From the filed FDD — automated extraction, check the source
2024 FDD · 1+ year old
KUNG FU TEA
Bubble tea · parent company: not identified
Kung Fu Tea is a bubble tea (boba) chain serving milk teas, fruit teas, slushes, and other customizable drinks with toppings like tapioca pearls. A franchisee operates a tea café, preparing drinks to order and managing a small storefront.
KUNG FU TEA net unit count grew 32.4% over 2021–2023 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. Most numbers on this page come from that document; others come from federal SBA loan records and labor and census data, each labelled with its source:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened, transferred and left the system, the main basis for our verdict, which rates how strong the disclosed record is, or says when the system is too new, the filing too old, or the disclosure too thin to judge.
Our rating · opinion
Strong disclosed record
Enough units and history to judge, and the operating record is good. Units grew 32% (2021–2023: 287 → 380); the fiscal 2023 exit rate was 5.9%, in line with the 5.5% median across 6 comparable systems (bubble tea).
Exit rate · fiscal 2023
5.9%
vs 5.5% median across 6 comparable systems (bubble tea)
Cost to open
$169K–$378K
Item 7 total investment range
SBA loan losses
Too few to rate
1 seasoned resolved loans; 30 needed
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Data as of 2026-10-29. Figures come from KUNG FU TEA's public FDD filings (latest: MN 2024, extracted 2026-06-18) and SBA FOIA loan records (through FY2026), extracted by us and possibly containing errors. The rating is our opinion, not investment, legal, or tax advice. Franchisor or owner and see something wrong? Report a correction — we review every request.
Buying an existing KUNG FU TEA? Transfer fee $5,000, resale record and asking-price check →
What each source says
FDD record · SBA loans · model · auditor
The sources broadly agree, and the verdict follows the FDD's operating record.
FDD record · Item 20
Strong operating record
Units grew 32% (2021–2023: 287 → 380); exit rate 5.9% (fiscal 2023) vs 5.5% median.
SBA loans · vs same-year loans
Too few seasoned loans
1 resolved loans approved by FY2020; 30 needed.
Modeled risk
Lower risk
Directional only — too few seasoned loans to check it.
Auditor opinion · Item 21
Not extracted
We did not extract the audit opinion.
Behind the verdict
the record, factor by factor · Item 20
latest consecutive years · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness · shown, not counted in the verdict
Systemwide units
2021–2023
Survival record
FDD Item 20 · outlet status by year
In fiscal 2023, 20 of 339 franchised outlets left the system — an exit rate of 5.9% (fiscal 2023), vs a 5.5% median across 6 comparable systems (bubble tea). An exit is not a failure: this counts terminations, non-renewals and "ceased — other reasons" as reported, and excludes transfers to new owners.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2021 | 2022 | 2023 |
|---|---|---|---|
| Outlets at start | 245 | 287 | 341 |
| Opened | 46 | 63 | 59 |
| Transfers | 13 | 11 | 17 |
| Terminations | 3 | 9 | 2 |
| Non-renewals | 0 | 0 | 0 |
| Reacquired by franchisor | 0 | 0 | 0 |
| Ceased — other reasons | 0 | 0 | 18 |
| Outlets at end | 287 | 341 | 380 |
| Net change | +42 | +54 | +39 |
The lender's view
SBA 7(a)/504 loan outcomes · compared with franchise loans of the same years
Banks have made 24 SBA-backed loans to KUNG FU TEA franchisees since 2016. Only 1 of its loans approved by FY2020 have resolved — fewer than the 30 we need to compare it fairly with other franchise loans, so we don't rate it.
All-time, 0 of 6 resolved loans charged off (0.0%). That raw figure mixes every approval year since 2016 — loans made in 2006–08 failed at several times the rate of loans made in 2010–13 across all franchises — so it is shown as evidence, not as the score. 75% of the brand's loans have not resolved yet.
—
1 seasoned resolved · 30 needed
0.0%
0 of 6 resolved, every approval year
—
charged-off $ ÷ approved $, defaulted loans
$268,771
what recent franchisees borrowed
—
shown with 10+ defaults
13 vs 3
distinct banks still lending
Charge-off rate by loan approval year (%) · dashed line = all franchise loans that year
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO KUNG FU TEA BY SBA FRANCHISE NAME/CODE · RESOLVED = CHARGED-OFF + PAID-IN-FULL · EXPECTED = SAME-YEAR RATE ACROSS ALL SBA FRANCHISE LOANS, LOANS ≥ ~6 YEARS OLD
The owner's side of the deal
FDD × federal loan record
Who finances it
The Huntington National Bank
29.2% of this brand's loans
That lender charges off 10.0% of its resolved SBA loans to other franchise brands in the FOIA file, vs 14.8% nationally — a read on that lender's portfolio mix, not a finding about the bank.
Who buys it
Too few identified operators
Does experience help here?
Not enough resolved loans to split
Computed from 24 SBA 7(a)/504 loans matched to KUNG FU TEA by SBA franchise code in the SBA FOIA file. Debt service assumes level amortization at the average disclosed term and rate. Owner-level splits rely on borrower-name matching and may misclassify. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $37,000 franchise fee (Item 5) and a total investment of $169K–$378K (Item 7). The franchisor publishes no earnings claim (Item 19) — ask current and former franchisees for real numbers.
To open (Item 7)
$169K–$378K
all-in investment range
Franchise fee (Item 5)
$37,000
upfront, one-time
Royalty (Item 6)
4%
of sales, ongoing
Starts at a placeholder of $900K — a round figure for the sector, not from KUNG FU TEA’s filings. This brand's FDD makes no Item 19 earnings claim; set your own figure and check it with current and former owners.
Royalty you'd pay / yr
$36K
4% of sales, before profit
Over a 10-yr term
$360K
royalties alone, excl. ad fund
This estimate is computed by software from the brand's public filings and any inputs you enter. No CPA prepared it for you and no assurance is provided on it. Actual results will differ, and the differences may be material.
This is not profit. It covers what the FDD fixes: what you put in, and the royalty you owe on sales. Your take-home depends on food and packaging cost, labor, rent, and the months to breakeven, none of which the FDD fixes for your unit (some Item 19s include cost data — read it).
Build a real pro-forma for KUNG FU TEA with a buyer-paid CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 4 wage cases against operators of this system, recovering $37K in back wages for 83 workers. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
4
Back wages owed
$37K
Employees affected
83
Since 2020
3
Read this carefully. The employers in these cases are individual KUNG FU TEA franchisees — separately owned businesses operating under the brand name — not KUNG FU TEA itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Cases are matched to the brand by trade name and may include misattributed employers. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2024.
Modeled risk
FDD Risk Score · a prediction from disclosure and loan-file features
The model puts this brand in its lower-risk band — but this brand has too few seasoned SBA loans to check the score against, so read it as a band, not a number.
Risk percentile
Lower risk
Directional · no point estimate
Modeled · vs same-year loans
band only
too few seasoned loans to check
Top drivers: Share financed by high-loss lenders (lowers) · No Item 19 disclosure (lowers) · System size (log units) (lowers) · Royalty rate (raises). Too few seasoned SBA loans to check the score — read it as a band. A linear scorecard trained on brands' vintage-adjusted SBA loss records; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Public records
Bankruptcy, closure & federal court records · coverage is selective · dockets are not scored
We have no verified public-record signals published for KUNG FU TEA. This is not evidence that no events exist. Check PACER, the FDD's Item 3 (litigation) and Item 4 (bankruptcy), and recent news yourself.
9 questions to ask a KUNG FU TEA franchisee
Built from this brand's own disclosures · take it to your validation calls
The franchisor will give you a list of owners to call. Most buyers ask whether they like it. These questions come from what KUNG FU TEA has disclosed. Each one carries the number it came from, so you can check the answer against the record.
- 01
KUNG FU TEA’s own Item 20 shows 20 of 339 franchised outlets left the system in fiscal 2023 — about 5.9%. Do you know any of those owners, and do you know why they left?
A franchisor will call these “transitions.” An owner three doors down usually knows whether they sold at a profit or handed the keys back.
FDD Item 20 · FY2023
- 02
17 units transferred to new owners in fiscal 2023. When you look at those, were they people cashing out a good business — or getting out of a bad one?
Item 20 counts transfers as neutral, but a transfer can be a good sale or a reluctant exit — the filing does not say which.
FDD Item 20 · FY2023
- 03
Item 7 says the low end to open is $169K; the average recent SBA loan to KUNG FU TEA franchisees was $269K. What did you actually spend to open, all in — and did your loan cover anything beyond the build-out?
Lenders size loans to the project they finance. If owners say they spent near the loan figure rather than the Item 7 floor, budget from what they spent.
FDD Item 7 vs SBA approvals FY2020+
- 04
You pay 4.0% royalty on gross sales, plus the ad fund, before any of your own costs. On your actual revenue last year, what did you take home as the owner — not revenue, take-home?
Royalty is charged on sales, not profit. This is the number the brochure never shows and the one your life actually runs on.
FDD Item 6
- 05
KUNG FU TEA’s FDD makes no financial performance representation at all — legally, they've told buyers nothing about earnings. What did your first 24 months actually look like, month by month?
When a franchisor won't publish numbers, existing owners are the only source. Silence in Item 19 is a choice, not a requirement.
FDD Item 19 · 2024
- 06
How many months did it take to cover your own costs, and how much cash did you burn getting there?
Ramp-to-breakeven working capital is the most underestimated line in any franchise purchase, and the most common reason otherwise-good units fail.
Not disclosed in any FDD — ask an owner
- 07
What does the franchisor charge for that you didn't expect — required tech fees, mandatory remodels, approved-supplier pricing?
Required spending appears across Items 6, 8 and 11 rather than in one place, so buyers routinely miss the total.
FDD Items 6, 8, 11
- 08
If your agreement came up for renewal tomorrow at current terms, would you sign again?
The single most predictive question you can ask. A hesitation is the answer.
Ask every owner you speak to
- 09
Who else should I call — including someone who left?
The franchisor's list is curated by definition. Former franchisees are where the unflattering truth lives, and current owners usually know how to reach them.
Ask every owner you speak to
Want this as a checklist you can take to the calls?
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A broker is usually paid by the franchisor to place you. I'm paid only by you, never by a franchisor you're considering — and the job is pressure-testing KUNG FU TEA’s numbers, including talking you out of a bad deal.
This page is what buyers see before they call you for validation. If the record above is wrong — or right in a way the numbers can't show — say so. Franchisors: send corrections with the page reference and we will review them against the filing and update or annotate the page. Corrections are checked against the filings; nothing you write is published with your name unless you agree to it.
KUNG FU TEA franchise questions, answered from the filings
How many KUNG FU TEA franchised outlets left the system last year?
In KUNG FU TEA's latest FDD Item 20 (fiscal 2023), 20 of 339 franchised outlets left the system — an exit rate of 5.9% — compared with a 5.5% median across 6 comparable systems (bubble tea) tracked here. That counts terminations, non-renewals, and "ceased operations — other reasons" as the franchisor reported them; it excludes transfers to new owners. The FDD does not say why each outlet left, and an exit is not the same as a failure.
How much does a KUNG FU TEA franchise cost?
Per KUNG FU TEA's 2024 FDD, buying in requires an initial franchise fee of $37,000 (Item 5) and a total initial investment of $169K–$378K (Item 7).
What royalty does KUNG FU TEA charge?
KUNG FU TEA charges an ongoing royalty of 4.0% of gross sales, per Item 6 of its 2024 FDD.
Does KUNG FU TEA disclose earnings (Item 19)?
No — KUNG FU TEA's 2024 FDD makes no financial performance representation in Item 19. That is legal and common, but it means the franchisor publishes no earnings claim; ask current franchisees for real numbers.