Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Why Invest: Kona Ice Reinvents America’s Iconic Ice Cream Truck to Become a No. 1 Franchise (Part 2)

by Brian Bixler on April 2, 2013

in Frozen Dessert Franchise, Why Invest

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This post is the second of two parts. To read Part 1, please click here.

According to the company’s Franchise Disclosure Document, the initial investment for a Kona Ice franchise is between $103,700 and $119,100, including a $15,000 franchise fee. The biggest expense is the customized KEV, with a cold plate freezer system of more than 30 cubic feet. With a capacity to serve thousands of people per day, the exterior is wrapped with palm trees, beach scenes, and the Kona Ice characters, and just one person can operate the unit.

Because of recent publicity the company has received, Lamb said he receives 800 to 1,000 inquiries per month from investors interested in becoming franchisees. He personally contacts each one during the vetting process, saying he’s interested in community-minded owner/operators. Philanthropy is a substantial component of the Kona Ice business model.

Philanthropy is Key to Model

The KEVs are being seen less on neighborhood streets and more at community events, Lamb said, as a fundraising tool for various organizations, especially schools.

Tony Lamb, Founder and CEO of Kona Ice

Tony Lamb, Founder and CEO of Kona Ice

Because food costs are very low, only about 6 to 7 percent of the operational budget, and labor costs remain low with only one server needed to operate a unit, the Kona Ice truck can travel to a school or church festival and serve up to 500 people an hour selling portions that range from 8 oz. to 22 oz. at prices that range from $2 to $4.

By giving a portion of its proceeds, 25 percent to 30 percent, to a benefiting organization, the operator still makes a profit and the company has been able to raise more than $10 million nationwide for various organizations, according to its website.

Schools are particularly happy with the concept, Lamb said, because Kona Ice is a healthy alternative to high-calorie treats and comes in flavors that are vitamin-fortified, gluten-free, and some that are 100 percent juice.

“When anybody thinks of fundraising, they think of Kona Ice,” he said.

Kona Kollege Provides Training

Since 2010, Kona Ice has focused heavily on providing training to its new and existing franchisees. Last year, the company launched Kona Kollege in Kentucky, a three-day program where franchisees learn all about the Kona culture: operation and maintenance of a KEV, accessing Kona merchandise, using social media as a marketing tool. And at graduation, the new franchisees drive away in their KEV.

The biggest challenge the company has faced so far is navigating the various health regulations that vary widely from market to market, Lamb said. He brought his father Tom Lamb out of retirement to work full time on helping franchisees meet various codes and regulations in their area. The Kona Ice trucks are approved by the National Sanitation Foundation.

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