Gong Cha
Gong Cha offers bubble tea, coffee, and other beverages in franchised stores, known for its proprietary methods and variety of drinks. It operates in the quick-serve beverage industry.
Gong Cha franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment for opening a store can range from $25,750 to $61,800, depending on the size of the store and whether you purchase items from approved suppliers other than the franchisor or its affiliates [p.31]. This estimate does not include the Development Fee or Initial Franchise Fee, which are separate costs detailed in Item 5 [p.29] and Item 7 [p.31].
What is the initial franchise fee?
The initial franchise fee is $34,500, which is fully earned by the franchisor upon receipt and is non-refundable [p.18, p.147].
What are the ongoing royalty and advertising fees?
The ongoing royalty and advertising fees are based on gross sales from master franchise or unit franchisees. These fees represent sales-based royalties related entirely to the use of the company's intellectual property, recognized as franchisee sales occur and deemed collectible [p.126]. Sales reports are due no later than the third business day after the close of each week, with late submissions leading to estimated fees based on previous weeks [p.206].
How long is the initial franchise agreement, and can I renew it?
The term of the initial franchise agreement is not specified in the excerpts. However, the FDD mentions that a master franchise agreement ("MFA") may allow for automatic renewal for four additional five-year terms, unless agreed to otherwise by both parties [p.124]. This suggests that while there might be an option for renewal, the specific duration of the initial franchise agreement itself is not detailed in these excerpts.
Can I sell or transfer my franchise, and what does that require?
According to [p.5], you can sell or transfer your franchise, but Gong cha USA Franchising, LLC may refuse to permit such a transfer for good cause, which is defined as including, but not limited to, specific reasons. This isn't specified in the excerpts.
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement for good cause, such as the franchisee's failure to comply with lawful provisions of the franchise agreement and not curing such failure within a reasonable time [p.5]. Additionally, under Minnesota Franchise Law, the franchisor can terminate the agreement if there is voluntary abandonment by the franchisee, conviction of an offense related to the business, or failure to cure a default that materially impairs the franchisor's goodwill [p.265 and p.277].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD mentions minimum liquid capital amounts as part of the selection criteria [p.9], but the specific amount is not provided.
Do I get an exclusive or protected territory?
No, you do not receive an exclusive territory. According to the FDD, you may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls [p.54]. This isn't specified in the excerpts for a master franchise agreement, but the general terms apply similarly.
What training and ongoing support does the franchisor provide?
The franchisor provides initial training for franchisees' Designated Principals, General Managers (if applicable), and other managerial personnel. This training must be conducted by individuals who have completed the franchisor's initial training program to their satisfaction. Additionally, the franchisor may require refresher courses, seminars, and re-training programs from time to time, with a maximum of four days per person each year. The location and timing of these trainings are determined by the franchisor in its sole discretion [p.154]. For ongoing support, the franchisor offers services under an agreement for a service fee to grow and maintain the Gong cha® system in the United States [p.11].
How many franchised outlets are there, and how many have closed or been terminated?
As of December 31, 2024, there were a total of 229 franchised outlets owned and operated by the Existing Master Franchisees or their subfranchisees/sublicensees in the United States. During 2024, 15 outlets were terminated or closed. [p.73]
Does the franchisor share any financial performance or earnings information?
The franchisor is permitted to provide financial performance information if there is a reasonable basis for it [p.72]. However, other than the financial performance representation specified in Item 19, the franchisor does not make any financial performance representations and does not authorize its employees or representatives to make such representations either orally or in writing [p.74].
What am I restricted to selling, and where must I buy supplies?
You are restricted to selling only the products and services specified by the franchisor at or from your Store. You may not sell other products or services through your Store or under the Gong cha® marks without prior written approval. All necessary supplies, products, and ingredients must be purchased from the franchisor or its designated affiliates, as these items must meet their standards and specifications [p.61].