How to Finance a Kung Fu Tea Franchise: Fees, Formats and SBA
By Marc Cornella
A Kung Fu Tea franchise loan usually finances a compact bubble tea shop rather than a full restaurant, but it still has to cover a franchise fee, a training fee, the build-out, tea-bar equipment, opening supplies and cash to carry the shop until sales settle in. Below we cover the brand’s published costs and fees, its store formats, where SBA lending stands and what lenders look for.
US Professional Funding is not affiliated with, sponsored by or endorsed by Kung Fu Tea; the name is used only to describe the business. Figures from the franchisor’s prospectus and disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice. Review the current Franchise Disclosure Document (FDD) with a franchise attorney.
Kung Fu Tea Franchise Loan at a Glance
- Franchise fee: $37,000 for a traditional store, according to the company’s 2024 and 2026 franchise prospectuses; the 2026 prospectus lists $25,000 for a non-traditional unit.
- Training fee: $12,500.
- Royalty: 4% of gross sales, paid monthly.
- Marketing fee: 2% of gross sales, paid monthly.
- Technology fee: $140 to $350 per month, per the 2026 prospectus.
- Initial capital investment: $362,000 to $650,000 for a traditional unit and $272,500 to $375,500 for a non-traditional unit, as listed in the company’s 2026 prospectus for its Select by Kung Fu Tea concept.
- Store size: roughly 500 to 1,200 square feet in the 2026 prospectus (the 2024 prospectus cited up to 1,500 square feet).
- System size: more than 390 locations across the United States and several other countries, according to the 2024 prospectus.
- Franchisor financing: the company says it does not provide direct financing.
- SBA Franchise Directory: we did not find Kung Fu Tea listed, so confirm current status with your lender before planning on an SBA loan.
What Is Kung Fu Tea?
Kung Fu Tea is a bubble tea chain that started in 2010 in Flushing, Queens, and is headquartered in New York, New York. The menu centers on brewed teas, fruit punches and milk teas, with customers choosing sugar level, ice level and toppings such as boba and jellies.
Its 2024 prospectus counts more than 390 locations in the United States, Taiwan, Australia, Canada and Cambodia, supported by a rewards app and rotating flavors.
Store formats. The company offers several ways to open:
- Traditional stores: sit-down shops in shopping centers, street retail, lifestyle centers and urban districts.
- Non-traditional units: kiosks and booths in airports, hospitals, universities, grocery stores, big-box retail and transit stations, reviewed case by case.
- Mobile truck: a limited-menu unit for events and major cities, described in the 2024 prospectus.
- Select by Kung Fu Tea: what the 2026 prospectus calls an elevated tea concept from the Kung Fu Tea family.
How lenders see the brand. Lenders view a bubble tea shop as a small-format beverage business with modest equipment needs, high drink volume and some sensitivity to weather and foot traffic. A national name and a training program help, but approval rests on the site, the lease and the owner’s cash and experience.
Kung Fu Tea Franchise Costs
Kung Fu Tea publishes its costs in franchise prospectuses; the binding breakdown is Item 7 of the current FDD, provided after an initial interview. Treat the figures below as a starting point for your Kung Fu Tea franchise loan and confirm each one in the FDD.
Initial franchise fee. The 2024 and 2026 prospectuses list $37,000 for a traditional store. The 2026 prospectus lists $25,000 for a non-traditional unit, and the 2024 prospectus lists $25,000 for a mobile truck. The fee is usually paid at signing from the owner’s cash.
Training fee. A separate $12,500 training fee covers owner and staff training. Fund it from cash or include it in a start-up loan’s uses.
Build-out and renovation. The prospectuses say renovation costs vary with the size of the space. A tea shop build-out includes plumbing for sinks and ice machines, electrical work for refrigeration and sealers, counters, flooring, seating and the storefront, and a former food space usually costs less to finish than a raw shell.
Equipment, furniture, fixtures and signage. The 2026 prospectus lists $50,000 to $150,000 for equipment, furniture, fixtures and signage in both formats. The 2024 prospectus listed equipment alone at $25,000 to $35,000 depending on space size.
Opening supplies and inventory. The 2026 prospectus lists initial supplies of $10,000 to $20,000 for a traditional unit and $5,000 to $15,000 for a non-traditional unit. Supplies come from approved vendors.
Total investment. The 2026 prospectus groups the costs this way:
- Initial capital investment: $362,000 to $650,000 (traditional) and $272,500 to $375,500 (non-traditional)
- Franchise fee: $37,000 (traditional) and $25,000 (non-traditional)
- Training fee: $12,500
- Equipment, furniture, fixtures and signage: $50,000 to $150,000
- Initial supplies: $10,000 to $20,000 (traditional) and $5,000 to $15,000 (non-traditional)
- Renovation: varies with the size of your space
The prospectus does not break out rent deposits, professional fees or working capital; those appear in the FDD’s Item 7 table. The classic store and the Select concept may carry different figures, so confirm which the FDD covers.
Ongoing Fees and How They Affect Your Loan
Royalty. Kung Fu Tea charges a royalty of 4% of gross sales each month.
Marketing fee. A further 2% of gross sales goes to marketing each month, bringing percentage-of-sales fees to 6% before any other cost.
Technology fee. The 2026 prospectus lists a technology fee of $140 to $350 per month, which covers systems such as point of sale and digital ordering.
How lenders factor these costs in. Because royalty and marketing fees come off the top line, lenders build them into projected expenses and test whether the store still covers its loan payments in a slower month. Ingredient cost per drink is often modest, but labor and rent are significant in a small, busy space, so the lease and staffing plan matter as much as sales.
Franchisor Requirements for New Owners
Kung Fu Tea’s prospectuses do not publish a minimum net worth or liquid capital figure, so ask the franchise development team and check the FDD. Lenders will want enough personal cash for the fees, part of the build-out and a working capital reserve.
The approval process. The company describes a five-step path:
- Submit an inquiry
- Hold an initial consultation or interview and receive the FDD
- Review the franchise documentation and sign the franchise and lease agreements
- Complete site selection and approval, then begin the build-out and training
- Hold the grand opening
The 2024 prospectus says applications are reviewed within up to 10 business days and construction normally takes 8 to 12 weeks after a location is secured and a building permit is issued. The 2026 prospectus says opening takes approximately 12 weeks or more. The company offers real estate development help, though a location is not guaranteed.
Ways to Own a Kung Fu Tea
A new traditional store. The most common route, underwritten on projections, the lease and the owner’s strength. Our franchise start-up financing page outlines how these loans work.
A non-traditional unit. Kiosks in airports, hospitals or campuses often cost less to open but run under a host venue’s concession terms, hours and revenue rules. Lenders read that agreement as closely as a lease.
Buying an existing store. Resales let a buyer and lender review actual sales, labor and rent. The franchisor must approve the buyer, and the lease usually needs landlord consent to assign. Our guide to buying a franchise resale explains the transfer process.
Multi-unit and area development. The company says it encourages multi-unit ownership and offers an area development opportunity.
Financing Options for a Kung Fu Tea Franchise
SBA 7(a) loans. The SBA 7(a) loan program is the most widely used SBA option for franchise start-ups and acquisitions, covering build-out, equipment, fees and working capital in one loan. Brand eligibility is covered below.
SBA 504 loans. The 504 program finances owner-occupied real estate and long-lived equipment, so it rarely fits a leased tea shop unless an owner buys a small building.
Conventional term loans. A conventional business loan can finance a new store or an acquisition, typically with a larger down payment and shorter terms than SBA loans, secured by business assets and personal guarantees.
Equipment financing. A tea bar runs on commercial tea brewers, ice machines, under-counter and reach-in refrigeration, blenders, fructose dispensers, tapioca cookers, cup sealing machines, point-of-sale terminals and menu boards. Many of these items can be financed or leased separately to preserve cash. See our restaurant equipment financing and leasing options.
Working capital and lines of credit. Bubble tea sales often swing with the seasons and the school calendar. A line of credit or working capital loan can carry payroll and inventory through slower stretches and fund pre-opening costs. Learn more about restaurant working capital.
Seller financing on resales. A selling franchisee may agree to carry part of the price. Any seller note must be acceptable to the senior lender and is typically subordinate to it, and some loan programs limit how it can be structured.
SBA Loans for Kung Fu Tea Franchisees
SBA lending for franchises runs through the SBA Franchise Directory, a list of brands whose franchise agreements have been reviewed for SBA eligibility. SBA lenders generally require a listing before making an SBA-guaranteed loan to a brand’s franchisee; a listing does not approve any borrower.
Kung Fu Tea’s status. Kung Fu Tea’s prospectuses describe the brand as SBA loan approved, but when we checked we did not find it on the SBA Franchise Directory. Listings change and can appear under a franchisor entity name, so have your lender confirm current status. If the brand is not listed, the franchisor may need to submit its documents for review, or the deal may go the conventional route.
If SBA financing is available. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Lenders will still expect an equity injection, personal guarantees and a full application package.
SBA application tips. Have a lease or letter of intent, the FDD, a construction bid, equipment quotes, projections and your personal financial statement ready, and show clearly how the franchise and training fees are being paid.
How Lenders Evaluate a Kung Fu Tea Deal
Personal credit and financial history. Expect a review of personal credit, tax returns and a personal financial statement, with a personal guarantee from significant owners.
Net worth and liquidity. Even without a published franchisor minimum, lenders want cash left over after closing for slow months, equipment repairs and the ramp-up period.
Industry and management experience. Food service, retail or team management experience strengthens a request, along with the company’s training and a clear plan for daily management.
Business plan and projections. Projections should reflect the specific trade area, the store’s format, seasonality, labor scheduling for peak afternoon and evening hours, delivery-platform sales and the 6% in combined royalty and marketing fees.
The FDD and franchise agreement. Lenders read Items 6, 7, 10 and 17 for fees, costs, financing and transfer rules. See how lenders read a franchise disclosure document.
Site and lease. The lease should run at least as long as the loan term, permit a tea or cafe use and allow assignment to a future buyer. Our restaurant lease checklist covers assignment, term and landlord consent.
Historical financials for resales. For an existing store, lenders review several years of profit and loss statements, sales reports and tax returns, and they compare reported sales with point-of-sale data.
Equipment and Build-Out: What Gets Financed
A bubble tea shop is equipment-light compared with a full kitchen, but its equipment runs hard every day: tea brewing and holding equipment, ice machines, refrigeration, blenders, fructose dispensers, tapioca cookers and automatic cup sealers, plus point-of-sale terminals, digital menu boards and, in some stores, self-order kiosks. Lenders give limited collateral value to this specialized equipment and to leasehold improvements, so leasing some items can preserve cash. Ask what refresh or remodel obligations the franchise agreement includes, especially when buying an older store.
Multi-Unit Growth and Development Agreements
Kung Fu Tea says it encourages owning multiple locations and offers an area development opportunity. Under a development agreement, an owner commits to open a set number of stores on a schedule, so the owner’s financing plan needs to match that schedule.
Financing a second or third store. Once the first store has a track record, lenders can underwrite its cash flow alongside projections for the next. Our article on multi-unit franchise financing explains how lenders view growing groups. Line up capital for each store before committing to a development schedule.
Real-World Scenarios
A first-time owner opening a strip-center store. A former retail manager pays the fees from savings, finances the build-out, equipment and working capital with a Kung Fu Tea franchise loan and keeps a reserve for the slower winter months in her market.
An existing store changing hands. A buyer acquires a store from a franchisee who is relocating. The franchisor approves the buyer, the landlord consents to assign the lease and the lender sizes the loan on the store’s actual history, with a small seller note subordinate to the senior loan.
An operator adding a second store. An owner with a year of strong results opens a second store in a nearby town. The lender combines the first store’s cash flow with projections for the new one and finances the equipment separately.
Common Mistakes to Avoid
- Assuming SBA financing without confirming the brand’s directory status
- Planning from prospectus figures instead of the current FDD’s Item 7
- Underestimating build-out in a raw shell space
- Leaving the 6% in royalty and marketing fees and the technology fee out of projections
- Ignoring seasonal swings when sizing working capital
- Signing a lease shorter than the loan term
- Committing to a development schedule without financing for each store
For more pitfalls, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Kung Fu Tea Franchise
Step 1: Request the FDD. Complete the inquiry, attend the initial consultation and get the current FDD for the format you want.
Step 2: Review costs with advisors. Go through Items 5, 6, 7, 10 and 17 with a franchise attorney and accountant and note any differences from the prospectus.
Step 3: Gather your financials. Prepare your personal financial statement, tax returns and proof of the cash you will contribute.
Step 4: Talk with a financing specialist. Before signing a lease, learn how much a lender will finance. Our conventional loan calculator gives rough payment estimates for planning only, not an offer or approval.
Step 5: Secure and approve the site. Work with the franchisor on site approval and get construction and equipment bids.
Step 6: Build projections and apply. Prepare projections for your trade area and format and submit the full loan package.
Step 7: Close and open. Coordinate the loan closing with the lease, build-out schedule and training, and keep working capital in reserve for the first months.
Kung Fu Tea Franchise Loan FAQs
How much does it cost to open a Kung Fu Tea franchise?
The company’s 2026 prospectus for its Select by Kung Fu Tea concept lists $362,000 to $650,000 for a traditional unit and $272,500 to $375,500 for a non-traditional unit. Confirm your format’s range in Item 7.
What is the Kung Fu Tea franchise fee?
The franchise fee is $37,000 for a traditional store, according to the 2024 and 2026 prospectuses. The 2026 prospectus lists $25,000 for a non-traditional unit, and a separate $12,500 training fee applies.
What royalty does Kung Fu Tea charge?
The royalty is 4% of gross sales per month, plus a 2% marketing fee and a technology fee of $140 to $350 per month listed in the 2026 prospectus.
Can I finance equipment separately?
Yes. Tea brewers, ice machines, sealers and point-of-sale systems can often be financed or leased apart from the main loan.
How long is the franchise term?
The prospectuses do not state it. Check Item 17 of the FDD, and make sure the term outlasts your loan.
How much liquid capital do I need?
The prospectuses do not publish a net worth or liquid capital minimum. Ask the franchisor, and expect lenders to want cash for fees, part of the build-out and reserves.
Can I get an SBA loan for a Kung Fu Tea franchise?
The company describes itself as SBA loan approved, but we did not find the brand on the SBA Franchise Directory. Have your lender confirm current status; if it is not listed, plan for conventional financing or ask whether the franchisor can complete the review.
Does Kung Fu Tea offer financing?
No. The prospectuses say the company does not provide direct financing or financial assistance. Check Item 10 of the FDD for the official disclosure.
Can I buy an existing Kung Fu Tea store?
Yes, subject to franchisor approval and landlord consent to assign the lease. Lenders prefer resales because they can underwrite actual sales and expenses.
Can a first-time owner get a Kung Fu Tea franchise loan?
Often, yes, if the owner has adequate cash, good credit and relevant management or service experience and completes the company’s training.
Does Kung Fu Tea share earnings information?
The 2024 prospectus says the company cannot provide income or return projections. Review Item 19 of the current FDD to see whether it includes any financial performance representations.
Final Thoughts
A Kung Fu Tea franchise loan is usually a moderate-size start-up loan built around a small space, specialized drink equipment and percentage-of-sales fees. Confirm costs for your format in the FDD, verify SBA status early, match the lease to the loan and keep working capital for seasonal swings.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment and working capital. Learn more about our franchise business financing and restaurant and food service financing solutions.
