketing.
Gong cha Franchise Loan FAQs
How much does a Gong cha franchise cost?
Gong cha’s U.S. franchise page estimates the initial investment at $207,450 to $648,460 per single unit. Check the Item 7 table in the current FDD for the controlling range and its assumptions.
What is the Gong cha franchise fee?
The fee is disclosed in Item 5 of the FDD. Gong cha’s franchise page does not list it separately.
What royalty does Gong cha charge?
Gong cha describes its royalty and marketing fees as competitive but does not publish the rates online. Item 6 of the FDD lists them.
How much net worth do I need?
Gong cha’s U.S. franchise page lists “$150,000 and $500,000 net worth” as its financial requirements and asks for adequate liquid resources. Confirm with the franchisor how each threshold applies.
Can I get an SBA loan for a Gong cha franchise?
Yes, if you qualify. Gong cha is listed on the SBA Franchise Directory, so eligible borrowers can apply for SBA 7(a) loans and, where real estate or long-lived assets are involved, SBA 504 loans.
Does Gong cha offer financing?
No. Gong cha says it does not provide financing and that franchisees can use their own resources. Item 10 of the FDD contains the formal disclosure.
Can I finance the equipment separately?
Often, yes. Beverage equipment, refrigeration and point-of-sale systems can be financed or leased apart from the main loan.
Can I buy an existing Gong cha store?
Yes. Gong cha says costs vary case by case. Lenders base resale financing on the store’s historical financials, and the transfer requires franchisor approval.
Do I need restaurant experience for a Gong cha franchise loan?
Food and beverage experience is preferred but not required. Lenders give weight to management experience and to an experienced store manager.
How long does it take to open?
Gong cha says approval takes about 30 days on average, and signing to opening takes about 4 to 8 months.
Can I open more than one store?
Yes. Gong cha offers multi-unit development agreements, and each store typically needs its own build-out and equipment financing.
Final Thoughts
A Gong cha franchise loan is about matching the right format to the right site. Buyers who confirm the current Item 7 figures, model cost of goods and seasonality honestly and keep adequate working capital give lenders a clear picture, whether they are opening a single kiosk or building a group of stores.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment and working capital. Learn more about our franchise financing and our restaurant financing solutions.
